The Impact of Land Property Rights Interventions on Investment and Agricultural Productivity in Developing Countries: a Systematic Review

Abstract

This Campbell systematic review examines the effect of interventions to strengthen land property rights on outcomes such as investment, agricultural productivity and farmer incomes in rural areas in low and middle‐income countries. The review summarises evidence from 20 quantitative studies (quasi‐experimental studies with statistical adjustment for bias) and nine qualitative studies. Land property rights improve productivity, consumption expenditure and income. However, caution is needed in interpreting this finding as there are few high‐quality studies available. The studies suggest that land property rights interventions contribute to welfare through improved perceived security and resulting long‐term investment. No studies showed that land property rights interventions improve access to credit. Executive Summary BACKGROUND Secure and predictable access to land as a productive resource is key to the livelihoods of millions of farmers around the world. Secure land tenure enables farmers to invest in long‐term improvements to their farms and soils in the expectation that they will reap the benefits of those investments without fear that their land be confiscated arbitrarily. Formal and informal land rights are therefore seen as key to improving the conditions of the poor in developing countries in terms of economic growth, agricultural production, food security, natural resource management, gender‐related inequalities, conflict management and local governance processes more generally. Existing evidence on the effects of land property rights interventions is mixed and to a considerable degree dependent upon the initial land rights conditions. In many cases where existing rights are already secure through stable informal and customary systems, the formalization of rights through land titling, one form of strengthening rights, may have little impact. In other cases, mechanisms for formalizing property rights where no formal institutions had previously existed are argued to have increased productivity and slowed forest loss. Much of the literature underscores the complexity of attribution and the importance of context to understanding relationships between security, registration and productivity, and to understanding gender dimensions. They also suggest tenure security alone is not a ‘silver bullet’ leading directly to higher farmer incomes, or that it is solely attributed to tenure reforms– that is, context matters. No known systematic review or meta‐analysis on the relationships between land property rights and productivity or welfare has been undertaken to date, and concerns have been highlighted by others over inconsistent effects and design limitations in some studies of tenure reform. This has therefore provided strong motivation for a systematic review that serves as an independent review of the quality and reliability of findings offered in the available literature. In particular, this review sought to examine the specific impacts of two types of land rights interventions: Conversion of communal or non‐demarcated rural land to freehold title and registration of such rights in an official registry; and Statutory recognition and codification of customary or communal rural land rights, and registration of these rights in an official registry. OBJECTIVES The objectives of the review are as follows: to understand the quantitative and qualitative impacts of interventions to strengthen land property rights on agricultural and livelihood outcomes in rural areas of low and middle income countries to assess whether these effects are different for men and women, and under what circumstances to assess specific mechanisms that enable or limit productivity improvement (barriers and facilitators) SEARCH STRATEGY The search strategy involved searches of 16 online databases, grey literature, hand searches of 27 key journals and bibliographic snowballing. The searches were carried out in October 2012 and the non‐impact evaluation, or qualitative, results were revisited again in July of 2013 after feedback on an initial draft of the report. SELECTION CRITERIA The review synthesizes quantitative evidence only from studies that: used randomized experiments or quasi‐experimental methods employing strategies for causal identification and using some method for removing biases due to non‐random assignment of treatment; estimated the impact of either conversion to freehold title or statutory recognition of land rights; measured at least one intermediate outcome defined in the study, or final outcomes (productivity of land use, welfare of pre‐ and post‐policy rights holders in terms of income/ consumption or poverty, gender‐based welfare outcome measures, or income/ consumption or poverty); estimated impacts with outcome data measured at the individual or household level; were undertaken in developing countries (as defined by the World Bank); and that measured outcomes at some point between 1980 and 2012. The qualitative criteria aimed to provide context and address possible answers to how and why interventions may or may not have been successful overall or for certain groups in particular. Eligibility of non‐impact evaluation studies was determined via a two‐stage screening process to facilitate the review of only the most relevant studies while quickly filtering out inappropriate