DISCUSSION PAPER Report No. : rUiU 65 Land Registration and Titling from an Economist's Perspective: h Case Study in Rural Thailand by Cershon Feder 1 Research Unit Agriculture and Rural Development Department Operational Policy Staff World Bank February 1987 The view, presented here are those of the author(s), and they should not be interpreted as reflectkg those of the World Bank. LAND REGISTRATION AND TIRING FROM AN ECONOMIST^s PERSPECTIVE : A CASE SW3Y IN RURAL THAILAND Gershon Feder Senior Economist Research Unit Department of .Agriculture and Rural Development The World Bank February 1987 The author is a staff member of the World Bank. The paper benefitted from helpful comments by Lynn Holstein. The World Bank does not accept responsibility for the views expressed herein which are those of the author and should not be attributed to the World Bank or to its affiliated organizations. The designations employed and the presentation of material in this document are solely for the convenience of the reader and-do not imply the expression of any opinion whatsoever on the part of the World Bank or its affiliates concerning the legal status of any country, territory, area or of its authorities, or concerning the delimitation of its boundaries, or national affiliation. LAND REGISTRATION AND TITLING FROM AN ECONOY1STqSPERSPECTIVE: A CASE STUDY IN RURAL THAILAND I. Introduction The establishment or upgrading of cadastres and land registratfon systems 1s viewed by nany as an essential infrastructure investment to be considered by less developed countries (Doebele, 1983; Williamson, 1982, 1983, 1985). The benefits to be derived from such invetments are vell known, and have been listed in some 'detail by Simpson(1976) and Willianson (1985). While most of these benefits pertain to improvement in the economic environment, and hence, increased productivity, there has been a paucity of quantitative infomation to indicate the magnitudes of these benefits. Knowledge of magnitudes is important, as governments face many competing claims for the public resources available for investment. Thus, while zany vill agree that cadastres and land registration are useful, a decision to actually invest in establishing or expanding these activities will be easier to undertake if it is demonstrated that the resulting benefits are higher than those of other public investments. The purpose of this paper is to report the results of a recent study undertaken in rural Thailand (Feder et al., 1987). The study focused on the economic taplications of land titling in the agricultural sector, and utilized farm level data from a sample of about 900 farmers in four Thai provinces. The methodology of the study faciliated not only an estimate of the agricultural productivity gain due to land registration and titling, but also a cost-benefit analysis demonstrating that investment in cadastres and land titling can generate very high returns. The program of the paper is as follows: The next section reviews .. theory relating land registration to economic perfomance. It is followed A by a discussion of the land rights system in Thailand. the subsequent two .- sections describe the nethodology utilized in the analysis and the empirical results. .4 cost-benefit analysis of titling is then presented and the last section sumarizes :he r2sults. If. Econoaic Aspects of Land Registration and Titling In many countries the evolution of individual land rights and mechanisms to enforce such rights in the rural context is closely relatsd to increases in population density and to advances in agricultural technology. As land becomes scarce, soci :ties which may have practiced shifting cultivation or long fallow periods to maintain land fertility nust adopt fertility- restoring technologies that allow continuous exploitation of the land. Because such technologies require investment of both ca~ital and effort, the cultivator must have investment incentives. One would expect investnent to h negatively related to ownership insecurity: v i c 5 increased uncertainty, investment incentives are reduced and current consumption is oreferred. Yith Lower capital accumulation, the demand 52r variable inputs vhich are complementary to capital is reduced. Output 7er unit of land is therefore lower when ownership is insecure. In the ealy stages of agricultural development, de-facto ownership may not imply substantial uncertainty about a farmer's continued use of the land. Uncertainty tends to increase, however, as commercialization 2ncreases and as new technology raises the land's income potential. There is ample evidence that the incidence of land disputes and land grabbing -- and consequently, tenure insecurity - increases as the potential return to land increases. Development also increases land transactions (sales, rentals), as efficiency considerations motivate adjustment in the land input to he compatible with other endowments such as faming skills. 3ut as the frequency of transactions between individuals who are not closelv r2l3ted increases, uncertainty over 3wnership '~nd entitlement to transfer land rights becomes a relevant factor. Individuals are therefore induced to spend resources on reducing uncertainty, and this, in turn, affects the scope and the price of land transactions. For the cultivator, ownership security is enhanced when the right to continuous!