Access to Land and Development
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Access to land can be an effective policy instrument for poverty reduction. This article shows how different types of property rights can affect access and use, analyses different modes of access, especially the role of land markets, and sets out some of the policy implications. It argues that making land an effective tool for development requires more than policing access: access must be secure, combined with the use of complementary inputs, and achieved in a context of institutions, public goods, and policies that allow the sustainable competitiveness of beneficiaries.
KeywordsAccess to land and development Agriculture and economic development Common property resources Democracy and economic development Family farm system Geographical information systems Human capital Inheritance rights Land markets Land reform Land registration Land use Natural capital Open-access resources Poverty alleviation programmes Property rights Rent control Rental markets Total factor productivity Tragedy of the commons
Access to land, and the conditions under which it happens, play a fundamental role in economic development. This is because the way the modes of access to land and the rules and conditions of access are set, as policy instruments, has the potential of increasing agricultural output and aggregate income growth, helping reduce poverty and inequality, improving environmental sustainability, and providing the basis for effective governance and securing peace. This potential role is, however, difficult to capture, and there are many cases of failure. History is indeed replete with serious conflicts over access to land and with instances of wasteful use of the land, both privately and socially. Governments and development agencies have for this reason had to deal with the ‘land question’ as an important item on their agendas (de Janvry et al. 2002). We explain in this article: (a) why access to land, and the conditions under which it is accessed and used, are important for economic development, (b) how different types of property rights can affect access and use, (c) the different modes of access, and in particular the role of land markets, and (d) some of the policy implications, in order to show how access to and use of the land can contribute to economic development. We stress in this article that access to land may be a difficult policy question, but that access will translate into development only if the harder question of influencing the way it is used is effectively resolved.
Importance of Access to Land for Development
Land is not only a factor of production, and as such a source of agricultural output and income; it is also an asset, and hence a source of wealth, prestige, and power. Because it is a natural asset, its use affects environmental sustainability or degradation. For these reasons, the link between access to land and development is quite multidimensional and complex, with many trade-offs involved.
If land is to serve as an instrument for output and income growth, investments have to be made to improve its productivity. For this to happen, incentives have to be provided. Some of these investments are short-term, but many others are tied to the land for long periods of time. As a result, security of access is a central policy issue as it is necessary for these investments to be made. Security can be guaranteed through formal means such as titles and legal enforcement, but also through informal mechanisms such as community recognition and enforcement of rights. Whichever way it is achieved, security of access must be credible if it is to induce investment (Deininger 2003).
To result in output and income growth, access to land must not only be secure, it must also be accompanied by access to complementary inputs and occur in a context favorable to productive use of the land. Empirically well-established complementary inputs include other types of natural capital such as water, working capital, and human capital. Access to land without these complementary inputs in the agricultural production function is not useful for development. In addition, the context where land is used affects its productivity. This includes institutions (such as credit, insurance, and product and factor markets with low transactions costs), public goods (such as infrastructure, market intelligence, research and extension, land registration, and contract enforcement mechanisms), and policies (macroeconomic and agricultural policies favorable to the activities in which the land is used). If complementary inputs and a favorable context for land use are not provided, it is quite evident that access to land will achieve little for output and income. Access to land is thus necessary but not sufficient. Providing what it takes beyond access to achieve income and growth – complementary inputs and a favorable context – can be highly demanding.
Secure access to land and to complementary inputs in a context that allows productive use can be a powerful instrument for poverty reduction. The family farm, with its labour cost advantage when there are transactions costs in labour markets and incomplete incentives to hired labour, can be particularly effective for this (Bardhan 1984). The inverse relation between farm size and total factor productivity, derived from the labour cost advantage of the family farm, has been cited as the empirical regularity justifying redistributive land reforms towards a family farm system. Access to even a small plot of land can be a source of security in the face of food market and labour market risks. Women’s control over land can be a source of empowerment, helping them consolidate their decision-making status over household expenditures that will often favour children (Agarwal 1994).
Finally, as a good in limited supply, the distribution of access to land can have a powerful influence on social inclusion and local governance. More egalitarian access can be the basis for greater political participation, more respect for the rule of law, and the ability to raise local fiscal revenues from a land tax, and provide the basis for the consolidation of democracy (Binswanger, Deininger and Feder, Binswanger et al. 1995). While these relations are far from direct, it is impossible to ignore the role that access to land plays in affecting these outcomes.
