The authors examine the impact of giving refugees access to cultivable land on refugee and host community welfare in Uganda. Cultivable land is allotted randomly to refugees when they arrive in refugee settlements, provided idle land is available at the time of their arrival. On average, refugee households received a plot roughly 0.5 hectares in size.
The authors exploit the quasi-random nature of land allocations to estimate the impact of an initial land endowment on refugee welfare (as measured by household income, the share of household income that is not aid, quality of dwelling, food security, consumption, and dietary diversity), as well as the spillover effects on income and production in the surrounding host communities.
The analysis is based on a 2016 survey of refugees in Rwamwanja refugee settlement in Kamwenge district of southwestern Uganda. The survey also covered local households and businesses living within 15 kilometers of the settlement. At the time of the survey Rwamwanja settlement had a population of 103,000 refugees, mostly from the Democratic Republic of Congo.
Main results:
- Land distributions have a significant and positive impact on refugee income, consumption, and welfare. Taking into account differences in household characteristics, household income is 49 percent higher in households that initially receive cultivable land; and 9 percent more households earned income when they received land. The effects on welfare indicators including per-capita expenditure on consumption items are positive but not statistically significant.
- Refugees’ ability to utilize land for productive activities improves their self-reliance, which translates into higher and more diverse food consumption. Refugees farm their land intensively, and the food they produce is an important source of nutrition. They sell some of this food in local markets to raise cash, most of which they spend locally, creating new income spillovers. However, the initial land-endowment effects on food security are positive but not significant, likely reflecting the influence of food aid on food security.
- Refugee households receiving larger plots of cultivable land have better quality dwellings. Refugee households receiving larger plots of cultivable land scored higher on the index of dwelling characteristics: an additional hectare raises the index by more than one-third of a standard deviation.
- Refugees create income spillovers by demanding locally supplied goods and services, benefiting households and businesses within 15 kilometers of the settlement. Increased demand from refugees stimulates local crop and non-crop production and generates positive income spillovers. Additionally, a sizeable number of refugees set up businesses that purchase inputs from host country businesses and households, and many sell their labor to businesses inside or outside the settlements. As local incomes rise, so does demand, and this generates multiple rounds of impacts in the local economy while stimulating trade that transmits benefits to other parts of the country. The total impact of an additional refugee household on annual real income in the local economy is around US$1,106 if the household receives food aid in cash and US$866 if it receives in-kind food aid—amounts that easily exceed the cost of food aid. The income gain is large when compared with average income in host country households around the settlement.
The authors conclude that refugees can create significant economic benefits for the countries that host them, and these benefits increase the more refugees are able to engage in host country markets. Total production and income impacts are larger when refugees receive assistance in the form of cash spent on locally supplied goods and services, and when they are given access to land. The potential economic benefits are also larger when governments locate refugee settlements in places where local farmers and other producers can supply refugees’ demands and where there is a potential for refugees to supplement their income by working or establishing businesses, generating stronger local linkages.