~r cultivate, and the ability to transfer a given tract of land by will or by sale, are secured not only by social custom but also by an effective state-enforced legal system. Thus, ~opulationgrowth and agricultural progress are tvpically accompanied by formal mechanisms to enforce land rights. A common mechanism is a unified system of Land rexistration and documentation whereby the state provides the land owner with proof 9r facilitates proving that a given and well- defined tract of land does indeed belong ~3 him. ?f the registration svstem is effective, and if the state can effectivelv protect the owner from encroachment 2r false challenges to his owners hi^, then such a mechanism i~deedenhances security. With agricultural development there is an almost universal emergence of rural credit markets, both fomal (e.g. banks) and informal (e.g. money lenders, traders). Credit transactions often require an explicit or implicit collateral. Land is an attractive collateral asset provided that the borrower can assure the lender that he has the ability to t r a n s f e r the land. S i lack of c l e a r l e g a l t i t l e t o r i g h t s prevents the -- I 2 mortgaging of land, a 9e.-fl*.et i t l e can provide e a s i e r access t o c r e d i t , d . e s p e c i a l l y credf t from formal lending i n s t i t u t i o n s who do not have personal o r d e t a i l e d information on the borrower. For informal lenders, c o l l a t e r a l s play a l e s s s i q n i f t c a n t role. These lenders u s u a l l y base t h e i r decistan 43n personal f a m i l i a r i t y v i t h t h e borrower and they 3ave a l t e r n a t i v a neans f > r enforcing repayment (e.4. s o c i a l pressures) which a r e not a v a i l a b l e t o formal lenders. Thus, farmers without secure tenure face fewer disadvantages i n t h e i n f o m a l c r e d i t market than i n t h e formal narket. However, i n f o m a l c r e d i t is t y p i c a l l y much more expensive than f o r n a l c r e d i t , and is confined mostly t o short- term loans of r e l a t i v e l y small magnitude. With l i m i t e d and more expensive c r e d i t , investments and inputs use would be lower among farmers lacking secure tenure and l e g a l t i t l e . This leads t o lower ? r o d u c t i v i t y per u n i t of land. It follows that the institution of land registration and t i t l i q q can have s i g n i f i c a n t economic consequences i n t h e a n r i c u l t u r a l s e c t o r . While t h i s proposition is generally recognized by economists and development o f f i c i a l s , it has not been subject t o rigorous quantitative a n a l y s i s . This lacuna harn~erst h e design and e v a l u a t i o n of ? o l i c f e s . A l t e r n a t i v e p o l i c i e s and investments a r e b e t t e r assessed when some knowledge of the magnitude 3f t h e i r e f f e c t s 1s a v a i l a b l e t o policy- makers. This i s s u e is p a r t i c u l a r l y a c u t e i n a country such a s Thailand, where rapid expansion of the c u l t i v a t e d a r e a has occurred i n the past three decades. Much of t h i s expansion took place through c l e a r i n g f o r e s t a r e a s , and without properly documenting and formalizing fanners' land r i g h t s . Many of these farmers operate i n designated f o r e s t reserve a r e a s owned by t h e s t a t e . These f a m e r s a r e c o n s i d e r e d s q u a t t e r s from a l e g a l p e r s p e c t i v e . From t h e d i s c u s s i o n above, it is hypothesized t h a t t i t l e and t e n u r e i n s e c u r i t y c a u s e s lower f a n p r o d u c t i v i t y because f n v e s t n e n t i n c e n t i v e s a r e reduced and a c c e s s t3 c r e d i t fs Limited. 3 i s conclusi3n i n p l i e s f u r t h e r t h a t the narket v a l u e of land which is not securell: 3 ~ ~ e d (e.g. u n t i t l e d land) will be Less than t h a t of an i d e n t i c a l t r a c t of Land which is s e c u r e l y held. T h i s i m p l i c a t i o n f o l l o w s from t h e f a c t t h a t t h e v a l u e of land r e f l e c t s t h e s t r e a m of n e t incomes which it gen,= r a t e s o v e r a long horlzon. S i n c e land w i t h s e c u r e t e n u r e h a s h i g h e r p r o d u c t i v i t y and is a l e s s r i s k y a s s e t , it h a s a h i g h e r market value. The c a u s a l c h a i n o u t l i n e d i n t h e d i s c u s s i o n above i 3 i l l u s t r a t e d i n F i g u r e 1. The subsequent s e c t i o n s of t h e paper p r e s e n t e m p i r i c a l evidence from Thailand s u s t a n t i a t i n g t h e hypotheses d i s c u s s e d above. Figure 1 : Land Ownership S e c u r i t y and Farm Productivity: A Conceptual Framework r- T i t led 1 Yore Securi t v t o Farmer t o Lender More Demand More Supply of Cheaper f o r Investment Long Term Credit P I Investment (input cornplem~ntarlty) I More Supply of Cheaper Variable Input Short Term Credit 4 I Input Use 1 Per Acre Higher P r i c e 111. The Land B i g h t s Systzz i n Thailand A d e t a i l e d d i s c u s s i o n of land r e g i s t r a c i o n i n Thailand h a s r e c e n t l y been provided by AnQJs-Lep~anand Williamson (1986). Below we p r o v i d e a summary of p e r t i n e n t d e t a i l s . The Land Code of 1954 is t h e S a s i s f o r t h e l e g a l land r i g h t s s y s t e a la Thailand today. The Code d e f i n e s t h e powers and d u t i e s of :he V d n i s t e r qf t h e I n t e r i o r and :he 3 e p a r t a e n r 3f Lands (DOL). A 1 1 of t h e land r e g i s t r a t i o n documents f o r land which is n o t government p r o p e r t y a r e i s s u e d by t h e DOL. The DOL, a c t i n g under t h e 'Land Code, can a d j u d i c a t e land r i g h t s o n l y f o r l a n d s u \ i c h a r e n o t d e s i g n a t e d o f f i c i a l l y a s f o r e s t r e s e r v e s , n a t i o n a l parks, e t c . The l a n d d o c u ~ e n