Reverse tenancy in Romania: Actors’ rationales and equity outcomes

Following the implementation of the land reform in the 1990s, land rentals have developed in Romania, mainly in a reverse tenancy configuration. The paper provides an analysis of contractual practices in this configuration, based on empirical data collected through intensive field work in Transylvania. The paper depicts the reverse tenancy configuration and the conditions of its emergence in Romania, following the implementation of transition reforms in the agricultural sector. Characterizing the negotiation and enforcement of contracts in this configuration shows that in a situation where no effective enforcement mechanism is available, the market structure is such that tenants can choose “very incomplete” contracts or default on their contractual obligations. The analysis of the landowners’ perspective, taking into account their perception of the contractual relationship, contributes to explain why contractual practices persist in this context. The article concludes with a discussion, from a policy perspective, of the equity-enhancing role of the land lease market in such a reverse tenancy configuration.