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PROPERTY RIGHTS AND NATURAL
RESOURCE MANAGEMENT IN
DEVELOPING COUNTRIES
Rasmus Heltberg
University of Copenhagen
Abstract. This essay surveys the literature on property rights and natural resource
management in developing countries. Focus is on policy relevant discussions
concerning collective action, property regimes, local institutions for natural
resource management, the evolution of individual property rights to land, land
titling by government and poverty-environment linkages. The tendency to draw
policy conclusions from simplistic analysis is criticised, and the need for more
credible empirical research is highlighted.
Keywords. Property rights; Natural Resource Management; Collective Action;
Institutional Economics; Common Property.
1. Introduction
Developing countries depend in a number of important ways on their natural
capital. Peasants, fishermen and cattle herders earn their living directly from
utilisation of renewable natural resources such as farm land, water, air, forest,
grazing areas, irrigation, plants and animals. In many countries these resources
are increasingly exposed to unsustainable exploitation, pollution and conversion
to other uses. When natural resources degrade or perish, peoples' livelihoods
disappear, aggravating problems of rural poverty, food insecurity and rural-urban
migration.
Scholars often distinguish among four main underlying factors causing
environmental destruction: Market failures (externalities), government failures
(environmentally adverse policies), population growth and property rights failures
(e.g. Pearce and Turner, 1990). This essay is about property rights failures in the
developing countries. An appropriate understanding of property rights and village
institutions is important for many aspects of development policy, including land
reform, land titling, conservation of forest, grazing and wildlife resources, fisheries
management, water management and so on. Simplistic government and donor
interventions based on the idea that institutions can easily be created, modified or
influenced by government decree will not achieve the desired outcome. Institution
building and institutional change are complex, and policies and incentives
transmitted through institutions or through groups of people may work quite
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differently from policies transmitted through individuals' responses. Many donor
projects have failed because institutional inertia was underestimated or because
the purpose of existing arrangements was not understood. Interventions in rural
life need to be based on detailed understanding of local institutions and their
functioning in order to correctly predict response to policies. This complicates the
design of conservation and land use policies, for example. Successfully involving
local user groups in conservation projects remains a challenge for donors and
wildlife and forest departments in many places.
The purpose of this article is to provide a policy-relevant survey of the
institutional economics of property rights to natural resources, including land.
Section 2 offers an overview of the most important concepts within institutional
economics. Section 3 outlines the property regimes within which resources are
owned and managed, while Section 4 focuses on management of common
property resources. Section 5 deals with the spontaneous evolution of land rights,
and Section 6 discusses state intervention to alter land rights, i.e. privatisation and
titling. Finally, Section 7 briefly surveys literature on the interrelationships
between poverty, population growth, degradation of natural resources and
management institutions, with some conclusions and suggestions for future
research offered in Section 8.
2. Institutional Economics and natural resources
In this article, institutions are broadly defined as rules, norms, habits and formal
hierarchies that shape agents' actions and expectations. This definition is similar
to Douglas North's (1989, 1991) conceptualisation of institutions as `rules and
their enforcement characteristics'. Institutions serve a number of important
economic functions, such as handling situations with missing or asymmetrical
information, facilitating and enforcing market and non-market transactions,
substituting for missing markets, coordinating the formation of expectations,
encouraging cooperation and collective action and reducing transaction costs.
Institutions are an important conditioning factor for market and non-market
transactions and activities. Contracts Ð together with the enforcement
mechanisms surrounding them Ð are an important example of a market
institution.
There are already several quite general surveys of institutional economics and
development, including Lin and Nugent (1995), Bardhan (1989), Stiglitz (1989)
and Nabli and Nugent (1989).1 These surveys distinguish between two very
distinct approaches to institutional analysis, (i) approaches based on transaction
cost and imperfect information and (ii) approaches using collective action theory.
Transaction cost and imperfect information approaches are suitable for analysing
the functional role of institutions in economic life (what could be called the
demand for institutions), while collective action theory is the appropriate
framework for understanding institutional change (what alternatively could be
called the supply of institutions). North's central hypothesis is that the purpose of
institutions is to economize on transaction costs (North and Thomas, 1973). An
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institution which for given relative prices and technology minimizes transaction
costs is efficient. The idea is that institutions tend to adapt in a (socially) rational
manner to information and other transaction costs. Hence, institutions are
understood as a cost-minimizing response to transaction costs and imperfect
information. Yet providing institutional change has its own costs, the private costbenefit ratio of institutional change differs from the social cost-benefit ratio.
The study of collective action shows the conditions in which actors are likely to
organise to jointly change the institutional equilibrium. Mancur Olson's seminal
book `The Logic of Collective Action' (Olson, 1965), analysed the factors that
promote and retard cooperation within groups to achieve a given goal. Olson was
interested in how people cooperate to form interest groups to lobby the state to
supply public goods. The major obstacle to collective action, according to Olson,
is that individuals free-ride on others' effort towards providing the common good.
Free-riding occurs when there is disutility from effort and when individual effort is
difficult to monitor and enforce. Under these conditions it is difficult to assign
rewards and punishments that provide individual group members with incentives
to provide effort towards the public good. The logic of collective action is
therefore a Prisoners Dilemma problem leading to too little collective action and
ensuing under-supply of public goods. Thus, it can be seen as an inherent
challenge for any group to devise mechanisms that keep free-riding in check in
group collaborative efforts. This is also pertinent to issues of natural resource
management at the local level which frequently rely on voluntary and hard-tomonitor contributions by individuals.
The functional role of a particular institution does not explain how it was
created, but possibly why it was. For example, while rightly arguing that property
rights in land serve important purposes of internalisation of environmental,
farming and technological externalities, one has neither explained how property
rights develop and change over time, nor the social processes needed to create
them. The functions performed by any given institution, often to handle a specific
transaction cost, can be seen as the source of its demand. Collective action theory,
by investigating group decision making, is useful for understanding how group
members develop, reinforce and change institutions in which they interact.
Therefore, collective action theory can be said to analyse institutional dynamics
and the supply of institutional change.
The assertion that institutions are always optimal is absurd when confronted
with reality. Basu et al. (1987: p. 13) point to the `profusion of cultural variants [of
similar institutions] and the evidence of horrendous distortions of lives at the
hands of many institutions created by man'. Without careful empirical analysis
(which is rare) functionalist explanations may become justifications for irrational
or non-functional institutions (Bates, 1995). Theories purporting to explain
institutions functionally fall short by failing to consider inertia, friction, vested
interests, agency and collective action problems Ð in sum, the role of history and
politics is ignored.2 Inefficient institutions are not changed without cost, and the
costs of collective action to individual agents may in many important cases be
smaller than the expected benefits. Quoting again Basu et al. (1987, p. 13)
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`there ... seems no reason to suppose a priori that competitive pressures are always
sufficient to break up less than optimal institutions'. In the context of natural
resource management, a similar point can be made: there would not be that much
resource degradation and poverty if property rights and natural resource
management institutions were `optimal'.
