Land Tenure Reform in Asia and Africa

Assessing Impacts on Poverty and Natural Resource Management

S. Holden, K. Otsuka, K. Deininger, S. Holden, K. Otsuka, K. Deininger

• Publisher: Palgrave Macmillan
• Year: 2013
• Print ISBN: 9781137343802
• eBook ISBN: 9781137343819
• Topic: Politics & International Relations
• Subtopic: Business General
• Index: Politics & International Relations

Rural poverty remains widespread and persistent in South Asia and Sub-Saharan Africa. A group of leading experts critically examines the impact of land tenure reforms on poverty reduction and natural resource management in countries in Africa and Asia with highly diverse historical contexts.

1

Land Tenure Reforms, Poverty and Natural Resource Management: Conceptual Framework

Stein T. Holden, Keijiro Otsuka and Klaus Deininger

1.1 Introduction

Land reforms have played a central role in the political economy of many countries in the world and have been subject to massive disagreements between different political interest groups and ideologies. The 20th century included many of the largest social land reform experiments in history, as in the erstwhile Soviet Union and in Eastern Europe, China, Vietnam and Ethiopia. Many of these reforms have since been partly reversed. In other countries with a colonial history, there have been tensions between the property rights established during the colonial period and traditional (customary) land rights; the ways to adapt these to changing conditions have become critical issues. Some countries have had very skewed land distributions rooted in ethnic, colonial and other historical circumstances, and this skew has created demands for land redistribution, both to reduce discrimination and poverty, and to stimulate economic development.

Several factors have created a new interest in land reforms around the world:

•The Millennium Development Goals sharpened the international focus on poverty reduction and legal empowerment of the poor as seen by the establishment of the Commission for Legal Empowerment of the Poor (CLEP).

•Population growth, population concentration and land degradation have created land scarcity and the emergence of land markets in densely populated countries in Africa, and this has created a new interest in land reforms, stimulating more efficient and sustainable land management.

•Excessive regulation of land transactions in some countries in Asia (for example, India, Nepal and the Philippines) has created both inefficiency in land use and inequity in operational land distribution.

•Economic growth in Asia has led to changes in eating habits towards more land-demanding foods (meat and milk), and to a growing shortage of usable land and water.

•Increasing demand for land for food and energy production have spurred a new land race to ensure national food security in countries with increasing food deficits. This has triggered sharp increases in demands for land in relatively land-abundant countries where the property rights and other institutional arrangements have not been developed adequately to handle these new demands or to protect the land rights of traditional land users and facilitate sustainable investments.

•Deforestation is one of the main causes of climate change, and the increasing international concern about this issue, and the support for the stopping and reversing of deforestation, have stimulated new thinking on how property rights and land reforms can play a part in reducing deforestation and forest degradation, and stimulate tree planting and better forest management.

New land reforms have been promoted by international institutions, such as the World Bank and UN organizations, donor countries, new governments and pressure groups within countries. Such reforms have typically aimed at stimulating economic growth by enhancing land use efficiency and investment, reducing poverty and promoting more sustainable land management. However, many of these reforms have not had the intended effects, or there have been disagreements about what the effects of the reforms have been. Given the complexity of the relationships, the problems in assessing the intended and possible unintended effects of said reforms may be related to both the design of the land tenure reforms and the measurement problems due to poor data. The problem of the disagreements about the effects of the reformshas also been caused by insufficient attention to the need for careful impact assessments and the data collection required to facilitate such assessments.

The renewed interest in land reforms has also spurred a new requirement to carefully monitor and measure their impacts. New standards are being established as to how to carry out program evaluation, not only through rigorous internal validation but also by giving more emphasis to external validation (Ravallion, 2009). Development economics research has moved in the direction of randomized social experiments as a preferred way of identifying unbiased estimates of program impacts; but so far it has been rather difficult to implement randomized social land tenure reform experiments.

New reforms in several countries have involved elements of randomized control trials related to the design of reforms, and these can provide valuable future lessons; however, for our purpose of evaluating past and recent ongoing reforms we have not, unfortunately, been able to draw on such experiments for this book. On the other hand, there may be clever ways of identifying natural experiments in relation to land tenure reform programs, and these may help to identify impacts whenever random social experiments are found, for whatever reason, to be unfeasible. This book tries to utilize such natural experiments as one source of evidence of the performance of past tenure reforms.

This book aims to identify the impacts and draw lessons from land tenure reforms in a number of countries in Africa and Asia, and to discuss the internal and external validity of the findings. The nature of the data and the complexity of the issues make it necessary to be cautious about the conclusions and their robustness. Good knowledge of the historical context and process of implementation of the specific land tenure reforms is essential for careful interpretation of evidence from past reform. In addition, the book draws heavily on recent rural household surveys as a basis for assessment of reform impacts. The authors combine historical, process and recent statistical evidence to infer causal implications about impacts of land tenure reforms. Subjective judgment is a necessary part of such analyses, as is any historical analysis based on limited evidence.

The book focuses on five major land tenure reform issues:

a)Land to the Tiller reforms (Nepal and India);

b)Market-assisted Land Redistribution reforms (Malawi and South Africa);

c)Land tenure security-enhancing reforms (Ethiopia, Vietnam and Uganda);

d)Forest tenure reforms (China, India, Nepal, Ethiopia and Kenya); and

e)The need for new land tenure reforms in Africa with the expanding demand for land.

