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Mar 27, 2013

How Land Titling Can Boost Access to Credit for Farmers in Ecuador

For more than 70 years, the Herrera family has owned and farmed 300 hectares in the municipality of Pimampiro in northern Ecuador. The family had a deed for the land but it provided few details about the exact property lines, which areas had been set aside as protected areas, and in which parts farming was allowed.

That changed about three years ago when a pilot project financed by the IDB established a modern, reliable, and continuously updated system to secure land ownership rights in eight rural cantons. The program generated or updated the cadastral informationof over 100,000 rural plots and reduced problems with informality like those faced by the Herreras. In all, more than 45,857 property titles were granted through the program.

“I now have the certainty that the land I own is legal,’’ said German Herrera, the family patriarch, who operates a dairy farm on the property. Herrera said the program has given him the certainty that he was farming on the right plot of land—another portion of his land is destined for conservation— and that the taxes he was paying were correct.

The project developed a cost-effective and agile methodology to register and physically measure properties on a large scale. The registry process was implemented with the participation of local governments and beneficiaries.

An impact evaluation of the project suggests that land formalization, which complemented government measures already in place to boost lending to the agricultural sector, has contributed to improved access to credit for farmers. With the help of this expanded credit supply, farmers project-wide who obtained formal land titles also boosted production and increased their annual income on average between $800 and $900 by the time the project ended in 2009.

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These preliminary results have prompted the Ecuadorian government to expand this registry program to another 50 cantons. The new phase, financed by an IDB loan approved in 2010, is expected to update the cadastre of 800,000 of the estimated 2.7 million rural properties in the country. The legal status of tenure will be clarified for approximately 170,000 properties.

This new project also incorporates a rigorous evaluation that will not only assess the impact of the project on credit, investments, production, and the performance of rural land markets but also on how land formalization can affect municipal revenue collection. Results from that evaluation, expected in 2015, may shed light on how to best develop specific agricultural policies to help Latin American farmers with formal land titles obtain loans to increase production and income.

Team Leader

Luis Hernando Hintze
luishh@iadb.org

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