3. Property regimes
Garret Hardin's much cited and often criticised `Tragedy of the Commons' (1968)
hypothesised that common resources lacking ownership were doomed to overexploitation. Common property rights were seen as the causal factor behind
resource destruction because it would be in users' private interest to harvest the
resource as soon as possible, before other users did so. When everybody owns the
resource, nobody has incentives to conserve it for future use. Each user imposes
an external cost on all other users in terms of reduced resource availability. In the
absence of property rights, the externality of future scarcity is not internalised by
individual users and the outcome is inefficient high intensity utilisation. The
consequence is overgrazing, overfishing, appropriation of irrigation water by
head-enders, clearing of forests and so on. Such resource use is inefficient because
at lower intensity of use, resource stock and output would be higher, and
harvesting costs lower. Furthermore, overuse can endanger the sustainability of
the resource. The `tragedy of the commons', as set out by Hardin, is a variant of
the Prisoners Dilemma, and hence closely connected to Olson's Logic of
Collective Action (1965). This is so because the problem of coordinating resource
users to limit their exploitation has free-rider problems similar to organising
potential beneficiaries to contribute towards a public good.
Undertaking investment that would enhance the value of the resource suffers
from similar free-rider problems. Therefore, under-investment (relative to the
social optimum) in common property may result, i.e. lack of fencing, no
maintenance of irrigation systems and failure to replant forests. The policy
implication of the `tragedy of the commons' hypothesis is to either privatise or
nationalise the resource, i.e. vesting property rights in the individual or the state.
This is based on the view that individuals or the state make better resource
managers than communities of users.
Hardin confused common property with open access, failing to distinguish
between collective property and no property (Ciriacy-Wantrup and Bishop, 1975).
In order to clarify the discussion, a clear distinction between different types of
management rules and property regimes is crucial (Runge, 1986). Thus, one can
define management rules to consist of (i) access rules (flow management) that
define rules of resource access and regulate sharing of output, and (ii)
conservation rules (stock management) concerned with limiting total resource
output, organising maintenance and undertaking investments. Resource regimes,
in contrast, are defined on the basis of the type of right users hold. In the majority
of the literature, a distinction is made between open access, common property,
state property and private property (Seabright, 1993).
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Open access denotes the lack of ownership and control. Examples include
marine resources in international waters, the air, the atmosphere and open space.
Access for potential users to exploit open access resources is free and unregulated.
Resources under open access are highly prone to over-use and degradation,
especially when population densities increase or if resources are commercially
valuable (Ciriacy-Wantrup and Bishop, 1975). Examples include the overfishing
of international waters and the difficulty of regulating transfrontier air pollution
(MaÈler, 1990). Thus, there is a `tragedy' of open access resources and a need for
states and international organizations to regulate their use. However, in the case
of terrestrial natural resources, few resources are completely without property
rights. Nevertheless, situations resembling open access can arise where property
rights are only nominal and unenforced, so that illegal use and encroachment has
become widespread. This is the case, for example, in many poorly protected
national parks and forest reserves, where villagers from the surrounding areas
may perceive it as legitimate and of little risk to encroach on resources (Heltberg,
2001).
Common property refers to resources under communal ownership where access
rules are defined with respect to community membership. Common property
comprise collectively owned resources as diverse as irrigation systems, fisheries in
national waters, common wells, common forests, pasture grounds, wastelands etc.
Property rights can be vested in the tribe, the village, the clan or lineage, user
committees, cooperatives, the municipality or the local government. Common
ownership has distinct advantages such as equity and insurance (Platteau, 1991),
yet potential free rider problems have to be overcome for communities to establish
effective management. Outsiders may encroach if enforcement is not perfect. Also,
conservation rules may or may not be established in common property regimes.
Baland and Platteau (1996) make a distinction between regulated common
property, where a set of rules governing resource utilisation are in place, and
unregulated common property, where no rules limit utilisation. Unregulated
common property resources are protected only by community membership
restrictions, while conservation rules do not exist or are not enforced. Unregulated
common property resources are at risk of degradation and overuse if the user
group is large relative to the resource or if income from resource exploitation is
large relative to the opportunity cost of time. Regulated common property is where
both access and conservation rules are in place. Open access and common
property resources are jointly referred to as the commons (or common-pool
resources).The commons are characterised by costly exclusion and that use is
subtractive, i.e. use depletes or congests the resource for other users (Ostrom,
1990; Oakerson, 1992).
State property resources are resources formally under state ownership, for which
the state ideally would enforce both access and conservation rules. When
governments fail to effectively enforce rules, state property may become de facto
private or open access. Many tropical forests, for example, are state property, and
in many instances degenerate into de facto open access as encroachment,
settlement and illegal logging go unchecked. In communist countries, natural
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resources including land were mostly state-owned, while cultivation rights were
delegated to individuals or collectives. Such a system may entail uncertainty about
long-term tenure security, and it provides few incentives for undertaking land
investments and improvements. In some African countries land has formally been
nationalised by colonial or independent governments, but nevertheless remains
under traditional village management. However, official legislation, such as land
codes, may affect local level resource management in various unintended ways.
Such legislation, even when not enforced, may undermine the authority of
informal common property institutions (Bromley, 1991).
Private property refers to property rights vested in the individual. The ideal or
perfect type of private property rights are complete, secure, transferable and
provide the holder with rights of possession, transfer, use, change and destruction
of the asset. The first Fundamental Theorem of welfare economics states that
perfect property rights, in conjunction with markets for all goods (including risk,
future goods and externalities) lead to Pareto efficiency. This does not hold when
property rights are imperfect. The enforcement characteristics of rights can have
an important bearing on efficiency. In this respect, it is crucial to distinguish
between de jure or nominal rights, on the one hand, and de facto or effective rights
on the other. Unsecured de jure rights, which are not enforced or prohibitively
costly to enforce, may not improve security of tenure, and hence will generally not
achieve the desired results. Even in developed countries, litigation expenses and
other transaction costs limit the effective enforcement of property rights, which
fall short of the perfect type. In developing countries, insecurity, high transaction
costs, poor, partial and arbitrary enforcement of rights and lack of infrastructure
can seriously constrain the efficiency of individual property rights, especially if
those rights do not enjoy the support of custom and a general sense of fairness
(Platteau, 1996).
4. Common property management
In the developing countries, common property systems are still quite widespread
and involved in the management of many diverse natural resources. Many authors
have documented how societies all over the world manage their common property
by means of detailed and complex rules adapted to local ecological and
technological circumstances (for reviews see Baland and Platteau, 1996; Ostrom,
1990). In general, the notion of an inevitable `tragedy' for common property
resources is not supported by the evidence, and over the board privatisation or
state regulation therefore does not seem justified (Wade, 1987; Runge, 1986).