Property Rights Over Land
The benefits that can be derived from access to land depend on the property rights that codify access and use. Property rights become increasingly complete as they allow the following functions to accumulate: entry, extraction, management, exclusion, and sale (Ostrom 2002). Open-access resources grant to all the rights of entry and extraction. They typically induce over-extraction, leading to the ‘tragedy of the commons’. Common property resources grant to members of a defined group, such as a community, the rights of entry, extraction, management, and exclusion of non-community members. This form of property right can result in socially optimal resource use if community members have the ability to cooperate in defining and enforcing rules for individual extraction and maintenance (Baland and Platteau 1996). Public ownership with centralized management also gives leaders these same rights. Socially optimum resource use can be achieved if controls and incentives can be aligned between leaders and workers, which has historically proved to be difficult in agriculture, despite many attempts. Finally, individual or corporate property rights give owners the full bundle of rights, including those of rental and sale. The effectiveness of this form of property right in land use depends on the existence of efficient land rental and sales markets, as well as the ability to internalize externalities, achieve economies of scale, and access mechanisms for risk spreading. Common property resources with cooperation may be a superior form of property right when individual tenures are unable to fulfil these functions.
Whether property rights correspond to common property or to individual or corporate forms of tenure, these rights have desirable aspects that need to be realized for access to be efficient. One is duration of the rights: long-term investments require sustained access and clear specification of how rights are transferred to others. Inheritance rights are thus a fundamental aspect not only of access to land but also of land use. A second is precise demarcation of land boundaries and clear specification of rights. Geographical information systems based land demarcation, land registries and record keeping of transactions, and adjudication of rights mechanisms are thus fundamental aspects of land management. A third is availability of conflict-resolution mechanisms, where conflicts over access to land can be resolved through informal or formal procedures that are fair and expedient. Uncertain rights and unresolved conflicts over access rights are the norm rather than the exception in developing countries, requiring major investments in regularizing these situations. Finally, property rights must be evolutive, and it must be possible to individualize or consolidate rights as opportunities and needs arise.
Modes of Access to Land
With open-access resources, entry is granted to all. Access to common property resources is usually given by birthright in a particular community. Clear demarcation of boundaries and clear determination of membership are important to permit the definition and enforcement of rules. Individual encroachment on public lands and establishing adverse possession rights through occupation is an important form of access where public lands remain plentiful. Finally, individual inheritance is also one of the most prevalent forms of access to land, with eventually discriminatory rights due to primogeniture and to gender and kinship privileges in inheritance.
Access to land through rental markets is often constrained by insecurity of property rights, confining transactions to narrow circles of confidence (family, friends, social peers), thus segmenting markets. While fixed-rent contracts are first-best efficient, sharecropping contracts may be the most efficient way of accessing land when there are market failures in insurance, credit, and non-traded inputs such as management and supervision (Hayami and Otsuka 1993). In general, the role of land rental markets as a mode of access to land for the poor has been under-appreciated in land policy, and these markets have all too often been atrophied by misguided rent controls.
Finally, the land sales market should expectedly be the most effective way of providing access to land to the most efficient entrepreneurs. This may not be the case, however, because these markets suffer from serious distortions that limit the fulfilment of this role. Land tends to be overpriced relative to its value in productive use due to its function as a store of wealth, speculation on land appreciation, tax advantages, use as collateral in accessing credit, and the status and power it conveys. Overpricing implies that even full credit lines using the land as collateral will not be sufficient to allow poor people to access land without subsidies.
Access to Land and Development: Policy Implications
In managing their ‘land question’, most countries have experimented with some type of land reform programme (Dorner 1992). This includes land reforms that have used the threat of expropriation to induce extensively used large farms to modernize or subdivide into smaller farms (Brazil). Other reforms have collectivized the land, either as state farms or as cooperatives. This has generally, as in Russia and eastern Europe, been based on the belief in economies of scale in farming and the superior efficiency of centralized management. In other cases, as in Latin America, collective farms have been used to facilitate transitions between large haciendas and subsequent distribution of the land as individual tenures (Mexico, Peru, Chile). Finally, the inverse relation between total factor productivity and farm size has been invoked in implementing redistributive land reforms that have established family farms out of former large farms (Taiwan, South Korea) or out of state farms or cooperatives (Albania, Bulgaria).
Because the land sales market should be the most effective way of codifying access to land, land reforms have recently taken the form of ‘market-assisted land reforms’, with examples in Brazil, Colombia, and South Africa (Deininger 2003). In this case, transactions occur between willing sellers and willing buyers, and subsidies are granted to the poor in addition to credit so they can afford purchases at market prices that are in excess of the productive value of the land. These interesting experiments are still in progress and in much need of evaluation.
Access to and use of the land is a fundamental instrument for successful development, both economically and socially. History shows both success stories and resounding failures. In general, making land an effective tool for development requires more than policing access: access must be secure, combined with the use of complementary inputs, and achieved in a context of institutions, public goods, and policies that allow the sustainable competitiveness of beneficiaries. Many policies and programmes have been put in place to achieve this goal, but the complexity of the task explains why success requires extensive control and commitment (Warriner 1969). A fundamental lesson derived from the history of the ‘land question’ is thus that, while reforming the pattern of access to land is difficult, it is far more difficult to make access complete in the sense of securing the competitiveness of beneficiaries so that they achieve income growth, poverty reduction, and sustainable use.
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