New Land Reforms and Their Impacts With Ethiopia as a Case Stein Holden Introduction • New land reforms high on the development agenda: – (High Level) Commission on Legal Empowerment of the Poor – The World Bank (scaled up financing of land reforms) – UNHABITAT (Global Land Tools Network) – MDGs: Rights based approaches Some of the issues • Are private property rights a preconditions for economic development? – de Soto, H. 2000. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. – de Soto vs. China vs. the current financial crisis • The relationship between financial markets and property markets/rights – The Achilles heel of the ”Western” economies – A source of economic growth and “bubbles” (boom and bust) – Distress sales and foreclosures during crises: What are appropriate policy responses? What makes dead capital alive…? Land reform policy issues in LDCs • Does formalization of land rights contribute to economic development? • How can land certification (or titling) reforms be made more pro-poor? • How can redistributive land reforms be designed to succeed? • How can land reforms be designed to stimulate more sustainable land use? And… How can we more confidently answer these questions? • From anecdotal evidence to statistical evidence at broader scale The three neoclassical focal points of land reform • Tenure security – Enhance investment • Transferability – Gains from trade – Reallocate land to more efficient users • Credit access – Land as collateral How important are each of these and are they always achievable? ”New”(?) dimensions to land reform • Legal empowerment of the poor and women – MDGs: • Rights-based approaches – Land as a safety net for the poor • Focus on empowerment Focus on land reforms to achieve MDGs • Global Land Tools Network (UNHabitat) • CLEP • What new dimensions and new impacts become relevant to study? The evaluation problem • A continuum or vector (”bundle”) of land rights • A vector of outcome or impact indicators • A set of conditioning factors • Baseline/Starting point conditions (counterfactual) • Representative samples (treated and untreated) • Logic of reform implementation – Crucial for identification of impacts – Can researchers influence it? • Randomized experiments the ideal but often not feasible • The toolkit for quantitative impact assessment has been improved substantially lately and is crying to be applied to these types of land reform problems Old and new land reform approaches 1 • Classical land titling reform: Formalizing private property rights to land – Surveying and titling upon demand – High tech and high cost approach • Low-cost land registration and certification – Broad-based, large-scale implementation with strong local participation – Low-cost technology approach – Experimentation with alternative technology approaches • Removal of restrictions on land markets (restrictions on sales, duration of rental period, price or contract restrictions, area restrictions, outsider restrictions, approval restrictions) • Formalization of land markets (Rental markets vs. Sales markets) Old and new land reform approaches 2 • Land redistribution policies and projects – Revolutionary reforms of the past – Regular redistributions to maintain an egalitarian land distribution (China, Ethiopia, Eritrea) – ”Market-assisted” redistributions in countries with inequitable land distributions (e.g. Brazil, Bolivia, South Africa, Zimbabwe, Malawi, The Philippines) • Formalization of customary land rights – Demarcation of village borders and village land use planning – Issuing of customary land certificates – Legal recognition of customary land rights • Legal empowerment of the poor/women – Conflict resolution systems – Joint certification of husbands and wives/rights upon divorce or death of spouse – Regulation of inheritance rights • Linking rights and obligations: Security of tenure conditional on proper land use What are the impacts of land reforms? Types of impacts • Tenure security – Investments (e.g. conservation, tree planting) – Land management – Land conflicts – Land productivity • Transferability – Land market participation – Efficiency of land use – Mobility/migration (labor market) – Land values – Distributional implications (land, risk/safety net, income, welfare) • Credit access – Use of land as collateral • Legal empowerment – Poor and vulnerable groups – Welfare indicators – Empowerment indicators • Overall effects on poverty and equity Why have many land reforms failed? • Land titling in Kenya and Madagascar – Have not enhanced tenure security, promoted investment, land and credit markets (e.g. Place and Migot-Adholla 1998, Jacoby and Minten 2006,2008) • Land distributions remain extremely skewed after many years with land redistribution reforms in Latin- American countries, South Africa, Zimbabwe, … Why have many land reforms failed in Latin America? • Emphasis on collective ownership and management after the reform – Naïve belief in advantages of collective management among radical groups? Collective management has in most cases failed in agricultural production (Eastern Europe, China, Africa, LA) • Modernization of large farms was used as a requirement not to lose the land – Naïve belief in economies of scale? Limited