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One Billion Rising Law, Land and the Alleviation of Global Poverty

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One Billion Rising Law, Land and the Alleviation of Global Poverty LAW, GOVERNANCE, AND DEVELOPMENT RESEARCH ONE BILLION RISING Law, Land and the Alleviation of Global Poverty Edited by ROY L. PROSTERMAN ROBERT MITCHELL TIM HANSTAD With a Preface by Joseph E. Stiglitz LEIDEN UNIVERSITY PRESS One Billion Rising Law, Governance, and Development The Leiden University Press series on Law, Governance, and Development brings together an interdisciplinary body of work about the formation and functioning of legal systems in developing countries, and about interventions to strengthen them. The series aims to engage academics, policy makers and practitioners at the national and international level, thus attempting to stimulate legal reform for good governance and development. General Editors: Jan Michiel Otto (Leiden University) and Benjamin van Rooij (Leiden University) Editorial Board: Abdullahi Ahmed An-Naı´m (Emory University) Keebet von Benda Beckman (Max Planck Institute for Social Anthropology) John Bruce (Land and Development Solutions International) Jianfu Chen (La Trobe University) Sally Engle Merry (New York University) Julio Faundez (University of Warwick) Linn Hammergren (World Bank) Andrew Harding (University of Victoria) Fu Hualing (Hong Kong University) Goran Hyden (University of Florida) Martin Lau (SOAS, University of London) Christian Lund (Roskilde University) Barbara Oomen (Amsterdam University and Roosevelt Academy) Veronica Taylor (University of Washington) David Trubek (University of Wisconsin) One Billion Rising Law, Land and the Alleviation of Global Poverty Edited by Roy L. Prosterman Robert Mitchell and Tim Hanstad with a Preface by Joseph E. Stiglitz Leiden University Press Cover photo: © 2007 Josh Fredman Photo Cover design: Studio Jan de Boer, Amsterdam Layout: The DocWorkers, Almere ISBN 978 90 8728 064 2 e-ISBN 978 90 4850 833 4 NUR 820 © R.L. Prosterman, R. Mitchell, T. Hanstad / Leiden University Press, 2009 All rights reserved. Without limiting the rights under copyright re- served above, no part of this book may be reproduced, stored in or in- troduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the written permission of both the copyright owner and the author of the book. Contents Acknowledgments 7 Preface Joseph E. Stiglitz 9 1. Poverty, law and land tenure reform Tim Hanstad, Roy L. Prosterman and Robert Mitchell 17 2. Tenancy reform Roy L. Prosterman and Jennifer Brown 57 3. Redistributing land to agricultural laborers Roy L. Prosterman 107 4. Micro-plots for the rural poor Robert Mitchell, Tim Hanstad and Robin Nielsen 153 5. Gender and land tenure reform Rene´e Giovarelli 195 6. Land tenure reform in India Tim Hanstad and Robin Nielsen 235 7. From collective to household tenure: China and elsewhere Li Ping and Roy L. Prosterman 277 8. Formalization of rights to land Robert Mitchell 333 9. Land rights legal aid Robert Mitchell 377 10. Concluding reflections Roy L. Prosterman 413 Select bibliography 429 List of contributors 435 Index 437 Acknowledgments The authors would like to acknowledge the generous support of the Bill & Melinda Gates Foundation, without which this book would not have been possible. The authors also gratefully acknowledge the support and contribu- tions of Leonard J. Rolfes, Jr. and David Bledsoe, both former Senior Attorneys of the Rural Development Institute, who helped shape the book and contributed to much of the learning represented here. We are grateful to Professor Jan Michiel Otto, Director of the Van Vollen- hoven Institute for Law, Governance and Development at the Univer- sity of Leiden School of Law, for suggesting that we write this book, and to the students and faculty of the institute for reviewing an early draft of the book and providing helpful recommendations. We also wish to thank the many staff members of RDI who helped in assem- bling and proofreading the book. We especially acknowledge the help given by Gina Zanolli, Leah Shepard, Neal Kingsley, Katharine Bond and Courtney Hudak. Preface Joseph E. Stiglitz, Columbia University It is a great pleasure for me to write this preface for Roy Prosterman’s landmark book on land tenure reform. – Roy and his colleagues at the Rural Development Institute have been tilling this soil for four dec- ades – long before the issue became fashionable.1 They have blended first-rate scholarship with advocacy: an early, and often lonely, voice recognizing the importance that access to land and security of land tenure has in uplifting the lives of the poor in agrarian economies. They have not only detailed these effects but also identified the me- chanisms through which these benefits are realized. In most develop- ing countries, most people depend for their livelihood on agriculture. Land is thus an essential part of the means of production, but those at the bottom typically have no land. Giving even small plots of land can make enormous differences to their