By Abbas Nazil
Extreme weather caused by climate change is driving long-term changes in land ownership patterns and reducing farm sizes in developing countries, according to new research by Arteaga et al. (2025), reprinted from VoxDev.
The study reveals that weather shocks, particularly extreme temperatures, are triggering a surge in land transactions, with smaller farms more likely to be sold and previously landless individuals entering agriculture.
This trend leads to a fragmentation of farm sizes, ultimately lowering average farm size and reducing aggregate agricultural productivity.
Drawing from household-level surveys and administrative data in Colombia, the researchers found that agriculture in many developing nations remains dominated by small-scale farms that are highly vulnerable to negative income shocks like droughts and floods.
When such shocks occur and formal insurance mechanisms are absent, rural households are often forced to sell land and assets, exit agriculture, or reduce consumption, leading to fundamental shifts in land markets and investment behavior.
The study notes that entry and exit rates in agriculture are particularly high for smallholders, and that exposure to adverse weather significantly increases the likelihood of small farmers leaving the sector.
Interestingly, while many smallholders exit farming after weather shocks, the number of new entrants—mainly landless individuals—actually exceeds the number of those leaving.
However, these new entrants typically purchase small plots of land, resulting in a net decrease in average farm size.
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Data from Colombia’s national land registries, combined with high-frequency climate data, confirm that extreme temperature days lead to spikes in both land sales and mortgages.
This land market activity is primarily driven by households previously outside the farming sector acquiring small parcels, further skewing the farm size distribution.
The phenomenon was also supported by longitudinal household data (ELCA), which showed that farmers exposed to extreme temperatures experience drops in per capita consumption, asset ownership, and landholding, as well as increased migration.
The researchers constructed a dynamic household model to explain the results, showing that land is not only a productive asset but also a buffer against economic shocks.
When productivity drops, vulnerable farmers are forced to liquidate land assets, pushing them out of agriculture.
At the same time, falling land prices make entry more feasible for new, often less experienced, farmers.
This reshuffling of land ownership not only fragments farms but also alters the skill composition of agricultural workers, leading to persistent productivity losses well beyond the duration of the original weather shock.
The study warns that as climate change continues to intensify, these effects may deepen, widening the productivity gap between richer and poorer nations.
It underscores the urgent need for better financial tools, risk management systems, and climate-adaptive agricultural policies to help farmers absorb shocks without making irreversible economic decisions.
