Property Rights: A Development Imperative

This story originally appeared in our October 8, 2010 e-magazine. Click here to subscribe.

For over a billion poor people in the developing world, changing their relationship to the land they live upon could measurably improve their quality of life. Granting access to land and legalizing rights to the land could lead to an increase in income, improve social security, and enhance opportunity.

Addressing the issue of property rights is also a key aspect of increasing economic growth of developing countries. In overlooking the role of land and land rights, have we neglected a key element in the fight to bring the poor out of poverty?

Much of the development dialogue of the last decade has focused on microfinance, and before that, on aid, infrastructure, and governance. And, indeed, all are important tools in poverty alleviation. But, we must also understand the development imperative of securing land and land tenure for the poor.

The majority of the poor live in rural areas where land is the key asset: a source of food security, income, credit, status, and power.  Without fair distribution of land and secure rights, millions of poor people suffer, and the economies of developing countries lose the opportunity to realize billions of dollars in assets for growth and investment. Creating a unified system that enables access to land and land rights is an essential component of fighting poverty.

The Importance of Land in Poverty Alleviation

According to Tim Hanstad, President of the Rural Development Institute, there are 1.2 billion people worldwide who own or lease physical property for which they do not hold formal rights or documentation, or live without permanent homes or access to land altogether.  Landlessness, a symbol of poverty in many developing countries, is a result of rapid population growth, lack of land, low agricultural productivity, arcane legal systems, and ineffective policies. Between 600 and 700 million people have access to land, but have insecure tenure.  Another 400-500 million are completely landless.

Land rights are directly and indirectly linked to human rights, the welfare of women and girls, and the cyclical nature of poverty. Providing the poor with land, and/or helping them to legally secure the land they live and work upon has overwhelming affects on many other aspects of development and can alter many of the factors that currently lead to global instability:

• Identity: Acknowledging property rights goes hand in hand with identifying a man or a woman as a part of a community and country, a fundamental human right.

• Women’s Empowerment: Women produce 60-80% of food in developing countries, but own less than 5% of the land. If women had the same access to land and seeds that men do, agricultural productivity would go up by at least 20%.  When women have secure rights to land, they invest more in nutrition and education for their children, they are more empowered in their household, and are much less likely to be victims of domestic abuse.
• Sustainable Growth and Climate Change Resilience: Secure access to land rights serves as an incentive to invest in the land with a long-term vision. Land users are more likely to manage resources carefully, and care for the land over time.
• Decrease Migration and Slow Urbanization: Legally recognized land ownership helps farmers increase their financial stability and reduces the likelihood of urban migration.
• Business Development: Land rights can enable entrepreneurs to transform land into collateral to access bank loans and start new businesses.
• Peace and Political Stability: Many conflicts are created by overlapping claims to land, which can lead to human strife, violence, land grabs and population displacement. Respect for property rights can contribute to greater peace and stability.

Property Rights and Economic Development

The argument that formal land rights could unlock potential for the poor and their countries’ economies was popularized by the Peruvian economist Hernando De Soto, in his book The Mystery of Capital (2000).  Called the “blueprint for a new industrial revolution,” the book describes the process by which developing countries can transform themselves and their economies by creating a system that legally represents people and their property. De Soto writes, “Leaders of [developing countries] need not wander the world’s foreign ministries and international financial institutions seeking their fortune. In the midst of their own poorest neighborhoods and shantytowns, there are—if not acres of diamonds—trillions of dollars, all ready to be put to use if only the mystery of how assets are transformed into live capital can be unraveled.”

With recognized rights to land and physical assets, owners are brought into the formal economy. These resources become live capital to owners, enabling them to buy, sell, or leverage as collateral so that they are able to take advantage of their most significant asset. By recognizing and honoring rights to property and land, developing countries can unlock capital and create unparalleled opportunity for their citizens.

While the tenuous relationship between the land and the poor goes back centuries, there are recent examples of the potential that can result from land reform. In the 1980s, China provided broad-based access to private land ownership in rural households through its “Household Responsibility System .”  This incentive system—which transformed China’s agricultural sector from collective to private production—increased yields, reallocated communal land to peasant households, and gave millions of smallholder farmers relative freedom over land use. The system lowered the number of people living in poverty from 542 million to 375 million within the decade.

In Taiwan, from 1949-1953, the land ownership framework was completely turned inside out, giving over 400,000 families land and title in a very short time. The reforms put the power of capital into the hands of many, instead of the few. The farmers suddenly had something they never had before: disposable income.  As a result, farmers invested more time, money, and fertilizer in their lands, diversified crops, and increased production at an annual rate of 5.6% from 1953 through 1970.

Change Comes with Time

While many development tools address symptoms of poverty, taking on the issues of land rights gets at the root cause of poverty. Landlessness is one of the strongest predictors of poverty, more so than gender or caste. When land rights are in place, many other things fall into place, such as health, education, and income generation.

The process of changing systems to give the poor better access and secure rights to land will require innovative action, policy reform, and patience. Hanstad of the Rural Development Institute (RDI) has likened the process to banking reform: “Success in this field is measured in decades. We can’t expect change to happen quickly. You’re never exactly done.”

There are organizations and governments around the world that are conducting research, running community level pilots, and implementing dynamic programs that are contributing to change.

Last month, at the Clinton Global Initiative in New York City, the NIKE Foundation, Omidyar Network, and RDI together announced a US$6.5 million commitment to create opportunities for 50,000 poor, rural girls in Sub-Saharan Africa and Asia by helping to strengthen their rights to land. The pledge aims to bring needed attention to these issues.

Scenarios: Women, Land, and Rights

Having unequal and undefined rights brings insecurity to poor women and girls around the world.

Inheritance: In West Bengal, a young girl from a farming family fears a fate she has seen befall her sisters. With no legal inheritance rights, girls are often married off or pushed out of the home at a young age.

Unequal Rights: In Rwanda, a woman struggles to cultivate enough food on her small plot to feed five children. When her husband leaves her, he denies her access to the land. She is left to care for her children without any formal rights to the property that can support her family.

Landlessness: In Indonesia, a woman and her family live next to a rice paddy field, which they cultivate. Although they live on the land, plant the field, and harvest the crop, they do not own it, and are considered landless. Their lives are dependent upon the whim of the land owner—and are therefore subject to removal at any time.