# Presentation: 520489

## CHALLENGES AND CHOICES: 

**Fruit of Peace, Seed of Development**

**Guatemala’s Land Fund**

## Dr. John Strasma Professor, University of WisconsinSenior Fellow, Boston Institute for Developing Economies and Consultant, USAID-Guatemala

**Dr. John Strasma ****Professor, University of Wisconsin**Senior Fellow, Boston Institute for Developing Economies and Consultant, USAID-Guatemala

- Assisted by Francisco Barquero,
- Alden Jiron and Julio Mendoza
- Prepared for the USAID Workshop on Conflict Prevention, Washington, D. C., 7 June 2000

## Peace Accords Assume Strugglewas over land, not Power

- Negotiators promised land cheaply
- 	for excombatants and refugees.
- Land Fund created to finance it.
- USAID grant $5 m, WB loan for $69 m.
- Tax reform and budget contribution promised.
- Groups strongly preferred, thought cheaper.
- Assumed “poorest of the poor”

## Models of Access 

- Welfare: Transform day laborers into yeomen full-time market-oriented small farmers.  Big loan and subsidy.
- Real world:  Up the tenure ladder, at rate set by individual capabilities.  Multiple transactions, lower costs.

## Land Conflict Prevention in Guatemala:  The first two years

**Land Conflict Prevention in Guatemala:  The first two years**

- By December 1999, 39 groups had bought farms for 2,938 families.
- The average loan was $4,386 for land, with no down payment and a two-year grace period.
- Some intended to produce collectively; other groups were only formed to acquire land.
- Groups idealized; legitimated.
- Lack norms on entry, exit, bonding.
- This may cause problems in future.

## Guatemala: results 

- No down payment expected;  average two-year grace period before first payment due.
- One loan per family, $4,386 average for land.
- A “compensatory” subsidy per family, $1,366.
- Administration, extension bring total to $6,500.
- First payments due; collection mechanism?
- Five already requested rollover.

## Are Lower Costs per Family Possible?  

**Are Lower Costs per Family Possible?  **

- Basic Concept:  More than one “Window”, with the first being most generous but others faster.
-  Market Concepts to Donors:  Each to choose programs in allocating their resources.
- Finance Rentals, as well as Purchases.
- Require down payment; poorest could “Rent to own,” like urban housing in the USA.

## More Radical Ideas:  

**More Radical Ideas:  **

-   Invite applicants to waive legal right to       	Subsidy in exchange for faster service.
-   Finance the productive value of the land, but 	not the speculative component of prices.
-    Precio pagado por caballeria:
- Peten $ 13,109		San Marcos $ 221,470 Lacapa $ 20,446		Sololá $ 158,892     Izabal $ 18,783		Chimaltenango $ 99,354

## Buying Land and Market Prices 

- Land prices in the market depend on speculative factors as well as productivity.
- The highest price land is not necessarily the most productive.  It will be hard for farmers to pay back market prices unless they have already made a large down payment, to reduce the amount of debt.
- The Peace Accords spoke of access to land as a means of production; that part of the price is all that  the Land Fund is morally committed to finance.