Land Administration Reform: Economic Rationale and Social Considerations

Systems for the administration of land issues are a common public service at the local or national level in most states of the world. Such organizations have evolved or have been established at different times in different societies, but their emergence in such diverse situations suggests that they fulfil an essential public service function which is quite uniform. The economic and social rationale that underlies the evolution and emergence of formal land administration systems is essentially universal, once certain levels of economic, social and political complexity have been reached. The paper outlines the economic rationale for local administration systems, pertaining to (i) the incentives for investment brought about by enhanced tenure security, (ii) the more efficient operation of land markets due to reduced uncertainty regarding ownership, and (iii) the facilitation of improved credit markets through better collateral options. The paper then outlines potential risks of negative social outcomes related to unfair advantages that may be exploited by wealthier and better informed individuals. The paper concludes with a derivation of implications for public policy and the design of reforms in land administration systems.