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Land Rights for Poor People Key to Poverty Reduction, Growth – World Bank Report

Available in: Français, Español
Contacts:
Paris: Anne Davis Gillet, +33-1-40-69-30-28
adavis@worldbank.org
Washington: Lawrence MacDonald 1 202 473 7465
lmacdonald@worldbank.org

Paris, June 19, 2003 — Strengthening poor people's land rights and easing barriers to land transactions can set in motion a wide range of social and economic benefits including improved governance, empowerment of women and other marginalized people, increased private investment, and more rapid economic growth and poverty reduction, according to a new World Bank report.

Land policies are at the root of social conflicts in countries as diverse as Cambodia and Colombia, Zimbabwe and Cote d'Ivoire. Political controversies, the complexity of land issues, and the fact that benefits of policy improvements accrue to people who are politically weak all hinder reform. As a result, festering land issues slow poverty reduction in many developing countries and sometimes lead to bloodshed, the report says.

Yet a growing number of countries are successfully addressing land policy issues. The report, Land Policies for Growth and Poverty Reduction1, shows that countries as diverse as China, Mexico, Thailand, Uganda, and some transition countries in Eastern Europe, have begun to address land policy issues in ways that benefit everybody. Although approaches vary, providing poor people secure tenure and facilitating land transactions are key.

"Development is fundamentally a process of change. Central to this is the increasing productivity and intensity of agriculture, of people shifting from farms to industry and services, and from the countryside to towns and cities, says World Bank Chief Economist Nicholas Stern, who oversaw preparation of the report. "Secure land tenure, especially for poor people and for women, whose land rights are very often ignored, is a key precondition for this, as is the ability to exchange land rights at low-cost," he says.

Stern adds that governments have an important role to play in providing the legal and regulatory support needed to strengthen poor people's land rights and reduce the cost of land transactions, for example, boundary demarcation, conflict resolution mechanisms, and land registries. "Effective land policy fosters investment and enhances productivity, and helps to empower poor people to participate in economic opportunities and in society more generally," he says.

In many developing countries governments own much of the land that poor people work and occupy. Land also may be held under traditional systems that are not legally recognized, or the legal status of the land may be otherwise unclear. Virtually everywhere land tenure systems discriminate heavily against women, with negative consequences for the entire society.

In all these situations, lack of secure tenure undermines incentives for poor people to invest in their land, for example, for small farmers to build terraces or irrigation, or for slum dwellers to lay a cement floor or put on a new roof. In addition, poor people with insecure land tenure are often afraid to criticize corruption or other abuses of power because they fear that officials will take away their land access, the report found.

Governments can address these problems by recognizing poor people's rights to the land that they legitimately occupy, the report says. In cases where the government itself owns the land, this requires giving secure leases or transferring ownership to the occupants. In other cases, it will mean clarifying the rules, granting legal rights and establishing ways to resolve conflicts and defend rights against challenges.

The study shows that increased tenure security increases the value of land and can greatly increase poor people's wealth, in some cases almost doubling it. Poor people with secure land tenure are more likely to invest in the land. They are also more likely to speak out against corruption and to demand basic services, such as health, education, roads and water. Where credit markets function, formal land rights can make it easier for poor people to borrow money, for example to start a new businesses.

Many of these benefits are evident in Mexico. Starting in 1992, Mexico transferred rights to 50-million hectares of state land to local communities known as ejidos. The transfer was supported by new laws, agrarian courts, a massive education campaign, systematic boundary demarcation, and award of land certificates to communities and individuals. The program raised incomes, improved governance, and stimulated growth of the rural non-farm economy.

"Formally recognizing the land rights of poor people is a clear win-win policy," says Klaus Deininger, the author of the report. "Perhaps surprisingly, we also found that land rentals make a tremendous contribution poor people's well-being. Land rentals make it easier for poor or landless people with the necessary skills to use land productively, and to gain land access or to expand their holdings. This benefits everybody," he says.

Many developing countries, such as Bangladesh, India, and Ethiopia, impose restrictions on land rentals in an effort to limit the exploitation of landless people. The study finds that such policies often backfire. Instead of protecting poor people, they reduce poor people's access to land, foster petty corruption and red tape, and discourage the investment that is needed for jobs and poverty-reducing growth.

The long-term effect of such problems can be substantial. One study cited in the report estimates that tenure insecurity and restrictions on land markets in India have reduced annual per capita growth by 1.3 percentage points. Had these problems been addressed ten years ago, the resulting higher economic growth would have made it possible for millions of additional people to escape from poverty.

The report shows that land rentals can facilitate development and increase productivity in ways that benefit poor people. In China, studies show that rentals raise the income of former farmers who take off-farm jobs and rent out their land, as well as the people who obtain land access through rentals. In Uganda the share of households renting land from others increased three-fold from 1992-1999, to one-out-of-three families. The increase in rentals coincided with a period of rapid growth and poverty reduction. Similar trends are also evident in Latin America, the report says.

