The Value of Land
Around the world, billions of people reside on land they do not own or have legal rights to occupy. In some cases, they may have permission of the state or landowner to use the land, but they do not have a long-term guarantee of the right to use the property. As a result, these residents have little incentive to invest in property improvements. In rural areas, a farmer who has no tenure or assurance of access to land is not likely to install irrigation or other systems to improve the agricultural productivity. In some developing countries’ urban areas, the absence of defined property rights is a common factor in slums and barrios, where residents invest little or nothing in land improvements.
In many of these situations, it is nearly impossible to gain secure title to land or real property. The reason for this lies in the lack of mechanisms that can reliably describe land and its ownership. For example, the boundary of a parcel may be poorly defined (if it is defined at all) and known only by general reference to natural features. Simple oral descriptions of land are not uncommon. Within families or clans, ownership of the land may be assigned and transferred with little documentation, and is often subject to dispute. In some areas, people may have so-called usufructuary rights to occupy real property owned by others. But frequently, these rights carry no secure or transferable financial benefits, and the rights often disappear once the grantee dies or moves away.
Clearly, if the risk of being pushed off the land is high, then there is no incentive to invest or improve.
In his book “The Mystery of Capital,” Hernando de Soto presented the theory that a unified legal system of property rights is the catalyst that releases the capital value of land. By comparing the experience of Western nations with that of developing countries in South America, de Soto demonstrates that secure title and valuation of land and property are fundamental drivers to economic stability and growth. The success of the West comes in part from centuries-old systems for gathering, managing and sharing information about real property, including its ownership, extents, value and usage.
There is strong empirical support for de Soto’s theory. In its International Property Rights Index 2009 Report, the Property Rights Alliance provides an analysis based on the quality of a country’s land definition and ownership systems, together with the system of legal protection that reinforces the ownership. The report’s lead author, Anne Chandima Dedigama, illustrates the positive relationship between land titling and a country’s economic strength or gross domestic production (GDP). The report reveals that even small countries that have strong land titling and information systems tend to have greater wealth than larger countries where the systems for land ownership are lacking.
Dedigama agrees: “When a property has value, it affords the owner an opportunity to participate in the economic process through successful entrepreneurial and/or agricultural activities. Property changes into an incentive for the owner to engage in work which enhances and contributes to the economy. With the recognition of property rights and due process which affords it marketability, an individual will become a participant in the production cycle which creates profit and/or loss, which in return contributes to the economic growth of a nation and finally raises the standard of living. This kind of economic empowerment spreads beyond a nation to link countries at a common ground, i.e. the international market.”
Releasing the value of property provides benefits to more than just the individual property owners. In sub-Saharan Africa, municipal and metropolitan authorities face debilitating challenges, often due to lack of money for local administration and development. The lax, or even nonexistent tax base can be attributed to the lack of functional cadastres. When the land is described and titled, its value is not just released to the owner; the land can also be assessed and taxed to provide funds for local growth and investment. Thus, the fundamental role of the cadastre in economic development is clear: The cadastre gathers, manages and shares information that defines and reinforces property rights. In turn, the property rights translate directly into economic development, social stability and physical well being.
A large percentage of land information is based on spatial data, with maps and diagrams playing the key role. Although some form of cadastre exists in many developing regions, the information has evolved and coalesced from multiple, often haphazard systems for land description. Paper records, often incomplete and poorly organized, make up a large percentage of the cadastral database in many regions. Information cannot be verified, shared or compared against other systems, and thus does not satisfy requirements of financial institutions to release the capital value of the land. Cadastres may be fragmented as well, with bits of related information held by different agencies in different locations. This introduces cost and complexity in gaining and using rights to property, which affects the poor the most. De Soto describes how it required 728 separate steps for a poor person to obtain a title for property near Lima, Peru. In contrast, a wealthy person has the means to navigate the regulatory maze, often bypassing delays and high fees.
In many countries, land rights were tied to informal, paralegal processes that evolved over time and did not provide secure ownership. Cadastral information must be accurate and as precise as practical based on local conditions. Consider the lessons learned from the 1962 Ghana Land Registry Act: In a paper at the XXIII FIG Congress in 2006, Rebecca Sittie said that many challenges in Ghana’s deed registration system arose from weaknesses in land descriptions. “Most plans attached to the deeds were more descriptive in nature because lands were not properly surveyed and demarcated. These inaccurate plans or maps often created conflicts among landowners. Because registration was based on the deed and not on the land, it led to multiple registrations for the same piece of land. There was no system to detect multiple registration of the same piece of land in the registration process.”
