Land Use Policy 27 (2010) 763–771 Contents lists available at ScienceDirect Land Use Policy journal homepage: www.elsevier.com/locate/landusepol Agrobiodiversity, farm profits and land fragmentation: Evidence from Bulgaria Salvatore Di Falco a,∗ , Ivan Penov b , Aleksi Aleksiev b , Tom M. van Rensburg c a Department of Geography and Environment, London School of Economics, Houghton Street, WC2 2AE London, United Kingdom b Agricultural University of Plovdiv, Bulgaria c National University of Ireland, Galway, Ireland article info Article history: Received 17 March 2009 Received in revised form 8 October 2009 Accepted 11 October 2009 Keywords: Crop biodiversity Land fragmentation Land reform: Profitability Bulgaria abstract This paper presents an empirical analysis of the role of land fragmentation, crop biodiversity and their interplay with farm profitability. Original primary data are drawn from a survey conducted in the Plo- div region of Bulgaria. The econometric results stress the ambiguous role of land fragmentation on farm profitability. On one hand, land fragmentation reduces farm profitability. On the other hand, land frag- mentation fosters crop diversification. We also find that crop biodiversity plays a beneficial role in farm profitability. Policies that aim to increase land consolidation and reduce fragmentation may overlook the positive link between diversity and plot heterogeneity. Policies that encourage land consolidation should, therefore, consider the crucial role that this has on other variables such as farm biodiversity. © 2009 Elsevier Ltd. All rights reserved. Introduction Land fragmentation, where a single farm comprises numerous individual parcels of land is a common agrarian feature of many transition economies as well as developing countries (Blarel et al., 1992; Dijk, 2002; Sabastes-Wheeler, 2002; Todorova and Lulcheva, 2005; Niroula and Thapa, 2007). During the 1990s, Central and Eastern European countries conducted land reforms. The main elements of reform were land restitution, privatization and disso- lution of large centrally run agricultural enterprises (Lerman, 1999; Davidova et al., 1997; Dijk, 2002; Kopeva, 2001). Land fragmenta- tion is often considered to be an obstacle for improving agricultural productivity and land abandonment (Theesfeld, 2005; Dirimanova, 2006). It is thought to impede growth and prevent efficiency gains in the agricultural sector and many governments including Bulgaria have sought to promote a more rational spatial allocation of land and formulated policies aimed at encouraging land consolidation (Blarel et al., 1992; Hung et al., 2007). Although it has been argued that land fragmentation may be detrimental to both farmers and the economy, there are a num- ber of reasons why farmers may benefit from land fragmentation. Land fragmentation provides a means of exploiting land parcels of differing quality. This facilitates crop diversification, spreads labour requirements, reduces production and price risks and bet- ter matches soil types with necessary food crops (Bentley, 1987; ∗ Corresponding author. E-mail address: s.difalco@lse.ac.uk (S. Di Falco). Blarel et al., 1992). Land fragmentation is thought to promote crop and agricultural diversity 1 (Bellon and Taylor, 1993; Hung, 2006). Bulgaria is a prime example of such a situation. After the land reform in 1991, agricultural production characteristics have changed dramatically. The mode of agricultural production in Bul- garia has gone from large specialized production units to highly fragmented private farms (Buckwell and Davidova, 1993; Kopeva et al., 1994). The focus of this paper is on analyzing the implications of land reform for both farm profitability and agrobiodiversity. While land fragmentation can be expected to have a negative effect on farm profitability, since it increases costs of control of organizing agri- cultural production it can also positively affect the level of crop diversification present on any given farm. Farmers may be induced to increase crop biodiversity in order to match different agroeco- logical conditions or quality of the plots they manage. Moreover, farmers can take advantage of this de-facto diversification and grow products that would be marketed at different periods during the year. Land reform has generated similar problems in other CEECs. The linkages between land fragmentation, crop biodiversity and farm profitability are, thus, crucial in the agricultural system of CEEC countries. 1 Agricultural biodiversity (or agrobiodiversity) is defined as a component of bio- diversity, referring to all diversity within and among species found in crop and domesticated livestock systems, including wild relatives, interacting species of pol- linators, pests, parasites, and other organisms (Qualset et al., 1995; Wood and Lenné, 1999). 0264-8377/$ – see front matter © 2009 Elsevier Ltd. All rights reserved. doi:10.1016/j.landusepol.2009.10.007