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Land Rights Systems for Shared Prosperity: on jobs, rents and power Stefan Dercon DFID and Oxford University

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Property Rights are Good Acemoglu and Robinson: Property rights key for growth, and a feature of inclusive institutions. Acemoglu/Johnson (JPE, 2005). Property rights institutions that protect citizens against expropriation and powerful elites first order importance for long-run growth

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Property Rights are Good High Level Panel to increase by x% the share of women and men, communities, and businesses with secure rights to land, property, and other assets DFID Result Framework for current 5 year period Number of people supported through DFID to improve their rights to land and property --- 6 million David Cameron Golden Thread of Development the economic, political and institutional building blocks for development Property rights one of the essential features

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Property Rights are Good What is it about them? Efficiency (incentivises effort and investment) Equity reasons right/power, including the poor and for women Leading to Interventions: To ensure rights are given and protected, including for women or other marginalised groups That are presumed to lead to growth and shared prosperity

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Are we asking the right questions? Land titling programmes have an opportunity cost, so are we giving enough thought about: Can we do it? Do we have the institutional conditions that will allow land rights programmes to lead to equitable, efficient outcomes? How to handle property rights so that are right for growth? Good for job creation? Good for structural transformation? What land system is required for job creation? Can we do within the state capacities we have? Do we create new opportunities for rent-seeking behaviour?

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Feeding into the key questions: Are we building sustainable, transparent land systems that support growth, jobs creation, poverty reduction and equal opportunities? Are we learning-while-doing whether they actually work deliver what they claim to deliver? Or are we creating

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Big questions, partial answers Can we design programmes that lead to equitable outcomes? A story from urban Tanzania: a nudge to gender equality in land titles; but is female empowerment a fantasy? Are property rights going to lead to shared prosperity through growth and jobs? A cautionary tale from Ethiopia (with surprising facts) and nods to Singur (West-Bengal), historical France and England Are land titling systems fit for purpose? The ambitious protective land laws offering land rights including to the poor in Dar es Salaam, Tanzania and the sobering tale of the 12 steps to land titles that cost of fortune to follow, if ever with success and with few lasting effects....

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Not just stories Results based on studies using RCT (Tanzania) and discontinuity design (Ethiopia) Daniel Ayalew Ali, Matthew Collin, Klaus Deininger, Stefan Dercon, Justin Sandefur and Andrew Zeitlin (2014), The Price of Empowerment: Experimental Evidence on Land Titling in Tanzania, mimeo Matthew Collin, Stefan Dercon, Hunter Nielson, Justin Sandefur, Andrew Zeitlin, (2014), The practical and institutional hurdles to obtaining land titles in urban Tanzania, IGC issues paper. C. Anthony Harris, Forced to sell the farm: Effects of expropriation and compensation programs on small-scale farmers in Ethiopia URB-03: EXPROPRIATION March 24, 15:00, MC 2-800

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1. The price of empowerment Tanzania 1999 Land Act: Direct influence of Hernando de Soto Expanded scope for ownership in urban, unplanned settlements Two types of titles: Residential License (RL) and Certificate of Right of Occupancy (CRO) RL is short term (5 year) lease on land, renewable, non-transferable, no collateral value CRO is long term (99 year) leasehold, transferable, can be used as collateral, perceived as more secure But by now: less than 3% of households living in unplanned settlements have obtained CROs

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Female Inclusion in Land? In principle: Land act has several provisions to protect women (default is female co-ownership, and spouse need to have each others permission) In practice: only 45% of men report that their wives will be consulted in selling even if they have CROs, in general, less than quarter of RLs have female name on it. Research programme: 1. What drives general low uptake of CROs? 2. Can we induce greater legal protections for female household members? 3. (in due course) What is the impact of CROs and female inclusion in CROs?

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Design: RCT Urban Dar es Salaam 2 neighboring sub-wards (mitaa), roughly 1,000 parcels each Focus on one today: Mburahati Barafu

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The study area 2 neighboring sub-wards (mitaa), roughly 1,000 parcels each Focus on one today: Mburahati Barafu

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Intervention (surveying plus repayment programme) randomised to blocks 50 `blocks' of roughly 40 parcels each Randomly assigned to treatment or control group Treatment: cadastral surveying and repayment program

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Intervention: price variation Parcel-level randomization of prices: Baseline price of C.R.O. post-cadastral survey is TSh 100,000 (< $50)

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Unconditional vouchers Some vouchers are `general' and act as immediate discounts.

