collective production are high and individuals to prefer individual ownership once alternative and less costly mechanisms to insure against covariate risks become available (see Key et al. 1998 for the case of Mexican ejidos).<sup>4</sup> It is well known that, because monitoring of effort in agricultural production is very difficult and costly, collectives where individuals are not residual claimants to profits are highly inefficient forms of agricultural production (Deininger, 1993). However, contrary to widespread misconceptions, communal tenure systems are generally _not_ based on collective production. Instead production on arable plots is normally undertaken by individuals who are residual claimants to output implying that, on arable plots, incentives for effort supply by individual cultivators are likely to be appropriate. Inefficiencies may persist with regard to either the longer-term sustainability of decisions concerning the use of communal areas such as forests and pasture or the disincentive to invest deriving from the inability to claim ownership rights to specific plots. In an analysis of Mexican farming communities (ejidos), McCarthy et al. (1 997) provide empirical evidence for the existence of collective action problems regarding the use of pasture and forest, but not of individually managed plots.

Communal resource ownership is often motivated by the ability to provide benefits in the form of easier provision of public goods, arrangements to enhance equity, or the ability to take advantage of synergies that would be difficult to realize under fully individualized ownership. Examples include risk-reduction through diversification advantages in highly variable environments (Nugent and Sanchez 1994), the utilization of economies of scale to break seasonal labor bottlenecks (Beard 1996; Mearns 1996), or investment in community-level infrastructure (Boserup 1965; Dong 1996).5 As long as effective means of governance and accountable institutions at the local level are available, these systems can -especially in situations when there is need for community-level investment- be very effective. For example, under the medieval open field system, cultivation decisions were made collectively but monitoring-sensitive tasks were carried out on an individual basis. This allowed utilizing economies of scale in fencing, harvesting, shepherding, and risk diversification through strip-cropping without compromising the advantages of individual effort supply (McCloskey 1975 and 1991;Townsend 1993; Blarel et al. 1992).

The usufructuary rights given under communal tenure systems do not impose large losses as long as population density is low and land is relatively abundant, pay off for making long-term investments is

> 4 The potential usefulness of communal land ownership as a device for consumption- smoothing is inversely related to the incidence of locally covariate climatic shocks. It is thus not surprising that, at comparable levels of population density, communal tenure systems have proven to be more durable in environments where such risks are lower.

> SAn interesting case to illustrate this is made by Ellickson (1993) who compares different settlements (Jamestown, Plymouth, Salt lake City, and the Bennudas) to suggest that, while many frontier settlements started out with group ownership and production to utilize economies of scale in

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