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Annual World Bank Conference on Land and Poverty March 25, 2014 Suha Satana Mika-Petteri Trhnen, Aanchal Anand Gavin Adlington Economic Impact of 20 Years of ECA Land Registration Projects Slide 2 Presentation Storyline Introduction to ECA land projects Economic Analysis on the impact of ECA land projects Buymagisha+ Conceptual Framework Qualifying the frameworks Closer look at 13 land registration projects Quantifying the Economic Impact of ECA Land Registration Projects Conclusions Slide 3 Europe and Central Asia (ECA) Region Countries 30 Population 893,314,335 Land area (sq km) 27,381,299 Properties registered Estimated at 300-400 million Slide 4 Three Stages of Land Administration Evolution Progression of reforms on land and property rights in ECA: 1. Assigning property rights to individuals and companies (farm restructuring, privatization, restitution) 2. Protecting property rights and encouraging real estate markets to operate efficiently (est. cadastres and property registers, systematic registration, improve service, legal framework) 3. Improving efficiency in the management and administration of property (improve planning systems, municipal finance and property tax, efficient management of state/municipal property, land consolidation, spatial data infrastructure and e-government) Slide 5 Land Projects Funded by the World Bank (1994-2014) *40+ projects loan amount for over $1.2 billion. *21 stand-alone land projects *16 projects under implementation today. Slide 6 ECA Land Projects 20 years; Lessons Learned Publication 2009 manuscript; ECA land assessment by experts 2012 review of 27 ICRs for Land Conference Paper (all but 2 ECA land projects satisfactory or highly satisfactory) 2013 Questionnaire on project impacts 13 countries replied Today: Economic impact of ECA land registration projects Fall 2014: Keys to successful land administration; Lessons learned in the 20 years of ECA land projects Slide 7 Why Focus on the Economic Impact of Land Registration Projects? Land registration is the core of ECA land projects ECA land projects have vast scope and differing data on economic impact Land registration projects manageable as many of the resultslike number of days to register a property or decrease in transaction costscan be measured relatively easily and compared across countries and time periods Slide 8 13 Land Registration Projects (1997 2012) Armenia; Land Titling Project Azerbaijan; Agricultural Development and Credit Project Bosnia and Herzegovina; Land Registration Project Bulgaria; Registration and Cadastre Project Croatia; Real Property Registration and Cadastre Project Kazakhstan; Real Estate Registration Pilot Project Kyrgyzstan; Land and Real Estate Registration Project Moldova; First Cadastre Project Romania; General Cadastre and Land Registration Project Russia; Cadastre Development Project Serbia; Real Estate Cadastre and Registration Project Slovenia; Real Estate Registration Modernization Project Ukraine; Rural Land Titling Project US$ 483 million of investment* * Includes funding from the World Bank, cofinanciers, and client governments Slide 9 Conceptual Framework for Economic Analysis; 6 Linkages of the Byamugisha+ Model Land Tenure Security and Investment Incentives Linkage Land Title, Collateral and Credit Linkage Land Markets, Transactions and Investment Efficiency Linkage The Labor Mobility Efficiency Linkage Land Liquidity, Deposit Mobilization and Investment Linkage Fiscal and Tax Linkage Slide 10 Land Tenure Security and Investment Incentives Linkage Land owners ability and incentives to invest in land improvements, including buildings, by virtue of the fact that registration provides them tenure security, exclusive use and safe access to benefits from the land, and the freedom to transfer their land rights Slide 11 Land Title, Collateral and Credit Linkage Secure formal land ownership provides access to commercial credit from formal sources to undertake investments, thus contributing to the emergence of financial markets Slide 12 Land Markets, Transactions and Investment Efficiency Linkage Land registration plays an important role in reducing transaction costs and increasing transparency. Land registration facilitates the emergence of a land market, increases market efficiency, and attracts investors Slide 13 The Labor Mobility Efficiency Linkage Land registration improves labor mobility which enhances allocative efficiency in an economy Slide 14 Land Liquidity, Deposit Mobilization and Investment Linkage Capital value of land and property constitutes one half to three quarters of a countrys wealth and is the key to promoting inclusive growth that targets the countrys bottom 40 percent in terms of per capita income Slide 15 Fiscal and Tax Linkage Land registration projects contribute to more comprehensive and accurate collection of property taxes. As the coverage expands and the taxable property value is more accurately defined, governments can reduce tax rates over the expanded and improved tax base and still collect the same revenues Slide 16 Challenges in Quantifying the Economic Impact of LRPs Poor data availability and reliability Inability to attribute economic impact to land projects alone Difficulty in measuring certain impacts associated with productivity and efficiency gains Linkages are not MECE (mutually exclusive and collectively exhaustive) Slide 17 The Economic Impact of ECA LRPs Note: Project Appraisal Documents (PADs) and Implementation Completion Reports (ICRs) used for this analysis to maintain methodological consistency Slide 18 Quantifying the Economic Impact US$ 483 million US$ 1,072 million 2.22x Economic impact is estimated at 2.22x the initial investment* Return on investment of 122% * Excludes the project in Kazakhstan due to the lack of adequate data on the projects economic impact. In the case of Moldova, the economic impact is defined based on the economic impact per registration derived from data for six countries: Armenia, Azerbaijan, Kyrgyzstan, Romania, Slovenia, and Ukraine. All other numbers retrieved from respective project ICRs. Slide 19 Quantifying the Economic Impact 1 million property registrations US$ 16 million economic benefit in the target country Estimated total short-term and long-term benefit to the economy of a single registration is estimated at US$ 16.13* Registering one million properties in the ECA region leads to an estimated economic benefit of just over US$ 16 million in the target country * This estimate is based on project data for six countries: Armenia, Azerbaijan, Kyrgyzstan, Romania, Slovenia, and Ukraine Slide 20 Summary 40+ land projects in 20 years in ECA transition 13 land registration papers analyzed in this paper Several challenges with respect to measuring the economic impact of ECA LRPs Byamugisha+ conceptual framework works: 1. Land Tenure Security, 2. Credit, 3. Market Efficiency, 4. Labor Mobility, 5. Liquidity and + 6. Fiscal and Tax Linkage Preliminary estimates show economic impact of LRPs as 2.22x the initial investment 1 million property registrations lead to an estimated economic benefit of US$ 16 million in the target country Slide 21 Q&A