The Importance of Property Rights

I believe explicit property rights are essential to the recovery of Haiti. One of the challenges organizations involved in rebuilding (like Architecture for Humanity) is simply ascertaining ownership of land. Gregg MacDonald, the lead coordinator for the UN Shelter cluster, has identified a lack of clear land title as one of primary delays in producing shelter for the internally displaced. In Port-au-Prince, there is little to no legally available land. The vast majority of open land around the city is owned by a few elite families who demand compensation. For individual properties, owners are unable to be located and proof of ownership is nonexistent.



Private property is essentially a social contract made among neighbors to benefit the community as a whole.  When no one owns or depends on the future value of land, the usual result is overuse and degradation. This phenomenon is known as the "tragedy of the commons." The other extreme is when ownership is fragmented and no one has the power to coordinate land uses in the public interest. Both of these conditions exist in Haiti. 


 Haiti rates extremely low in its property rights index, a measure of "the degree to which a country's laws protect private property rights, and the degree to which its government enforces those laws." Haiti scores the same as Cuba, a country where property cannot be bought or sold amongst its people. That score is 10 out of 100. "The index also assesses the likelihood that private property will be expropriated and analyzes the independence of the judiciary, the existence of corruption within the judiciary, and the ability of individuals and businesses to enforce contracts."

Gaining legal ownership recognized by the government is extremely complex, and most Haitians operate on a more informal, paperless system. How surprising is this when over half of Haitians are illiterate? In addition, less than 5% of all Haitians are fluent in French, the official language of the country. The odds are incredible that the average Haitian could gain legal rights to property, even one that they have lived and worked on for decades. Hernando de Soto, a Peruvian economist, measured the length of time it took to gain legally recognized property rights in several countries, including Haiti. Purchasing "legally recognized title to property in Haiti takes over 11 years and 111 bureaucratic steps involving 32 separate offices and countless forms to be filed." To lease a property for 5 years takes 65 steps and 2 years. According to a 1997 diagnosis by the Institute for Liberty and Justice, 82 percent of Haitians own their properties extralegally, that is not governed by law.    

Eric Freyfogle sums up the benefits of property rights as the following: "Private property promotes economic enterprise; it fosters privacy and personal development; and it provides stability for communities and states." Haiti's inability to protect property rights will continue to severely compromise efforts to rebuild.  Incentives to improve property are low because property is not protected like it is in the United States. The vast majority of Haitians have no guarantee that they can sell their land, use their land as collateral for a loan, or protect it from being taken away from them. Land's value is exclusively of the present. 

This post was heavily influenced by the 2007 book, On Property Rights: Finding Common Ground on the Ownership of Land by Eric Freyfogle.


February 28 UPDATE: For more about land issues in international aid, see this great blog post from Tales From the Hood.