lives and the lives of their fa- milies. Prosterman and his colleagues not only talk about the impor- tance of land, they provide hard evidence. But Roy and his colleagues are not Panglossian idealists. Their hard- headed research will be a challenge for many a warm-hearted reformer: land reform is not easy. They carefully document the successes and the failures, paying close attention to the differences in circumstances of the different countries. Their conclusions are at the same time sober- ing and heartening. The numerous failures are often cited by critics of land reform. Prosterman and his colleagues conclude that govern- ments should purchase land, without compulsion, paying market prices; and given the tight budget constraints facing many developing countries, this limits the scope. At the same time, they argue that micro-plots can have very high productivity and make a great deal of difference. That means the government may not have to purchase huge amounts of land to make a big difference to large numbers of the poor in these countries. I have long been an advocate of land reform, and in the following paragraphs, I want to explain why, provide some suggestions of how governments can lower the costs of market-based land reform, and show what can be done to increase the prospects of successful land re- form. Finally, Prosterman and his colleagues argue for the importance of enhanced security of tenure. There are good reasons for this. But in 10 JOSEPH E. STIGLITZ many countries, there is resistance. I want to explain at least part of the cause of that resistance, making some suggestions of how we can square this circle. The rationale for land reform One of my earliest papers was on land tenancy.2 I attempted to explain the widespread practice of sharecropping. To most economists, this in- stitution seemed strange – for sharecropping greatly attenuates incen- tives. There are widespread complaints in developed countries about tax rates that approach 50%, yet most workers in developing countries have to turn over to their landlord 50% – in some cases 2/3 – of their crop. I explained sharecropping in terms of balancing out concerns over risk (landlords are better able to bear risks) and incentives (work- ers need some incentives to motivate them, in a context where it is costly for landlords to monitor workers). If workers were risk neutral (and had access to capital), workers would rent land and would have good incentives. If monitoring were costless, landlords would hire workers and pay them a fixed wage, absorbing the risks of fluctuations of output and price. Sharecropping represents a compromise. But while it may be a good compromise, incentives are nonetheless attenu- ated: workers do in general work less than they would if they owned their own land. Redistributing land to workers should, in this theory, result not only in more equity, but in greater output and efficiency. These economic theories, based on the New Paradigm of Informa- tion Economics,3 represented a marked break from conventional neo- classical economics, which argued that one could separate issues of dis- tribution from efficiency. The divergence between the distribution of the ownership of land and the ownership of “labor” creates what are called agency problems, which can have a large economic toll. Perhaps this accounts for why many of the most successful develop- ment stories began with land reform: Taiwan, Korea, Japan, and China. In the case of other successes, like America, land was in ample supply. Jefferson thought that the backbone of America was the small farmer who owned his own plot of land.4 The first problem encountered in land to the tiller programs is that, in most countries, the land has to be taken away from others. Those from whom the land is being taken away don’t like it. This gives rise to political problems, and without wholesale revolution (as in China), these cannot be easily ignored. The standard mantra is that expropria- tion of land undermines security of property rights, which are viewed as sacrosanct. The violation of property rights itself has strong, adverse incentive effects. PREFACE 11 But this argument against land expropriation is not always totally per- suasive. Property rights are always circumscribed. Someone who buys stolen property will lose that property if the rightful owner makes a claim, even if the new “owner” paid good money for it. But questions may be raised about the legitimacy of many land claims. In South American countries, land was taken from the indigenous inhabitants. Do they not have some legitimacy in reclaiming the land that was theirs? So too in other countries where land is given away by colonial masters. In many countries, there is a rethinking of the rights to land of the aboriginal or indigenous inhabitants. In recent years, similar ques- tions of legitimacy are being raised about property rights acquired in the process of transition from communism to a market economy: many of the old party bosses seemed to have simply grabbed state assets.
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