Power Traps or Poverty Traps? Institutions, Markets, and Environmental and Livelihood Rest, Schemi e mappe concettuali di Economia Internazionale

Scarica Power Traps or Poverty Traps? Institutions, Markets, and Environmental and Livelihood Rest e più Schemi e mappe concettuali in PDF di Economia Internazionale solo su Docsity! Power Traps or Poverty Traps? Institutions, Markets, and Environmental and Livelihood Restoration by Stein Holden Abstract The roles of institutions and markets to mitigate the problems. Power traps are identified as the main cause of poverty-environment traps and resource curse and the main constraint that hinders institutional reforms that are essential for market development and environmental and livelihood restoration. Introduction Poverty traps and resource curse are only symptoms and not the primary cause of the sad state of nature. It is rather power traps that is what is the matter with the world and these power traps must be broken before efficient institutional reforms can be introduced that both stimulate market development and environmental and livelihood rehabilitation. Sachslarge parts of sub-Saharan Africa are stuck in a poverty trap that hampers economic growth while the crisis is exacerbated by rapid population growth and land degradation assistance from the rest of the world is needed Rosenstein-Rodan”big push perspective”: The existence of poverty traps may be related to endogenous fertility, technology traps associated with low degrees of substitutability between labour and other forms of capital, or impatience traps associated with market imperfections. The empirical evidence of the existence of poverty traps is, however, still inconclusive due to the limited availability of long panels, measurement error and attrition. This also makes it hard to explain why some countries, communities or households may have fallen into a poverty trap. The so-called resource curse which to some extent is a counterexample of the poverty-environment trap. countries highly endowed with certain valuable natural resources have also failed to develop and instead suffered from low economic growth and continued poverty. Recent studies increasingly emphasize the importance of institutions rather than the resources per se to explain the ‘resource curse’. Both poverty-environment traps and resource curses are conceptual misnomers with respect to the causal problems that they aim to analyse tend to misdirect the attention away from solutions. Power traps are the primary cause of poverty traps and resource curses and breaking these power traps is essential for successful institutional reforms. Ethiopia is used as the main case and land resources and land reforms are given focus due to the frequent failures of such reforms in the developing world. Comparisons are made between land reforms and efforts of land rehabilitation in Ethiopia, other African countries, and China land reforms open opportunities even in very poor countries if the windows of opportunity are well utilized. Conceptual framework Definition Power: - as control over legal forces in terms of formulating laws and/or exercising laws according to own interests (legal power) - be to be able to break the law and escape from legal punishment Power trap: situation where there are sufficient resources to create broad economic development and welfare improvements in a society, but such development fails to take place for several reasons: a. A situation where those in power use it to hinder broad economic development and where those negatively affected lack the power to break the trap on their own. This implies that those in power primarily act out of self-interest to maximize their private returns at the expense of others and to keep their power. This is a dictatorial power trap that is supported by a strong government. Institutions are developed to conserve this power structure b. A situation where several political interest groups compete for power and fail to cooperate or find stable cooperative solutions can result in varying conditions from civil war to weak and unstable governments that fail to put welfare-improving policies in place [ Anarchy, civil war situation, Unstable, weak democracies, corrupted democracies] There are many who benefit more from defection than from cooperation although broad economic development would require broad cooperation. This implies that those in power do not get sufficient support to implement well- intended and potentially welfare-improving policies. This is the dilemma of democracies; short-term political gains are given more weight than long-term economic and welfare gains. Power traps cause low investments for several reasons: 1. They cause skewed resource distributions such that the majority are too poor to invest and/or they lack the necessary access to markets and technologies 2. the powerful elite does not invest itself to create economic development but rather to stay in power 3. the power structure and the elite scares away other potential investors that could contribute to economic development 4. only investors that can go into an alliance with those in power, help in resource extraction for mutual benefit and invest at a large scale in such countries but with limited local growth effects 5. potential donor countries are scared away from providing investment funds because they are not wanted or they see small chances of succeeding with their donor support. Discriminatory and/or weak institutional structures can facilitate continued existence of power traps. Discriminatory institutional structures can provide legal basis for discrimination of the resource poor by the powerful while weak institutional structures cannot protect the poor against illegal actions by the powerful. Driving forces behind land degradation Many reasons why land users consciously or unconsciously degrade their natural resource base: 1. Missing information: The land users are unaware of the (full) consequences of their land use practices and underestimate the severity of the problem. This implies that their perceived rates of degradation are below scientifically estimated rates. 2. Appropriate technologies unavailable. Land users do not have access to appropriate technologies to intensify land use or adopt more sustainable land use practices and this may inhibit or reduce conservation incentives. 3. Tenure insecurity. Land users are aware of the problem, but their tenure insecurity leads to short planning horizons and low WTP. 4. Collective action failures. Much land degradation takes place on communal and state land and coordination and cooperation problems undermine efforts to conserve these areas. 5. Population pressure. Population pressure leads to land scarcity and an increase in the shadow value of land. If incentives to degrade are stronger than the incentives to conserve due to the high population pressure, higher population pressure is bad for the environment. 6. Rapid population growth. Rapid population growth may lead to a lag in learning, technology- and institutional adjustment, which may cause underinvestment in conservation. 