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The formalisation of urban land tenure in developing countries
Alain Durand-Lasserve (CNRS France & SEDET)
Harris Selod(Paris School of Economics & INRA)
The World Bank Urban Research Symposium, May 14-16, 2007, Washington DC.
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Outline of the presentation
1. Definitions & potential effects of formalisation2. Diversity of formalisation approaches3. Assessing the effects of formalisation4. Redefining formalisation strategies5. Lessons & implications6. Conclusion
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1. Definitions and potential effects of land tenure formalisation
Land tenure refers to a ‘bundle of rights’.– Right to occupy, use, develop, inherit, transfer.– A social relation involving a complex set of rules.– A ‘continuum in land rights’.
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1. Definitions and potential effects of land tenure formalisation (continued)
Tenure informality: a wide range of situations.– Type of informal settlement:
Unauthorized commercial land developments.Squatter settlements.
– Primary tenure rights on the land:Public.Private.Customary-owned land.
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1. Definitions and potential effects of land tenure formalisation (continued)
Informality of tenure and insecurity of tenure.
– Tenure security is the right to be protected against ‘the permanent or temporary removal against their will of individuals, families and/or communities from the home and/or the land they occupy, without the provision of, and access to, appropriate forms of legal or other protection’ (COHRE, 2003).
– Tenure insecurity is often associated with the risk of forced eviction.
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1. Definitions and potential effects of land tenure formalisation (continued)
– Tenure insecurity is influenced by:
The tenure status (especially the type of informal settlement).The primary tenure rights on the land (public, private, customary).The occupancy status of the dwelling unit (owner-occupiers, tenants, squatters).The political and legal context (legal framework, political will, regulatory framework).
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1. Definitions and potential effects of land tenure formalisation (continued)
Land tenure formalisation:– A process by which informal tenure is integrated into a system
recognised by public authorities.– Three main objectives:
Improving land market efficiency (as an incomplete land market may lead to an inefficient land use).Reducing poverty (as poverty can be sustained by informality through a variety of mechanisms).Ensuring the right to secure tenure (as informality is often associated with tenure insecurity).
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1. Definitions and potential effects of land tenure formalisation (continued)
Tenure formalisation (continued): – In practice, two types of tenure formalisation:
The administrative recognition of occupancy rights = the delivery of personal rights (administrative permits, licenses or certificates, short-term leaseholds).The delivery of real property rights (freehold titles, surface rights, registered long-term leaseholds), i.e. ‘land titling’.
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1. Definitions and potential effects of land tenure formalisation (continued)
The potential effects of tenure formalisation:– A multiplicity of mechanisms.– The effects can involve increased tenure security but not
necessarily.– The type of rights matters (personal rights or real rights).– Some effects may only occur under specific political or
economic conditions.- The effects may differ across areas (urban, peri-urban, rural).- We will distinguish the effects of:
- Increased tenure security.- The delivery of rights (real property rights).
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1. Definitions and potential effects of land tenure formalisation (continued)
The potential effects of increased tenure security:– Ambiguity of tenure formalisation as a means to increase
tenure security (conflicts, eligibility, tenants/owners, potential incompatibility with other systems of rights,…)
– The potential effects of strengthened tenure security:Labour-market effects: individuals no longer have to remain home to protect their asset ⇒ frees hours of work / enables a shift to occupations outside the home / substitution of adult to child labour.Housing-improvement effects: households have renewed incentives to renovate their homes ⇒ savings opportunity / indirect effect on health and education / encourage community investment as well / encourage home-based activities.
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1. Definitions and potential effects of land tenure formalisation (continued)
The potential effects of real property rights:– Effects that are due to the nature of the delivered rights, and
especially their transferability:Access to credit: using the property as collateral.Enhanced provision of services and access to infrastructure: securing investments / enabling cost recovery / better planning and administration / possibility of taxation.Empowerment of vulnerable individuals and groups: households freed from dependency of stakeholders who benefit from the perpetuation of informality / women have a say in family decisions (affecting fertility or their labour-force participation).
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1. Definitions and potential effects of land tenure formalisation (continued)
The potential effects of real property rights (continued):
Land-market effects:– Improved market efficiency through better allocation of
land following the unification of land market / reduced transaction uncertainty / increased ability to transfer / larger trading opportunities.
– But: Are households able to incur their share of formalisation costs? Are tenants eligible and can they cope with an increase in land rents (possibly beyond the capitalization of tenure security improvement)?
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2. Diversity of land tenure formalisation approaches
Mains situations encountered:– We propose a 5-class typology of TF programmes.
1. The primary status of the land illegally/informally occupied (whether public land—in the public or the private domain—, private land, or customary land).
2. The type of informal settlement (unauthorised land development/subdivision or squatter settlement).
3. The type of delivered rights (personal rights or real rights; individual or collective).
4. The eligibility criteria (occupancy status, length of occupation, conformity with planning norms).
5. The scale and time frame of implementation (implemented at the settlement level, the city level, or nationwide; systematic or sporadic tenure formalisation).
