Can land fragmentation mitigate the impact of weather shocks? Evidence from rural Vietnam

Land fragmentation—broadly refers to the division of farmland into multiple separate plots managed by a single household—is widely regarded as inefficient due to higher production costs and limited economies of scale. However, its potential benefits for risk management remain underexplored, particularly in developing Asia. This study investigates whether land fragmentation can help smallholder farmers cope with rainfall shocks, using evidence from Vietnam. By combining household panel data from the Vietnam Access to Resource Household Survey (2008–2018) with satellite-based rainfall data, I employ household fixed effects and an instrumental variable strategy to address potential endogeneity. The results show that land fragmentation—measured by either the number of plots or the Simpson index—significantly mitigates crop losses from rainfall anomalies by 3.0–3.8 % and 4.2–5.3 %, respectively. Further analysis indicates that this effect operates through enhanced crop diversification. Although land fragmentation reduces crop productivity under normal weather conditions, it functions as an informal insurance mechanism in the absence of formal risk markets. These findings highlight the risk-buffering role of land fragmentation and offer policy insights for designing climate-resilient agricultural strategies in Vietnam.