Assessing the impact of rural land titling in Peru: The case of the PETT program

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Assessing the impact of rural land titling in Peru: The case of the PETT program. Ricardo Fort. World Bank Conference on New Challenges for Land Policy and Administration, 14-15 February, 2008 Washington D.C. 1. Outline. Land Policy in Peru and the PETT program Data collection - PowerPoint PPT Presentation

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  • Assessing the impact of rural land titling in Peru: The case of the PETT programRicardo Fort

    World Bank Conference on New Challenges for Land Policy and Administration, 14-15 February, 2008 Washington D.C.

  • 1. OutlineLand Policy in Peru and the PETT programData collectionResearch questionsAnalytical frameworkEmpirical resultsLessons learned and policy implications

  • 2. Land policy in Peru and the PETT programPeruvian agrarian sector: 9% of GDP, employs 1/3 of countrys working population, 76% are poor.Beginning 90s: Market liberalization reforms. Only 10% of parcels were officially registered.PETT program in 1992: free titles and registration for farmers with/without informal land documents.

  • 2. Land policy in Peru and the PETT programPETT titling process is of universal coverage type, and free of charge. Decentralize offices working at the same time.The program recognize different types of informal documents during the process, but delivers titles indistinguishable of them.

  • 3. Data collectionIn 2,004 more than 2,000 household surveys collected70 districts in 5 regional domains in Coast and Andean regionsSample frame: National Cadastre database (2 million parcels)Treatment: already titled by PETTControls: not titled yet, but near future

  • 3. Data collectionLimitations of the Cadastre databaseOmits individual plots in communal domainsSome variables were out of dateLack of information on Non-T&R parcelsDifficult to group all parcels of same ownerDefinition of treatment and control groupsProgram timing-biasDelay in T&R of parcels because of conflictsDifferent T&R time depending on previous land documents

  • 4. Research questions How do legal documents before titling affect farmers tenure security and land-related investments? Is T&R required to enhance this effect?What are the principal determinants and constraints that farmers face for accessing to formal sources of credit? Can land titling lift up some of these impediments and improve credit access for its beneficiaries? Can land titling programs generate an externality effect on investments and land values by increasing the regional coverage of land rights formalization?

  • 5. Analytical frameworkPrevious land documents

  • 6. Empirical results: Question 1 T&R has a differentiated effect on investments, depending on the type of land document that farmers hold before the policy initiates.Stronger impact on parcels with previously weaker levels of tenure security (weaker documents).Access to land documents is mostly limited to farmers that were already better-off. At best an imperfect substitution to PETT titles. A public intervention like this one to lift-up the limitations for certain farmers to acquire tenure security by informal means.

  • 6. Empirical results: Question 2

  • 6. Empirical results: Question 2 More than 50% is non-price rationed in the credit market, with the highest percentage reporting a lack of sufficient amounts of land and collateral value as main reason for being rejected or self-excluded (quantity rationed).Having a PETT title does increase the probability of getting access to credit, nor reduces the probability of being quantity rationed.Access to formal loans almost exclusive for wealthier farmers, with large amounts of land, and high educational levels.

  • 6. Empirical results: Question 3 Individual T&R increases the level of farmers tenure security and enhance investments.The strength of this relationship is related to the density of land rights formalization.

  • 6. Empirical results: Question 3 T&R and the level of titling density have a positive impact on land values:Having T&R increases value by 34%1% increase in Titling Density increases average land values in that district by a similar percentageOn the one hand, for individual titling policies to become effective, other conditions to reduce transaction costs in rural areas and to improve the dynamics of land markets need to be fulfilled.On the other hand, these conditions can at least be partially improved when the level of titling density start to increase.

  • 7. Lessons and policy recommendationsT&R provides conditions to enhance investments:When recognize informal land rights and community networksBecause reduces transaction costs at regional level, improves land markets dynamics, facilitates credit supplyConcentrate work on farmers without documentsTargeting at the regional level

  • 7. Lessons and policy recommendationsHowever, T&R not sufficient to improve the livelihood of poorer farmersLack of long-term credit in spite of T&R could affect competitivenessComplementary policies needed: opportunities for increasing land-holdings and acquiring insurance against negative shocks.

  • 7. Lessons and policy recommendationsImprovements for monitoring and evaluation:Baselines and long run panel-datasetUpdated records of advances and reasons for delaysSustainability of the T&R programNeed to reduce costs and procedures for registering new land transactions

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