Economic Issues in Land Administration

Land is of such fundamental importance that the land administration function has tended to be taken for granted. Increasingly, however, there is a debate as to how much money should be allocated to this area and with what priority. A host of concerns have been raised with respect to: 1. documenting the benefits and costs of titling and registration projects; 2. financing the construction and ongoing management of land administration infrastructure; 3. developing appropriate pricing strategies and policies for land administration services and products; and 4. examining the economic issues associated with determining the most effective roles for government and the private sector in the land administration field. Where more fundamental assessment of the role of real property has taken place, two schools of thought have emerged that are not mutually exclusive. The first has been based on traditional arguments for detailed a priori benefit/cost assessments (factoring in both quantifiable and non-quantifiable variables); the second and more recent has argued for minimal initial investment in the infrastructure, leaving it to market forces to dictate subsequent developments. The classic work of Gershon Feder and his World Bank colleagues on assessing the benefits of titling and registration has recently been reported in Feder and Nishio (1998). Feder developed a conceptual framework for the economics of land registration, initially in the context of a study on rural Thailand (Feder et al 1988). Two links between titles and economic performance were highlighted: the enhancement of tenure security and the role of titles in collateral arrangements that would facilitate access to institutional credit. Feder’s conceptual framework for evaluating landownership security and farm productivity is illustrated in Figure 11.1. Using empirical evidence from rural Thailand, Feder and his team compared the economic performance of two groups of farmers: one group was without legal titles and operated in forest reserves while the another group had legal titles and operated outside the forest reserve boundaries. Study sites were selected from four provinces, with the comparative groups operating in geographical proximity and within a similar agrarian and climatic environment.

Managing the Land Administration Process

Technology rarely poses the major concerns in any effort to build and sustain an effective land administration infrastructure. Rather, the core challenges tend to be related to management issues, as will be discussed in this chapter. Management was described in our earlier book as the art and science of making decisions in support of certain perceived objectives. Like politics, it is the art of achieving the possible, the ability to get things done. Management skills are needed in order to implement policy decisions and to meet the objectives set for any organization. Good management seeks to do this in an optimum fashion—perfect solutions never arise. Management entails extrapolating trends from a limited range of facts—sufficient information is never available for decisions to be made with certainty as to their outcome. Better information will however bring about a better understanding of any system and hence create the possibility for its better operation. Information is needed to: 1. monitor what is going on so that areas where decisions need to be made can be identified; 2. help evaluate alternative strategies for dealing with the problems or opportunities that have been identified; 3. assist in selecting the right course of action; and 4. facilitate the implementation of whatever has been decided. Management operates at all levels from the personal to the institutional; for instance all individuals need to practise self-management in order to achieve their optimum personal goals. More particularly, management within an organization operates at three key levels—strategic planning, management control, and operational control. Strategic planning is the process whereby decisions are made on an organization’s objectives, including where the organization should position itself to cope with future trends and markets. Operational control involves the day-to-day processes of ensuring that routine tasks are carried out efficiently and effectively. Management control is the interface between these two, ensuring that adequate resources are secured, either in terms of people, money, or equipment, to achieve the organization’s mission and objectives.

Land Values and the Fiscal Cadastre

Classic economic theory holds that there are three vehicles for generating wealth in an economy—capital, labour, and land. Land is fundamental, for labour cannot live without space and capital cannot be managed without offices and the infrastructure that is built upon the land. The management of land has social, political, and economic dimensions. While the post-war land reforms were driven largely by political agendas, current reforms are primarily concerned with the development of land markets. In their study of urban land markets, the Organization for Economic Cooperation and Development (OECD) pointed out that: . . . Land plays an important role as a financial asset. It is an important element in the portfolios of central and local government, nationalized industries, private companies and financial institutions. Financial markets and property markets are intimately connected. Land, especially seen from an historical perspective, is often considered from an investor’s point of view as a superior asset to the financial assets available on capital markets, mainly because of the potential of land to maintain its value over time and because of favourable tax treatment. The more capital and land markets are developed, the higher is the degree of possible substitution between land and other assets. Land and building values together can account for a substantial share of the market capitalization or many businesses and are often a prime consideration of corporate strategy. Stock market growth can be fuelled by rising prices in real estate markets when land is used as collateral for loans. Should land and prices fall in a volatile market place, a high level of dependency on land and property-based assets may carry the risk of serious financial disruptions. . . . The report went on to state that: Land policy cannot be effectively designed and pursued if governments do not understand how their land markets operate (OECD 1992). Land and property are important components in any market driven economy—their value is a measure of the wealth of any society and probably accounts for more than 20 per cent of GDP (UNECE 1996). In most countries, the biggest landowner is the state.