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Some vouchers are conditional, and only apply if HH includes a woman as an owner on CRO application Conditional discounts gender conditions

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Variation in conditional and unconditional vouchers Some get general, some conditional and some both vouchers of various values

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Leading to price variation

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Subsequently correlated with uptake We find high sensitivity to price But do gender conditions matter?

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Resulting into many more women registered on titles through conditions Figure shows estimates of co-titling (probability of woman to be included on actual title when application is submitted) We find that co-titling rate shoots up from about half to close to 100% when conditional voucher is received instead of general voucher.

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But gender conditions dont come at a cost in terms of uptake. Estimated takeup impacts of 0.379% and 0.377% per TShs 1,000 of conditional and unconditional discount. They are statistically indistinguishable.

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Conclusion 1: land rights for the poor? Can we design programmes that lead to uptake of titles for the poor? YES WE CAN up to a point poor people are willing to pay for it, but make sure it is not too much

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Conclusion 1b: land rights for women? YES WE CAN - WE ARE IN SILVER BULLET LAND: Gender conditions have no cost in terms of uptake for a given price so simple nudges have huge impact on female empowerment in land titling programmes. But lets be cautious does it mean anything for women to have their name on the title? Do we have the institutional conditions that will allow land rights programmes to lead to equitable, efficient outcomes? (to be continued)

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2. Are land rights good for jobs? Jobs will come from industrialisation and urbanisation Are we setting up land systems supporting structural transformation?

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Some lessons from history The economists view Industrialisation could take off thanks to property rights (Acemoglu and Robinson) and happened in UK thanks to Glorious Revolution of 1688. But property rights by then at least as secure in France or even in China by then (Allen, 2009). In France probably too secure: e.g no profitable irrigation or canals in Provence as no way of overriding private property rights; In England, parliament could override private rights. A key part of development is ability to ensure land can be used for higher productivity use and for public infrastructure. A transparent system of protecting and at times overriding private rights for the public good. (Eminent domain, compulsory purchase, expropriation systems).

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What (not) to learn from India Singur (West-Bengal) 400 ha agricultural land taken in 2006 to be offered to Tata for the production of the Nano car Forcible acquisition under an old (British colonial) law compensation paid Protest and violence, and international news coverage, and huge political fall-out Interpretation of law rejected by courts Tata Motors left in 2008 New law very bureaucratic and slow? Not solving bad land records Discussion March 26: RES-21 8:30 Papers by Dilip Mookherjee and co-authors -Inadequate or inappropriate compensation/poor valuation Comments on new law Naresh Saxena (new law anti-farmer and anti- growth)

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Solving this, Ethiopia style Bidding to attract industries Land systems more like China than Africa All land belongs to the state Constitutional user rights (with commensurate land registration programmes) But government can take away with clear compensation rules also for economic purposes

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Ethiopias non-Singur 300 ha agricultural land, near Kombolcha taken away to give way to Steel Plant, 2013 Land taken away according to law, with compensation 10 years land productivity (not quite headline news) C. Anthony Harris, Forced to sell the farm: Effects of expropriation and compensation programs on small-scale farmers in Ethiopia URB-03: EXPROPRIATION March 24, 15:00, MC 2- 800

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Study Area: Kombalcha Survey well before land was taken away, and afterwards. Red=treatment; green=control

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Impact of expropriation On average: households affected lost 50% of their land received 100,000 Birr (the equivalent of 5,200 USD). Compensation received equivalent of USD 8,000 for unirrigated land USD 16,000 for irrigated land (compared to USD 25,000-36,000/ha in stated policy Singur) Our data suggest in line with regulations and principles (10 years productivity of land)

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Impact of expropriation Compared to those who did not in diff-in-diff setting (note: average compensation=100,000 birr) ...increased savings by 58,000 Birr ...increased value of home by 9,000 Birr ...increased consumption by 6,200 Birr (possibly spent more than that to compensate for income loss) ...increased non-agricultural assets by 6,200 Birr ...do not change the value of livestock holdings ...increased non-farm activity