research based on the Critical Skills Appraisal Programme (CASP) tool. This involved similar criteria to the quantitative search, albeit with different methodological requirements. Specifically, studies were filtered based on clearly defined research objectives, links to relevant literature, context and sample selection, data collection, methods, as well as quality and relevance of their analyses. Other types of reform were not eligible for inclusion in the review, including those relating to justice, capacity‐building, outreach, and inheritance. DATA COLLECTION AND ANALYSIS Data extraction sheets were devised to facilitate comparison of interventions discussed in studies meeting the inclusion criteria. For quantitative studies, estimated effects on any of the intermediate and final outcomes were extracted. For all studies, quotes from the study on how the intervention seemed to have affected any of the intermediate outcomes were extracted. For outcomes measured in terms of monetary value (productivity, value of credit received, and consumption), we carried out our quantitative analysis in monetary terms as well. When natural logarithms were not used (for example, value of credit received), we used a standardized difference that standardizes the outcome relative to the control group standard deviation. For binary outcome measures (indicators for long term investment, formal borrowing) of treatment effects in terms of absolute changes, a variety of analyses were carried out including consideration of the natural logarithm of the risk ratio. When a study included multiple estimates of the same treatment effect, we used the one judged to have minimal risk of bias. Quantitative studies were coded in terms of risk of bias in estimating impacts, and were assessed using the IDCG Risk of Bias Tool. Because of high inter‐study heterogeneity in effect sizes, random effects synthesis and random effects meta‐regression on moderator variables were used. Furthermore, given the low number of studies (20 quantitative studies), only bivariate meta‐regressions of effect estimates on moderators were performed. For the qualitative component of this review, an aggregative metasummary approach was undertaken, focusing on quantitatively identifying the frequency of qualitative results found in the research via a five stage process of findings extraction, category grouping, theme abstraction, identification of frequency and intensity of findings, and results interpretation. This approach avoids the synthesis of concepts and creation of lines of argumentation. RESULTS The quantitative results presented are based on a corpus of 20 studies focusing on the impact of land rights recognition or formalization at the level of the farming household. In the Latin American and Asian cases, recognition typically took the form of freehold titling. The African studies assessed programs where rights were recognized through provision of freehold title, through formal registration of customary rights, or through conversion of customary rights to long‐term leasehold rights. We were not able to identify any quantitative evidence of sufficient quality examining the investment or productivity effects of statutory recognition of customary land rights. The studies on freehold titling provide evidence mostly consistent with conventional economic theories of property rights. The limited quantitative evidence base suggests benefits of land tenure interventions, measured in terms of productivity and consumption expenditure or income, and suggests that long‐term investment and increases in perceived tenure security are plausible channels through which tenure recognition may contribute to welfare for those who receive title. The credit channel finds no support, although the evidence base is very thin. When looking at the contextual factors that moderate the effects of tenure recognition, we find gains in productivity are significantly greater outside Africa and in wealthier settings, although strong correlation between the two makes it impossible for us to determine whether this is a “wealth effect,” or something we characterize as the “Africa effect”, defined as the effect of relatively high pre‐existing levels of tenure security that characterize customary tenure arrangements. The evidence base is too thin to say how productivity and investment effects are moderated by our other contextual factors of interest, including length transpired since the intervention, levels of democratic governance, population density, agricultural systems, or cash crops. The quantitative evidence base has very little to say about consequences of such policies for social outcomes like displacement, conflict, or gender equality. Thus, while tenure recognition appears to improve land productivity and the material welfare of those who have access to registered land, we do not have a clear sense of the dynamics that follow from such policies in terms of overall access to land. We also have no quantitative evidence on policies that certify communal property rights, one of the forms of property rights enhancement that motivated our interest in this review. The qualitative side of the review analysed nine studies that catalogued a broad spectrum of both positive and negative experiences with land tenure interventions, the diversity of which made it difficult to draw out conclusive trends. They did however confirm that social impacts resulting from tenure interventions can be