How does land transfer intervention promote farmers’ land investment? Evidence from China

Land investment plays a critical role in sustainable land use and agricultural development, but little is known about how to effectively promote land investment. Using data from the China Household Finance Survey, this study explores how land transfer interventions stimulate farmers’ land investment. This study finds that land transfer interventions significantly enhance investment in leased land. The main reason for this is that interventions have increased the level of formalization of land transfers, including payment of rental, cash transactions, and defined lease durations. Meanwhile, interventions extended the duration of land leases and enlarged the areas leased. Moreover, interventions during the negotiation and pricing stages, supervisory stages, and governmental involvement exert the most pronounced influence on land investment. Finally, this study also finds that interventions increase household expenditures on fertilizers, pesticides, and seeds except for leased land. The findings above offer valuable insights for policymakers aiming to refine land institutions and promote land investments.