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3. Assessing the effects of land tenure formalisation
Methodological approach:– Ideally, one would like to compare the socio-economic
outcomes in the presence of a formalisation project (e.g. the number of hours worked) with the outcomes that would be observed observed in the absence of that project.
– What can be done instead is to compare beneficiaries (treatment group) and non-beneficiaries (control group) of a particular TF programme.
– But these groups could differ with respect to relevant characteristics that are not observed in the data (selection bias) making the identification of the true effect of land tenure formalisation problematic.
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3. Assessing the effects of land tenureformalisation (continued)
Methodological approach (continued):– There would be no problem if the beneficiaries and non-
beneficiaries were randomly drawn (controlled experiments).– The statistical methods used so far in the evaluation of TF:
Natural experiments (Buenos Aires in the 1980s).Difference in differences (Ecuador, Peru).
– These methods hinge upon assumptions whose validity can be at best favourably argued but cannot be proved => evaluations must be carried out with caution.
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3. Assessing the effects of land tenureformalisation (continued)
Results (almost exclusively from titling):– Effects on tenure security
Suggestive evidence of a ‘security premium’ associated with security (Kim, 2004, Lanjouw and Levy, 2002) or formality (Jimenez, 1984, Friedman et al., 1988).
– Effects on access to creditOnly weak evidence (Field and Torero, 2006, Galiani and Schargrodsky, 2006).Weakness confirmed by case studies (i.e. non-econometric studies).
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3. Assessing the effects of land tenureformalisation (continued)
Results (continued):– Labour-market outcomes
Not much happens through access to credit.Mixed evidence through improved security: from an increase on hours worked and work outside the home and a decrease in child labour (Field, 2006), to no labour income effects (Galiani and Schargrodsky, 2006), or a increase in home-based activities (Rose, 2006).Case studies point out at evidence on home-based activities and activities within the settlement (Banerjee, 2004).
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3. Assessing the effects of land tenureformalisation (continued)
Results (continued):– Effects on home improvement, health, education and
fertilityPositive effects on housing renovation (Field, 2005).Case studies point at investments at the community level (Johnson, 1987) but can be conflicting with planning norms.Improved child health maybe through housing renovation (Galiani and Schargrodsky, 2006).Improved education and reduced number of days missed at school (Galiani and Schargrodsky, 2006).Decrease in fertility (Field, 2006, Galiani and Schargrodsky, 2004).
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3. Assessing the effects of land tenureformalisation (continued)
Results (continued):– Land market effects
Reduction in transaction uncertainty and increase in the ability to transfer (Lanjouw and Levy, 2002) and rising housing prices.Case studies point at the displacement of poor household who may not afford even the subsidized cost of a formalised site (Payne, 1997, Gravois, 2005).
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4. Redefining formalisation strategies
Is titling the most appropriate formalisation option?– What is really at stake in land titling? Several objectives:
Securing tenure?Empowering the poor?Formalising and unifying land markets?Promoting and securing private investment?
– ⇒ Questions:Could these objectives be conflicting in addressing the housing needs of the poor?Should land titling be considered a key component of pro-poor policies?
– ⇒ Mixed evidence (section 3).
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4. Redefining formalisation strategies (continued)
Critique of the titling approach– Tends to become hegemonic in donor’s thinking (although
other options in tenure categories).– To which extent individual freehold titles should be provided
rather than other documents?– Can the poor interact with the formal real-estate market to
their own benefit once they obtain ownership documents? (Brown et al., 2006).
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4. Redefining formalisation strategies (continued)
Critique of the titling approach (continued)– In some cases, promoting individual land ownership could
weaken rather than strengthen tenure security:Titling policies may create a pattern of land ownership that is less affordable to the poor than other tenure formalisation options.Titling may not be appropriate to deal with customary tenure (i.e. in sub-Saharan African cities). ‘Urban stakeholders' should not be considered an undifferentiated group that have a priori compatible interests.
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4. Redefining formalisation strategies (continued)
Practical problems of property rights delivery– Already weak administrations may not have the capacity to
cope with the demand for land titles.
– Practical implementation problems :Insufficient land administration capacity;Judiciary system not adapted to land-related conflict resolution;Length and cost of land titling.Inappropriate legal and regulatory framework;
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4. Redefining formalisation strategies (continued)
Practical problems of property rights delivery (continued)
– Norms and standards can be major obstacles to tenure formalisation (e.g. Kigali, Rwanda).
– In situ tenure formalisation, although clearly preferred to displacements and relocation, may be problematic:
Not always feasible.Compatibility with urban planning objectives?May conflict with market forces.