However, local common property is no panacea for sustainability either, as there
are also many cases of degraded resources.
Research into local resource management often focusses on the efficiency,
sustainability and distributional impact of management institutions. In this
context, efficiency is defined as maximising the discounted profits from the
resource, and sustainability is defined as a rate of harvest which does not exceed
long-term resource regeneration. Common property research is often focused on
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the rules, mechanisms and institutions which rural communities adopt to manage
their CPRs. There is an interest in identifying causal factors behind the collective
action leading to successful case stories of local CPR management and, perhaps
equally interesting, the conditions leading to collapse of local informal management systems. Below, some important results first from game theoretical research
and from village case studies are highlighted.
4.1. Games and cooperation
Theoretical research in CPR management applies noncooperative game theory to
analyse the strategic interaction between agents utilising the same finite common
property resource. Often, a two-person one-shot game is analysed. To employ
these games, it must be assumed that (i) resource extraction is subject to
decreasing returns to scale so that use subtracts from the resource (otherwise there
would be no dilemma) and (ii) that the payoffs from outside options (other than
resource use) are lower than the payoff in the noncooperative equilibrium. Much
of the literature focusses on the one-shot prisoners dilemma (PD) game, in which
defection (non-cooperative behaviour) is the dominant strategy for both players
regardless of the actions of the other player. This is the theoretical underpinning
of Hardin's `Tragedy of the Commons' and of Olson's `Logic of Collective Action'
(Bardhan, 1993). The PD game is illustrated in Figure 1(a), where `C' stands for
cooperative play and `D' for defect or non-cooperative play.
However, the presence of free-rider problems does not, by itself, lead to a PDtype situation. It is important to realise that the one-shot PD game fails to capture
the salient characteristics of a number of CPR situations. Thus, in some instances
the consequences of noncooperative behaviour are sufficiently gloomy to induce
one of the players to play cooperatively, even if the other does not. This situation
can be represented by the Chicken game, depicted in Figure 1(b). Of course, it is
crucial who will bear the cost of playing cooperatively, and precommitment
strategies are important in Chicken-game situations. In other cases, cooperation is
advantageous for each player, given that other players also cooperate, for example
in making joint investments. In this situation, the benefit from one individuals'
effort is insufficient to outweigh the cost unless others also cooperate. This is
called the Assurance game, depicted in Figure 1(c), and captures the widely
observed phenomenon that people tend to be cooperative when others are, and
(a) Prisoner’s dilemma
C
D
C
3,3
1,4
D
4,1
2,2
(c) Assurance game
(b) Chicken game
C
D
C
3,3
2,4
D
4,2
1,1
C
D
C
2,2
–1,1
D
1,–1
0,0
Figure 1. Game theoretic models of collective action (Bardhan, 1993).
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otherwise not. An important role for common property management institutions
is to solve the assurance problem, i.e. make resource users confident that their
contribution will be reciprocated by other users and therefore privately optimal in
the long run.
For repeated games, it is well-known that cooperation can be sustained in the
Prisoners Dilemma when the game is repeated infinitely or in finite games with
insecurity about the other players or about the exact ending date of the game. The
cooperative outcome can be sustained with so-called trigger strategies, where
defection (uncooperative behaviour) is deterred by a credible threat from the
participants to play uncooperatively in all subsequent rounds of the game if any
one player is found to defect. However, there are some shortcomings of using the
highly stylized representation of game theory in the context of CPRs. Thus,
repeated games have a multitude of equilibria, depending on the trigger strategy
adopted, out of which the theory is unable to predict which will be selected by the
players. Also, the literature has so far focused on the tractable but unrealistic case
of identically repeated games. More realistic would be the situation where the
game depends on past outcomes, so that resource stock and payoffs are a function
of the players' previous moves.
4.2. Case studies of common property management
Field studies, covering a variety of countries and resources, have reported a vast
array of local informal organizations, rules and enforcement mechanisms
developed to manage common property resources. This literature has uncovered
many interesting findings, although much of it suffers from selection biases
because only resource systems and communities that still exist are available to be
studied today and, furthermore, sometimes researchers may purposively sample
relatively well-managed resources for case study sites (Baland and Platteau, 1998).
Generally, not all local rural communities display successful (informal) management of common property resources, but neither is there general failure. In fact,
there is substantial variation across time and space in the ability of villagers to
manage their collective resources. Although much remains to be learned about the
determinants of success at CPR management, several stylized facts seem to be
emerging from the case studies.
First, there is some evidence that smaller groups are more likely to manage
CPRs, in conformity with Olson's (1965) predictions. For example, Ahuja (1998)
using satellite imagery, found substantial inefficiency in land use in Cote D'Ivoire.
Small villages, however, were less inefficient.
Second, communities do not appear to use punitive trigger strategies to enforce
compliance with CPR management rules. Instead, communities deter members
from breaking rules by using fines in cash or kind, moral persuasion, social
exclusion of offenders and religious taboos. Punishments are context-specific,
applied gradually and are subject to negotiation with the offender, in contrast to
the all-or-nothing trigger strategies analysed in game theory (Ostrom et al., 1994).
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A third point emerging from field studies is that collective action for resource
management is more likely the larger are the potential gains from cooperation,
that is, when the community depends on the resource for a substantial share of
income and potential losses from over-use and resource degradation are large
(Wade, 1988). This result is intuitive from a supply and demand perspective: the
larger the gains from cooperation, the more likely is it that the benefits exceed the
costs of organising collective action.
Fourth, misguided outside intervention, especially by the state, may lead to
break-down of traditional management systems. Thus, when colonial and
independent governments have nationalised natural resources, it has often led to
collapse of existing CPR management systems because local authority structures
governing resource use were undermined (Bromley, 1991; Ostrom et al., 1994;
Ostrom, 1990). Governments have been unable to implement effective management of the nationalised resources, sometimes leading to severe resource
degradation. The failure of governments as CPR managers is partly caused by
government agencies' lack of detailed local information, reinforced by the fact
that the nature of many resources makes central monitoring difficult and costly.
Furthermore, when outsiders have imposed new resource management institutions, these institutions have often lacked local legitimacy and credibility.
Consequently, collective action has not come forward, and pervasive encroachment on resources has often been the result. Policymakers have paid insufficient
attention to local institutional, cultural, technical and natural environments and
the complex subtleties shaping incentives for informal resource management.
Therefore, interventions seeking to improve the resource situation through
tenure reform have, on a number of occasions, had adverse effects. Other
research has shown, however, that villages that have received substantial
external intervention from NGOs and others, have much larger labour
contributions to maintenance of common land and water resources (Chopra
and Gulati, 1998).
Fifth, there is a complex relationship between common property and equity.