Land Registration

Land registration systems provide the means for recognizing formalized property rights, and for regulating the character and transfer of these rights. Registries document certain interests in the land, including information about the nature and spatial extent of these interests and the names of the individuals to whom these interests relate. They also normally record charges and liens, that is rights to retain property against debts as in the case of mortgages, although in some systems these are held in separate registries. In addition, land registries provide documentary evidence that is necessary for resolving property disputes as well as information for a wide variety of public functions (such as land valuation). There are at least three basic types of land registration system: (i) private conveyancing; (ii) registration of deeds; and (iii) registration of title. Under a private conveyancing system, land transactions are handled by private arrangement. Interests in land are transferred by the signing, sealing, and delivery of documents between private individuals with no direct public notice, record, or supervision. The pertinent documents are held either by the individuals to a transaction or by an intermediary such as a notary. In such a system, the state has little control over the registration process (save for regulating the intermediaries) and there is little if any security for errors or fraud. Also, private conveyancing systems are invariably slow and expensive. Despite these serious limitations, notarial versions of private conveyancing are still found in many parts of Latin America. Under a system of registration of deeds, a public repository is provided for registering documents associated with property transactions (deeds, mortgages, plans of survey, etc.). There are three basic elements in deeds registration: the logging of the time of entry of a property document; the indexing of the instrument; and the archiving of the document or a copy thereof. While there are many types of deed registration system, they are all based on three core principles (Nichols 1993): 1. Security-registration of a document in a public office provides some measure of security against loss, destruction, or fraud.

Policy Issues in Land Administration

Land administration strategies and processes need to be structured within a broad policy framework, the shape of which will depend on the jurisdiction concerned. A common thread between systems will be the promotion of economic development, social justice and equity, political stability, and environmentally sustainable development. The processes of re-engineering, total quality management, and other management reforms discussed in Chapter 9 were originally designed for use in the private sector so that organizations could respond better to the demands of the market place. More recently, they have increasingly been adopted by public sector administrators who have been forced to respond to the market oriented approach and hence have been required to upgrade land administration systems. In the United States the processes of re-engineering have been packaged under such labels as ‘entrepreneurial government’ and ‘reinventing government’ and were addressed in the National Performance Review (known as the Gore Commission) which had a mandate to ‘re-invent and to reinvigorate the entire national government’. The ideas were picked up by many other governments—from Australia to the UK (Butler 1994), the Netherlands to New Zealand, and Singapore to Sweden-regardless of party or ideology. Although reinventing government means different things to different people, it has generally entailed: 1. restructuring the way government services are organized; 2. developing new strategies and processes for managing government services (for instance, simplifying administrative programmes); 3. empowering the recipients of public services. As with the private sector, a crucial component of reinventing government has been the effective use of information technology (IT). Governments in general have only recently begun to review their national information strategies and to develop new ways in which they deliver services to citizens and businesses. Over the past few years, IT has changed the way that many people live through the creation of new products and services. Examples include the use of credit and debit cards, the ability to withdraw cash from a ‘hole in the wall’ even in a foreign country, the mobile phone and fax machine, and access to information on the Internet. Information technology now makes it possible for citizens and businesses to deal directly with government agencies if they so wish (UK Government 1996).