7. Market imperfections. Imperfections in land markets may undermine the scarcity effect on the shadow value of land. Credit market imperfections in combination with poverty may lead to high discount rates and/or short planning horizons reducing incentives to invest in conservation. Imperfections in insurance markets and risk may cause underinvestment. Particularly covariate risk is a challenge in risky environments. 8. Poverty. People may be too poor to afford to invest in conservation (poverty-environment trap). Subsistence constraints may effectively reduce poor people’s ability to invest (ATP) in conservation. 9. Policy distortions. State interventions may have prevented the development of market and nonmarket institutions, which could have stimulated conservation activities. 10. Transaction costs and asymmetric information. Transaction costs and asymmetric information cause pervasive market imperfections which are particularly severe in remote marginal areas. 11. Political and social instability exacerbate or cause tenure insecurity, market imperfections and poverty. 12. Power traps. Elite capture and rent-seeking by powerful elites with little regard for equity and sustainability issues can prevent institutional responses and lead to poverty-environment traps. International organizations like the UN and the World Bank here have important roles to give advice and support to local governments. They may not succeed unless the power traps are broken such that institutional reforms can be introduced that trigger market development and environmental rehabilitation. Institutions, Markets and Environmental Rehabilitation Case: Ethiopia The Ethiopian highlands represent one of the most densely populated parts of the African continent due to the favourable climate and fertile soils. However, these highlands were identified as one of the environmental hotspots by the World Development Report 2008. They suffer from severe environmental degradation due to erosive cropping and livestock production systems, insecure property rights, civil war, climate risk, poverty, and an inter-related set of market, institutional- and policy failures. One of the most important land-related effects of the military regime (Derg) was the 1975 land reform where all land was made state land. No household was allowed to have more than 10 ha of land and the landlord class was excluded from leadership positions. This eliminated the earlier so powerful elite that dominated in Southern Ethiopia in particular. Land was allocated to households based on household size and followed up with land redistributions to sustain the egalitarian land distribution. All land transactions were prohibited and so was hiring of labour as markets were “evil capitalistic creatures”. Collective agriculture was promoted but failed like in many other countries where it was tried, and the land redistributions created tenure insecurity. The long civil war, droughts and famines in the 1980s demonstrated that the country had moved from one power trap to another. And this led to it being characterized as a poverty-environment trap and environmental hotspot. Institutional Responses The problem of environmental degradation first caught attention during the devastating famine in Wollo in 1973/74. The Peasant Associations that were established under the new regime also became the local institutional tool for implementing conservation activities. The World Food Program and other international agencies in 1980s and promoted conservation activities through food-for-work (FFW) incentives in accessible food-deficit areas. The Ministry of Agriculture was also organizing much of this soil conservation activity through a top-down planning and implementation approach emphasizing quantity rather than quality, using a standardized technological approach that often was inappropriate. Farm households preferred to even remove conservation structures on land that clearly suffered from land degradation due to soil erosion were that the structures took up space, harbored pests and made plowing more difficult. More severe land scarcity appeared to enhance removal of conservation structures while stronger perceptions of the importance of the problem reduced the probability of removal of structures. Low or negative returns to conservation in the short run caused lower adoption of conservation structures in higher rainfall areas than in drier areas Research in the Tigray region, starting from 1998 The major differences compared to earlier conservation efforts through FFW that we had observed in other parts of Ethiopia were: 1. compulsory labour tax on all adult members of society of 20 man days of work per year for communal purposes. A lot of this labour was used for soil and water conservation activities. The work was largely organized by the communities themselves with expert help 2. Two types of Food-for-work (FFW) projects were used in addition. The first was employment generation schemes (EGS) that served as a safety net for food insecure households, the other was FFW for soil and water conservation where the investments were the primary objective while provision of employment and food was a welcome form of payment 3. Establishment of area enclosures to rehabilitate degraded communal lands, and to prevent further degradation by humans and livestock 4. Investments in different types of irrigation to make more efficient use of water and enhance dry season production The achievements through these organized activities throughout the 1990s were impressive. They demonstrate that a lot can be done by poor communities living in risky and marginal drylands provided that they collaborate and mobilize their surplus labour during seasons when there are few alternative income generating activities. The second major institutional reform was the land registration and certification reform that was implemented first in the Tigray region in 1998-99 and followed with similar reforms in the Amhara, Oromiya and SNNP regions from 2003. This reform was based on a new federal land law of 1997 as well as regional land proclamations in each of these four regions. These land laws retained the state as owner of all land, prohibited all land sales and mortgaging of land, and restricted the duration of land rental contracts. However, these laws strengthened the user rights of farm households by making them perpetual and inheritable and declaring that land redistributions should stop. Such redistributions tool under the previous regime to prevent landlessness to occur and to maintain an egalitarian land distribution. However, the redistributions had also created tenure insecurity. The land registration and certification were a very welcome undertaking key elements of the low cost reform: a) Use of staff with limited training to organize the local land registration b) Use of only local tools for demarcation and measurement of farm plots c) Coverage of all land in a village through a sweeping survey where households walked