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4. Redefining formalisation strategies (continued)
Practical responses (tenure formalisation can be accomplished through legal instruments other than the sweeping delivery of freehold titles):
– Incremental tenure formalisation.Initial stages should provide de facto recognition of informal settlements (protection against evictions) and, as well as access to basic services.De facto recognition can be followed by the granting of personal rights (administrative permits or certificates)Personal rights can then be incrementally upgraded to real rights (e.g. freeholds or long-term registered leases).It allows governments to build technical and administrative procedures over time and within their own resource capacity.
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4. Redefining formalisation strategies (continued)
Practical responses (continued)– Rehabilitation of adverse possession procedures
Brazilian municipalities.In most countries, existing legislations are usually not fully enforced.
– Alternative tenure options to individual property titlesSome innovative practices promoting group-tenure arrangements (Thailand, Columbia, Kenya).However, the long-term sustainability of group-tenure arrangements can be questioned.
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4. Redefining formalisation strategies (continued)
Practical responses (continued)– Community participation in tenure formalisation
Participatory processes at various stages of tenure formalisation processes (identification of needs to cost recovery).
– Decentralising land administration and management responsibilities
A response to problems stemming from centralised land management and administration (e.g. sub-Saharan African countries ). Enabling municipalities to promote tenure upgrading and regularisation (e.g. Brazil).
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5. Lessons and implications for tenure formalisation
Conditions for a successful implementation of land tenure formalisation:1. Political will, commitment and continuity at the highest level.2. Proper articulation between national tenure formalisation
strategies and local policies (e.g. India: Draft National Slum Policy, 1999; Brazil: 1988 Federal Constitution and the Statute of the City, 2002).
3. Tenure formalisation should not be reduced to its legal dimension but considered within an integrated policy of environmental, employment and income-generation programmes (e.g. Brazil: National Policy to Support Sustainable Urban Land Regularisation, 2003).
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5. Lessons and implications for tenure formalisation (continued)
4. Land administration: be adapted to the requirements of tenure formalisation programmes and project (it takes up to 30 years to change a country’s land administration system).
5. Tenure formalisation and regularisation: be combined with (i) policies for preventing the formation of new informal settlements); (ii) relocation options for households that are not eligible for tenure formalisation.
6. Financial system: be adapted to the needs of low-income households.
7. Judiciary system:- responsive and independent.- conflict-resolution mechanisms and bodies at local level.
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5. Lessons and implications for tenure formalisation (continued)
The diversity of tenure situations in informal settlements involves a diversity of responses:
– Land rights are not restricted solely to registered rights.– Tenure formalisation should adapt to continuum of land rights. – Take into account legal pluralism (various land rights systems
and legitimacy that may coexist).– Tenure formalisation not restricted to settlements that comply
with planning norms and standards.
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5. Lessons and implications for tenure formalisation (continued)
Narrowing the gap between formal and informal tenure rather than implementing rigid tenure regularisation programmes:
– In sub-Saharan African cities, customary land delivery is an alternative for providing land for housing low-income households.
– Integrating customary practices requires:Adoption of more flexible planning norms.Incentives for customary actors to operate according to minimum planning rules and land registration procedures.
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5. Lessons and implications for tenure formalisation (continued)
The limits of the transferability of tenure formalisation policies:
– As tenure is a social relation, transferring tenure formalisation experiences regardless of the local context may reduce land supply for the urban poor and increase tenure insecurity.
– Necessary to define targeted formalisation policy objectives, taking into account local situations:
The available financial resourcesEconomic development strategy and policy optionsExisting tenure system Continuum in land rightsThe state of the housing market
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6. Conclusion
Improve our knowledge of impacts of tenure formalisation:– Very few evaluations. They focus exclusively on titling. – Evidence that formalisation programmes improve land-market
efficiency and can have beneficial socio-economic effects. – In particular, existing evaluations suggest that tenure
formalisation through land titling may affect labour-market participation, housing conditions, health, education, fertility.They fail to find an impact on access to credit.
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6. Conclusion (continued)
Improve our knowledge of impacts of tenure formalisation(continued):
– The extent to which mobility may bias these evaluations should be carefully investigated (need to follow up the socio-economic outcomes of displaced households).
– Assessments should not be exclusively concerned with effects on individuals and households from the settlement but also with general equilibrium effects.
– How formalisation programmes may affect land use and spatial sorting in the presence of residential mobility.
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6. Conclusion (continued)
Formalisation processes may have a variety of effects depending on the context:
– Need to identify the key factors of success of tenure formalisation projects. Do land titling programmes reach their objectives?
– To what extent would alternatives to individual freeholds or registered leaseholds be able to reach the same objectives?
– Systematic comparative research should thus be undertaken in order to evaluate the advantages and drawbacks of tenure formalisation options, depending on social and political contexts.
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6. Conclusion (continued)
Lessons to be learnt from an operational point of view:– Appropriate assessment and evaluation tools must be
developed (define an operationally relevant and comparable measure of tenure security).
– A security of tenure indicator should enable the identification of trends and dynamics at city or settlement level over time and establish international comparisons.
– Particular attention must be paid to scaling up issues.