We present a brief literature review related to these five areas in boxes that also provide the basis for our conceptual framework. We start by providing a discussion and review of literature on why land tenure security is so important for enhancing economic and social development.

1.2 Why securing land rights is important

Development economists have long highlighted the central role of institutions, that is, the socially imposed constraints on human interaction that structure incentives in any exchange, and in shaping growth and the distribution of its gains among the population (Greif, 1993; North, 1971). Property rights are social conventions, backed by the enforcement power of the state (at various levels) or of the community, allowing individuals or groups to lay ‘a claim to a benefit or income stream that the state will agree to protect through the assignment of duty to others who may covet, or somehow interfere with, the benefit stream’ (Sjaastad and Bromley, 2000).

Since in most contexts, land and associated real estate is one of households’ most important assets, societies have from the earliest days of recorded history developed customs and laws on how to define land rights, and many societies have set up registries to make public the assignment of rights and their transfer among private parties (Powelson, 1988). The creation and maintenance of such a property rights system is an important public good that reduces the need for landholders to expend resources (for example, hiring private armies) to protect their rights. Key avenues through which property rights systems affect economic outcomes are increased investment incentives (or a reduction of the need to spend resources on defensive measures) through reduced risk of land loss and the facilitation of market transactions (Besley and Ghatak, 2010). In light of such long-term effects, they will also be of relevance for political power.

Investment incentives: Secure property rights affect economic outcomes most immediately by reducing the risk of land loss, increasing investment incentives and reducing the need for individuals to spend resources on protecting their rights. In fact, historically, land rights emerge at the transition from the hunter–gatherer stage when investment in land becomes important (Binswanger et al., 1995). The prospect of being able to enjoy the fruits of their labor encourages owners to make long-term land-related investments, and manage land sustainably (Besley, 1995). Positive impacts of land tenure security on investment in rural areas have been documented in China (Jacoby et al., 2002), Thailand (Feder et al., 1988), Latin America (Bandiera, 2007), Eastern Europe (Rozelle and Swinnen, 2004), and Africa (Holden et al., 2009; Fenske, 2011; Goldstein and Udry, 2008).

If there is widespread insecurity of property rights, clarification of such rights through systematic adjudication and registration of land rights can be a cost-effective way to increase tenure security. The magnitude and distribution of the associated benefits will depend on the reduction in enforcement effort afforded by formal recognition, the increment in security afforded by the intervention (which will depend on the legitimacy and legality of existing arrangements and the level of disputes), and the availability of investment opportunities. The benefits will be greater if the increment in tenure security is large – for instance, if land tenure had previously been insecure or conflict-ridden while the new arrangements enjoy wide legitimacy – and if payoffs from land-related investment are high.

Land transfers and financial markets: Economic development normally involves specialization and a move of part of the labor force out of the agricultural sector. Such movement creates heterogeneity in the population, increasing the scope for efficiency-enhancing land transfers. Institutions allowing such transactions at low cost, and without those who transfer use rights having to fear that they may lose their land, can increase productivity of land use. As land rental allows labor to move from agriculture to non-agriculture without forgoing the benefits – for example in terms of a social safety-net function – associated with land ownership, in most cases such transfers will be through rental rather than sale. Initially they are likely to involve community members. High transaction costs, which can also arise because rights are unclear or because of institutional inefficiencies, can reduce the number of such transactions or drive them into informality, with potentially negative impacts on long-term economic development (Libecap and Lueck, 2011).

Asymmetric information and risk have long been shown to lead to credit rationing in equilibrium and the use of collateral as one way of reducing such credit rationing (Stiglitz and Weiss, 1981). The immobility and relative indestructibility of land make it the ideal collateral. However, banks will use it for this purpose on a large scale only if they have access to a low-cost means of making reliable inferences on ownership, and the absence of other encumbrances, for any given plot of land. Such information is normally provided by land registries; if it is reliable and comprehensive, it can eliminate the need for physical inspection of the land in question, or enquiry with neighbors, thus reducing the transaction cost of exchanging land in impersonal markets and creating the preconditions for using it as collateral to secure loans. While this provides the conceptual foundation for credit impacts from land titling or registration, such effects may be expected only if there is already a latent and unsatisfied demand for credit (that is, a portfolio of viable projects), if foreclosure is possible, if registry information is comprehensive and remains up to date over time, and if third parties, such as mortgage lenders, can access reliable registry information at low cost on a routine basis.

Compared to the overwhelming empirical support for investment impacts, evidence of credit impacts from land titling, although not entirely absent (Feder et al., 1988), is very limited. These credit impactsmay accrue only to wealthy producers (Carter and Olinto, 2003); and in a number of cases where there were expectations for property rights ...

Table of contents

• Cover
• Title
• 1   Land Tenure Reforms, Poverty and Natural Resource Management: Conceptual Framework
• Part I   Land Redistribution Reforms
• Part II   Tenure Security and Transfer Rights Enhancing Reforms
• Part III   Forest Tenure Reforms
• Part IV   New Challenges and the Future of Land Tenure Reform
• Index