Gershon Feder. The Intricacies of Land Markets - Why the World Bank Succeeds in Economic Reform through Land Registration and Tenure Security

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1 Gershon Feder The Intricacies of Land Markets - Why the World Bank Succeeds in Economic Reform through Land Registration and Tenure Security

2 Land Administration and Socio-Economic Development

3 Key message: A well designed and properly managed land administration system is a key factor in socio-economic development.

4 Structure: 1. History 2. Conceptual framework 3. Empirical evidence on economic impact 4. Social considerations 5. World Bank experiences

5 Historical Perspectives (i) Ancient Egypt (4 th -6 th Dynasties, 2200 B.C.) All lands registered at prime ministers' office Ownership transfer recorded on papyrus, signed by three witnesses Official seal marks end of document, to prevent fraud By 550BC landholder keeps document of possession as well as all earlier documents of earlier owners

6 Historical Perspectives (ii) Hammurabi's System in Babylon ( B.C.) Private ownership common All land holdings registered in palace Tracts marked by boundary pegs State adjudication of ownership and use

7 Historical Perspectives (iii) Assyria ( B.C.) Transactions recorded in king's presence Records kept on clay tablets in palace Property law enforced by state Displacement of boundary markers severely punished

8 Historical Perspectives (iv) Ancient Israel (700 B.C.) Sales recorded on deeds, signed by witnesses Two copies of deed, one of which sealed Copies kept by a temple priest, in ceramic jar

9 Historical Perspectives (v) Cleopatra's Egypt (35 B.C.) Detailed cadastre kept by the state, recording every single tract's possessor, dimensions, location, nature of crops grown, and tax status

10 What does history suggest? Sophisticated land administration systems are associated with economically and politically advanced societies Governments or their surrogates have always had important roles in maintaining and facilitating land administration systems

11 The Conceptual Framework (i) Tenure security Incentives for investment Greater productivity

12 The Conceptual Framework (ii) Land administration More developed land market (transactions) Improved tenure security More developed credit market (collateral) Greater economic prosperity

13 The Conceptual Framework (iii) Better land administration Better tax collection Better citizenship

14 Testable Hypotheses: Land registration Greater investment Land registration Land registration More credit Higher land value Land registration Greater revenue from land

15 Titled land 300% Empirical evidence: Investment 200% % 100% 0 Thailand (1988) Honduras (1996) Brazil (1996)

16 Empirical evidence: Credit Titled land 400% % % 100% 100% 0 Thailand (1988) Honduras (1996)

17 Empirical evidence: Land value Titled land 200% % 100% 0 Thailand (1988) Indonesia (1996) Philippines (1984) Brazil (1996)

18 Empirical evidence: Revenue from land Titled land THAILAND (1988) 100% % 0 Province 1 Province 2 Province 3

19 Social Considerations Change in rules can provide unfair advantages to the wealthy High transactions costs undermine the access for the poor More efficient land markets can lead to land concentration when credit markets are distorted Remedial steps are available to tackle these risks

20 World Bank Experiences: Scope of Operations The World Bank is a major financier of land administration activities: Scores of projects over the past 15 years Activities in Asia, Africa, Europe, Middle East and Latin America A variety of activities supported: Cadastres, registration, titling, organizational reform, legal reform, capacity building, studies Both rural and urban sectors

21 World Bank Approach to Land Administration Land administration viewed as input for socioeconomic development Analytical work typically precedes actual financing The broader context of a country's situation: legal system, economic forces, political background are considered Complementary investments and policy reforms supported as well Social risks addressed in project design Long term horizon

22 Common Design Features in Land Administration Projects Ensure that the institutional policy and legal framework is appropriate Information campaigns to protect the underprivileged Legal assistance for the poor Community involvement in adjudication and conflict resolution, and feedback mechanisms Geographical prioritization Reliance on private sector where possible Subsidize first-time registration for small land-owners, but plan for long-term fiscal sustainability

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