t s , r e f e r r e d t o by t h e i r Thai zcronym, correspond t o t h e phases of land a c q u i s i t i o n , u t i l i z a t i o n and l e g a l possession. I n terms of ownership s e c u r i t y and land r i g h t s , we c a n d i s t i n g u i s h between s e c u r e and unsecure documents. Although t h e t i t l e deed document (NS-4) is t h e most s e c u r e document, t h e r e a r e two o t h e r documents (NS-3 and NS-3K) t h a t accord l e g a l r e c o g n i t i o n and p r o t e c t i o n of a f a r m e r ' s ownership r i q h t s o v e r a g i v e n t r a c t of land. F u l l ownership r i g h t s a s d e f i n e d h e r e enaS!e t h e farmer ta f r e e l v and Legally t r a n s a c t w i t h t h e land. -YS-4 L e g a l ownership is documented i n a f u l l u n r e s t r i c t e d t i t l e deed c a l l e d NS-4 (Char,od). T h i s document e n a b l e s t h e owner t o s e l l , t r a n s f e r and l e g a l l y mortgage t h e land. It is issued on the basis of a a p r e c i s e s u r v e y w i t h c l e a r i d e n t i f i c a t i o n of t h e p r o p e r t y aiarked by boundary s t o n e s and is r e g i s t e r e d i n t h e p r o v i n c i a l land r e g i s t e r . NS-3 and SS-3K The s e c u r e documents r e l a t e d t o t h e phase of u t i l i z a t i o n a r e NS-3 (Nor-Sor-Sarm) and NS-3K (Nor- Sor- Sam- Kor) - " Certificate of Use" o r " Exploitation T e s t i ~ ~ n L a l " .These documents c e r t i f y t h a t the occupant has made u s e of t h e land f o r a ? r e s c r i b e d period of time. Ynder :he e x i s t i n g l e g i s l a t i o n , ii farmer n u s t f i r s t p o s s e s s an VS-? qr VS-7Y document b e f o r e he can o ~ t a i na f u l l t i t l e deed (!-IS-6). The law a l l o w s sale, mortgage and o t h e r t r a n s f e r s u t i l i z i n g t h e s e documents -9 r e c o r d t h e t r a n s a c t i o n . The NS-3 c e r t i f i c a t e s g r a n t e d between 1954 and 1972 were surveved i n i s o l a t i o n by t a p e s u r v e y s and t h e land was d e s c r i b e d i a t h e c e r t i f i c a t e by g r a p h i c metes and bounds w i t h a n approximate diagram showing t h e shape of t h e p a r c e l . A f t e r 1972, s y s t e m a t i c s u r v e y s using u n r e c t i f ied a e r i a l photographs were i n t r o d u c e d (NS-3K), where land is d e s c r i o e d on t h e c e r t i f i c a t e by 2 p l a n , and t h e c e r t i f i c a t e s t a t e s t h a t t h e h o l d e r "has possessed and a a d e u s e of t h e land." 'Vhile t h e above documents (NS-4, ?IS-3, and XS-3K) a r e t h e r)n:;r documents which a l l o w t h e f a m e r t o f r e e l y and l e g a l l y t r a n s a c t w i t h 3 g i v e n t r a c t of land, t h e r e a r e s e v e r a l a t h e r documents vhich ~ r o v i . . ? e evidence s u p p o r t i n g a f a r a e r ' s ownershi? claim. These documents, NS-2 3nd SK-1, however, do n o t c e r t i f y s e c u r e I-.gal ownership. The Thai land a d m i n i s t r a t i o n system s h a r e s w i t h o t h e r d e v e l o p i n g c o u n t r i e s t h e problem of Limited funding and a n i n a d e q u a t e a d m i n i s t r a t i v e i n f r a s t r u c t u r e t o provide till titles t o a l l e l i g i b l e farmers. / As a . . -1/ Recently, however, t h e government undertook a s i g n i f i c a n t expansion o f t h e t i t l i n g and land r e g i s t r a t i o n c a p a c i t y t h r o u g h a s p e c i a l p r o j e c t funded p a r t i a l l y by e x t e r n a l donors. r e s u l t , t h e p r o c e s s of land r e g i s t r a t i o n h a s been r a t h e r slow. Only a small p r o p o r t i o n ( a b c u t 12x1 o f land not claimed by t h e s t a t e is covered by f u l l t i t l e (NS-r(). Considering t h e ,.rea a c t u a l l y docurncnted (1.e. land with e i t h e r f u l l t i t l e o r c e r t i f i c a t e of u t i l i z a t i o n ) , t h e p r o p o r t i o n I s 53 p e r c e n t . In o u r study a r e a s , 2 r i m r i l y a g r i c u l t u r a l a r e a s , t h e occurrence of f u l l t i t l e deeds !SS-A) uas r a r e . I t is perhaps because of t h e l o v o c c u r r e n c e of t h e f u l l t i t l e deeds, t h a t t h e s t a t u s and u s e f g ~ l n e s sof t h e c e r t i f i c a t e s of u t i l i z a t i o n has r i s e n , b l u r r i n g t h e d i s t i n c t i o n between t h e NS-4 and YS-3 o r ?IS-3K i n r u r a l a r e a s . A!:hough some coannercial banks seem t o p r e f e r c o l l a t e r a l s documented on a f u l l t i t l e deed t o t h o s e documented on a c e r t i f i c a t e of u t i l i z a t i o n , t h e r e a r e l n d i c a t i o . . ~ t h a t i n p r a c t i c e t h e d i f f e r e n c e s between t h e c e r t i f i c a t e s of u t i l i z a t i o n and f u l l t i t l e are r a t h e r small. Williamson ( 1983') and t h e Y i n i s t r y of A g r i c u l t u r e and Cooperatives (1980, p. 7 ) c l a i m t h a t t h e r e f 3 l i t t l e d i f f e r e n c e between f u l l t i t l e and YS-3 o r NS-3K. As Williamson s t a t e s , "banks v f l l lend e q u a l l y , i r r e s p e c t i v e of whether t h e l a n d h a s a title o r a c e r t i f i c a t e of u t i l i z a t i o n " (Williamson, 1983, p. 10). Our own f i e l d survey and numerous d i s c u s s i o ~ sw i t h f a r 3 e r s and land o f f i c e r s i n d i c a t e t h a t i n t h e r u r a l a r e a s s t c d i e d t h e r e is ;!rc!e d i s t i n c t i o n between NS-3, NS-3K and Nc i documents, and t h a t a l l a r e t a k e n a s evidence of l e g a l ~ w n e r s h i pby banks and buyers. L i k e many o t h e r developing c o u n t r i e s , T h a i