While secure tenure and rentals overwhelmingly benefit poor people, the report found that sales rarely improve land access for the poor. Poor people faced with crop failures, a serious family illness or other economic shock are often unable to borrow and may be forced to sell their land at distress prices. This can result in speculators amassing large land holdings and depriving poor people of land access.

Land sales restrictions and ownership ceilings are meant to protect poor people in such circumstances. But the study found that the restrictions often merely force the sales underground, to the detriment of everybody. The report suggests that a more effective response would be to improve social safety nets, for example, by offering food for work programs.

History has left some countries with a highly unequal distribution of land and other assets. High levels of inequality inhibit growth and make it very difficult for poor people to share in whatever growth occurs. In this case, the report says, government intervention to redistribute assets, including but not limited to land, can be a worthwhile investment in a country's future.

While there is agreement that the post-World War II land reform programs in Japan, South Korea, and Taiwan (China) were highly successful, the results of land reform efforts in other countries have been mixed, despite significant efforts.

Based on a large number of studies on the subject, the report concludes that in order to be successful, reform efforts need to be backed by political commitment, integrated into a broader approach to development, and implemented transparently and in partnership with civil society. Objective evaluation of land reform initiatives in a number of countries where land issues have recently received fresh attention would be of great value.

"There is no 'one size fits all' approach to land policy," says Deininger. "Adapting to local conditions and involving all stakeholders is essential to the design and implementation of effective land policies."

Such consultations were reflected in the preparation of the report itself. The report is the outgrowth of a three-year research and consultation process that included extensive discussions with policy makers, advocates for the poor, and land experts around the world. Four regional workshops attracted a total of more than 600 participants from 60 countries.

Preparation of the report received financial and intellectual support from developing countries, all major European donor countries, and the US. European donors established a Land Policy Task Force to provide technical support and to ensure that land policy issues are addressed in EU-supported development projects.

"Land reforms are massive undertakings which no donor can support alone," says Philip Mikos, the head of the EU Land Policy Task Force. "We are convinced that this report will provide a foundation for better and deeper coordination and greater effectiveness of our support to governments in their efforts to reform."

The report was released in Paris on Thursday at a meeting that included members of the EU Land Policy Task Force. The release will be followed by a two-day meeting of experts on land and conflict organized by the Organization of Economic Cooperation and Development, Development Assistance Committee (OECD-DAC) were the report will also be discussed.


1 A World Bank Policy Research Report by Klaus Deininger. Oxford University Press and the World Bank 2003.

 

Comments on Land Policies for Growth and Poverty Reduction

By documenting the long-neglected importance of land tenure for good governance and private sector development, especially in Africa, this report broadens the discussion, highlighting the far-reaching implications of land policy for economic development.
Kasim Kasanga, Minister of Lands, Government of Ghana

This policy research report is a significant contribution to the knowledge and experience that can guide policies and programs for poverty-reducing growth. It has emerged from a participatory process that serves as an example to others in its efforts to consider the wide range of views and opinions that can inform effective land policy development. The report will be a critical resource for governments, civil society, and international organizations.
Bruce H. Moore, Director, International Land Coalition, Rome, Italy

Researchers have often neglected the profound impact of land policies on countries' long-term social and economic development. This report draws on an impressive body of research to emphasize this dimension and illustrate implications for policy. It deserves a wide readership among academics and policymakers.
Yujiro Hayami, Chairman, FASID Graduate Faculty, and Professor, National Graduate Institute for Policy Studies, Tokyo, Japan

Historical experience in many countries demonstrates that without a clear land policy, it will be difficult or impossible to reduce deep-rooted structural poverty and inequality. Building on a wide array of research and experience, this report lays out the main dimensions of the issue and illustrates how they can help to develop an approach to land policy that fits into more general strategies for poverty reduction.
Alain deJanvry, Professor, University of California, Berkeley, USA

This report represents a major and welcome shift in World Bank thinking on land policy by offering an increased openness and flexibility in thinking, a readiness to admit to past mistakes, and an avoidance of dogmatism. The critical test will be to ensure that the report's relatively more enlightened approach and principles will be turned into better Bank practice at the country level. This will require genuine commitment from senior management in the Bank and continued pressure from civil society advocates who defend the land rights of the poor.
Robin Palmer, Land Policy Adviser, Oxfam, Great Britain

This immensely rich compilation of experience as well as theory on land policy and administration highlights the complexity of the issues with which development practitioners must deal. It provides recommendations to improve policy with regard to land ownership and use, which is essential to fostering dynamic economic growth.
Emmy Simmons, Assistant Administrator, USAID

Land policy is the single most critical policy issue for sustainable development that can help to ensure peace and stability, economic growth, equitable social development, and rational resource management. Comprehensive and well balanced, the report provides a basis for donors to work together to address land policy within a shared operational framework.
Uwe Werblow, Head, Environment and Rural
Development Unit, European Commission

More information on the report is available at: http://econ.worldbank.org/prr/land_policy/

 




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