Institutional Frameworks, Property Rights, and Agricultural Investment: Evidence from Nigerian Farmland Markets

Secure land tenure and well-defined property rights are foundational institutional conditions for agricultural investment, yet Nigeria's dual land governance system, combining statutory and customary tenure, creates significant heterogeneity in the security of property rights experienced by farm households across geopolitical zones. This study develops and tests a theoretical framework linking institutional tenure quality to agricultural investment decisions, applying it empirically to farmland markets across Benue, Kano, Cross River, and Oyo States. The theoretical model integrates the institutional economics of property rights with an agricultural household model of investment under uncertainty. The framework is estimated using instrumental variable techniques applied to a novel primary dataset of 600 farm households with detailed land transaction and investment histories. Title registration, plot-level boundary documentation, and community tenure endorsement are used as distinct measures of property rights security. Results indicate that secure property rights increase long-term soil investment by 34 percent and irrigation infrastructure investment by 41 percent, with the largest effects in states with active land sales markets. Customary tenure security provided through community endorsement generated investment effects only marginally lower than formal title, challenging the policy assumption that formal titling is the only route to investment security. The study makes a theoretical contribution by distinguishing the mechanisms through which different tenure forms affect investment horizons and risk tolerance. Policy implications target the Land Use Act reform debate and advocate for a hybrid tenure system that recognises community endorsement as a legally valid instrument. Keywords: property rights, land tenure, agricultural investment, institutional economics, Nigeria