l a n d is faced w i t h t h e problem of i l l e g a l occupatf 2- and u t i l i z a t i o n o f state- owned land by l a r g e numbers of farmers. An e s t i m a t e d 5.3 m i l l i o n h e c t a r e s o r about o n e - f i f t h of t h e l a n d o f f i c i a l l y d e s i g n a t e d a s state- owned f o r e s t r e s e r v e , is under pennanent o c c u p a t i o n and cultivation by s q u a t t e r s . T h i s is about 21 p e r c e n t of t h e land under c u l t i v a t i o n and i n v o l v e s about one m i l l i o n s q u a t t e r farm households. Even t h o u ~ hmany of t h e s e s q u a t t e r s had d e - f a c t o p o s s e s s i o n of t h e land f o r 15-20 y e a r s , they c a n n o t o b t a i n t i t l e s o r c e r t i f i c a t e s of u t i l i z a t i o n . The f o r e s t r e s e r v e a r e a s can be found s i d e by s i d e w i t h t h e non- forest r e s e r v e a r e a s , 1a n e i q h b o r i n q g e o g r a p h i c a l a r e a s l o c a t e d w i t h i n t d e n t i c ~ i3 g r o c l i m a t i z zones and s l t h 3 l a i l a r s o c i o - p o l i t i c a l s t r u c t u r e s . As t h e p a t t e r n of a g r i c u l t u r a l expansion in Thailand h a s a l v a y s been through a p r o c e s s af f o r e s t c l e a r i n g and s e t t l e m e n t , t h e r e is no s o c i o - c u l t u r a l o r e t h n i c d i f f e r e n c e between t h e s q u a t t e r s i n o u r s t u d y a r e a s and t h e i r n e i g h b o r i n g legal owners.:/ IV. Methodology and Data Ownership s e c u r i t y is d e f i n e d i n t h i s s t u d y a s t h e p o s s e s s i o n of l e g a l ownership r i g h t s , c e r t i f i e d by an a p p r o p r i a t e s t a t e - i s s u e d document. Secure ownership e n t a i l s p r o t e c t i o n from t h e r i s k of e v i c t i o n , and t h e a b i l i t y t o l e g a l l y mortgage and sell t h e land. Y o r a a l l y , ownership s e c u r i t y would 5e d i f f i c u l t t o q u a n t i f y . In Thailar. +owever, two qrouys of f a n e r s a r e r e a d i l y d i s t i n g * l i s h a b l e i n t 5 e i r ownership s e c u r i t y s t a t ~ s . One group comprises s q u a t t e r s who o p e r a t e f a r a s i n f o r e s t r e s e r v e a r e a s . The o t h e r g r o u p I s composed of l e g a l l y t i t l e d f a r m e r s o p e r a t i n g o u t s i d e t\e f o r e s t r e s e r v e boundaries. Because ownership s e c u r i t y is uniform w i t h i n e a c h group, comparisons between t h e two groups circumvent t h e need t o -1/ However, i n some f r o n t i e r a r e a s c l o s e t o t h e c o u n t r y ' s i n t e r n a t i o n a l b o r d e r s , t h e s q u a t t e r p o p u l a t i o n c o n s i s t s o f h i l l t r i b e s who a r e not e t h n i c Thai. a c t u a l l y q u a n t i f y ownership s e c u r i t y and i n f e r e n c e s r e g a r d i n g t h e economic i m p l i c a t i o n s of ownersh4p s e c u r i t y can be made. However, t o simply compare t h e economic i n d i c a t o r s of t h e two groups may ignore o t h e r important d i f f e r e n c ? ~between them, and t h u s i n v a l i d a t e t h e a s s e s s o e n t of t h e impact of o v n e r s h i p s e c u r i t y based 9n such comparisons. For exarmle, one imoortant f a c t o r t s the a q r o c l l a a t i c environment i n v h i c h t h e f a n e r o p e r a t e s . There is no p o i n t i n comparing a t i t l e d farmer o p e r a t i n g i n a f e r t i l e v a l l e y t o a s q u a t t e r o p e r a t i n g i n a hil1.r a r e a ; t h e t v o d i f f e r nc- o n l y i n ownership s e c u r i t y s t a t u s , but a l s o i n s o i l and t e r r a i n type. To avoid f a l s e a t t r i b u t i o n s , a k e y element of t h e s t u d y methodology was t o s e l e c t s t u d y s i t e s i n v h i c h s q u a t t e r s and t i t l e d farmers o p e r a t e i n g e o g r a p h i c a l p r o x i a i t y w i t h i n a s i a i l a r a g r o c l i m a t i c environment. Accordingly, a l l o b s e r v a t i o n s w i t h i n a p a r t i c u l a r s t u d y s i t e -- borh w i t h i n t h e f o r e s t r e s e r v e a r e a s and from a d j a c e n t a r e a s o u t s i d e t h e r e s e r v e s - were l o c a t e d w i t h i n a r a d i u s n o t exceeding 20 miles. Great c a r e was t a k e n t o e n s u r e t h a t a s t u d y site had s i m i l a r t e r r a i n s and i n f r a s t r u c t u r a l f a c i l i t i e s . S i t e s vet selecred in f o u r p r o v i n c e s v h i c h met t h e r e q u i r e d s i m i l a r i t y of a q r o c l i z m t i c c o n d i t i o n s and g e o ~ r a ~ h i c aproximity of t h e l samples of l e g a l owners and s q u a t t e r s . These were l o c a t e d i n Lop Burl p r o v i n c e on t h e f r i n g e o f t h e 2 1 ~ t i d i. ' ; 3 ' ? , and Nakhon Ratchasima, Khon-Kaen, and Chaiyaphun provinces i n rh: 4 c r t h e a st . Surveys were conducted d u r i n g t h e 19P. y Gv e t s e a s 0 9 i n the f i r s t t h r e e p r o v i n c e s , and fn' 1986 f o r Chaiyaphum provlrce. TP.2 sanpi!.nq d e s i g n f o r e a c h province c o n s i s t e d of a randoa sele: - :c? in t h e pre-+c;ecte< s t u d y site of t e n v i l l a g - ? i r - -'-e f o r e s t r e s e r v e and t e n v i l l a g e s i n t h e a d j a c e n t non - forest r e s e r v e a r e a . Within each v i l l a g e , about I0 f a r m e r s were randomly . s e l e c t e d To account f o r i n d i v i d u a l d i f f e r e n c e s between farmers ( e . ~ . i n i t i a l w e a l t h , l o c a t i o n , s o i l t y p e ) , :>e e a p i r i c a l analyses r e p o r t e d I n subseauent c h a p t e r s rrtl!ize !a:.