the fields together with the organizers, and agreed on the plot demarcations and ownership of the individual plots d) All plots were listed on forms through identification of the name of the owner, the name of the location, the size of the plot, the land quality class, and the names of the neighbours to the plot, and with the neighbours as witnesses of the plot border e) All the information was written into registry books that were kept at the community level and with a copy at district level f) certificates were issued in the name of the head of the household, where information on all the plots of the household was listed as in d) The Ethiopian reform was characterized as having very low-cost compared to land titling programs in other countries and had been rapidly scaled up and had provided certificates for more than 20 million plots and 8 million households. While the reform was found to have many weaknesses, it was still found to be highly cost-effective as a first-time registration and provides important lessons. Technical and resource constraints cannot explain the failure of many other and less poor African countries to implement propoor land reforms. Therefore, the main obstacle is political and rests in the local power structures. Impacts on Natural Resources and Livelihoods Holden, Deininger and Ghebru show that land certification has stimulated tree planting and maintenance of soil conservation structures and has enhanced land productivity. They find that land certification has stimulated the land rental market, and particularly poor, female-headed households have become more willing to rent out their land because they feel more tenure secure. This appears to have enhanced the role of the land rental market as a safety net and has also had a poverty-reduction effect for female-headed households. The land registration and certification reform also had resulted in a reduction in land-related disputes, especially for land border disputes among neighbours. The Ethiopian policymakers are attempting to further enhance sustainable land management (SLM) by revising their land laws and have introduced revised laws and regulations in the four bioregions. The establishment of Land Administration Committees (LACs) at community level is intended as the institutional instrument to enforce these laws and regulations. Role of Markets Market development in Ethiopia is not only severely constrained by the rugged topography and poor infrastructure that causes very high transaction costs and information asymmetries, but also by political constraints due to scepticism towards certain types of markets. The fear is that the poor will be forced to sell their land and become destitute while the land policy, emphasizing an egalitarian land distribution, has used the land as a primary safety net and also an important instrument to stay in power. There is clear evidence that these public efforts have contributed substantially to land conservation although there is some mixed evidence regarding whether they have crowded in or crowded out private investments in conservation. The most successful of these FFW programs have been those with local participation in the identification of investment priorities, timing of the operations, and organization of the work. Otsuka and Place revealed that land rental markets are expanding in Africa, it is becoming a relevant policy issue how to promote more sustainable land management on rented land. The Ethiopian laws that restrict the duration of such rental contracts (maximum 2-5 years) may in this regard have a negative effect on tenants’ land use practices. In the future the non-farming economy has to be expanded in Ethiopia to provide alternative employment as an exit option from agriculture and as a safety net when climatic shocks cause failures in the agricultural production. Good infrastructure and functioning markets are essential for poverty reduction. A Comparative Perspective The Ethiopian land registration and certification reform was demanded and appreciated by most households as it enhanced their tenure security. An important reason for this success was the non-existence of local elites that resisted the reform. The broad and sweeping approach with strong local involvement, simple technology and low cost also ensured equitable participation. The well-established peasant associations at community level were also important for the successful environmental rehabilitation in Tigray. Implementing pro-poor land reforms is first and foremost about breaking the power traps. Ethiopia succeeded in breaking the feudal power trap and eliminated its powerful landlord elite and established an equitable land distribution but went into another power trap and lost valuable time during the anti-market period with civil war and famines. The period after 1991 with local collective action, FFW for conservation, area enclosures and land registration and certification has put the Tigray region on a better track but still many challenges remain to create strong growth and poverty reduction to break out of the poverty trap caused by the past power traps. Failed Land Reforms in Africa Place and Migot-Adholla  the impacts of land registration and titling had weak impacts on tenure security, credit access, crop yields and concentration of holdings based on studies in four Kenyan sites. They found no evidence - of increased land market activity after land titling in Kenya - no significant positive impacts of land titling in Madagascar - the formalization of land rights in Mali played into the hands of those with power, information and resources while the Nigerien case resulted in more conflictsin southeastern and titling has become possible and titles can be obtained but at a very high price, beyond what is affordable for ordinary farmers, through bureaucratic and corrupt processes. At the same time untitled land has become very tenure insecure and can be expropriated with little compensation paid. The main beneficiaries of the system are the wealthy, powerful, well- informed and well-connected. The planned new land reform in Malawi had been blocked by the traditional chiefs in the Parliament because they felt that their power was threatened by the proposed reform. Market-assisted land redistribution and restitution programs in South Africa and Zimbabwe have aimed to reduce the extremely skewed land distributions that were introduced by the colonial and racist policy regimes in the past. Like similar programs in Latin America, these programs have not been able to scale up and meet the ambitious targets set due to lack of political will and low investments in administrative capacity to handle the programs. The new scramble for land that has emerged in Africa following the high energy and food prices in 2006- 2008 has created a need for policy and land reform action to prevent emerging conflicts and protect the land rights of poor groups. Establishing good institutional frameworks that can handle and monitor such deals will be crucial to avoid political instability.