significant, unpredictable and in some instances have negative consequences such as displacement or diminished property rights for women. While the quantitative studies assess on‐farm outcomes of titling beneficiaries only, the qualitative studies consider impact of titling programs on both beneficiaries and the broader population including those who may not have received title. This contradistinction is important to bear in mind. The potential for negative social impacts found in qualitative studies further indicates the importance of assessing broad social outcomes and particularly in collecting data on those who may lose out as a result of land property rights reforms. AUTHORS' CONCLUSIONS The findings of this systematic review underscore the importance of tenure security. In addition to being a pre‐condition to farm investments that foster productivity and increase farm incomes, growing investor interest in farmland as well as contextual changes– population growth, changing settlement patterns, political conflict, environmental degradation and climate change– are among the factors underscoring the need to better secure tenure rights in developing countries. In principle, tenure security can be delivered through tenure conversion, from informal tenure to freehold title, but also by extending greater legal recognition to informal or customary tenure arrangements, the latter approach being especially relevant to sub‐Saharan Africa. Either approach has potentially different measurable effects on productivity and investment, though the effects in both cases may be positive. Any tenure reform may have negative social effects, including on women's access to land and on displacement of the poor or others facing social and financial barriers to participating in the reformed regime for assigning rights. Though tenure recognition improves productivity in settings where title is the dominant means for securing land rights, as is the case in much of Latin America and Asia, productivity gains may take time to become apparent, the effects may vary substantially across cases, and they likely depend on other supportive conditions, such as the performance of credit, input supply, and product markets. The study results draw attention particularly to the significant gains in productivity and investment in agriculture in the Latin American and Asian cases due to tenure formalization, and the comparatively weak effects attributable to formalization in Africa. To explain these regional differences we propose the idea of the “Africa effect”, based on the fact that most farms in sub‐Saharan Africa are held under customary tenure arrangements, which generally provide long‐term tenure security to qualified members of land‐holding families, groups or communities. As such, customary tenure may provide a level of pre‐existing tenure security without formalization, something that is not typical in Latin America or elsewhere. As a result, gains to formalization in Africa may be more limited because tenure insecurity, which formalization seeks to remedy, is often not present to the degree that designers of reform programs assume. Low gains to investment and productivity in Africa following tenure formalization may also be explained by the low levels of wealth and income of African farming families in comparison to those studied in Latin America or Asia. Understanding the relevance and the relative weight of either effect— the wealth/income effect and the “Africa effect” noted above— in explaining lower levels of investment and productivity following formalization in Africa merits further research. Our review of qualitative studies and literature on African agriculture suggests levels of rural agricultural productivity in Africa may remain weak due to factors other than tenure insecurity. These factors may include small farm size, the importance of off‐farm income to rural households, the high opportunity costs of agricultural labour, and the associated deployment of working‐age family members to urban centres for work, among others. We propose an agenda of needed future research. We believe further research is needed, inter alia, on: the relationships between household wealth and income, customary tenure, and investment in agriculture in Africa the positive and negative effects of tenure recognition on women's tenure security in Latin America, Africa and Asia, and the gains or losses in women's tenure security in comparison to the customary tenure arrangements replaced by tenure formulation in Africa the effects on farm‐level investments and productivity and the management and productivity of natural resources used in common resulting from tenure reforms extending statutory recognition to customary tenure arrangements. POLICY MESSAGES The results of the study point to a number of key messages for policy‐makers to consider: Tenure security is important. The evidence from the eligible studies suggest that provision of title to smallholders in Latin America and Asia can result in significant increases in investment, agricultural productivity, and farmer incomes. The gains to formalization in Africa appear also to be positive, though much weaker, and the database for Africa is very limited. The greater gains in Latin America and Asia are likely explained by the fact that in these regions titling is the dominant pathway for securing land rights. This is not the case in Africa, where customary tenure arrangements have proven to provide