~ >n : 5 a r a c t e r i s t l c s af t h e f a r ~ e r3nd i!s f a r a . These a n a l y s e s a r e e s s e n t i a l l y econometric, eaploying r e g r e s s i o n t e c h n i q u e s and dichotomous c h o i c e models. E v i c t i o n of s q u a t t e r s i n f o r e s t rese-rve a r e a s by government o f f i c e r s h a s been r a t h e r r a r e i n Thailand due t o s o c i o - p o l i t i c a l c o n s t r a i n t s . While o v e r a l l s t a t i s t i c s of e v i c t i o n t r e q u e n c i e s f o r t h e c o u n t r y a r e n o t a v a i l a b l e , d a t a from t h e f o u r p r o v i n c e s surveyed i n t h e c o n t e x t of t h e p r e s e n t s t u d y s u g g e s t t h a t t h e l i f e t i m e p r o b a b i l i t y of e v i c t i o n f o r a s q u a t t e r is a b o u t 4 p e r c e n t , a r a t h e r lw frequency. The low p r o b a b i l i t y of e v i c t i o n , combined w i t h t h e f a c t t h a t land t a x is being c o l l e c t e d on s q u a t t e r ' s land a r e f a c t o r s which enhance t h e s q u a t t e r s ' p e r c e p t i o n of ownership s e c u r i t y . Indeed, when s q u a t t e r s were asked what t h e y perceived as t h e n o s t i n p o r t a n t ddvantage of p o s s e s s i n g 3 s e c u r e land ownership docanent s u c h a s NS-3 o r YS-3K, the m a j o r i t y s t a t e d f a v o r a b l e a c c e s s t o i n s t f t u t i o n a l c r e d i t . V. Eqirical Results An examination of c r e d i t t r a n s a c t i o n s by sample farmers i n d i c a t e d a marked d i f f e r e n c e betveen i n s t l t u t i o n a l ( f o r m a l ) and non-instf t u t i o n a l ( i n f o r m a l ) l e n d e r s . Institutional lenders often require loan collaterals, Figure 2 : Yap of Thailand while non-institutional lenders do not. This is because non-institutional lenders face a lcwer borrcwer-specific risk since they are familiar with the farmers in their area and have better enforcement possibilities. Titled farmers pledged land as collate-a1 in more than half of their institutional loans. Squatters were unable to pledge land as collateral and as a result tbe amount of Lnstitutional credit per unit of !and obtained by squatters was less than that obtained by titled farmers. While acczss to non-institutional credit was not significantly affected by ownership security, the cost of such credit was three times higher. Further, in areas vhere the non-institutional credit market is not well developed, the loan amounts were limited. Econometric analysis confirmed that the supply of institlltional credit is significantly affected by the provision of land collateral. The credit advantages associated with land collateral were larger in provinces where production is subject to high weather risks. Legal owners thus enjoyed substantial advantages (ranglng from 52 to 521 percent) in access to cheaper institutional credit. They received significantly more longer tera credit and significantly more credLt from commercial banks. Commercial bank loans fn almost all cases required a land collateral. Data on land values reported by the sample farmers were used to estimate econometrically the value of legal ownership in the study areas. The estimates account for other variables which might affect land values (e.g. soil quality, market proximity, etc.). In all the provinces studied, ownership security had a statistically significant effect on land prices. The effect is substantial in the northeastern provinces, where the value of u n t i t l e d l a n d ranges between one h a l f and two- thirds t h e v a l u e of t i t l e d land. The v a l u e of l e g a l ownership is much s m a l l e r i n Lop Buri province ( u n t i t l e d l a n d ' s v a l u e is 80 p e r c e n t t h a t of t i t l e d l a n d ) . I n Lop Buri t h e i n f o r m a l c r e d i t market is r e l a t i v e l y w e l l developed, a f a c t whicil Frobablv a c c o u n t s f o r t h e lower v a l u e of s e c u r e l e q a l t i t l e s i n c e informal c r e d i t o r s u s u a l l y do not r e q u i r e 1 legal c 3 l l a t e r 3 1 . Econometric a n a l y s i s of c a p i t a l accumulation e s t a b l i s h e d t h a t In t h e t h r e e n o r t h e a s t e r n provinces, ownership s e c u r i t y induced s i g n i f i c a n t l y h i g h e r c a p i t a l / l a n d r a t i o s , h o l d i n g o t h e r farmer a t t r i b u t s s c o n s t a n t . The d i f f e r e n c e s i n c a p i t a l / l a n d r a t i o s between t i t l e d and u n t i t l e d farmers ranged from 56 t o 253 p e r c e n t . I n Lop Buri t h e impact of ownership s e c u r i t y on c a p i t a l formation was n o t s i g n i f i c a n t . A d d i t i o n a l l y , t h e a d o p t i o n o f two t y p e s of land- improving i n v e s t m e n t s was shovn t o be s i g n i f i c a n t l y a f f e c t e d by ownership s e c u r i t y i n t h r e e of t h e p r o v i n c e s , h o l d i n g fariner and land c h a r a c t e r i s t i c s c o n s t a n t . I n t h r e e p r o v i n c e s , d a t a a t t h e household l e v e l were s u i t a b l e f o r a n econometric a n a l y s i s of t h e impact of ownership s e c u r i t y on i n p u t and o u t p u t . The r e s u l t s i n tvo n o r t h e a s t e r n p r o v i n c e s confirmed t h a t , c e t e r i s p a r i b u s , t i t l e d f a m e r s u s e s i g n i f f c a n t l y h i g h e r amounts of v a r i a b l e t 2 ~ u t ; ( l a b o r , power, o t h e r cash i n p u t s ) p e r u n i t of land t h a n do u n t i t l e d farmers. Crop v a l u e p e r u n i t of l a n d was a l s o h i g h e r , by 12 t o 26 p e r c e n t . D i f f e r e n c e s i n Lop Buri province were s m a l l e r , and n o t s t a t i s t i c a l l y s i g n i f i c a n t . However, when t h e a n a l y s i s used a more g e n e r a l d e f i n i t i o n of farm income, i n c l u d i n g income from non- crop a g r i c u l t u r a l p r o d u c t s and n o n - t a m a c t i v i t i e s , t i t l e d f a r m e r s performed s i g n i f i c a n t l y b e t t e r t h a n u n t i t l e d farmers i n a l l t h r e e provinces. The d i f f e r e n c e s ranged from 12 t o 21 percent. T a b l e 1 summarizes t h e r e s u l t s o f t h e Table 1: Differences i n Economic Performance Between U n t i t l e d and T i t l e Farmers (Ratios of the l a t t e r t o the former) a/ - Province LOP Nakhon Khon Irldicator Buri R a t c h a s ima Kaen Chaiyaphum - C a p i t a l Stock per Unit of 'Land Owned P r o b a b i l i t y of Improving Land by Bunding 1.184 1.695* 1.411* 1.028 P r o b a b i l i t y of Improving Land by Stump Clearinq 1.123* 1.474* 1.293" 1.005 Labor Days per Unit of Cropped Land 1.147* 1.147* 1.052% n.a. D r a f t Power Expense per Unit cf Cropped Land -946 1.387* 1.269" n.a. Other Input Expenses p e r Unit of Cropped Land 1.184 1.246* 1.348* n.a. Value of A g r i c u l t u r a l Output per Unit of Cropped Land 1.045 1.118* 1.267* n.a. Revenue from A g r i c u l t u r a l and ~ o n - l s q r i c u l t u r a l A c t i v i t i e s 1.145" 1.127* 1.208* 2.3. Value of Land 1.250* 2.326* 2.128" 1.539* - a / A r a t i o of 1 implies equal performance f o r t i t l e d and u n t i t l e d f a r o r r s , r a t i o of 2 implies a 100% difference. * denotes s t a t i s t i c a l s i g n i f i c a n c e a t a 90% (one- tailed) confidence l e v e 1. a n a l y s i s of e c o n o s i c p e q f o r z a n c e c r i ~ e r i a . 3y and l a r s e , t h e e m p i r i c a l c o r k s u p p o r t s t h e e c 3 n o x i c t h e o r y o u t l i n e d i n S e c t i o n XI. VI The Benefits arid Costs of h n d Ownership Security The ?ur?osr ?f :his section is r a a n a l y z e t h e economic c o s t s and 5eger'its e n t a i l e d i n 3r9'~'.?i-q iecgtad ?vnershi? i n Thailand. 5 . e p r e c e d i n g s e c t i o n ?r3v'.ied e ~ ~ L d e n c:hat r i n c r e a s i n q t h e ownershi3 secgrit;: of u n t i t l e d f a m e r s bv g r a n t i n q t 5 e n f u l l l e q a l ownership would i n c r e a s e t h e i r productivi:y. T5e bezer'i:. of t i t l e d o w n e r s h i p t o a farner can t h u s be c a l c u l a t e d a s t h e p r e s e n t v a l u e of t h e i n c r e m e n t s t o n e t income which w i l l a c c r u e to h i s o v e r a l i f e t i ~ e . The i n c r e m e n t s a r e d e f i n e d r e l a t i v e t o t h e stream of nec incomes exoecced under h i s p r e s e n t i n s e c u r e ownership s t a t u s . If the faner Incurs any costs i n changing h i s s t a t u s , then chese need t o be s u b t r a c t e d F r o s t h e b e n e f i t of s e c u r e ownership. An equivalent s e a s u r e o f t h e nec 5 e n e f i c :o C a n e r s is t h e d i f f e r e n c e i n t h e v a l u e of t h e i r land S e f o r e and a f r e r rhe ownership s t a t u s change, n i n u s r k e c sts of i m p l e 3 e n t i n e t h e c5anqe. The o f f i c i a l fee for processing and a v a r d i n p a s e c u r o awnership doctment, such a s YS3-T, t o an rligi5le f a n e r is r e l a t i v e l y v : ?n t o :O baht ? e r ? l o t . S i n c e ? l o t s a v e r a p e about 15 t o 25 rai. t h e o f f i c i a l fee t r a n s l a t e s i n t o a b o u t 2 b a h t o r less per r a i . -'/ I n r e a l i t y , however, E a r n e r s pay n o t o n l y t h e o f f i c i a l f e e , but a l s o f o r :he g i f t s and h o s p i t a l i t y t h a t t h e y p r o v i d e t o i n d i v i d u a l s implementing t h e ground s u r v e v and a d j u d i c a t i o n 7 r o c e s s . .An e s t i n a c e of chese c o s t s was o b t a i n e d from t h e sampled f a r x e r s . Uean f i z u r e s f o r t h e 7 r o v i n c e s i n t h e s t u d y a r e p r e s e n t e d Saht = L'S i n Table 2 ; The f i g u r e s f o r SS3-K and ?IS3 documents a r e l i s t e d s e p a r a t e l y , s i n c e mostly NS3-K docuzents were issued a f t e r 1972. The procedure f o r i s s u i n g NS3-K documents t a p l i e s lower c o s t s t o f a m e r s a s compared t o NS-3. .The d a t a c o n f i n chat the c o s t s of a c q u i r i n g an YS3 a r e considerably h i g h e r than those f o r 32 YS3-K. Yowever, vhen expressed per r a i of land, the monetary c o s t s of a c a u i r i ? ~3 secure docuent a r e s t i l l low, amountinq t o l e s s than 1 percent of the value of land. The increase In land value d ~ teo the a c q u i s i t i o n of t i t l e ranges from 25 percent of u n t i t l e d land value i n Lop Buri t o 132 percent i n Yakhon U t c h a s i s a . C l e a r l y , the net b e n e f i t of ownership s e c u r i t y t o f a m e r s f s s u b s t a n t i a l . This suggests t h a t t h e government f e e cherged t o f a r n e r s f o r survey, a d j u d i c a t i o n and documentation can be increased s i g n i f i c a n t l y from its c u r r e n t Low l e v e l s . It should not be increased too mch however, lest farmers w i l l refuse to o b t a i n t i t l e documents. Such revenues can reduce t h e pressure on public budgets a s s o c i a t e d with any large- scale land t i t l i n g e f f o r t s . For p o l i c y purposes, however, an assessment of the b e n e f i t s of providing s e c u r e Legal ovnership should be Sased on t h e s o c i a l c o s t s and b e n e f i t s r a t h e r than on t 5 e b e n e f i t s a s perceived by Carsers.'