Improving Governance of Land Resources in Ukraine Klaus Deininger, World Bank Kyiv- 6 June,

World Bank’s contribution to Ukraine’s land governance  Rural Land Titling & Cadastre Project (US$ 84 mn, )  Land Governance Assessment – diagnostic instrument to assess country- level status of land governance  Capacity Development for Evidence-based land & agricultural decision- making ( ) – implemented by KEI at KSE with three outputs:  Analytical support to evidence-based policy making on land  Land governance monitoring & supporting public debate  Support legal drafting as needed  Pilot new approaches to address key issues 2

Results of the monitoring show that:  i) the level of registration of state land is significantly lower than that of private land (24% vs 71%) which is a source of non-transparent practices.  Ii) the completion of the Registry of Rights is much lower and includes only 20.9% of the number of records in the Land Cadaster;  iii) the rental price for agricultural land is one of the lowest in Europe and CIS countries reducing the wellbeing of rural land owners and providing for inefficient use of land resources;  iv) the sales market for land (outside of Moratorium for agricultural land) is extremely thin primarily due to lack of financial instruments, difficulties with using property and rental rights as a collateral. The primary type of transactions for agricultural land is rent (about 4.7 rental agreements with average duration of 7.6 years) with substantial informal rental market;  v) the number of taxpayers for land tax (about 7.3 mln) is substantially lower than the number of private land owners and land users. 3

Key issues: Private land  Incompleteness of and errors in the Land Cadaster in Cadastral records create extra transaction costs and make rights more insecure.  The Moratorium for sales of agricultural land limits transferability of private agricultural land, restricts access to finance, puts downward pressure on the rental prices and, thus, limits development of rural areas (both agricultural and non-agricultural sectors).  Restriction on minimum duration of rental agreements to 7 years was established in

The number of registered leases by registrar type quarterly, January 2013-October

Key Issues: State land  Conflict of interest is created by accumulation of registration function and function for management of state land within one organization - State Service for Geodesy, Cartography and Cadastre. This provides opportunities for non-transparent practices and reduces incentives to register state land.  Low level of registration of state land in the Cadaster provides opportunities for non-transparent land use and corruption. It is unclear how much of this is driven by land without agricultural potential (e.g. forests). 6

Key Issues: Communal land  Demarcation of boundaries of towns, villages and other settlements is incomplete, making decision-making by local councils difficult, weakens the investment climate and is a source of land conflicts in some regions. It will be difficult to establish new administrative units – hromadas – if boundaries are not clarified.  Low level of registration in Cadaster of communal land provides opportunities for non-transparent practices and leads to foregone opportunities in terms of development and local budgets revenue.  Low capacity at the village level: Need for capacity development 7

Key Issues: unclear legal status  Collective land - Non-constitutional form of property is inherited from the time of collective farms.  Unclaimed property is a growing issue which leads to unauthorized (illegal) or inefficient use of land. There are two types of property in this category: unclaimed inheritance (estimated land in this category is between 1 and 3 mln ha), and land in property of enterprises that were closed up. 8

Ways to move forward: Short term:  Improving institutional arrangements and transparency of land governance:  Improve procedures for price registration  Mass valuation of land based on market prices:  Improve efficiency of land tax  Establish regular monitoring of land governance  Exploring rayon-level land use planning  Increasing efficiency of state land management 9

Ways to move forward: Longer term reforms  deregulation of rental transactions,  improving protection of rights of tenants and land owners by registration of rental rights;  simplifying procedures for error corrections in cadastral and registry records;  exploring ways to open up sales markets for private agricultural land 10