The impact of group inequality on the likelihood of collective action is
ambiguous. On the one hand, inequality among users in income or production
capacity may induce distrust. Thus, inequality and distrust can lead to conflict,
suspicion and reluctance to abide by agreements. In general, some degree of trust
among community members is necessary for inducing collective action and
compliance with rules unless monitoring and enforcement is easy (Platteau, 1992).
For example, some regions in India have a long history of conflict between high
and low caste villagers. High-caste villagers have appropriated common property
resources for their personal benefit, leading to general distrust in the management
of CPRs and consequent attempts at encroachment by low-caste people (Agarwal,
1994). Similarly, Ribot (1995) for Senegal and Andersen (1995) for India report
how wealthy and influential villagers in control of supposedly democratic forest
councils are able to use state resource laws to their personal benefit and to the
detriment of the poorer and powerless resource users, often the women. Nugent
(1993) notes that local organizations and institutions can suffer from the same
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problems of rent seeking and ensuing inefficiency that sometimes plague politics
at the national level.
These examples show that economic and political inequality and rent seeking
sometimes undermine the effectiveness and efficiency of local institutions, which
do not always secure equitable and fair outcomes. On the other hand, inequality
can sometimes increase the likelihood of collective action. A single `large' resource
user may find it profitable to provide the public good privately, whether it is
resource management or physical investment. This is the case when the large user
can appropriate a sufficiently large share of the benefits from the public good to
cover the costs of provision (Baland and Platteau, 1997).
Although local CPR management is no panacea for achieving equity and
sustainability, common property resources often appear to be shared in an
equitable manner. Jodha (1992) presents data for India indicating that the poor
rely on common property resources for a larger share of their income than the
wealthy, making such income inequality-decreasing. The reason for this is that the
poor have a lower opportunity cost of time and therefore readily work in lowproductive common property resources. In rural parts of Sub-Saharan Africa,
common property farm land, pastures and other resources often provide social
security and substitute for missing insurance markets.
It needs to be acknowledged that resources under common property can serve
vital economic functions that individual property can not. Not only may common
property display lower transaction costs compared to private property under
certain circumstances. CPRs role as an insurance substitute often depends on
secure and easy access to geographically dispersed resources. This is the case for
management of resources where yields fluctuate widely across time and space.
Herders in the arid and semi-arid tropics thus rely on common property to a very
large extent because of the large spatial variability in rainfall, water and pasture,
which makes it crucial to have access to very large areas Nugent and Sanchez
(1993, 1999). The argument extends beyond herding. McCloskey (1975) argued
that plot scattering of peasants in medieval England provided an insurance
substitute against rainfall risk, something that would not be achieved with
consolidated land holdings. Blarel et al. (1992) have made the same point with
respect to present-day farming in tropical areas, where scattering plots across
microclimates (for example at different altitudes) hedges against rainfall risk. A
similar argument could be made for fisheries and hunting. Individual property
rights are not only cumbersome and hard to enforce in many cases, but would also
ignore the need for fishermen and hunters to move spatially in search for movable
stocks of fish or animals. In fact, Nugent and Sanchez (1993) argue that tribal
institutions and chiefs play a larger role in herding as compared to agricultural
societies because they fulfil crucial CPR management functions in herding
communities requiring a large degree of flexibility for risk management.
The conclusion is that common property systems deserve respect for their
management, equity and insurance functions. Policymakers should refrain from
undermining common property systems, and should consider providing them with
legal recognition and other forms of support. A major outstanding issue is
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whether common property institutions can be purposively created or induced by
policymakers and donors to undertake resource conservation in circumstances
where sustainable management techniques have failed to emerge spontaneously.
5. The evolution of land rights
Property rights to land are a crucial factor in shaping productivity, efficiency and
distribution in agrarian societies. Rights to land, and their enforcement, shape the
security of tenure and hence the incentives to undertake investments in land. The
purpose of this section is to survey how, in the absence of interventions, property
rights to land tend to evolve as societies develop, i.e. the tendency to spontaneous
privatisation is investigated. In Section 6 below, the pros and cons of state
intervention to promote individualisation and titling of land is discussed.
When analysing the long-run evolution of property rights in land, it needs to
emphasised that property rights, like other institutions, evolve endogenously in
response to various factors. Different authors emphasise different sets of factors
as the main conditioning variables for the evolution of land right systems. As will
be discussed in the following, the major determinants proposed in the literature on
the evolution of land rights are (i) population density, population growth and
migration, (ii) relative factor prices, (iii) the cost of providing and enforcing
private titles, (iv) agricultural commercialization and trade and (v) available
technology. We start, however, by discussing why land rights are so important.
5.1. Why are land rights important?
The importance of natural resources is best illustrated in the case of farm land. A
substantial variation in property rights to land is found across time, communities
and individuals. In Africa, for example, access to land is often (de jure or de facto)
governed by traditional common property systems. In this system, land is
controlled by the village or the clan, which allocates usufruct rights to individual
parcels to its members (Barrows and Roth, 1990). Often, all members are entitled
to land, and land sales are outlawed or restricted. In South Asia, farm land is
mostly privately owned, while forests, pastures and wastelands are common or
state property (Jodha, 1991). Land rights are a major determinant of productivity,
income, investment and efficiency in agriculture, and are a salient feature of the
political economy, distribution and welfare of rural populations. In many
societies, land also has a number of important cultural and religious connotations.
In land-scarce rural societies such as South Asia, land is a major asset and a
substantial proportion of household wealth is held in land. The distribution of
land is strongly correlated with income. In a study of Pakistan, Adams and
Alderman (1992) found that actual and imputed income from land accounted for
more than half of total income inequality. Hence, land income was the largest
source of inequality in their sample.
Land is an important asset because it is highly complementary to household
endowments of labour and human capital, is relatively secure, yields a positive
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expected return to its owner, and may be required as collateral in order to gain
access to credit (Binswanger and Rosenzweig, 1986). In land-scarce rural societies,
controversies regarding access to land often lie at the cornerstone of tensions,
conflicts and wars, as de Janvry and Sadoulet (1989) have shown for Latin
America and Andre and Platteau (1997) for Rwanda. In land-abundant societies,
including parts of semi-arid Africa, land has little commercial value and
consequently does not form an important component of household wealth. In
land-abundant areas, livestock is a major asset which performs many of the same
functions as land does in the land-scarce communities, although livestock is less
important as a source of collateral (Binswanger, McIntire and Udry, 1989).
Property rights are claims over future income from assets. Property rights can
be conceptualized as a multidimensional variable. Thus, property rights to land
are a `bundle' of different claims, comprising use rights (the rights to grow crops,
perennials, and to modify the land) and transfer rights (the rights to sell, rent, gift,
mortgage, pledge or bequeath the field). For example, traditional usufruct land
tenure in Sub-Saharan Africa often comprises the right to cultivate the plot, to
keep the full crop output, to bequeath the plot and sometimes to sell it within the
community. However, sales to outsiders may be forbidden or subject to approval
by village authorities. Land may have seasonal variations in ownership status. In
some parts of Africa, land is farmed individually, while after harvest all land
becomes part of the village common property pasture. This arrangement, which
may facilitate herder-farmer interaction, can limit the scope for certain private
investments, such as planting perennials and fencing, that would inhibit grazing.
