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Investment foundations: Secure property rights

Investment foundations: Secure property rights. Virginia Cram -Martos Director, Trade and Sustainable Land Management Division 31 May 2013. UNECE Committee on Housing and Land Management. Work of the Committee. Who we are. The structure of the Committee. Why we care.

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Investment foundations: Secure property rights

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  1. Investment foundations: Secure property rights • Virginia Cram-Martos • Director, Trade and Sustainable Land Management Division • 31 May 2013

  2. UNECE Committee on Housing and Land Management

  3. Work of the Committee

  4. Who we are The structure of the Committee

  5. Why we care Secure land tenure and property rights are fundamental to shelter and livelihoods, and a cornerstone for the realisation of human rights and for poverty reduction. UN-HABITAT

  6. The ECE’s focus • Housing issues unique to our region, including the: • Results of mass privatisation in the 1990s of now sub-standard housing • Development of institutions and expertise to support property rights where such rights did not exist 20 years ago • Regularization of informal settlements created due to institutional voids and/or unmanageable bureaucracy • Retrofittingof large volumes of poorly insulated, temperate climate housing

  7. Secure Land Tenure & Property Rights Enable: • People to invest in improved homes and livelihoods • Good environmental management • Improved food security • The realisation of human rights, including the elimination of discrimination…

  8. How Inadequate Property Rights Can NegativelyAffect Economic Growth • Expropriation risk – causing lost investment & effort • Increased risk of costs incurred in order to defend “unsecure” property • Reducedinvestmentbecausehigherrisksmeaninvesterswillrequirehigher «minimum» returns • Summarized from “Reforming property rights “ by Tim Besley, MaitreeshGhatak (the London School of Economics) 22 April 2009

  9. How Inadequate Property Rights Can NegativelyAffect Economic Growth • A failure to facilitate trade (e.g., by preventing the development of efficient rental and sales markets) • The inability to use property to support other transactions(i.e. as collateral) • High enforcement costs and risks for lenders meaning that they may not be willing to lend an efficient amount or, in some cases, lend at all. • Summarized from “Reforming property rights “ by Tim Besley, MaitreeshGhatak (the London School of Economics) 22 April 2009

  10. Property Rights Provide the Underlying Economic Basis for Decent Housing A study in Peru showed that the change in ownership status due to a nation-wide land titling program resulted in an increase of over two-thirds in housing renovations A related study in Argentina showed that the transfer of land to a group of squatters occupying a wasteland on the outskirts of Buenos Aires, resulted in improved housing investment as well as other benefits.

  11. Correlation: Expropriation Risk and Income per Capita Protection of property rights

  12. Correlation: Property Registration and Income per Capita Ease of registration (rank)

  13. The Causes of Weak Property Rights? Breakdown in law and order and Predatory states BUT JUST AS IMPORTANT – PERHAPS MORE SO Many governments simply fail to invest sufficiently in basic legal institutions and property registration institutions

  14. Going Forward So a priority should be To invest more in ensuring secure property rights This requires political will To develop political will we need to help politicians, government officials and the public to better understand the economic benefits

  15. A possible opportunity to increasepoliticalwill: A Regional Framework Convention on Housing

  16. Hernando de Soto ”No nation can have a strong market economy without adequate participation in an information framework that records ownership of property and other economic information”

  17. Governments should Use nationally appropriate policy instruments to bring informal housing into the formal sector where it can be better regulated and better contribute to economic development Ensure that property rights and tenure are defined and protected in a clear and straightforward manner. Develop cadastres and registries which define property boundaries and ownership rights for as much of the country as possible Recommendations

  18. Thankyou • Housing and Land Management Unit • www.unece.org/hlm/welcome.html

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