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Are they worse off? Those who lost land have consumption higher than control group (6,200 birr per annum more despite income loss) have less trust in local officials are indifferent in Cantrils ladder of life (overall, how satisfied are you with your life, using 10-steps) And expect to be better off than control group in five years from now (subjective poverty scale) But not clear where earnings will come from in data (high liquid savings, consumption but limited off-farm or other investment)

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Conclusion 2: land rights for jobs? Countries need to have a transparent, fair system to transfer land from one use to another, including where the market may suffer from hold-up problems For public purposes For industrialisation and job creation? Handing out individual land rights can protect the poor, but it should not be fundamental hindrance of essential structural transformation, required for poverty reduction Systems will have to be nested in local institutional and legal contexts. Important efficiency and equity trade-offs that must be confronted, and researched.

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3. Are land right systems fit for purpose? Providing and enforcing land rights potentially bureaucratically intensive process E.g new land law in India: may now take years to get rights as well as to conclude expropriate from farmers, leaving all in limbo In countries where much work is needed on land titling, are we setting up functional real institutions or just systems not fit for purpose? Matthew Collin, Stefan Dercon, Hunter Nielson, Justin Sandefur, Andrew Zeitlin, (2014), The practical and institutional hurdles to obtaining land titles in urban Tanzania, IGC issues paper.

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Experience with CROs in Tanzania After 15 years, only 3% of households in urban unplanned settlements with titles At least 12 distinct steps each with risks of hold-up, cost escalation, corruption, and confusion and with considerable tax uncertainty Even in our RCT, started in 2010 we are still trying to ensure those who paid are getting the CRO

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The sobering 12 steps to a title Step 1: Hire a Surveyor Step 2: Surveyor Prepares a Base Map Step 3: Submitting the Base Map to Municipality Step 4: Submitting the Base Map to Ministry Step 5: Completing the Cadastral Survey & Placing Beacons Step 6: Approval of Survey by Municipality/Ministry Step 7 Receipt of Unique Plot Number Step 8: Completion of CRO Forms and Creation of Deed Plan (five forms and a proof of payment) Step 9: Deed Plans/CRO forms Submitted to Municipality Step 10: Deed Plans/CRO Forms to Ministry Step 11: CRO Approved for Collection Step 12: collect the CRO

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Cost? Cost prohibitive, not just in time Official route (without extras) $23 for plot of 20m by 20m (400 sq metres) In practice, private route required costing up to $712, before back payments of tax and extras. A system fit for bureaucrats and rent-seekers, and not for poor people? People are willing to pay for title but at a reasonable rate for the poor

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Conclusions Our examples showed: That we can easily nudge men to ensure women get onto titles but can we be confident that this means real empowerment? That protecting land rights is surely good but do we get systems that are fit for a dynamic economy and that will promote jobs and structural transformation? That it is easy to get top-heavy bureaucratic systems with much rents but no impact for the poor They have in common: a deep understanding of the local institutions norms, rules, legal system, bureaucratic culture will be required to be successful

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Conclusions (2) We tend to build land rights systems as they work in other countries or in imagined histories. But do we think enough about whether they will work in a particular setting, contributing to solving the problems of growth, poverty reduction, structural transformation and exclusion? Isomorphic mimicry Just like tropical frogs that just look like poisonous frogs, we build institutions (including land rights systems) that just look like effective institutions, but are they?

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Conclusions (3) Land rights systems need to work Contribute to growth and poverty reduction Contribute to efficient and equitable outcomes; protect and promote development They function within institutional settings Norms and practices on exclusion, e.g. by gender Legal and other institutional settings Bureaucratic cultures and capacities At times, our programmes risk trying to build institutions, without impact, wrong for particular settings We need good land governance systems with strong institutional assessments and transparent monitoring of rights and, when it happens, of expropriation.

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How to guard ourselves? Diagnose: Are land rights and the way we offer them a real solution for the problem one tries to solve? Also in the long run? Monitor: Does the programme work (i.e. achieve outcomes and change) as one thought it would in this context? Build up a real evidence base Evaluate: Learn from success and failure, openly and transparently with strong evidence. And dare to ask, all the time: Is this just a fad? A white elephant? A great new rent-seeking opportunity for some? Is this just superficial change? Top heavy, bureaucratic? Is this really contributing to structural transformation? To Jobs? To poverty reduction? To inclusion?