The type of land right has important consequences also for the possibility of
using land as collateral for credit, especially credit from the formal sector. Lack of
legal title, seasonal variations in ownership status, restrictions on sales to
outsiders and thin or non-existing land markets imply communal lands have little
value to the lender in the event of foreclosure. Therefore, communal lands cannot
be used as collateral by lending institutions (Binswanger and Rosenzweig, 1986).
Despite these limitations, communal land rights may nevertheless be secure in the
sense that the likelihood is small that somebody would claim, encroach upon or
expropriate usufruct land. Communal systems tend to be more secure where
communal farming has existed for some time, and where official land codes give
legal recognition to the communal system, or at least do not undermine it.
Conversely, communal systems appear to be less secure in newly settled regions
and where laws rule out indigenous systems, for example by undermining the
authority of the traditional chiefs to allocate lands, or, as colonial law in Africa,
by expropriating native lands for the benefit of expatriates (Okoth-Ogendo, 1993).
5.2. Boserup and the importance of population pressure
Boserup's (1965) seminal study describes how private property rights evolve over
the long run in response to population growth. Facing increasing population
densities, the response of rural communities all over the world has been to adopt
more intense farming systems. Intensity of farming, as defined by Boserup, refers
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to the frequency with which a given plot of land is farmed, i.e. the inverse of the
fallow period. The intensity of farming is closely connected to the evolution of
property rights. Thus, already before reaching the agricultural stage, open access
land disappears as tribes of hunter-gatherers consider that they have exclusive
rights to collect food and to hunt in a particular area (Boserup, 1965: p. 79). As
population increases, hunting and gathering is replaced by long-fallow cultivation,
where forest or bush is cleared, cultivated for a year or two, and subsequently left
fallow for a period of 6 ± 25 years, while the soil regains its fertility. With
expanding populations, this system eventually becomes unable to support
everybody, and the length of the fallow period has to be reduced. Under shortfallow and annual cropping systems, marginal lands are brought into cultivation,
ploughing and animal traction are introduced, and cultivation is intensified by
using more inputs and capital and by investing in soil and land improvements.
The intense farming systems, which are able to support much larger populations,
imply more labour input per hectare than long-fallow cultivation. Boserup shows
that, historically, agricultural intensification has been accompanied by institutional changes, so that the rights cultivators hold over land gradually become
more individual, secure, long-term and transferable. This is necessary to induce
farmers to undertake investment in land improvements such as clearing of roots
and de-stumping for short fallow cultivation, planting of trees etc.
Boserup's contention that institutions, in many cases, adapt to and
accommodate growing populations is strongly anti-Malthusian. In fact, Boserup
argues that the development of large parts of Africa is constrained by its small and
scattered populations. Low population densities make the construction of basic
transportation and social infrastructure uneconomical, as the per capita costs of
roads, railways, schools and health facilities become prohibitive. Thus, areas of
low population density are often associated with lack of market access and high
degrees of self-sufficiency. Migration has much the same effects as population
growth, that is, migration into a given area can be expected to increase the
demand for individual title, while migration out of an area will mitigate the effects
of population growth.
5.3. The property rights school
The property rights school may be viewed as an extension of Boserup's theory,
sharing the view that the unit value of a resource is the main determinant of its
privatization, but emphasising agricultural commercialization (due to changes in
technology, transaction costs, prices etc), in addition to population growth, as
important for rising resource values and hence demand for individualized rights.
They also stress that the benefits of individual rights have to be weighted against
the costs of supplying those rights. Demsetz (1967), a major proponent of the
property rights school, argues that `a primary function of property rights is that of
guiding incentives to achieve a greater internalization of externalities'. With
regard to land rights, this principle implies the prediction that individual property
rights will evolve when the gains from individual title exceed the costs of land
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titling and enforcement. For example, at low levels of the labour-land ratio, access
to labour, rather than to land, is the main challenge facing cultivators. As a
consequence, property rights in labour (slavery, feudal systems, bonded labour)
tend to be more firmly established than rights to land at low land-labour ratios
(North and Thomas, 1973; Feeny, 1989).
Population pressure is not the only factor that affects relative factor prices. New
profitable technologies, investments, movements in terms of trade or new trading
opportunities would be expected to bring about agricultural commercialization
and increase the value. Just as in the case of population growth, these other
factors in agricultural commercialization have the effect of increasing the relative
value of land, thereby providing incentives for customary users to invest in
individualized and more secure rights.
Relative factor scarcities, as driven by demographic developments and other
factors, also play a key role in Ruttan and Hayami's (1984) Induced Innovation
theory of technological change. Ruttan and Hayami (1995) argue that the
direction of technical change is shaped by relative factor and output scarcities,
as mediated through factor and output prices. For example, Japanese fertilizerintensive, land-saving rice varieties. Thus, technical change in Japanese
agriculture has been land-saving, whereas technical change in American
farming has been labour-saving, reflecting the difference in relative factor
scarcities and prices in the two countries. Later, the framework was expanded
to include innovations in institutions and property rights. In this formulation,
institutions evolve to promote efficiency in an interrelationship with society's
endowments of technology, resources and culture. Relative factor scarcities,
technical change and growth in product demand are also here the most
important determinants of the direction of institutional change. Property rights
and contractual arrangements are the institutions which are most likely to
respond to changes in factor scarcities, thereby improving the efficiency of
market allocations.
In conclusion, Boserup, Induced Innovation theory and the property rights
school share related views on the evolution of property rights, envisioning an
optimal response to resource costs in the form of gradually more individualized
rights. A few empirical studies have confirmed the optimistic Boserup sequence of
population-induced intensification, but many others have not. One of the best
known cases is Kenya's Machakos Highlands, where a five-fold increase in
population since the 1930s has been accompanied by tree planting and increasing
agricultural yields (Tiffen and Mortimore, 1994). Yet Machakos is a special case
in that customary land rights resembled transferable private property as long ago
as the 1930s (Lopez, 1997).
