1. Building Land Markets In Post Conflict Contexts:
Evidence From Colombia
Author(s)
(i) Camilo Pardo Herrera; (ii) Ivonne Moreno Horta; (iii) Daniel Perez Jaramillo
Affiliation
(i) George Mason University (ii) Independent (iii) Inter-American Development Bank
Author’s Address
(i) (ii) (iii)
Introduction
The Government of Colombia is currently executing a wide-range land restitution policy in order to redress the massive land-seizure phenomenon caused by internal armed conflict. The policy favors material restitution which entails the recovery of stolen land and the re- establishment of property rights in the name of original owners; financial compensation is only exercised when Restitution Tribunals deem the material recovery impossible.
This policy design has been criticized because it could potentially act as a land-market inhibitor, as it generates uncertainty for the stability of the transactions and consequently, it could hinder socio-economic development of rural areas. Supporters of this idea suggest then to avoid land restitution as a policy option.
Structured as a case study comprising three municipalities, the paper uses quantitative data from 2000 to 2014 to analyze the impact of internal conflict and restitution policy on the dynamism of local land markets. Useful information for policy decisions about implementation is presented in the conclusions.
Results
Violence and armed conflict are critical determinants of the dynamics of land markets. During the most critical years of the conflict, 2000 to 2005, land markets were practically inexistent (Figs. 1,2,3), with monthly averages of 264, 14 and 25 transactions. This situation drastically changes after 2006 when security is restored and averages for each municipality reach 557, 48 and 72 transactions respectively; an increment of more than 100%.
The former is confirmed by the quantitative analysis which shows that for every 100 people forced to displace, the number of transactions drops 12%, which at an average of displacement of 2,97 results in a general decline of 38% in the number of transactions.
In the same sense, a one unit increase in the homicide rate (for each 1000) decreases the number of transactions in 4%, which at a average homicide rate of 1,19 signifies a 5% negative effect.
These two variables combined, result in a negative effect of armed conflict over local land markets that exceeds 40%.
Although in much lesser proportions, restitution policy has also an effect on the land market. When in implementation, the dynamics of land markets decrease at around 25%.
Fig. 1
Fig. 2
Conflict
Post-Conflict
Conflict
Post-Conflict
Restitution
Restitution
Fig. 3
Conflict
Post-Conflict
Restitution
Materials and methods
The dynamism of local markets, selected as the dependent variable, is measured by the natural logarithm of the number of monthly buy-sell transactions in each municipality
As independent variables, the model controls for (i) the intensity of conflict (measured by hundreds of persons forcedly displaced, homicides per inhabitants, number of massacres and number of kidnappings), (ii) the execution of the land restitution policy, (iii) access to credit and (iv) the price of land.
A long panel pooled model (estimated by feasible generalized least squares) was executed in order to assess the impact of the independent variables on the number of transactions in a given month.
Correlation across time for each municipality is considered for the FGLS estimation.
The final equation of the model reads as follows:
Land restitution in post-conflict settings is thus a valuable tool to contribute to post-conflict state-building, the achievement of a sustainable peace and to enhance economic development in the country.
Conclusions
Property rights are an important driver of post-conflict reconstruction as they contribute to the reconstruction of the rule of law, which in turn fosters national reconciliation and determines the achievement of a stable and democratic peace.
Although in a much lesser proportion than violence caused by conflict, property restitution seems to have a negative effect on the number of transactions in a given municipality over a specific period of time. However, if democratization is the core goal of the transition, land restitution should be preferred as an allocation mechanism, over the use of force during conflict.
Property rights -as the essence of land markets- are also at the core of economic development. Once property is formalized, States become their guarantor; an unproductive task that is performed by private individuals while in informality. Also, by permitting its transfer or lease of land rights facilitate gains from trade, provide an incentive for investment and allow a more efficient allocation of the resource.
Social and economic development based on rights allocated through a legitimate mechanism such as land restitution will always be more profitable and sustainable than opting for a development policy based on land rights allocated by the brutality of war.
Acknowledgements
Literature cited
Besley,Timothy & Ghatak, Maitreesh (2010) “Property Rights and Economic Development”. In “Handbook of Development Economics, Vol. 5” Rodrik, Dani & Rosenzweig, Mark (Eds), The Netherlands: North-Holland.
McCallin, B. (2013) “The role of restitution in post-conflict situations”. In “Land and post-conflict peacebuilding”, Unruh, J. & Williams, R.(Eds), London: Earthscan. .