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This paper analyzes the property rights/deforestation linkage in Latin America. It recognizes that tenure issues have an effect on land clearing pressures in two areas. The first deals with the security of individual property rights on established agricultural lands and its effects on agricultural production and employment. The second involves alternative tenure types and their impact on land clearing in forest areas.

Excessive deforestation has been taking place in tropical areas of Latin America for the past several decades. Among the causes of accelerated deforestation are population and income growth, extensive logging, expanding agricultural growth patterns and lagging agricultural yields. Government policies have also contributed to accelerating deforestation, by adopting measures to increase the profitability of agriculture in forested areas, constructing roads in frontier areas and adopting patterns of agricultural growth favoring large-scale mechanized production and low employment generation.

According to economic theory, improving tenure security in established agricultural areas should increase productivity, labor use, and the efficiency of land market transactions. Recent empirical evidence in Honduras, Paraguay and Brazil has confirmed that access to a secure title increases access to credit and promotes on-farm investments. Therefore, strengthening property rights is an important element in a strategy of agricultural intensification and employment generation. It will reduce demographic pressures on forest resources as well as the demand for additional agricultural output. However, increased tenure security must be complemented by removing those policy biases that facilitate land concentration and the under-utilization of productive lands.

Tenure issues play an important role in the complex dynamics associated with excessive forest clearing in frontier areas. Although empirical evidence is still scant, recent studies in Brazil and Guatemala suggest that establishing formal individual property rights does not seem to reduce land clearing rates. This is explained by the greater private profitability of agricultural and ranching activities. Hence, alternative property regimes in forested areas are necessary to discourage forest removal.

State ownership of forested areas is only a partial solution to the problem since most Latin American governments at present do not have the means to fully enforce property rights over all public forest lands. In long-inhabited areas with a low population density and cohesive communities, common property regimes have been shown to be an efficient method of managing forest resources. However, these regimes may not be appropriate for active frontier areas, where new tenure modalities must be designed to discourage expanding settlements. Governments should consider granting restricted property rights to private agents and NGOs who display the capacity to safeguard forests. Lower land taxes and favorable income tax treatment for those who preserve forests may also help protect these resources.

Property rights policies alone cannot be the central element of a strategy to reduce deforestation pressures at the frontier. Regardless of tenure policies, forest clearing is likely to persist if settled areas do not offer sufficient employment opportunities to potential migrants. Also, deforestation trends will endure if government policies continue to support land clearing by granting ex postproperty rights to settlers and increasing the private profitability of alternative, unsustainable land uses.

Governments in the region should adopt a policy agenda to diminish excessive deforestation rates. Zoning and land use planning policies need to establish which lands are suitable for agricultural use and which are better left under forests or other uses. The institutions that support property rights must be strengthened. For settled agricultural areas, individual property rights should be issued to stimulate agricultural intensification. Governments need to grant individual property rights to untitled agricultural lands, eliminate barriers to land sales and land rentals, and suppress regulations that introduce risks to hiring rural labor.

In addition, complementary policies are required to promote a more efficient pattern of land use and greater employment in agricultural activities. These measures include:

• modifying macroecomic and sectoral policies that stimulate inefficient land uses;
• reforming labor market provisions to promote a more intensive use of human resources in agriculture;
• promoting appropriate credit sources for poor farmers;
• redirecting public investment in infrastructure;
• promoting research and extension for the benefit of smallholding sectors; and
• adopting complementary measures to increase employment generation in both urban and rural settings in non-agricultural activities.

In forested areas, tenure policies also have an important role to play in reducing deforestation pressures. Governments need to implement several reforms, such as eliminating the practice of requiring proof of land clearing in order to obtain legal title or credit, ending support of formal and informal colonization efforts in areas without agricultural potential, defending and enforcing protected areas, and designing creative tenure arrangements to preserve forest lands. Among the latter, priority should be given to strengthening formal property rights among indigenous and other traditional communities, granting logging concessions in favor of local forest dwellers, and establishing restricted private property rights over forest areas that cannot be appropriately safeguarded under public ownership. In addition, governments should promote pilot efforts to enact local land taxes with higher rates for pasture and crop lands than for forest uses.

No single factor alone will halt the deforestation currently occurring in the region. However, a combination of reforms and policy changes -- including the alteration of present land tenure practices -- will reduce the excessive rate of forest clearing. It remains for the governments of Latin America to act on policy recommendations to face the complex challenge before them.

Last updated: 04/20/07