5.4. Critique of the property rights school
The assertion of Boserup and of the property rights school Ð that rights,
institutions and maybe even technologies adapt in some optimal manner to
population pressure and relative factor prices Ð cannot be universally correct,
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because if it were, there would not be so much rural poverty, resource degradation
and violent resource conflicts in the developing countries. Lopez (1997)
emphasises how unstable environments and fragile soils in many parts of the
tropics seriously constrain Boserup's intensification scenario. Others stress the
crucial role played by technology, rather than by population growth, for
agricultural intensification and the evolution of land rights. They argue that
agricultural intensification is not taking place in Africa, even in areas with high
population densities, due to the lack of a suitable technological package. For
example, intensification has occurred in parts of Nigeria suited for maize (for
which improved varieties are available), while other areas with similar population
densities, but unsuited for maize, have not intensified (Hayami and Platteau,
1996). Many of the tensions erupting in Rwanda's 1994 genocide were caused by
extreme population pressure on the land, aggravated by static technology and
severe shortage of off-farm income opportunities. There was an increasing
number of conflicts over access to land. Thus, the Boserupian accommodating
mechanisms do not appear to have been at work in Rwanda. In fact, the ensuing
bloodshed has been conceptualized as a Malthusian reaction to overpopulation
(Andre and Platteau, 1997). Thus, high rates of population growth, lack of
economic growth, static technology and a fragile resource base appear to be some
of the more important factors constraining agricultural intensification in the
tropics.
Furthermore, it is clear that changes are needed when growing resource scarcity
are making open access and unregulated common property resources unsustainable. However, those changes need not always be in the direction of privatization,
as assumed by Boserup and the property rights school. One could also envision a
move toward better regulation of the commons, for example in the form of
effective management of use rights or yield-enhancing investments. The choice
between individual rights and regulated common property would probably
depend on factors such as transaction and enforcement costs, environmental and
technological factors and distributional considerations. Thus, the costs of
delineating farm land are relatively small compared to for example fisheries and
hunting. Also, land improving investments play an important role for the
development of agriculture. Animal herding and other resource systems with high
temporal and spatial variability call for users to be able to disperse their extraction
over large areas, best achieved under common property, as discussed in Section 4
above. And it may be impossible to arrive at a fair and generally acceptable
sharing of the commons: equal sharing may be unfair to the poor if they rely more
on the commons than the non-poor, while sharing proportional to prior use may
be unacceptable to elites if resource use rights are a defining characteristic of
community membership (Baland and Platteau, 1998). The conclusion is that the
implicit assumption, often encountered, that individual and transferable property
rights are the end goal and result of development may not be warranted. And that
institutions, including property rights, can be stuck in sub-optimal equilibria. The
next section reviews evidence on the effectiveness of land titling programmes in
improving matters.
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6. Land titling
There is a widespread belief that individual, secure and transferable property
rights to land promote investment, resource conservation and efficiency.
Therefore, governments and donors have sought to find ways of granting
individual title to peasants. Results appear to be mixed, and a debate has arisen
concerning the effect of titling. This debate concerns the merits of granting legal
title to individually cultivated lands; there is little controversy about the need for
tenure security and protecting peasants' land rights, for example when under
threat from commercial interests. Thus, the issue to resolve concerns the effects of
titling programmes on tenure security, investment, resource conservation and
productivity. This discussion is relevant only for land areas presently cultivated or
inhabited without formal title Ð largely to be found in traditional farming and
herding in Sub-Saharan Africa, in forests and marginal lands of Asia and Latin
America and in urban slums everywhere in the developing world.
Circumstances vary. In the case of traditional African farming, land claims
often exist, typically rooted in historic ethnic ties to the land. In the case of newly
settled areas, for example in previously sparsely inhabited forest margins, old
claims do not exist, and in fact settlers establish a claim through the act of settling.
In most parts of Sub-Saharan Africa access to land is governed by traditional
communal land rights, under which land is owned by the tribe, clan or village and
individual cultivators hold use rights which are subject to approval by traditional
village authorities. These use rights may or may not be transferable. The concern
over traditional land tenure in Africa needs to be understood in the light of the
disastrous agricultural performance of Africa over the last three decades, which
have witnessed a steady fall in per capita food production. This has generated
pressure to alter the systems of land tenure in Africa towards personalized, freely
transferable and formal rights. These are perceived to be more secure and hence
more likely to elicit the necessary increase in investment. Thus, a number of World
Bank-funded structural adjustment programs include components of land titling,
in which title deeds of individuals are formally recorded (Platteau, 1992). As the
titling process is relatively costly, and may have unintended consequences, it is
important to establish firm evidence for the benefits of titling. Such evidence, as
discussed in the following, appears to be lacking at the moment.
In areas at the forested margin, the interest in tenure security is more often due
to environmental concerns over dwindling forests. There are also worries in
situations where competing claims over land escalate into violence and armed
conflict, as well as about the effect of title on investment and productivity.
6.1. Expected effects of titling
The reasons for undertaking titling of land are the perceived efficiency and
productivity gains from individual, secure and transferable land, as well as tax
motives. Historically, the evolution of land tenure systems have often been shaped
by the need for government revenue generation as argued by Feeny (1988) for
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British India. There are three distinct channels through which private title may
positively influence investment incentives, productivity and efficiency (Feder and
Feeny, 1993; Feder, 1987; Barrows and Roth, 1990; Besley, 1995). These are (i)
enhanced security of tenure, (ii) the importance of titled land as collateral and (iii)
promotion of active land markets and efficiency gains from trade in land.
First, titling has been hypothesised to increase the security of tenure, that is, reduce
the holder's perceived risk of losing the land. Through enhanced tenure security,
investments that generate long-term benefits, such as fixed capital formation, land
improvements, tree planting and other natural resource management investment
will be more attractive to farmers. Second, private title is potentially important for
the development of formal credit markets, constrained by problems of missing
and asymmetric information. Giving loans against collateral is the preferred and
established manner in which formal credit institutions circumvent problems of moral
hazard, adverse selection and imperfect enforcement. Land is an asset with a number
of characteristics that make it well suited to use as collateral. Land cannot be stolen
or damaged while mortgaged, and consequently can remain in the possession of the
borrower, to whom it yields a positive expected return (Binswanger and Rosenzweig,
1986). However, for land to be a good collateral it is necessary that ownership is welldefined, that rights are transferable and that land markets exist, so that the lender
can recover the loan by selling mortgaged land in the event of loan default.
Third, private title would often facilitate development of active land markets.
Transactions in land will lead to gains from trade and specialisation if land is
transferred from less to more productive operators. This is because, in the absence
of credit constraints and extra-economic valuation factors, the more productive
farmers will have the highest valuation of the land, and hence will be able to
outbid less productive farmers on competitive land markets. In practice, land
markets may not always allocate land to the most efficient producers, as shown
for Pakistan by Heltberg (1998).
6.2. Empirical results for Africa
A number of empirical studies for Africa surveyed by Barrows and Roth (1990),
Atwood (1990) and Platteau (1992, 1996) do not lend support to the claim that
titling is associated with increased productivity, investment and trade in land. For
example, evidence from Kenya, where titling was initiated already in the 1950s,
shows that land which was titled nevertheless has remained under communal
tenure and titling appears not to have had much effect on land markets.
