The Distribution of Residual Controls and Risk Sharing: A Case Study of Farmland Transfer in China

Structuring contracts to share interest and risk is the central premise of farmland transfer, yet the contract framework and its determinants have rarely been empirically tested based on micro-level data. In this study, we aim to examine factors underlying the balanced distribution of residual contr...

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Bibliographic Details
Published inSustainability Vol. 10; no. 6; p. 2041
Main Authors Han, Hongyun, Li, Hanning
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 15.06.2018
Subjects
Agricultural economics
Agricultural land
Agricultural policy
Case studies
Contracts
Households
Property rights
Risk management
Risk sharing
Sustainability
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Summary:Structuring contracts to share interest and risk is the central premise of farmland transfer, yet the contract framework and its determinants have rarely been empirically tested based on micro-level data. In this study, we aim to examine factors underlying the balanced distribution of residual controls and risk sharing on contract framework by using field surveyed data of 353 individual farmland transfer contracts. Our evidence shows that the policy of farmland property rights registration has a significant effect on the contract framework and supports the implication of enforcement costs exerted by the effects of the scale ratio and the contract form, contract duration, conversion way, and long-lived assets input. Although our findings fail to support the typical implication of risk sharing as an explanation of contract framework of farmland transfer, given the symmetric positions of two contracted parties of rural farmer households, it is proved that right confirmation and contract duration are two important factors underlying contract options.
ISSN:2071-1050
2071-1050
DOI:10.3390/su10062041