! - me ?et b e n e f i t s t o f a r n e r s , a s c a l c u l a t e d above, could d i f f z r from rhe Ter 5 e n e f i t t o s o c i e t y . This is because ~f d i s t o r t i o n s in rhe narket valuation 3f Land p r i c e s and because of t h e discrepancy between t h e c o s t s paid by f a m e r s f o r t i t l i n g s e r v i c e s and the r e a l public c o s t s of providing those t i t l i n g s e r v i c e s . The study developed a t h e o r e t i c a l model which s>ows t h a t i f t h e -1/ S o c i a l c o s t s o r b e n e f i t s a r e a -3ore complete concept of economic value, whereby goods and s e r v i c e s a r e evaluated a t t h e r e a l value of resources r e q u i r e d t o produce or provide them. T a b l e 2: T i t l i n g Cost t o Farmers - - Province Lop Buri Nakhon Ratchas ima Khon-Kaen Chaiyaphum Item Average p l o t s i z e ( r a i ) 25 15 16 22 Cost of YS3 per p l o t (Baht) Cost of NS3 per r a i (Baht) Cost of NS-3K p e r p l o t (Baht) C o s t of NS-3K p e r r a i (Baht) 8 3 8 1 Average p r i c e of U n t i t l e d Land ( p e r r a i ) 2828 3448 3204 2015 - a/ F i g u r e s i n p a r e n t h e s e s i n d i c a t e sample s i z e s . p r o b a b i l i t y of e v i c t l o n is non- zero, t h e observed p r i c e of u n t i t l e d land u n d e r e s t i m a t e s t h e expected d i s c o u n t e d v a l u e of t h e g r o s s s o c i a l b e n e f i t s forthcoming from such land. The o v e r v a l u a t i o n s t e m s from two s o u r c e s . One s o u r c e is t h e f a c t t h a t farmers a r e r i s k - a v e r s e , w h i l e s o c i e t y is risk-neutral.:/ Risk a v e r s i o n i m p l i e s t h a t t h e farriers r e q u i r e an a d d i t i o n a l d i s c o u n t on t h e price > I t h e r i s k y a s s e t (nr.tlt!ed l a n d ) 3s c ~ m p a r e dt o t h e p r i c e chev would Se w i l l i n g 5 9 pay under risk n e u t r a l i t y . The second s o u r c e f o r u n d e r v a l u a t i o n , however, would remain even when f a r m e r s a r e r i s k - n e u t r a l , o r a s long a s t h e r i s k o f e v i c t i o n is non- zero. The reason why p r i v a t e v a l u a t i o n and s o c i a l v a l u a t i o n of land d e v i a t e is because t h e r i s k t o t h e f a r a e r is not t h e same a s t h e r i s k t o s o c i e t y . When a farmer is e v i c t e d , he l o s e s both a p o r t i o n of t h e s t r e a m of o u t p u t s and t h e v a l u e of t h e land. I n c o n t r a s t , s o c i e t y l o s e s a p o r t i o n of t h e o u t p u t , bur r e t a i n s t h e 7 r o d u c t f v e p o t e n t i a l of t h e land. The t h e o r e t i c a l a o d e l a l s o shows t h a t when i n t e r e s t r a t e s r e f l e c t t h e r e a l c o s t of c r e d i t then t h e market p r i c e of t i t l e d land would e q u a l its s o c i a l value. Xowever, i n a c r e d i t market s u c h a s t h a t i n m a i l a n d , where i n t e r e s t r a t e c e i l i n g s and o t h e r i n t e r v e n t i o n s a r e p r e s e n t , t h e reai c o s t of c a p i t a l is h i g h e r ehan t h e i n t e r e s t r a t e on bank loans. Tais i m p l i e s t h a t i n Thailand t h e c a r k e t p r i c e of t i t l e d land is h i g h e r than lcs s o c i a l value. The magnitude of t h e g r o s s i n c r e a s e i n s o c i a l w e l f a r e r e s u l t i n g from a l l o w i n g t h e l e g a l r e g i s t r a t i o n of a u n i t of f o r e s t r e s e r v e l a n d of a given q u a l i t y [ e x p r e s s e d a s a p r o p o r t i o n (8) of t h e market p r i c e of u n t i t l e d l a n d -1/ Rlsk n e u t r a l i t y is d e f i n e d a s t h e behavior c h a r a c t e r i z i n g a n i n d i v i d u a l who is i n d i f f e r e n t between a s u r e award of $100 and a gamble i n which t h e r e is a n e q u a l chance of g e t t i n g $200 o r n o t h i n g a t a l l . of t h e same q u a l i t y ] is o b t a i n e d u s i n g a f o m l a where ? and Pnt a r e t h e p a r k e t p r i c e s of t i t l e d and u n t i t l e d l a n d , t r e s p e c t i v e y and 3 Fs a cerm l e s s than 1, s u r n m r i z i n g t h e v a r i o u s a d j u s t n e n t s which csrrec: the narket p r i c e s :3 e l i m i n a t e the d i s t o r t i ~ n s . I t can be shown t h a t t h e r a t i o of a a r k e t p r i c e s of t i t l e and u n t i t l e d land f o r any g i v e n land q u a l i t y is independent of t h e q u a l i t y , and t h u s t h e i n v e r s e of t h e r a t i o s r e p o r t e d i n t h e l a s t l i n e of Table 1 can be used. The v a l u e of 9 depends on v a r i o u s assumptions r e g a r d i n g t h e r e a l r a t e of i n e r e s t and t h e d e g r e e e of r i s k a v e r s i o n . Assuming a r e a l i n t e r e s t r a t e of 12 p e r c e n t , and p r o v i d i n g a l t e r n a t i v e e s t i m a t e s f o r a c a s e of r i s k n e u t r a l i t y and r i s k a v e r s i o n , t h e g r o s s b e n e f i t s a r e r e p o r t e d i n column 1 of T a b l e 3. I n Lop Buri province t h e b e n e f i t s a r e small, and under t h e assumption of r i s k a v e r s i o n they a r e n e g l i g i b l e . The reason may be, a s p o i n t e d o u t e a r l i e r , t h e abundant a v a i l a b i l i t y of i n f o r m a l c r e d i t i n Lop Buri, h i c h d i a i n i s h e s t h e i s p o r t a n c e of titles I n t h e provinces. T?ie d i r e c t c o s t s t o socierv which a r e incurred i n the process -3f p r o v i d i n g f a r m e r s with t i t l e documentation x e r e r e c e n t l y e s t i m a t e d by Burns (1985), u s i n g data from t h e Thai Department of Lands. Those e