Remittances, Farm Investments and Land Use Change in Kerala, India

Experts and international organisations highlight the impact of remittances on productive investments for development. A number of surveys reveal that remittances are partly used for farm investments (Taylor et al., 2006; Wouterse and Taylor, 2009). Based on the New Economics of Labour Migration (NELM) it is hypothesized that households invest remittances for reducing income risks by diversifying agricultural production, for overcoming credit constraints and for productive investments. Furthermore, it is assumed that remittances contribute to land use changes in the farm sector. These considerations lead to the following research questions: (1) How far are remittances to rural areas used for farm investment? (2) How far do investments out of remittances influence land use change? For that purpose, a survey among 400 households was conducted in Kerala (India) and the research region of Malappuram, because this region features high a density of migration, high amounts of remittances transferred from the Gulf countries, water shortages during dry season, and a long farming tradition . The data are analysed by correlations and descriptive statistics. The results indicate that farm investments correlate positively with remittances. Besides, households which receive remittances have a higher likelihood to change their land use.