Human Resources Management

Effective human resources management is a key ingredient in building and sustaining a country’s land administration infrastructure. Whether it is building new systems or reforming existing ones, the recruitment, training, provision of support for, and evaluation of employees will ultimately be far more important than matters pertaining to technology and process. Yet traditionally, human resources management has not been given much serious attention in the land administration field. Within the broader public administration arena, however, the human resources management function is increasingly being recognized as a central organizational concern and that ‘its performance and delivery are integrated into line management; the aims shift from merely securing compliance to the more ambitious one of winning commitment. The employee resource, therefore, becomes worth investing in, and training and development thus assume a higher profile’ (Storey 1991). What distinguishes modern human resources management from the more traditional personnel functions is its focus on utilizing human resources to strategic management objectives. Effective human resources management seeks to: 1. link human resources management issues to the overall strategy of an organization; 2. build strong organizational cultures aimed at uniting employees through a shared set of goals and values (‘quality’, ‘service’, ‘innovation’, etc.) and by promoting a commonality of interests amongst employees and management; 3. recognize employees as a resource, as social capital that can be developed and can contribute to competitive advantage; 4. replace traditional top-down communication, coupled with controlled information flow, to a sharing of information and knowledge; and 5. achieve flexibility and adaptability to manage change and innovation in response to rapid changing circumstances (Burt and Spector 1985). This section examines briefly some of the principal human resources management issues, particularly as they relate to developing countries. The focus will be on concerns within the public sector (where most of the core land administration activity occurs), the broader issues of developing local capacity in both the public and private sectors, and the requirements for developing professional associations. Significant emphasis has been given in recent years to the challenges of building and sustaining institutions for capable public sector administration in the developing world.

Surveying and Mapping

Recent major property formalization projects have had total estimated costs ranging from US$20 million to more than US$250 million with loans ranging from US$2 million (to support feasibility studies) up to approximately US$100 million. In general these costs have been required for: • institution strengthening: 10–15 per cent • mapping: 20–5 per cent • adjudication and surveying: 30–50 per cent • registration: 20–5 per cent. This chapter reviews aspects of the adjudication, surveying and mapping of property, processes that are used to identify and record the land to which ownership rights are attached. There are essentially four basic processes involved: • Adjudication and the definition of the boundaries of the parcel. • Legal delineation and monumentation of property boundaries. • Preparation of descriptions of the properties, usually in map form. These processes are essential components in the initial formalization of property and in the subsequent use and transfer of formal property rights. They provide much of the information necessary for the overall planning and coordination of land titling projects, for assessing evidence in support of the initial registration of title, for the actual delimitation and registration of boundaries. 'They also form the basis for the subsequent re-establishment of boundaries in the case of uncertainty, dispute, or subdivision. Cadastral surveying is the term generally used to describe the gathering and recording of data about land parcels, even where the records do not form part of an official cadastre. When properties are initially registered, government officials have traditionally undertaken the processes of cadastral surveying and land title adjudication. The costs are then paid for by the state or through aid programmes. More recently, private sector surveyors have carried out some of the work on contract in an attempt to reduce actual costs and to accelerate the pace of projects. The surveys of changes to the boundaries that take place after the initial survey (through consolidation, subdivision, amendment, etc.) may be undertaken by the public sector but are more often carried out by private licensed surveyors.

