upfront outlays fail to make investments in formalization that would yield clearly positive returns.

To distinguish these explanations requires data on both the costs and benefits of formalization. We begin by sketching the costs associated with formalization; the experimental results below will shed light on the benefits, defined narrowly in terms of state revenue from the sale of land titles and collection of property taxes.

For the Tanzanian government, by far the largest single cost of land tenure formalization is cadastral surveying. Crucially, cadastral surveying exhibits strong scale economies. These economies are due in part to simple geometry: beacons placed at the corners of one parcel can double as markers for adjacent parcels.<sup>4</sup> In addition, the administrative processes associated with cadastral surveying – everything from consulting with local community leaders to filing papers with the relevant sub-ward, ward, municipality, city council, and ministerial officials – can be done en masse with considerable cost savings.

Interviews with multiple surveying companies in Dar es Salaam produced cost estimates for surveying a single parcel ranging from approximately $600 at the very low end to upwards of $3,000 – depending on the size, location, and other complicating factors related to local government administration.

The Tanzanian Ministry of Lands estimates systematic demarcation at scale costs approximately 150,000 to 250,000 per parcel ($96 to $160), though the basis for these estimates is somewhat opaque. For the purposes of this randomized field experiment, the World Bank – in collaboration with the Ministry of Lands, the Dar es Salaam City Council, and the Kinondoni Municipality – contracted a private surveying company to produce a cadastral survey of the roughly 1,100 parcels in the treatment area. In addition, because of the large number of parcels affected, the project was also required to contract a certified town planner to produce a detailed map of future, purely hypothetical infrastructure investments in the area (including the boundaries of roads if paved, installation of electric street lights, public water pumps, etc.) that was approved by the Kinondoni Municipal Council. The combined cost of town planning and surveying for the project was considerably below the Ministry’s estimates, at roughly 70,000 shillings per parcel (approximately $45).

Assessing the fiscal sustainability of systematic land demarcation is slightly more difficult than testing whether the government can sell titles to 100% of demarcated parcels at a price in excess of 70,000 shillings (or 50% above 140,000 shillings, and so on). First, we explore the possibility for price discrimination on the basis of household wealth, which combines progressivity with additional revenue generation. Second, the government’s fiscal calculus must also factor in not just the immediate revenue from the sale of titles, but the discounted present value of future property tax receipts on titled land. We return

> 4In the simple case of rectangular parcels on a grid, surveying _n_ parcels requires (<sup>_~~√~~_</sup> _<u>n</u>_ + 1)<sup>2</sup> _/n_ beacons. Obviously demarcating a single parcel requires four beacons. As _n_ increases, the number of beacons required per parcel approaches one.

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