The State of the Amazon Potential for Revenue Collection with Land Tenure Regularization in Pará
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The State of the Amazon Potential for Revenue Collection with Land Tenure Regularization in Pará Dario Cardoso, Brenda Brito*, Sara Baima and João Victor Siqueira CONTEXT The low amounts charged for In Pará, as well as in the rest of the Amazon, selling public land in land tenure the low prices charged for selling public land in regularization proceedings in the land tenure regularization proceedings represent Brazilian Amazon may encourage financial losses for the government and a major new invasions of unallocated public socioenvironmental risk for the region. Such areas, given that such low prices create a devaluation creates an expectation of profit expectations of profit through sale of with the sale of the area after the land holder the properties later on. Pará is one of receives a land title. This profit expectation the Amazon states exposed to this risk, can stimulate new illegal occupations of public since about 38% of its territory lacks lands and lead to land conflicts. This type land tenure definition and has been the of land invasion generally results in illegal target for crimes of invasion and illegal deforestation, a common practice for signaling sales of public land. the land occupation and later for claiming the In this issue of The State of the land title with the land agency1. Thus, the low Amazon, we estimate the potential for value of land can be a public subsidy for illegally collection with land tenure regularization deforested areas. in the state using two scenarios: prices Pará has been targeted by gangs currently charged by the Land Institute of specializing in invading and illegally selling Pará (Instituto de Terras do Pará - Iterpa) public lands associated with illegal deforestation, and land market prices. as was exposed by operations Castanheira We conclude that the amount (2014)2 and Rios Voadores (2016)3. This crime of charged by Iterpa is nine time less than invading public land has contributed towards the market value. Therefore, Pará needs conflicts over land ownership and made Pará to increase the amount charged for one of the leading states for land conflicts in land tenure regularization in order to the Amazon4. Two other factors contribute to discourage occupation of new public areas, the state’s vulnerability on this issue. First, the was well as to increase income collection lack of control over federal and state public by the State government to invest in lands without a formal allocation, which cover ending land tenure uncertainty. 38% of Pará territory5. The second factor is the slowness in promoting the allocation of those April | 2018 | Nº 24 1 www.imazon.org.br The State of the Amazon areas, especially for responding to land claims in areas under state jurisdiction. CAR database from those who have legal priority for tenure has several overlaps among parcels, so when we regularization, such as indigenous peoples, observed an overlap of more than 5% between traditional communities and small farmers. Thus, parcels in CAR, we kept only the larger parcel in to discourage new invasions of public lands and the analysis. In cases of overlaps of less than 5%, generate revenue for accelerating the appropriate we kept all parcels. allocation of such areas, governments should Next, we excluded parcels that cannot increase the land price charged when selling be sold by the government, such as those public land for medium and large landholders. overlapping with areas occupied by traditional In this The State of the Amazon we assess communities, quilombolas (communities of the potential revenue collection by the Land descendants of runaway slaves) and indigenous Institute of Pará (Iterpa) when selling public peoples9. However, we did not obtain spatial data land. Iterpa is responsible for approximately of all areas with land claims from these groups, 64% of the total non-allocated area in the so it is possible that some of the parcels used in state, equivalent to 24 million hectares6. Our this analysis still have some impediment to sale. estimate consider two scenarios of public land For example, we did not obtain data from Iterpa sale: i) prices currently charged by Iterpa and on land claims from traditional communities10. ii) land market prices. The difference between Finally, the CAR database does not inform those prices represents the potential increase whether the properties have or have not been of collection for the state if the prices currently titled. Thus, for this study, we assumed that all charged are adjusted to the market value. of the parcels selected are not titled and have potential for being regularized through sale. METHOD In total, we selected 