high levels of tenure security, in many settings likely reducing the demand for formalization among land holders. Moreover, levels of wealth and income are lower among African farmers, constraining their ability to invest in farm inputs and infrastructure upon securing title. Any tenure reform may have negative social effects, including on women's access to land and on displacement of the poor or others facing social and financial barriers to participating in the reformed regime for assigning rights. African customary land rights are a form of usufruct right once common in regions around the world before the systematic introduction of individual systems of private land ownership in Europe beginning in the 18th century. African customary, or usufruct, systems provide access to land as a social right, to qualified members of land holding communities. Conversion to title extinguishes the social basis for claiming land rights, a right particularly important to poor households who may lack the financial resources necessary to secure land through the market. An important policy message is that great care should be taken when considering land reform programs in Africa that would convert customary tenure arrangements to arrangements based on freehold title. The economic gains to conversion may be significantly more modest than anticipated, and the social consequences, in terms of the ability of the poor to gain access to land, may be considerable. Moreover, conversion of usufruct systems to private property has rarely occurred historically without considerable social and economic displacement. Though tenure recognition improves productivity in Latin America and Asia, where title is the dominant means for securing land rights, productivity gains may take time to become apparent, the effects vary substantially across cases, and they likely depend on other supportive conditions, such as the performance of credit, input supply, and product markets. Most studies provide little information about why certain households or land parcels received tenure recognition while others did not, posing a problem of selection bias – better‐off households may have been better able to secure their tenure, making their productivity, levels of investment and other class‐related indicators a cause rather than an outcome of the tenure recognition. While we find clear positive evidence on productivity in seven of the 20 cases that met our selection criteria (five in Latin America, one in Asia and one in Africa), we also find that land rental markets and credit access are unaffected or only marginally affected. The evidence suggests, then, that arguments that tenure conversion will unleash rental and credit markets merit greater scrutiny, taking account of local contextual factors. Policy makers should consider and assess a variety of models, appropriate to regional and national contexts, when framing tenure interventions. More evidence is needed to help policy makers choose what types of reforms are most appropriate in a given context. This includes the need for more evidence on both titling and, given the major blind spot in the current evidence base, statutory recognition of customary tenure. Such studies should provide evidence on diverse social outcomes, including displacement, women's access, and other data on both winners and losers of any given policy reform. What is clear is that there are important regional variations, and the literature we reviewed strongly suggests that titling works better in Latin America and Asia than in sub‐Saharan Africa. This stands to reason. Title is the dominant means for securing land rights in Latin America and Asia and land reform beneficiaries would be unlikely to consider an tenure arrangement other than title satisfactory. In sub‐Saharan Africa customary tenure systems remain relatively functional and the overlapping character of family and collective resource rights–to residential, cropping, grazing and common property resources– complicate the creation of exclusive property rights, potentially resulting in significant levels of displacement. Importantly, a greater challenge to customary rights in Africa is not tenure conversion per se, but the fact that customary arrangements lack adequate constitutional and legal recognition in many countries. Customary arrangements often operate on land held by the state, and as such customary rights are vulnerable to arbitrary taking by state agencies, in some cases in land deals with large‐scale outside investors. This vulnerability is being addressed in several African countries (including Mozambique, Kenya, South Sudan) by new policies and legislation that give full statutory recognition to customary tenure, on a par with state land and land held under freehold title. Specific aspects of customary arrangements that are considered regressive socially or not responsive to transparent administration or accountability are also subject to legislative remedy, without diminishing their underlying value in providing access to land as a social and economic right. For instance, traditional authorities, who typically administer land rights, can be made accountable to public oversight or, as in the case of Botswana, replaced in their land administration function by civil land boards. Women can be enabled, by statutory reforms, to hold customary rights jointly with spouses. Customary rights can be registered as lease rights, and in turn sub‐leased to outside investors.