2023 Annual Meeting Agricultural and Applied Economics Association
The size of farms is an important determinant of agricultural productivity. This paper studies the effect of weather shocks on rural land sales and farm size in Colombia. Using a unique administrative dataset with transaction-level information on land sales and a land registry covering most of the country, we show that extreme temperature events increase the frequency of land sales and decrease average farm size within Colombian municipalities. We show that this result is driven by initially smaller farms, that in the event of a shock are further fragmented and purchased by new owners. The effects of extreme temperature on land sales are stronger in poorer and more isolated municipalities, where landowners are also less likely to take out land mortgages after the shocks. These results suggest that credit constraints are a relevant mechanism driving distress sales and land fragmentation.