# **4.2 Transferability, land values and land-related investment**

To probe if Zambian large farms’ possession of title has the expected effect, table 5 reports IV estimates of title impact on objective outcomes such as land and credit market participation at holding level (col. 1 & 2); and perceptions regarding the risk of conflict (as the self-assessed risk of having any disagreement on the land parcel arising within the next 5 years), the right to sell, and self-assessed land values at plot level (cols. 3-5). Results in panel A are for overall effects of land title while panel B distinguishes between title on land that was previously under customary tenure or state land. The Sargan overidentification statistic does not reject the validity of the instruments except in the subjective land value regression. Panel C complements these estimates with a simple OLS regression to see if there is any difference in relevant outcome variables between state and customary land once parcel and household characteristics (coefficients for which are omitted in all tables) are controlled for.

Contrary to expectations of title facilitating land sales and credit access, only 15 farmers with title reported having engaged in subsequent land purchases. This makes estimation of a land sales regression impossible and forces us to rely on rental market participation instead. Results from relevant regression in table 5 col. 1 suggest that, instead of increasing participation, title triggers a significant and, with 20 percentage points, large _reduction_ of land rental market participation. This effect is more pronounced for chief certificates and titled land on previously customary land (panel B). Panel C suggests land rental market participation is significantly lower by 12 percentage points on state than on customary land, suggesting that instead of expanding land market activity to foster structural transformation, the separation of state from customary land may actually constrain it.

While further investigation of the mechanisms underpinning this reduction in land rental market participation is desirable, these results clearly reject the notion that the state-customary land dichotomy helps to activate land or credit markets. Instead of helping to establish a dynamic large farm sector that uses markets to transfer land to its best use, title in Zambia seems to create barriers to competition in land markets in ways consistent with notions of rent seeking and speculative land acquisition. In such a context, expecting title to improve credit access would be unrealistic and we indeed find that title (or chief certificate) has no impact on credit access (col. 2). In the credit access regressions, only farm size is significant, a variable that has been found to serve as a signal of credit worthiness in other contexts where foreclosing on titled land was not a realistic option (Castaneda Dower & Potamites 2014).

Results regarding title impacts on perceptions suggest that, compared to customary land without document, formal rights reduce the perceived likelihood of future dispute (col. 3) and increase perceived ability to sell (col. 4) and self-assessed land values (col. 5), though for the latter the overidentification test rejects the validity of the instruments. Title does not affect conflict risk overall (panel A) and for land previously under 15