# **2.1 Land tenure security and investment: Conceptual and measurement issues**

The empirical link between greater tenure security and transferability of land and incentives for investment and efficiency of resource use rests on three arguments. First, security of rights, i.e. a reduction in the probability of being evicted or otherwise losing land rights has been shown to provide land users with greater assurance that they will be able to enjoy the fruits of their labor, thus encouraging them to make long-term investments and manage land in a sustainable fashion (Besley 1995). Having land rights defined clearly and accessible enforcement institutions available reduces the probability of unproductive spending on conflict, something that has been shown to have far-reaching impacts on productivity as well as equity (Deininger and Castagnini 2005). Second, adding the right to transfer land to others, either through rental or sale, encourages investment as it makes it easier to liquidate such investment in case of an exogenous shock (Deininger _et al._ 2005). It also constitutes an essential precondition for transactions that can help bring land to more efficient uses, thus maximizing output and allocative efficiency and creating the preconditions for labor to move from agriculture to non-agricultural pursuits in the broader context of economic development (Kung 2002). With rapid economic transition, e.g. at the urban fringe or in areas of rapid commercial expansion, and the associated increase in the number of transactions, ways of ensuring the legitimacy of land transfers and eliminate incentives for opportunistic behavior by one of the contracting parties have been shown to be critical to (Lavigne Delville 2002). Finally, having a formalized and low-cost way to unambiguously identity land owners without the need to physically inspect the parcel, enquire with neighbors, or conduct an extensive search of land records, allows the use land as collateral. This will, in turn, be critical to facilitate financial market development and the emergence of more sophisticated financial instruments that draw on the abstract representation of land rights provided by titles (de Soto 2000).

Differentiating elements of property rights in this way illustrates two points. First, although they do not form a necessary evolutionary sequence, different elements build upon each other and the institutions to support them become increasingly more sophisticated and costly to implement (Sjaastad and Bromley 2000b). Second, any land tenure regimes defines a multi-dimensional bundle of rights, the content of which often differs depending on local circumstances. More disaggregated information on the individual “sticks” in this bundle will be required to accurately assess the impact of specific rights. In fact, the high variability in the results from empirical studies aiming to explore the impact of title (Pinckney and Kimuyu 1994, Migot-Adholla _et al._ 1994, Roth _et al._ 1994) can be interpreted as resulting at least partly from omission of “lesser” rights to transfer land with or without permission by the lineage or a finer gradation of tenure security linked to this arrangement in specific contexts. For example, formal title will have maximum impact on increasing tenure security if owners and potential buyers are aware of the 3