The requirements for physical positioning in a cadastre create unique opportunities in developing countries. In many regions, existing systems of geodetic control are incomplete or outdated. The effort to update or reestablish the framework introduces costs, delays and inaccuracy into efforts to create a modern cadastre. To solve this, a country or region can establish a geographic reference framework by installing a number of GNSS receivers to serve as geodetic reference stations. The location of each continuously operating reference station (CORS) can be precisely determined, and the resulting network provides a single, consistent basis for positioning across the country.
Because of the speed, accuracy and cost effectiveness of GNSS reference stations, they have emerged as the enabling technology for new or greatly improved cadastral information systems. Surveyors and mappers can use the information from the GNSS stations to capture positions on cadastral markers, natural features, local monuments and other objects that define property boundaries. This approach works well across an array of property types. Work in urban or other high-value regions may call for position precision of a few centimeters. In agricultural or rural areas, precision at the decimeter level may be sufficient. And for environmental and natural resource studies, meter-level positioning is common. Organizations can use different types of field equipment and procedures to obtain the precision needed for local requirements. Because all the positions are tied to the GNSS reference stations, independent field observations can be traced and verified.
People within the positioning and land information disciplines understand the value of GNSS as a basis for cadastral development. More recently, broader communities are coming to understand its importance as the enabler for property rights as well. In 2010, Ghana Supreme Court Justice S. Gbadegbe described the need for modern positioning systems in developing nations: “The preparation of maps of cities and towns is a necessary requirement and a catalyst to decision making and development and it is obvious … that GNSS has enormous and ever-increasing potential which can be exploited for national development and poverty alleviation in a sustainable manner, especially with the improved services of GPS which is undergoing modernization.”
The results of research and cadastral work in Africa, South America and elsewhere are encouraging. Developing nations can bypass the years of paper-based documentation endured by many regions and move directly to modern, low-cost land and cadastral information systems, underpinned by modern spatial reference systems provided by GNSS and CORS. The return on the investment will be rapid, and will carry large, long-lasting social and economic benefits.
· de Soto, Hernando. The Mystery of Capital. New York, NY: Basic Books, Perseus Books Group, 2000.
· Galiani, Sebastian, and Ernesto Shargrodsky. Property Rights for the Poor: Effects of Land Titling. Center for Research in Finance, School of Business, University Torcuato Di Tella, Buenos Aires: University Torcuato Di Tella, 2005.
· Gbadegbe, S. "National Navigation System; A Tool for Sustainable Development for a Better Ghana." Keynote Address, 2010 Annual Land Surveyors Seminar, Ghana Institution of Surveyors, 2010.
· India Department of Land Resources. Department of Land Resources. National Informatics Centre, New Delhi. http://dolr.nic.in/ (accessed June 19, 2011).
· Kumar, N. "Renovating Cadastral Map- An Indian Perspective." FIG Working Week. Hong Kong: FIG, 2007.
· McKinsey Global Institute. India: The Growth Imperative. Monograph, New Delhi: McKinsey&Company, 2001.
· Mishra, P. "Cadastral Surveys in India: A Critique." LIS National Conference. Delhi: LIS National Conference, 2000.
· Mishra, Saurabh. "Enhancing Land Registration and Cadastre and Economic Growth in India." GIM International, 2006.
· Moffett, Matthew. "Barrio Study Links Land Ownership To a Better Life." Wall Street Journal, November 9, 2005.
· Property Rights Alliance. International Property Rights Index. 2009 Report, Property Rights Alliance, Washington: Property Rights Alliance, 2009, 80.
· Rabley, Peter. Ghana Project Leverages GIS-Based Title Information and Microfinance to Alleviate Poverty. July 2009. www.esri.com/library/bestpractices/alleviate-poverty-ghana.pdf (accessed February 2011).
· Rajkhowa, P.K. National Land Information System Policy Issues. Monograph, Dehli: Geospatial World, 2000.
· Sittie, Rebecca. "Land Title Registration - The Ghanaian Experience." Shaping the Change, XXIII FIG Conference. Munich: FIG, 2006.
· Stenmark, John. Jumping the Technology Curve. September 1, 2009. http://www.pobonline.com/Articles/Features/BNP_GUID_9-5-2006_A_10000000000000651962 (accessed February 2011).
· World Bank. India Land Policies for Growth and Poverty Reduction. Monograph, India Country Management Unit, South Asia Region, World Bank, World Bank, 2007.