Klaus Deininger, Daniel Ayalew Ali, Tekie Alemu 05 March 2009 Impacts of Land Certification on Tenure Security, Investment and Land Markets: Evidence from Ethiopia (Amhara Region) Klaus Deininger, Daniel Ayalew Ali, Tekie Alemu 05 March 2009

Policy environment Evolution of Ethiopia’s rural land policy environment Feudalist structure followed by nationalization and collectivization in 1975 1995 constitution w. guaranteed access 1997 decentralization of responsibility to regions Reasons for high tenure insecurity 1997 Amhara redistribution; current debate in Tigray Urban and agro-industrial expansion (flowers) Leasing still restricted everywhere except in Amhara region Will lose land if find off-farm job with permanent income Ethiopia as an interesting case Huge program (25 mn plots) quite rapidly implemented; with little outside assistance Turns conventional wisdom on its head Participatory local process - rather than expert driven Rights are not alienable - and plenty of remaining policy restrictions No spatial reference at all – contrary to surveyors 5

Program characteristics Main features Democratically elected LAC has responsibility Field-based adjudication process (elders to resolve conflict) Certificates with holders’ pictures but no map (to be added in 2nd stage) Very cost-effective ‘1st stage’ (< 1 US$/parcel) Process characteristics (from nation-wide survey) Public meetings held, LACs with members from most sub-kebeles High share of field-based adjudication Only 5% of unresolved conflicts (vs. 20%+ in Thailand) Case study/survey evidence on possible impact High willingness to pay to replace certificate Reduction of conflict Gender (women’s pictures, awareness where stored); polygamy 5

Data and general approach Data sources 4-round panel (1999, 2001, 2004, 2007) from East Gojam Some 900 households with 4,000 plots in each round 3 rounds before implementation, some certified in 4th round Identification strategy Define villages as treated if certified > 12 months ago Control for household specific effects Verify that there is little difference in time-varying effects Conservative estimate for two reasons Even in treated villages not all households have certificates Many households in untreated ones had certificates Expected short-term impacts Perceived tenure security Land-related investment (soil conservation measures) Rental market participation 5

Outcome variables considered Perception of admin. land size change next 5 years Recent land redistribution (1997) (Un)compensated expropriation for urban expansion Both loss and increases are relevant (political pressure) Question included in all 4 rounds Investment in soil & water conservation structures Should see a direct investment effect Existence and new construction No of hours spent in maintaining/constructing Land rental market participation Amhara the only region where no constraints in terms of length Both participation and area transferred 5

Risk of land loss Equation to be estimated use Chamberlain’s method

Investment & rental market Plot-level investment equation Household-level rental market participation

Policy implications for Ethiopia Ensure sustainability of impacts Establish mechanisms for regular updating (computerization) Add spatial element (satellite imagery) Systematically include CPRs Demarcation & dealing with encroachment Rules for internal management Enforcement mechanisms Enhance benefits through policy changes Land leasing & off-farm employment Threat of redistribution/enforcement of LT contracts External threat from expropriation Explore longer-term effects Already benefit much beyond cost But could be much larger (& very cost-effective) Especially with policy changes 5