Securing land ownership to drive development

Most people in the developed world do not have to worry about losing the right to live where they do. If you have a deed or a rental contract, it is unlikely that someone is going to turn up tomorrow with their own paperwork and kick you out. This security means owners that build a new kitchen know they can enjoy it for decades or increase the value of their property when they sell. Farmers can plant trees that take years to mature, knowing they won’t be kicked off the land by the time they bear fruit.

Imagine if you were not sure if you really owned your house. Maybe you could keep living here next year. Maybe someone would boot you out. Not only would you be psychologically worse off, but you would also be much less likely to invest in making your home or land better.

Yet, for the majority of people in developing countries, secure property rights are a rare luxury. Globally, 70 per cent of the world’s population has no access to formal land registration systems. One-in-five, or almost a billion people, consider it likely or very likely they will be evicted in the next five years. In Jordan, 38 per cent consider themselves insecure even in their main property.

Getting more land security is one of the many goals that world leaders signed up to achieve by 2030, when they set the Sustainable Development Goals (SDGs) in 2015. This year we will be at halftime for these global goals, but we are nowhere near halfway to completion. Indeed, despite a great many development organisations focusing on achieving better land tenure, progress has been negligible, with zero countries reporting any progress at all.

My think-tank has worked with some of the world’s best economists to identify the most effective ways we can speed up delivery of the SDGs. In a just-published research paper, the former lead land specialist at the World Bank, Dr Frank Byamugisha, and his colleagues show that developing better land registration systems would deliver amazing benefits.

The researchers focused on Sub-Saharan Africa because it has the lowest proportion of land that has been officially mapped and categorised by governments: At just 14 per cent, Sub-Saharan Africa has the weakest land property rights and highest levels of disputes. The continent also has by far the most adults insecure in property tenure, along with the highest cost of registering land in the world.

Path-breaking countries like Rwanda have shown how it is possible to register land, digitise the information, and provide legal mediation to resolve inevitable land disputes.

Nonetheless, achieving greater rural land security in Africa will take enormous effort, because 86 per cent of all the continent’s rural land plots are still unregistered. The total cost for the continent will run to about $21.7 billion.

However, the benefits would be much larger still. When farmers know they own their land, they are more willing to make expensive investments to increase long-term productivity. They can also use their land deed as collateral to borrow money for investments like farm equipment or property expansion.

Unfortunately, there is relatively little direct evidence from Africa on what the impact would be on productivity. This means the researchers have to use evidence from the rest of the world, which leaves the impact less certain. Nonetheless, the evidence suggests that the benefits from more land security, through higher agricultural productivity, would likely increase household incomes by almost $400 billion.

Spending $21.7 billion to deliver almost $400 billion in benefits is a very good investment, achieving $18 of social benefits for each dollar spent.

The case for increasing land tenure security is even stronger for the almost half-a-billion people living in Sub-Saharan Africa’s urban areas. More than a third of all urban land parcels are unregistered, and it would cost a much smaller $5.2 billion to survey and register this land, including the land in slums, along with setting up dispute resolution and running the system.

Moreover, the benefits of tenure in urban areas are better documented: homes with secure registration are on average worth 25 per cent more. This is not surprising: A house is worth more simply because the owner now has the financial and psychological security of knowing that she owns it. The researchers show that the total benefits of providing more secure urban tenure would therefore be about $160 billion, or 30-times the costs.

Currently, the world is failing to deliver on many of the most important promises of the SDGs, in part because this agenda set out to do everything at once.

Instead, we need to prioritise the smart solutions first. Being wildly off-track on our global promises can seem unsettling, but it can also be an energising wake-up moment. We urgently need to focus on investing in the very best solutions. Improving urban tenure security, which at low costs would make hundreds of millions of people better off, is one such investment. It is only rarely that the world is offered an opportunity that delivers up to $30 of social benefits for each dollar invested. We should take it!

Bjorn Lomborg is president of the Copenhagen Consensus and visiting fellow at Stanford University's Hoover Institution. His new book "Best Things First" is now available for pre-order.