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Farm size and land allocation are important factors in explaining lagging agricultural productivity in developing countries. This paper examines the effect of land market imperfections on land allocation across farmers and aggregate agricultural productivity. We develop a theoretical framework to model the optimal size distribution of farms and assess to what extent market imperfections can explain non-optimal land allocation and output inefficiency. We measure these distortions for the case of Guatemala using agricultural census microdata. We find that due to land market imperfections aggregate output is 19% below its efficient level for both maize and beans and 31% below for coffee, which are three major crops produced nationwide. The regions with higher distortions show a higher dispersion in land prices and less active rental markets. We also find that the degree of land market distortions across locations co-variate with road accessibility and ethnicity and, in a lower extent, with education. [ABSTRACT FROM AUTHOR]

Smallholder farmers are increasingly exposed to weather extremes but lack access to affordable insurance products to protect their livelihoods from catastrophic crop damage. This paper analyzes the feasibility of Picture-Based Insurance (PBI) as a tool to improve the quality and affordability of crop insurance. Under PBI, insurance claims are verified using a time-lapse of pictures from insured plots, both pre- and post-damage, taken by farmers themselves using regular smartphone cameras. PBI aims at minimizing asymmetric information and costs of claims verification compared to indemnity insurance, while reducing basis risk and improving trust, tangibility, and understanding compared to indexbased insurance. A pilot implementation in the rice-wheat belt of India speaks to PBI being a feasible and valuable complement to existing insurance products. Damage is visible from smartphone pictures, farmers can take pictures of sufficient quality for loss assessment, and PBI helps reduce severe downside basis risk at minimal cost. [ABSTRACT FROM AUTHOR]

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