Evaluating the impact of land redistribution : a CGE microsimulation application to Zimbabwe

Abstract

Zimbabwe has recently gone through a widely criticised land reform process. The country has suffered immensely as a result of this badly orchestrated reform process. Yet land reform can potentially increase average incomes, improve income distribution and as a consequence reduce poverty. This paper presents a counterfactual picture of what could have happened had land reform been handled differently. The paper uses a computable general equilibrium (CGE) model coupled with a microsimulation model in order to quantify the impact of land redistribution in terms of poverty, inequality and production. This is to our knowledge the first attempt to apply such an approach to the study of the impact of land reform on poverty and distribution in the context of an African country. The results for the land reform simulations show that the reform could have had the potential of generating substantial reductions in poverty and inequality in the rural areas. The well-off households, however, would have seen a slight reduction in their welfare. What underpins these positive outcomes are the complementary adjustments in the fiscal deficit and external balance, elements that were generally lacking from the way Zimbabwe's land reform was actually executed. These results tend to suggest that well planned and executed land reforms can still play an important role in reducing poverty and inequality.