Introduction and Overview

1948 saw the Universal Declaration of Human Rights. All governments that signed the Declaration formally recognized that human beings have a right to adequate shelter as one component of their right to an adequate standard of living. In 1996, at the Habitat II Conference, many countries committed themselves to ‘Promoting optimal use of productive land in urban and rural areas and protecting fragile ecosystems and environmentally vulnerable areas from the negative impacts of human settlements, inter alia, through developing and supporting the implementation of improved land management practises’ (UNCHS 1996). Access to land and security for credit are vital components of sustainable development and good land management practice; every State needs to ensure that efficient and effective land administration mechanisms are in place. Land is a physical thing that encompasses the surface of the earth and all things attached to it both above and below. It is also an abstract thing that is manifest as a set of rights to its use with a value that can be traded even though the physical object cannot be moved. The term ‘land administration’ is used here to refer to those public sector activities required to support the alienation, development, use, valuation, and transfer of land. The relationship between human beings and the land is of fundamental importance in every society and is evident in the form of property rights. This relationship has evolved in many different ways, from full state control, through communal forms of tenure, to the individual property rights. In the land reform programmes of the 1960s, especially in Africa, new land tenure arrangements such as the granting of individual freehold rights were introduced, often contrary to traditional custom and practice. In the reforms of today, especially in east and central Europe, the land restitution programmes have reprivatized land previously owned by individuals. They have also granted first-time rights of private ownership to what was formerly state-owned land, on the basis of the traditions of the past, thus reinforcing old land tenure arrangements.

New Directions in Land Administration

The role of property in fostering good governance, robust economies, and strong civil societies has received fresh attention in the wake of the dramatic global changes that have occurred during the past decade. Innovative and cost effective ways to formalize property rights have emerged, linking these with new strategies and tools for building and maintaining the infrastructure necessary for sustaining a property regime. Land administration functions have been re-engineered and there have been legal reforms that have focused on modernizing, standardizing, and simplifying legislation relating to land and property. There have been new concepts of risk management, the introduction of new technologies, and a variety of organizational reforms. Many of these reforms have been the consequence of political changes, especially as a result of the collapse of communism, the adoption of a market driven approach to the economy and the impact of information technology. The processes of re-engineering have focused on a diverse package of measures dealing with land tenure security, land and property transactions, and access to credit. They have also been concerned with the provision of support for physical planning, the sustainable management and control of land use and of natural resources, and facilitating real property taxation. Internationally funded projects have also been concerned with the protection of the environment, the provision of land for all people whatever their gender but especially for the poor and ethnic minorities, and the prevention of land speculation and the avoidance of land disputes. As Burns et al. have reported: . . . The policy environment for land titling projects is becoming more complex, and a range of issues must now be addressed if a project is to pass through a Multilateral or Bilateral funding agency’s approval process. These include impact on gender, impact on the environment, resettlement requirements and impact on indigenous groups (Burns et al 1996). . . . Gender issues, fix example, are becoming increasingly important with the international funding institutions demanding that gender equity be present both in law and in practice; this requires performance indicators to demonstrate compliance with the regulations.

Land Information Management

A key component of land administration is the management of land and property related data. Such data may be held in manual or digital form although, increasingly, all land related records are being computerized for ease of storage and retrieval. Data are raw collections of facts that, from a land administration perspective, may be gathered and written down as numbers and text, for instance in a surveyor’s field book, or collected and stored digitally through the use of ‘data loggers’ and computers. They may also be held graphically as on maps or aerial photographs. Data become information when processed into a form meaningful to a decision-maker. The usefulness of this information will depend upon the quality of the data and especially on the extent to which they are up to date, accurate, complete, comprehensive, understandable, and accessible. Even then, good data do not necessarily produce good management decisions since other factors may be involved, such as the qualities of the data user; the converse is however true, namely that poor quality data will almost certainly result in bad decision-making. Land and property related data are increasingly managed within formal land information systems (LIS). As with all information systems, LIS use a combination of human and technical resources, together with a set of organizing procedures, to produce information in support of management activities (Dale and McLaughlin 1988). Increasingly, the technologies that drive the data processing are components of geographic information systems (GIS). There has been much debate about the nature of GIS, some seeing them as sets of hardware, software, and data while others have seen them as all-embracing institutional arrangements of which the technology is only part. In the following discussion, GIS will be treated as the former and restricted to the acquisition and assembly of spatial data; their processing, storage, and maintenance; and their retrieval, analysis, and dissemination. By analogy with the motor car, GIS are the engines that power the car and data are the fuel; operating a transportation system is, however, a more complex process.