Transforming Deserts: The 2011 International Property Rights Index
The 2011 International Property Rights Index (IPRI) was released last week, bringing to mind a vital yet overlooked global development debate about the role of property rights in improving economic opportunities at the base of the pyramid.
Sometimes property rights advocates get caught up in a fairy tale about how titles provide easy access to capital for poor entrepreneurs to grow their businesses, and lift themselves and their employees out of poverty. In reality, property rights alone are rarely enough to spur financial sectors into small business lending. But maybe that isn’t really how property rights best contribute to economic prosperity for the poor.
When famine struck in the 1980s, a few farmers in West Africa’s semi-arid Sahel region started looking for ways to improve the soil. They strategically placed small stones across where patchy rains sent water downhill, an old technique called cordons pierreux. Each cordon slows the water so that silt and small seeds settle down rather than wash away over the hard earth. From the mud collected around these stones, a remarkable story emerges.
Small grasses sprout first, trapping more silt and seeds from the water. Farmers soon add shrubs and even small trees, whose fallen leaves provide more nutrients to the soil below. Grazing animals leave droppings that further enrich the soil. New root systems keep the restored soil from washing away. After a few years, adjacent rows of stones can regenerate an entire field for farming. By September 2008, using cordons and other homegrown soil restoration methods, farmers in Niger had regenerated 19,000 square miles of formerly barren land.
But that’s not the whole story. Just next door in Burkina Faso, where the same knowledge of techniques to reclaim desert soil exists, farmers haven’t been so successful. Why?
According to National Geographic Magazine:
Burkina Faso has not recovered as much as Niger. [A farmer’s] story suggests one reason why. While villagers in Niger have gained control over their land, smallholders in Burkina still lease it, often for no charge, from landowners who can revoke the lease at the end of any term. Read the original story
Without security of property, Burkinabe farmers just weren’t willing to invest the time and effort it takes to improve soil quality. (In 2011, by the way, Burkina Faso is cited as one of the most improved since a year ago). Just over the border in Niger, a credible commitment to property rights including an implicit promise that farmers could keep the lion’s share of greater income from more productive land was enough.
It’s not an issue of finance. You don’t need a loan of any size to line stones up on a hill, and there are plenty of other long-term investment opportunities among small farmers as well as small entrepreneurs for which finance, micro- or larger, just isn’t necessary.
Even with secure property rights, formal banks may still be reluctant to extend farmers loans or crop insurance for a variety of reasons; corrupt and state-controlled banking sectors not the least among them. But even in absence of access to credit, secure property rights boosted incentives for Nigerien farmers to invest some sweat equity into their land.
Property rights are not a silver bullet for the world’s poverty and food security problems, but they are a crucial piece in the puzzle. As the farmers in Niger can tell you, property rights have gone a long way in enabling them to use the knowledge they themselves have at their disposal to improve soil quality.
Combine secure property rights with greater market access and information to strengthen bargaining power, and you’ve already got a powerful set of incentives to invest some sweat equity into production capacity and productivity. Even without access to credit, those incentives can induce people to literally transform deserts and improve their future economic prospects. Then, when small farming isn’t so much a desert, perhaps bankers will see things differently.