8,053 parcels in CAR that might be the object of land sale by Iterpa The sale of public lands by Iterpa occurs (Figure 1). The average size of the parcels is mainly during the processes for land tenure 466 hectares, with a standard deviation of 516 regularization without bidding of parcels ranging hectares. The majority (74%) range from 100 to from 100 to 2,500 hectares, if the landholders 500 hectares; 21% range from more than 500 comply with the legal requirements7. We did to 1,500 hectares; and only 5% have more than not obtain access to land sale requests currently 1,500 up to 2,500 hectares. Those parcels account being processed at Iterpa. Thus, we used the for 3.7 million hectares throughout the state. Environmental Rural Registry (CAR) dataset To calculate the potential revenue from March 2016 (the month we began our collection with the sale of such 8,053 parcels, analysis) to select parcels with potential for we considered the net profit, in other words, the land sale and to estimate the potential revenue revenue obtained with the sale of the parcel after collection with such cases. subtracting the expenses incurred by Iterpa in the For this estimate, we selected land parcels sale process. We considered two scenarios in this in CAR ranging from 100 to 2,500 hectares8 analysis: i) the land prices currently charged by April | 2018 | Nº 24 2 www.imazon.org.br The State of the Amazon Iterpa, in other words, the so-called Bare Land a 20% discount for lump sum payment13. In the Value (VTN for its Portuguese acronym) with latter case, we considered lump sum payment in rates applicable under Resolution no. 01/2015 of half of the cases, based on information from Iterpa the State Council for Agricultural, Agrarian and of how often landholders choose this payment Land Tenure Policy (Cepaf ); and ii) the average option14. We applied a resampling method to select market value (MV)11. the cases that received the 20% discount and to Next, we applied two discounts provided estimate the average amount collected with a 90% by law: i) a 30% discount for properties that confidence interval in each scenario15. Appendix I conserved 80% or more of forest cover12; and ii) details the methodology used in this study. Figure 1. Location of the 8,053 parcels potentially eligible for sale by Iterpa in Pará identified in this study April | 2018 | Nº 24 3 www.imazon.org.br The State of the Amazon RESULTS that amount by charging below market prices (Figure 2). On average, that would be a subsidy We estimated that the potential collection of R$ 2,384 per hectare or R$1.1 million per (net profit) for Iterpa with the sale of 8,053 property. In addition, this price difference properties selected in this study would be demonstrates that Iterpa does not comply with nine times less than the collection based on the state legislation, which determines that the market value. The average collection based on government should use the land market as a base governmental values is R$ 1.1 billion (90% to regulate the prices for selling public land16. confidence interval of R$ 1.101 billion to R$ The greatest differences between the 1.108 billion) and the average collection estimate market value and the amount charged by Iterpa using the market value is R$ 10.06 billion (90% were found in municipalities in the Santarém and confidence interval of R$ 10.04 billion to R$ Paragominas regions, where the average prices per 10.09 billion). hectare (without applying the discounts provided The difference between the average values in the law) correspond to only 8% and 7% of the for the two scenarios is in fact a potential public market value respectively (Table 1). The smallest subsidy for holders of public land and an income difference was observed in the islands region, loss for the State on the order of R$ 9 billion, where the hectare charged by Iterpa corresponds since the government chooses not to collect to 70% of the average market value. 12,0 10,0 8,0 Amount charged 6,0 10.1 9.0 Subsidy R$ million 4,0 2,0 1.1 0,0 Market Iterpa Figure 2. Comparison between the potential collection and subsidies in public land sale of 8,053 properties in Pará, based on the prices charged by the land market and by Iterpa in 2016 April | 2018 | Nº 24 4 www.imazon.org.br The State of the Amazon Table 1. Comparison between average prices per hectare for 8,053 properties, by region, according to the prices charged by Iterpa and by the land market in Pará in 2016 Iterpa value/hectare Iterpa value in relation Region of the state Market value/hectare (R$) (R$) to the market value (%) Santarém Region 219 3.077 7 Paragominas Region 357 4.600 8 Redenção Region 438 3.439 13 Belém Region 423 1.850 23 Island Region 167 240 70 If Iterpa practiced market value when to be the priority in land tenure regularization.