Furthermore, transactions of titled land have in many instances not been entered
in official land records, making such records more or less obsolete. Instead, land
transactions continue to be regulated by traditional village authorities, a fact
which has gained acceptance in state legislation.
There are three sets of reasons, discussed in the following, why titling
programmes in Africa do not seem to yield the expected benefits: (i) communal
ownership may give sufficient security of tenure, (ii) distortions in the
implementation process of land titling and (iii) African agriculture is facing
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other, more urgent, constraints than land rights. Hence, demand for title may be
small (especially given the costs, which are substantial for peasant farmers).
First, even if communal rights do not enjoy formal legal sanction they may
provide substantial security of tenure, as they are backed and enforced by
traditional local authorities and enjoy widespread acceptance. Although there are
large variations in communal management systems between different African
societies, it is often the case that (male) members of the community have a right to
land. Cultivation rights are often heritable. The right to land and the inability to
permanently part with land serve as an insurance substitute and protection against
landlessness. The importance of secure access to land as an insurance substitute in
risky, economically stagnant societies should not be understated Ð relying on the
ancestral land for farming, herding, collection, hunting or fishing is sometimes the
only fallback option available.
Communal land rights are often rather secure in the sense that the likelihood is
small that usufruct rights are claimed, encroached upon or expropriated.
Traditional rights tend to be more secure where communal farming has existed
for some time, and where official land codes give legal recognition to the
communal system or at least do not undermine it. Conversely, communal systems
are less secure in newly settled regions and where laws rule out indigenous
systems, for example by undermining the authority of the traditional chiefs to
allocate lands, or, as colonial law in Africa, by expropriating native lands for the
benefit of expatriates (Okoth-Ogendo, 1993).
Second, the costs, difficulties and distortions associated with the titling process
itself should not be overlooked. Thus, during the titling process, the more wealthy,
influential and better educated often grab land for themselves at the expense of
disadvantaged groups. People risk losing land they have long been farming. Land
grabbing leads to unfair outcomes, conflicts and inefficiencies, and risks
supplanting a stable, recognised traditional system with an unstable, unequal and
illegitimate system. The result may well be increased litigation expenses and tenure
insecurity (Atwood, 1990). To the extent land titling increases the insecurity of
tenure, it will worsen the incentives for agricultural production and investment.
Third, African agriculture is facing other, arguably more binding, constraints to
productivity growth, investment and credit expansion than systems of property
rights. These constraints include the lack of improved crops and other modern
technologies, poor infrastructure, distorted prices and missing markets for inputs
and outputs (Place and Hazell, 1993; Hayami and Platteau, 1996). Shiferaw and
Holden (1998) investigated why Ethiopian peasants remove conservation
structures on sloping land. Several factors turn out to be at work Ð for example
the lack of recognition of soil erosion as a problem and scarcity of land (since
conservation occupies scarce land) Ð while perceived land security was not. A
large part of the apparent benefits of titling in other parts of the world stem from
gaining access to credit. Even with title, it is doubtful that African peasants would
be able to access credit.
Summing up, titling should be carried out selectively after careful analysis of the
demand for such institutional change. In addition, ways of improving the mutual
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compatibility of modern law and traditional systems might be developed, for
example through official recognition of communal tenure.
6.3. Empirical findings from elsewhere
Feder et al. (1988) analyse tenure security and collateral empirically, using a sample
of Thai farmers. One part of the sample were squatting inside a forest reserve, and
hence were unable to obtain legal title to their land, even if squatters rarely are
evicted in Thailand. The other part of the sample were farming under very similar
conditions, except that they were settled outside of forest reserves, and therefore held
title. Results show that in two out of three districts, titled farmers used more variable
inputs, and had higher yields, relative to untitled farmers. Titled farmers also tended
to invest more in capital equipment and in land improvements such as bunding and
de-stumping (Feder, 1993). The district where titling did not appear significant was
characterized by cash cropping and active informal credit markets, which do not
depend on collateral to extend loans. Thus, legal recognition of land rights can be
instrumental in improving tenure security and expansion of institutional credit.
However, the data used for Feder's studies comprise relatively newly settled forest
areas. Land relations among squatters in `frontier' areas are likely to be more
uncertain and disputed than in areas with relatively longer sedentary settlement
where boundaries are known and accepted (even if de jure documents are lacking)
and dispute settlement mechanism exist. Newly settled areas may not have developed
local institutions and authorities for land regulation and dispute settlement. Hence,
extrapolation of the results of Feder et al. from Thailand to already cultivated areas
Ð as some people appear to have done Ð may not be valid.
In fact, the conclusion of Feeny (1988), in his comparison of the historical
evolution of tenure systems in South and South-East Asia, is that there is more
need for titling and government intervention in areas not previously under
cultivation. Legal title and government institutions are needed to serve as
substitutes for traditional institutions and dispute settlement mechanisms that
would often exist in areas already under cultivation. Land disputes are more
common on the frontier and create demand for titling. However, Feeny also finds
from his historical sample that unequal land ownership emerges from land titling
or that existing inequities are exacerbated. This corresponds to present-day
findings of elite manipulation with the titling process noted above.
Titling schemes on disputed lands, at the forest frontier or elsewhere, can have
unintended consequences. They may exacerbate existing land conflicts, can lead to
escalating violence or increase deforestation. In Brazil, for example, landless
peasants use a strategy of squatting on private or state land in the hope of
benefitting from land reform legislation, under which such squatters sometimes
are provided title. Engaging in violence becomes a strategic decision by squatters
and large landowners in order to affect the titling procedure (Alston, Libecap and
Mueller, 1999, 2000). The underlying problem is that in countries with `unused'
land, often in forests, legislation in many cases opens up for people to claim
`unused' land. The act of squatting and clearing forest is the means through which
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farmers, rich or poor, can legally make land claims. Paradoxically, legislation
therefore provides incentives for strategic clearing of forest by prospective title
holders. Laws furthermore lead to excessive clearing (beyond the economically
justified) because the eventual title area is proportional to the area cleared, while
the risk of not achieving title is positively related to the amount of forest
remaining on the claimed land. In the words of Angelsen (1999), `Deforestation
becomes an investment to the farmer and a title establishment strategy. Land
titling and credit programmes [in the forest frontier context] may therefore
increase deforestation'. This has apparently also been the case in Central America
and in some Asian and African countries.
In conclusion, the benefits of secure title is not at doubt. Titling and land
reform programmes, paradoxically, may create uncertainty and incentives for
violence and deforestation whenever titling is not merely a careful registration of
existing and previous claims. The opposite phenomenon is sometimes observed in
Africa, where planting trees can be a way to gain more secure rights in some
traditional land tenure systems.