EOS in tropical agriculture • Large farms were favored in allocation of (subsidized) credit in relation to the modernization, eliminating advantages from small scale production • Successful small scale production requires more than land (knowledge, skills, access to credit and other markets, infrastructure) – Many types of investments are necessary and it takes time before benefits come • Naïve belief that establishment of private property rights is sufficient for the credit market to start to function well • Big land owners have allied themselves with those in power – Democracies have also failed to achieve large land redistributions Examples of successful land reforms • Ethiopia – Low-cost land registration and certification • China – Household responsibility system • Mexico – Constitutional reform • India – Computerized registry system, tax-base Case study on the new land reform in Ethiopia A summary of key findings follows for impacts of land certification on – Land market participation + Gender – Investment, land management and land productivity – Gender and land productivity – Land conflicts – Household poverty – Empowerment of women Land certification in Ethiopia • Certification: Individual households are given user rights – Includes rights to use, bequeath, inherit, rent out, invest – No right to sell or mortgage – Responsibility for land conservation – Restrictions on migration and on duration of rental contracts – Restriction that maximum 50% of holding can be rented out – Obligation to use the land • Land certification started first in Tigray Region in 1998 • Land certification started in 2003-2005 in three other regions (Amhara, Oromiya, and SNNP regions) of the country Conceptual model for land certification project Regional Land Federal Land Proclamation Federal Government Proclamation and Implementation Rules Regional Government Resources Donors Land Registration and Certification Implementation Community Conditions Impacts: Before Land Reform a) Land Disputes b) Land Markets Poor People’s c) Land Investments Individual and Markets d) Women’s Collective Assets and Empowerment Capabilities Poverty Reduction Land laws, land administration and land conflict resolution Federal level Land Proclamation Regional level Land Proclamation Regional level land administration Higher courts and Implementation Rules District court District level land administration Village social court Land registration Village level land administration and Certification Local conflict mediators Land disputes Land certificates in Tigray • Simple one-page certificates – Name of head of hh (husband not wife usually) – Name of location, plotsize, land quality of plots, and names of neighbours Administrative costs and sustainability • Regional governments do not have enough funds to ensure high quality land certification – Low-cost approaches are necessary – Level of technology, staff skills • Administrative approaches chosen require maintenance – Low-cost approaches can be more difficult to maintain – Different approaches are tested in different regions, some gradual upgrading – Some high-cost approaches tested (e.g. in the Amhara Region) are much too costly Land registries • Books or computers or both? – Skill requirements – Costs of equipment and infrastructure – Maintenance costs – How decentralised? Digital maps or simple drawings? Costs vs. accuracy Data in Tigray Region • Household panel data survey • Stratified random sample of 400 households in 16 communities • Stratification based on population density, market access and agroclimatic variation (sub- sample of an IFPRI community survey) • Surveyed in 1998, 2001, 2003 and 2006 – Household and farm plot level data – Use households for which we have complete data (balanced panel) • Survey of 400 local conflict mediators in 27 communities (85 villages) Tenure Insecurity, Gender, Low-cost Land Certification, and Land Rental Market Participation By Stein Holden, Klaus Deininger and Hosaena Ghebru Gender and Market Participation: Key Hypotheses • H1. Female-headed households are more likely to rent out land and rent out more land than male- headed households (due to their poverty in non- tradable non-land resources) vs. • H2. Female-headed households rent out less land than male-headed households because they are more tenure insecure. • H3. Landlords that received certificates rent out more land after the reform (due to increased tenure security). • H4. Female landlords that received land certificates rent out more land as a response to getting land certificates compared to male landlords that received land certificates (because they initially were more tenure insecure and land certificates increased their tenure security relatively more). Findings • Significant and positive effect of land certification on the amount of activity in the land rental market – Potential landlords have become more willing to rent out their land, especially female-headed households – Female-headed households with land certificates rented out significantly more land – Easier for (potential) tenants to access land to rent in • Significant transaction costs in the land rental market also after the certification Land rental market participation in 2003: Distribution of net land leased in by own farm size 10 5 0 -5 -10 0 5 10 15 20 ownlnd 95% CI Fitted values nli Impacts of Low-cost Land Certification on Investment and Productivity By Stein Holden, Klaus Deininger and Hosaena Ghebru Investments, Management and Productivity of Land: Hypotheses • H1: Having a certificate for a farm plot enhances investments on the plot in form of building of new structures, improvement/ maintenance of existing conservation structures and planting of trees • H2: Restrictions on tree planting in the land proclamations (especially on eucalyptus) have prevented investment in trees. Therefore, land certification has not stimulated this type of investment and there will be no difference between plots with and without certificates • H3:Land certification has enhanced land productivity Findings • Land certification has contributed to – Increased investment in trees – Better management of soil conservation structures – Higher land productivity (+45% on average) Yield distribution, plots with and .5 .4 .3 without land certificate Density .2 .1 0 0 2 4 6 8 10 logtotvalha Certificate No certificate Why is Land Productivity Lower on Land Rented Out by Female Landlords? – Theory, and Evidence from Ethiopia By Stein Holden Norwegian University of Life Sciences and Mintewab Bezabih Göteborg University Introduction • Female headed households typically belong to the poorest group of households in rural areas of Africa – Asset poverty – Insecure property rights – Weak bargaining power – Low status – Low political power Propensity score matching results Variable All plots Owner-operated Rented out plots plots Kernel Nearest Kernel Nearest Kernel Nearest matching neighbour matching neighbour matching neighbour Land productivity Female landlords 1366.02 1366.02 1430.85 1430.85 1345.05 1345.05 Male landlords 1806.08 1952.30 1799.02 2266.90 1815.49 1753.60 Difference -440.1 -586.28 -368.2 -836.04 -470.44 -408.55 Bootstrapped st. 126.21 177.76 255.65 414.59 156.26 210.83 error t-statistic -3.487*** -3.298*** -1.440 -2.017** -3.011*** -1.938** Number of observations Female landlords 439 439 124 124 315 315 Male landlords 820 477 329 153 484 255 Why lower productivity: Hypotheses • Female landlords have land of poorer quality • Female landlords are more tenure insecure and use only short-term inefficient sharecropping contracts • Female landlords are less able to enforce efficient bahaviour of their tenants by using threat of eviction if performance is poor • Female landlords are less able to screen and select good tenants and to evict bad tenants • Female landlords rent out the land to their relatives who may not be efficient tenants Tenant characteristics of male and female landlord households Variable Female Male Bonferroni test of landlords landlords significant difference Mean value Mean value F Prob > Tenant age 2.368 2.232 4.73 0.0090 (tage)1 Oxen owned by 1.940 2.075 2.99 0.0041 tenant (toxcd) Blood-related .466 .365 12.81 0.0004 tenant (btenant) In-law related .184 .102 17.58 0.0000 tenant (stenant) Duration of 4.825 2.637 9.17 0.0000 partnership (clength1) .4 .3 Yield distribution by sex Density .2 .1 0 2 4 6 8 10 logyield Male landlords Female landlords Duration of partnerships by sex .25 .2 .15 Density .1 .05 0 0 5 10 15 20 clength1 Male landlords Female landlords Share of land rented out by sex 1.5 2 Density 1 .5 0 0 .2 .4 .6 .8 1 tradeshare Male landlords Female landlords Conclusions Tested alternative models and theories to explain the productivity differential on rented out plots of female vs. male landlord households in the Ethiopian highlands. • Significant differences in tenant characteristics for female vs male landlords pointing in direction of adverse selection due to higher eviction costs and possibly female landlords’ lower ability to screen and select good tenants • Higher level of inefficiency linked to kinship contracts of female landlords in relation to contracts with in-law tenants. – May be due to the high eviction costs of tenure insecure female landlords who therefore are less able to freely screen and select the better tenants than male landlords are. • Contract duration of female landlords was longer than for male landlords indicating that they were less able to use threat of eviction to enhance tenants’ effort Would land certification change this? • If female-headed households receive land certificates, do they become more tenure secure? • More able to evict bad tenants? • Better able to select good tenants? • Less dependent on (in-law) tenants? • Obtain higher productivity on rented out land? • What do the panel data from Tigray tell us? Land productivity on rented out land of male and female landlords by year 1998: Before certification 2006: 7 years after certification Kernel density estimate Kernel density estimate .5 .5 .4 .4 .3 .3 Density Density .2 .2 .1 .1 0 0 2 4 6 8 10 4 6 8 10 rologtotvha rologtotvha Female headed hh Male headed hh Female headed hh Male headed hh kernel = epanechnikov, bandwidth = 0.2918 kernel = epanechnikov, bandwidth = 0.3069 Can land registration and certification reduce land border conflicts? By Stein Holden, Klaus Deininger and Hosaena Ghebru General Conflict Theory Struggles over territory