Transforming Property Rights into a Tool for poverty Alleviation: the Importance of Institutions Geoffrey Hamilton Regio

1. Transforming Property Rights into a Tool for poverty Alleviation: the Importance of Institutions Geoffrey Hamilton Regional Advisor - UNECE Land for Development Programme UNECE Seminar - Policies for achieving the Millenium Declaration Development Goals in the ECE region: reducing extreme income inequalities Palais des Nations 2-3 October 2003

2. How to promote poverty alleviation and enterprise and industry restructuring? • Challenge: rising poverty in rural and urban areas linked to industrial and enterprise restructuring • Solution: an effective land and property rights regime based on effective institutions United Nations Economic Commission for Europe

3. PRESENTATION • HOW land and property rights systems alleviate poverty • WHAT are the challenges for applying such institutional arrangements in transition economies • HOW UNECE’s Land for Development programme is assisting governments with pro-poor policies? United Nations Economic Commission for Europe

4. Overview of the reform in Transition Economies UK in the 1980s LAND AND PROPERTY RIGHTS SYSTEMS • Restitution, Allocation to workers and to special categories • Different ownership forms under privatization • Mix of land and property rights policies: e.g. open, restricted, rental • Heavy emphasis on establishing National Cadastre Agency INTERCONNECTING INSTITUTIONS that forms the superstructure by which land and property rights are traded United Nations Economic Commission for Europe United Nations Economic Commission for Europe

5. What is required for Poverty Alleviation? DESIRABLE CHARACTERISTICS of LAND and PROPERTY rights systems • Transform rights from paper into practice • Ensure rights are traded; through valuation, legal and banking services • Role of mortgage banks; enforcing the security in a loan • But also…………….. “Listen to the barking dogs” • Predictable and durable • Transparent allocation and broad access • Limited nature to take account of the public interest e.g. zoning and planning United Nations Economic Commission for Europe United Nations Economic Commission for Europe

6. The Land for Development Programme (LFDP) HOW DO THESE SYSTEMS ALLEVIATE POVERTY? • Fighting rural poverty through tailored financial and legal institutions • Credit cooperatives and Third Party Arbitration Courts • Trickle down effect • Formalisation of property rights for the poor Is it short term success or can they become sustainable? Key factors: political will, organizing the poor, the role of local governance United Nations Economic Commission for Europe United Nations Economic Commission for Europe

7. UK in the 1980s LFDP: Challenges and Perspectives • All governments and all departments • REAG and WPLA working together • High Level Panel to give priority to land policy • Help address issues that are controversial • Regional consultation but need to do this on the ground • Privatization and liberalization plus sound an effective institutions for securing and trading new property rights • From Europe’s weakest to one of Europe’s strongest economies • Spread of property ownership shares, titles etc…to citizens who never owned property, sale of council houses Example of poverty alleviation and enterprise restructuring ? United Nations Economic Commission for Europe United Nations Economic Commission for Europe

8. Conclusions and future steps APPLYING THE MODEL IN THE TRANSITION ECONOMIES • Inequality of property and land rights access Source of conflicts and undermines social cohesion; liberalization and markets are not sufficient • Security of tenure and informality Security has an economic impact; importance of flexible and inclusive institutions • No return to a “golden age” • Need to create the demand for institutions • Tenure security and fighting the informal sector • Integrated land policies • Integration of land issues into the development agenda Restructuring of land related institutions, local governance, removing barriers to credit • Development of financing tools and banking market How to attract foreign institutional investors? How to mitigate the credit risk: through risk rating agencies? By developing standards? Which is the role of development banks on the residential side? United Nations Economic Commission for Europe

9. THE LAND FOR DEVELOPMENT PROGRAMME (LFDP) • Fighting rural poverty through tailored financial and legal institutions • Credit cooperatives and Third Party Arbitration Courts Is it short term success or can they become sustainable? Key factors: political will, organizing the poor, the role of local governance United Nations Economic Commission for Europe

10. UNECE LAND FOR DEVELOPMENT PROGRAMME • Helps to remove barriers to creating pro-poor finance • Establishes new inclusive institutions Third Party Arbitration Courts • Integrated land for Development: • HIGH LAVEL PANEL (Hernando de Soto) United Nations Economic Commission for Europe

11. CONCLUSIONS AND NEXT STEPS • Land for Development achieved a consensus on giving a focus on poor-poor policies • More research on the institutions and service providers to implement pro-poor policies • FUNDING: MODELS BUT ACTIONS! United Nations Economic Commission for Europe