7. Poverty, population growth and rights to natural resources
Whereever the Boserup mechanism does not work, poverty, high fertility and
resource degradation are closely connected and form a vicious circle (Cleaver and
Schreiber, 1994). Poverty may force parents to have many children, first because
they seek to secure their old age, and second because they lack the funds and
opportunities for educating those children, opting for a strategy of many rather
than few and well-educated children. Poverty and population growth degrade
natural resources. Poverty has the effect of increasing the household specific
discount rate by which future income streams from the resource are compared to
current streams. That is, the necessity of survival make poor resource users shortsighted, even though their failure to undertake conservation measures may
undermine their future livelihood (Reardon and Vosti, 1995). Also, if conservation investments require cash rather than merely household labour, the poor may
not be able to finance such investments (even if it has a high private benefit-cost
ratio) to the extent they are credit constrained.
There are several mechanisms through which population growth puts pressure on
natural resources and on resource management systems. First, expanding rural
populations imply increased harvest and offtake when more people use and harvest
open access and common property resources. Second, population growth often has
a `Ricardian' effect of pushing people to adopt farming on less productive lands, i.e.
expansion into marginal farming areas, leading to reduced fallow periods, soil
erosion, diminishing soil fertility and deforestation (Pinstrup-Andersen and
Pandya-Lorch, 1994). This kind of agricultural `extensification' is done by
necessity, rather than desire, as the marginal lands (forests, hill sides, dry areas)
tend to have low productivity, seldom are well-suited for agriculture and often lack
basic infrastructure. Third, increasing populations may cause traditional common
property resource management systems to collapse if rules regulating resource
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access and offtake fail to respond in time (Jodha, 1985). Whether this will happen
depends on the intensity of prior interaction among users, their knowledge,
technology, outside options and on the rate of population growth. In a
comprehensive survey of population growth and institutional adaptation, Dasgupta
(1995) concludes that given the rapid population expansions of modern times, it
seems unlikely that institutional adaptations will take place with sufficient speed to
save many natural resources from severe degradation.
On the other hand, closing the circle, degraded resources reinforce and
exacerbate rural poverty, because rural populations in a number of ways are
depending on nature for their livelihood. Resource degradation affects the poorest
section of the rural populace disproportionately, because the poorest (e.g.
landless, women, minorities and migrants) often derive a greater share of their
income from common property resources than the non-poor as already noted. The
same can be said about the insurance substitution role of access to common
property resources. Furthermore, poor farmers do not face the same opportunities
as developed country farmers for substituting man-made capital (including
fertilizers, pesticides, irrigation and machinery) for natural resources, leading to a
high degree of exposure to the vagaries of ecological systems.
However, neither poverty nor population growth is to blame for all resource
degradation. There are a number of instances in which wealth, rather than poverty,
causes environmental destruction. For example, in many parts of semi-arid Africa,
livestock is a preferred store of savings and a major capital asset with the relatively
more wealthy pastoralists prime culprits of overgrazing and degradation of
common property grazing (Reardon and Vosti, 1995). Heltberg (2000, 2001), using
data from villages in Rajasthan, describes how the poor rely disproportionately on
common forest resources for fuelwood collection, while the larger farmers, who
own more livestock, cause more grazing pressure on the forests. Thus, a vicious
circle between poverty, population growth and resource degradation may sometimes arise, but environmental problems can also be caused by many other factors.
Templeton and Scherr (1999) review over 70 empirical studies in poor hill areas, and
find that the effects of population growth on the quality of land and forest are
indeterminate. As the land-labour cost rises, people often (but not always) invest to
increase the productivity of key resources and change management methods.
Crucial factors behind farmer adaptation appear to be (i) awareness of mounting
resource constraints, (ii) economic viability of new, resource conserving methods
and (iii) the effectiveness of local institutions. Scherr (2000), in a survey of this
literature, concludes that policies for achieving sustainable agricultural intensification and poverty alleviation ought to (i) improve access of the poor to resources
important for their livelihood, (ii) seek to increase the productivity of those
resources and (iii) promote local management institutions.
8. Conclusions and suggestions for future research
Institutions exert a major influence on market and non-market behaviour.
Institutions evolve endogenously in response to economic and other factors, in
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ways which are highly complex. Population growth, market forces, environmental
endowments and technological factors appear to be some of the most important
determinants of institutional patterns. This survey has striven to provide a policyrelevant overview of literature on natural resources in developing countries,
focussing on property regimes, CPR management, the long run evolution of land
rights, the effectiveness of government interventions to provide land title and
some of the links between poverty and resource degradation, often mediated
through population pressure and institutions. It was concluded that common
property systems deserve respect for their management, equity and insurance
functions. Policymakers should refrain from undermining common property
systems, instead seeking to support them. Few general conclusions regarding the
effectiveness of local institutions Ð be it CPR management, land rights or others
Ð in responding to environmental pressure can be safely made.
Future research is likely to strive to gain a better understanding of the evolution
of resource management and other rural institutions, and the ways in which policy
can affect outcomes. Continued dialogue between, on the one side, anthropologists and field workers, who possess detailed knowledge about the array of
existing institutions, and, on the other side, economists, who may help achieve
insight into the functioning and efficiency of such institutions, would be fruitful.
Research in the institutions of developing countries is not merely of theoretical
interest, but can in important ways help improve policy analysis and advice,
especially when rooted in solid empirical work. As a matter of fact, considerable
scope exists for improving upon and developing empirical institutional analysis,
including measurement of concepts such as transaction costs, institutional change
and social capital (Paldam, 2000). Data needs, survey design and analytical
methods for institutional analysis often differ from analysis of household
behaviour. For example, analysis of local common property resource management institutions necessitate data at the village level, rather than the usual
household surveys. A large number of village studies have in fact been carried out,
but often suffer from problems of sample size and selectivity. For example, in
studies of individual villages and their CPR management institutions, it is
sometimes unclear whether this particular village was selected randomly, or
whether it was chosen purposively by the researcher with a view to represent a
specific case, e.g. of successful institutional adaptation (Heltberg, 2001). Moreover, an important challenge to research in this field is the need to geographically
map data on institutions and socio-economic outcomes to environmental data
(often obtained from satellites or aerial photos), preferably using both crosssection and time-series data (Scherr, 2000).
Finally, various researchers have argued that social systems are highly path
dependent such that institutions and social capital created centuries ago exert a
strong influence even today.2 More research on this hypothesis is needed, but
as argued by Eggertsson (1997) to the extent this hypothesis is true it would
certainly affect the way we think about development policy advice not least
with regard to the prospects for successful manipulation of institutional
dynamics.
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211
Acknowledgements
Comments from Alan Matthews and from two anonymous referees of this journal are
gratefully acknowledged, but all errors and omissions are entirely my own fault.
Notes
1. Other researchers work with the related area of social capital, variably defined to be
trust, cooperation or networks, recently surveyed by Paldam (2000).
2. Many historians take the contrary approach of attributing existing institutions entirely
to their history, falsely presuming that inertia by itself constitutes an explanation.
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