among the most pervasive forms of conflicts • Malthusian hypothesis: Severe land scarcity leads to more conflicts (Malthus, 1798, Homer-Dixon, 1999, Diamond, 2005) • Resource curse hypothesis, certain valuable resources lead to rent-seeking and conflicts – Role of institutions crucial (Mehlum et al. 2006) • Inequality/relative deprivation enhances conflicts • How do land reforms affect conflicts over land? – Mixed empirical evidence Hypotheses • 1. Neo-Malthusian hypothesis • 2. Resource curse hypothesis • 3. Market access hypothesis • 4. Fuzzy border hypothesis • 5. Land redistribution conflict hypothesis • 6. Quality land reform reduces conflicts hypothesis – Better plot border demarcation + area measurement + witnesses + land certificate • 7. Local participation reduces conflicts hypothesis Types of conflicts Total number % of all Number of % of land conflicts of conflicts conflicts conflicts to in woreda courts woreda courts All conflicts 18620 100 All land-related conflicts 9705 52.1 1530 100 Border conflicts 3630 19.5 711 46.5 Ownership/inheritance conflicts 1870 10 284 18.6 Divorce-related conflicts 2603 14 353 23.1 Land redistribution 1155 6.2 98 6.4 conflicts Land rental contract 678 3.6 84 5.5 conflicts Conflicts involving violence 1300 7 220 14.4 Cases that went to woreda courts 1530 8.2 1530 100 THE MOST DIFFICULT CONFLICTS TO DEAL WITH Type of conflict Most difficult Second most conflict difficult conflict Border conflict 170 61 Ownership/inheritance conflict 67 130 Divorce-related conflict 88 112 Land redistribution conflict 13 19 Land rental contract conflict 7 11 BORDER CONFLICTS DURING AND AFTER THE LAND REGISTRATION AND CERTIFICATION Situation after the registration and certification Change Less No More Total (%) conflicts change conflicts Situation Less 198 9 16 223 (58.4) during conflicts registration and No change 33 65 8 106 (27.7) certification More 30 3 20 53 (13.9) conflicts Total (%) 261 (68.3) 77 (20.2) 44 (11.5) 382 (100) Conflict mediators’ perceptions of border disputes before and after land certification, Southern Ethiopia (Holden and Tefera 2008) Has the land registration and Were border disputes common certification had any effect on border before registration? disputes in your community after the registration and certification process No Yes All was completed? Less disputes 13 107 120 No change 16 18 34 More disputes 4 10 14 Total 33 135 168 Chi-square=22.8, p=0.000 Main findings • The land reform in Tigray has contributed to a reduction in land border disputes • Better market access is associated with less conflicts • Variation in quality of the reform was reflected in the frequency of conflicts: Better quality -> Less conflicts – Quality of land demarcation and measurement – Involvement of local elders enhanced conflicts • Some support for the resource curse hypothesis • Many land border conflicts near district centers remain unresolved – Expansion of urban centers into rural areas has not been addressed well by the reform Poverty effects • Households that recived land certificates increased their consumption expenditure per capita more than other households • This was particularly the case for female- headed households that received land certificates • These findings are robust and not contaminated by endogeneity bias Joint certification of husbands and wives: Women’s Empowerment • Study in Southern Ethiopia by Holden and Tefera (2008): Study early impacts • ”From Being the Property of Men to becoming Equal Owners” • Available at: – http://www.gltn.net/en/newspage/land-registration-in-ethiopia-early- impacts-on-women.html • Laws without enforcement may not help much when there are strong traditions against them • Indications that the joint certification program has strengthened the position of women in SE Successful land reform in Ethiopia • Land certificates have been provided to more than 6 million households and for more than 20 million plots of land within a period of 8 years • Land certification has in Tigray enhanced – Tenure security, especially of women – Land rental market participation – Land investments – Land productivity – Reduced land conflicts – Reduced poverty, especially of female headed households (Deininger et al. 2008, Holden et al. 2008a, 2008b, in press, Holden and Tefera 2008, Ghebru and Holden 2008). The studies can be obtained from email@example.com upon request. Why has the Ethiopian land reform been so successful? • It has not provided full private property rights to land • It has not opened for sales markets for land • It has not opened for mortgaging of land • It has not used advanced technology or highly skilled technical staff during implementation (except in pilot areas) Conclusion: Wider perspective Why the Ethiopian reform with more restricted rights has been successful while land titling programs in Kenya and Madagascar did not have similar effects: • Collateral effect unimportant in all cases • Initial tenure insecurity higher in Ethiopia – created a demand for certificates • Low cost and rapid implementation through a participatory and transparent process • Local administrative capacity and motivation • No local elite was threatened by the reform To what extent can it be replicated elsewhere?