evidence to help base decisions in this area on evidence regarding what works and what does not in a specific situation rather than broad generalizations and preconceived notions.

# **2.2 Conceptual framework**

Establishment and maintenance of a property rights system is a public good that affects economic outcomes through two main channels (Besley and Ghatak 2010). The first is the reduction of expropriation risk that will reduce the need to spend private resources on protecting property and increase investment incentives. The second is the facilitation of market transactions that allow efficiencyenhancing transfers of land to more productive users and its use as collateral in financial markets If property rights are insecure or boundaries ill-defined and land values are high or increasing, a process of adjudication and first-time registration to document existing rights that enjoys legal recognition and is backed up by local consent and enforcement can reduce expropriation risk and spur land-related investment. The magnitude and distribution of the associated benefits will depend on the reduction in enforcement effort afforded by formal recognition, the increment in security provided by an intervention (which may be affected by on the legitimacy and legality of existing arrangements and the existing level of disputes) and the availability of investment opportunities. Benefits are expected to be larger if the arrangements adopted enjoy wide legitimacy, if the increase in tenure security is large, if high levels of resources had earlier been expended in efforts to secure rights or conflict over these, if formalization involves recognition of rights by groups (e.g., women or migrants) that had previously been excluded, and if the scope for improving land use, through either land-related investment or transfers, is high.

While unlocking investment is contingent „only‟ on removal of impediments to tenure security, realizing gains from transferring land to more productive uses or users, often beyond a given community, requires that, in addition to clearly defined property rights, reliable information on such rights is broadly available at low cost. To allow this, public registries normally make complete, current, and authoritative information on property rights assignment available to interested users. If imperfections in markets for credit and insurance are not too severe and non-agricultural opportunities are available, this can facilitate transfers to bring land to its most productive use and spur development of a financial system.

The conceptual basis for credit-effects of land titling is that immobility and indestructibility make land ideal collateral but that it is very costly for banks to determine whether plots offered as collateral can be accepted.<sup>1</sup> A reliable and comprehensive central registry dramatically reduces the cost of such enquiry, making it possible to exchange land in impersonal markets and use it to secure loans. If lack of reliable information on land ownership precludes access to credit for large segments of land owners but land

> 1 In general, this would require physical inspection and inquiry with neighbors to ensure that there are no other ownership claims and some form of a registry to ensure that the land has not already been pledged as a security for other transactions.

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