This is a conventional view advanced by the World Bank: land rights are more secure and transferable through the titling process – that is, assigning titles to parceled bits of land so that urban and rural poor can then use the land.
Titling land provides a guarantee to the informal urban and rural markets that the fruits of their investments will not be appropriated by the government or private land holders, and this can be done with a “flick of the wrist” as Hernando de Soto writes. All Third World governments and lawyers need to do is look at squatted land and write up a legal sheet documenting their formal ownership and welcome them to the private housing system.
Yet for almost every study showing that the titling process leads to greater security of land tenure, there are studies showing that causality runs the other way around. Instead of increased security of land tenure (titling is one of several ways to do that) causing long-term investment, it has been argued that investments themselves cause security of land tenure. The causality is reversed.
One example of this are the studies that have looked at investments in cash crops. Planting profitable trees – coffee, eucalyptus, for example – enhances tenure security (Atwood, 1990; Besley, 1995; Otsuka et al., 1997; Brasselle et al., 2002; Sjaastad, 1997; Place, 2001). Other findings show that tenure insecurity has little effect on the decision of farmers to plant trees and invest in the land (Holden, 2002). These findings cast considerable doubt on the need for embarking on ambitious land registration and titling policies, if the goal is increasing investments or standards of living.
Most of the literature finding a link between tenure security and long-term durable investments in the land have sidestepped the question of causality and have jumped to the conclusion that widespread titling should increase tenure security – (and do not mention titling’s adverse effects on landless, indigenous and the new urban poor.)