rentals cheaper to implement. This reduction of transaction costs would increase the liquidity of the land market and could bring the number of efficiency-enhancing transactions closer to the optimum, i.e. helping to transfer more land from less productive to more productive individuals.

A second type of social cost associated with fully individualized property rights relates to the fact that, at low levels of development, communal land ownership may perform an important insurance function that would be eliminated by establishing fully individualized property rights in land.<sup>20</sup> Furthermore, it has long been known that in cases where other markets are highly incomplete, land sales markets may not automatically transfer land to more productive users. In such situations, individualization of land rights could be doubly disadvantageous (see Platteau, 1998 for references). On the one hand it could pave the way for the emergence of sales markets that deprive traditional communities of their source of livelihood (often without adequate compensation), thus generating social unrest and violence and eliminating an important form of insurance. On the other hand, where land rights are introduced in such an environment, productivity will not necessarily increase as availability of land rights could induce concentration of landholdings by a privileged minority of wealthy individuals who -for example by having access to noncovariate sources of income- are in a position to accumulate land for speculative purposes without making productive use of this asset.<sup>21</sup> Historical evidence does indeed suggest that, in situations where other markets are not well developed or where policy-induced distortions affect the functioning of land markets, increased transferability of land may deprive the poor of an important social safety net. The importance of the insurance aspect is confirmed by the fact that, even where societies have made the transition to individualized land rights, they have often maintained land-related social safety nets to provide insurance for the poor. One example for a mechanism to do so is to allow continuing uses of communal pastures and forest areas of low productive value as well as an universal right to collect leftovers after the harvest or graze animals on harvested fields. Another one is the provision for periodic redistribution of at least part of the land available to the community - for example the Bible mandates land redistribution every 50 years.<sup>22</sup> Such redistribution of cultivation rights is likely to decrease productive efficiency by attenuating individuals'

> 2' Jodha (1990) provides evidence on the importance of access to the commons as a safety net for the poor. Based on panel data from China, Burgess (1997) finds that the equitable allocation of land use rights under communal tenure has an effect similar to a lump sum transfer that provide insurance against low nutritional outcomes in a way that is more incentive-compatible than arex _post_ redistribution. The fact that land ownership has a more significant impact on improving nutrition than on income can be explained by the fact that, with imperfect rural grain markets, considerable cash outlays would be required to achieve a similar effect through market purchases of grain. The presence of equity benefits from periodic redistribution of land rights in China would be consistent with peasants' strong support for the system of periodic redistribution (Kung, 1995).

> **21** Note that this is historically well-founded, as the many examples in Binswanger et al. (1995) demonstrate.

> **22** If incentive structures and enforcement mechanisms to ensure that such provisions are actually implemented at the local level are non-existent, the provision for regular redistribution can actually give way to arbitrary behavior and rent extraction by local leaders. For a theoretical and empirical discussion of these issues see Tumer et al. (1998).

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