1. Impact of land certification in Amhara on tenure security, investment and rental markets By Deininger, Daniel and Tekie World Bank: March 9-10, 2009 Washington DC

2. Motivation The demand for secure property rights to land Need for investment to increase agricultural productivity & sustainability Increasing urbanization, escalating land prices, governance challenge ‘Scramble’ for land in wake of bio-fuel boom (speculation) Supply-side factors New land legislation in much of Africa in 90s Advances in IT and remote sensing reduces cost But why has so little happened on the ground? Technical or institutional obstacles? Limited benefits compared to cost? Political reasons? Ethiopia as an interesting case Huge program (25 mn plots) quite rapidly implemented; little outside ass. Turns conventional wisdom on its head Participatory local process - rather than expert driven Confers non-alienable rights - and plenty of remaining policy restrictions No spatial reference at all – contrary to surveyors

3. Tenure security effects Evidence of tenure security effects Investment effects (virtually everywhere) Higher land values, housing investment in urban areas Ability to transfer land to better uses Less need to guard assets: Formal labor markets, child labor Governance, conflict corruption, and institutional performance Will be more pronounced if insecurity high But their realization depends on a few preconditions Recognition of local arrangements rather than imposition of new models Equity effects if there is no broad access to information State presence and ability to enforce Institutional and economic sustainability (cost-effectiveness)

4. Transferability & credit effects Rationale: Reliable information on ownership Assures against dispute if rented out Reduces transaction cost associated with transfer If formalized for sale can be used as collateral for credit Evidence on rental evidence Increases in relevance with emergence of off-farm sector (Vnm) Allows to increase productivity through transfer to non-relatives Magnitude between 60% and 20% Credit market impacts Credit-worthy projects a precondition Many potential limitations (foreclosure, liquidity) Institutional and economic sustainability (cost-effectiveness)

5. Policy environment Evolution of Ethiopia’s rural land policy environment Feudalist structure followed by nationalization (state/communist property) in 1975 A number of redistributions b/n 1975 and 1997 1991 reforms; 1995 constitution w. guaranteed access 1997 decentralization of responsibility to regions Reasons for high tenure insecurity 1997 Amhara redistribution Federal vs State power on land issues; 2005 federal proclamations tries to reign in regional autonomy Urban and agro-industrial expansion (flowers); possibility of biofuels Leasing still restricted everywhere except Amhara Led to pressures on improving security

6. Program characteristics & hypotheses Main features Democratically elected LAC has responsibility Field-based adjudication process (elders to resolve conflict) Certificates with holders’ pictures but no map (added in 2 nd stage) Very cost-effective ‘1 st stage’ (< 1 US$/parcel) trad’l methods 2 nd stage Process characteristics (from nation-wide survey) Public meetings held, LACs with members from most sub-kebeles High share of field-based adjudication Only 5% of unresolved conflicts (vs. 20%+ in Thailand) Case study/survey evidence on possible impact High willingness to pay to replace certificate Reduction of conflict Gender (women’s pictures, awareness where stored); polygamy

12. Data and general approach Data sources 4-round panel (1999, 2001, 2004, 2007) from 7 villages in East Gojam Some 900 households with 4,000 plots in each round 3 rounds before implementation, some certified in 4 th round Identification strategy Define villages as treated if certified > 12 months ago Control for household fixed effects Verify that there is little difference in time-varying effects Conservative estimate for two reasons Even in treated villages not all households have certificates Many households in untreated ones had certificates Expected short-term impacts Perceived tenure security Investment Rental market participation

17. Outcome variables considered Perception of admin. land size change next 5 years Recent land redistribution Uncompensated expropriation for urban expansion Both loss and increases relevant (political pressure) Question included all 4 years Investment in soil & water conservation structures Should see a direct investment effect Existence and new construction No of hours spent in maintaining/constructing Land rental market participation Amhara the only region where no constraints in terms of length Both participation and area transferred

19. Risk of land loss use Chamberlain’s method Equation to be estimated

21. Investment & rental market Plot-level investment equation Household-level rental market participation

26. Policy implications for Ethiopia Ensure sustainability of impacts Political economy very interesting (accident) Establish mechanisms for regular updating (computerization) Add spatial element (satellite imagery) Systematically include CPRs Demarcation & dealing with encroachment Rules for internal management Enforcement mechanisms Enhance benefits through policy changes Land leasing & off-farm employment Threat of redistribution/enforcement of LT contracts External threat from expropriation Explore longer-term effects Already benefit much beyond cost But could be much larger (& very cost-effective) Especially with policy changes

27. Broader implications Local rights recognition can have significant impact Can be implemented cost-effectively ($1.5 w. satellite image) Benefit likely to exceed cost in most situations Communal arrangements can be relied upon, unless high inequality Replace titling with recognition of rights Both individual and communal rights Work on specific arrangements for the latter Use as basis for institutional mechanisms (local democracy, updating) Need for quick & comprehensive action Rush for biofuels & commodity boom increases land values Unless rights are recognized, this can lead to large-scale dispossession Legal basis exists in most African countries But implementation is sorely lacking & even some backsliding This is not land reform - but may prevent the need for one in the future