Formalization Without Certification? Experimental Evidence on Property Rights and Investment

    1. Study Information

       

      This section discusses the 2018 paper, “Formalization Without Certification? Experimental Evidence on Property Rights and Investment” by Markus Goldstein, Kenneth Houngbedji, Florence Kondylis, Michael O’Sullivan, and Harris Selod.1

      The Millennium Challenge Corporation (MCC) provided technical and financial support to the Government of Benin to develop Rural Land Use Plans (Plans Fonciers Ruraux, PFR), which were developed as part of large-scale land formalization. As part of the program, all PFR villages were selected through district-level lotteries that provided a public and transparent identification of program and comparison communities.

      This study uses administrative monitoring and evaluation data from the MCC and Millennium Challenge Account-Benin to document the village-level eligibility for the PFR, the outcome of the program assignment lottery, and the implementation schedule across treated villages. In addition, the study uses the 2006 national EMICoV survey data to establish pre-intervention balance between treatment and control communities. This survey was conducted by the National Institute of Statistics and Economic Analysis (INSAE), and its sample covers 3900 households in 160 villages (91 treated and 69 control) of the experimental sample. Third, the researchers conducted a rural household follow-up survey in March/April 2011. That sample covered the sub-sample of 2010 rural EMICoV villages: 160 villages from the original 2006 EMICoV sample were revisited, and an additional 129 villages were randomly selected to complement the 2006 sample. The 2011 survey sample covers 289 villages: 191 treated and 98 control. The selection of villages was done randomly and stratified at the level of the commune, with on average 7 villages surveyed per commune. Overall, 3507 households were interviewed (approximately 12 per village), with detailed information on 6572 parcels used by these households.

      Note: The authors of this study also wrote a 2016 World Bank Policy Brief on this research, “Securing Property Rights for Women and Men in Rural Benin.” 2

    2. Questions posed
      • What is the impact of land demarcation (prior to the issuance of land certificates) on parcel-level measures of tenure security, cultivation and investment decisions, and agricultural production? What are the differences between male-headed households and female-headed households?
    3. Description of intervention

      The PFR program focused on the formalization of existing customary rights of individual landholders. The program formalized customary rights of rural households through two main steps. First, the program demarcated all land parcels in a community and assigned property boundaries, and, second, the program issued land use certificates. The land use certificates were not issued at the time of the study.

    4. Context of findings

      Arable land is held communally and under customary tenure but farmed by households. Men have ownership-like rights under customary law. The default marital property regime is separate property.

      Female-headed households have weak customary property rights. Female-headed households’ landholdings are on average 1.56 ha smaller, and are more likely to have been obtained on the rental market than through bequests or land clearing, a more customary way of gaining rights to land. In the presence of weaker tenure security, investment in long-term crops such as perennials is lower among female-headed households.

    5. Key findings

      The presence of clear borders (demarcated by stones, for example) serves as a proxy for tenure security, because the landholder feels confident to identify a visible marker of security from encroachment and expropriation. Male-headed households were more likely to mark borders after the demarcation than female-headed households (difference significant at the 10% level). Although significant, this gender difference is attenuated by the higher propensity of female-headed households to have clear borders, regardless of program assignment, which aligns with the assumption that women have weaker initial tenure security and expend more effort to stake their claim to their land.

      In relation to gender differences in the impact of land demarcation on cultivation and investment decisions, the study estimates suggest that assignment to the PFR increases the likelihood of fallowing land exclusively among women-headed households. This finding suggests that PFR land demarcation activities disproportionately increased the probability of fallowing among those with weaker initial property rights—leading them to undertake an investment in soil fertility.

      Female-headed households were more responsive than males to an external change in their relative tenure security. The demarcation process lead female-headed households to shift their agricultural activities away from their relatively secure land (i.e., demarcated parcels within the village) and toward less secure land outside the village perimeter, allowing them to protect their claim to that land and reduce the risk of expropriation.

    6. Unanswered questions
      • What was the effect of demarcation on women within male headed households? Did their tenure security increase or decrease or neither?
      • Why does the study observe a widening of the gender yield gap on treated parcels for female headed households? The study detects a significant 26% decline in output and a 36% drop in yields on within-village parcels following demarcation activities. Though imprecise, the yields on parcels outside of treated villages, meanwhile, are more than twice the size of those within treated villages. In contrast, the study observes no significant differences in treatment impact by parcel location for male-headed households.
      • The study finds nearly two-thirds of a hectare drop on within-village parcel size for female-headed households. Why does this occur?
    NOTES
    1. Goldstein, M.; Houngbedji, K.; Kondylis, F.; O'Sullivan, M.; Selod, H. 2018. Formalization without certification? Experimental evidence on property rights and investment. Journal of Development Economics 132 (2018) 57–74.

    2. Goldstein, M.; Houngbedji, K.; Kondylis, F.; O'Sullivan, M.; Selod, H. 2016. Securing Property Rights for Women and Men in Rural Benin. Gender Innovation Lab Policy Brief; No. 14. World Bank, Washington, DC.