s t i m a t e s a r e r e p l i c a t e d i n column 2 of T a b l e 3. The c o s t t o s o c i e t y of p r o v i d i n g a f u l l title does n o t exceed 5.6 p e r c e n t of t h e market v a l u e of u n t i t l e d l a n d i n any of t h e p r o v i n c e s s t u d i e d . The c a l c u l a t i o n of t h e n s t s o c i a l b e n e f i t s (column 3) shows t h a t even when f a n n e r s a r e assumed r i s k - a v e r s e , t h e n e t s o c i a l b e n e f i t it s u b s t a n t i a l , ranging from 397 baht p e r r a i i n Chaiyaphum p r o v i n c e , t o 1276 baht p e r r a t i n Khon-Kaen province ( i . e . from 20 t o 39 p e r c e n t of u n t i t l e d land v a l u e , assuming r i s k a v e r s i o n ) . The b e n e f i t / c o s t r a t i o f o r a ? o l i c y of t i t l i n g s q u a t t e r s range!; from 4.5 i n Chaiyaphun t o 12.0 i n Khon-Kaen under t h e assumptiol- of r i s k aversion.:/ This i n p l i e s c h a t p r o v i d i n q s e c u r e ownership ( t i t l , :) t 3 s q u a t t e r s g e n e r a t e s 12 t x t r e q e l v high s o c i a l r a t e 3f r e t u r n . The a n a l y s i s above d e a l s -4th t h e b e n e f i t s of p r o v i d i n g l e g a l ownership ( t i t l e s ) t o s q u a t t e r s on f o r e s t r e s e r v e land. The b e n e f i t s voul(i be s m a l l e r when t i t l e is awarded t o r c c u p i e r s of undocumented l a n d s o u t s i d e of t h e f o r e s t r e s e r v e , as i n t h e i r c a s e t h e r e is no s i q n i f i c a n ~d e f i c i e n c y i n investment i n c e n t i v e s . Rather, t h e lower p r o d u c t i v i t y of such farmers stems from c o n s t r a i n e d a c c e s s t o i n s t i t u t i o n a l c r e d i t . The d a t a show, however, t h a t t h e market p r i c e of such land is much c l o s e r t o t h e p r i c e of f o r e s t r e s e r v e l a n d t h a n it is t o t h e p r i c e of t i t l e d land. It thus f o l l o w s t h a t t h e 5 e n e f i t s t o s o c i e t y from t i t l i n g such undocumented land tsr still substantial, exceeding a benefit- cost r a t i o of 2 in the three n o r t h e a s t e r n provinces. V I I . Summary and Conclusious The s t u d y r e p o r t e d i n t h i s paper provided a q u a n t i t a t i v e est!.mate o f t h e impact of titles on economic performance, through t h e p r o v i s i o n of state recognition and protection of ownership rights. It was shown that i n - 1/ The b e n e f i t / c o s t r a t i o is c a l c u l a t e d a s t h e r a t i o of t h e d i s c o u n t e d v a l u e of b e n e f i t s t o t i t l i n g c o s t . A r a t i o o f 1 i n d i c a t e s t h a t t h e r e t u r n t o t h e p r o j e c t is e x a c t l y e q u a l t o t h a t of o t h e r i n v e s t m e n t s which are being undertaken. most areas studied, titled fanners invest more than untitled farmers, undertake more land improvements, untllize aore production inputs, and have a signficantly higher productivity. The market value of titled land was shown to be significantly higher than that of untitled land of equal quality. X cost-benefit analysis has shown that the benefits to society zenerated by titlinq siqnificantlv outweigh the costs for three of ths four provinces. The ?ate of return indicated by the calculations is several times higher than the standard return on public investments, The implication of these results is that cadastres and titling can be very beneficial public investments, whic!~should rank high among the priorities of governments. An assessment must be made, however, of the particular circumstances of the area or country where the investment is considered. A quantitative analysis of the type performed in rhe present study could be replicated in order to provide a vell foundsd justification for investment in specific regions. .b more quantitative informat LL L . I l l < i l : F C~TI-I::L:l 1 9 3 . t.1 P : C::pi:i L: i Analysis. 5y g o Sinsvanger, T. Sil,lra-3.1i ; h , E ' , Etrltl-,a:- ?,to, *'.,', 1,' :nrfe )I-:, :(.'j. Kashf rsagar, J3.r...!? i!) 3 5. Regor: No.: ARU 66 The Iapacr ot Agricuicrira~~ x E ~ : :i01: Y Th,: TT~ i n i r i ge a ~ 'l'i1 ~ l ~ : : s y g : ~ : ! ~ . . > India. by Cdrahon Fedar and Rggrr 5 Lade, J14na 19F 5 . Report No.: M U 47 Xectrodoiogical Issues .La rhr Sv;lluac,irn ~i Z x t e n ton 1-pae:., ~ Sy Carshon Peder and R ~ g r rj i a d e , J u l y 1985. 3eporr No. : .ARU AS Estimation of Aggregara .4gricuitarai ;uppi:# R ~ s ~ c > I I Y ~ . by Bans Sinsvanget, 'fair "undlak, Yaw-Chens 'fang anr A1,jn 3owers August 1985 (Zavised 3c:obar 1984:. Reoor: Yo.: .UU 59 Land 'jalues and Land t f c l c Ssturf::t I:: 3uraL :hailand. by Yongyuth Chalamwong and Garshao Fader, :une 1985 :!?et.i.?ed0c:tc~Ser 1985). % E D o ~ = YO-: M U 50 Land Ovnership %curicy and CapLzal ?oorjation in Rural. 3 a i i a n d O by Carahon Fader and Tongrof Onchan, Desrmb%r 1985 l8?avf;rd February 1986). Xeport Yo. : XRU 51 Land Ovncrship S~curityand F a n Proditcti-rlty ;I: Xura, %a.i*ar.d. by Gershon Pedar, A p r i l 1385. Regor= Yo.: M U 52 Social and Cultural Aspect-; of Lln? ?!-.b.erican:e ;nd 1r; r,;ac t i:)n5 i n Tural Thailand. by C5arles 3. "ell, ;uno L996. -:)is -----.. -- :t:srr i c n P a 3 c r n -.- I - : c:cc :i311 (i t! 92pL;t: -2 :- ;I I \I:.- I . ~ o d'7 .sr fJr~ci::rtivity!n '-1?atLr+.1i ' S Fore it Eteserre Areas t::$.t it' J ; Cc:rZ ' h r ~;edt:::, Tcangrl:; 13:-,i!;zn ord Yonbn u;.:! hal;unrong, August 15186. 3-- ----'.--2 . : x3'J 55 ( n tt:\r Detenin3r;t:ss a £ Cross-Czur,:~; A3grc.,gntr! X g r i c d ~ u r a lSupply '-~yk?asn5 BFnsvangr r , Yair !kr.dL,ik., Y ~ w - C h e c %a:-zgand Alan Bowers, ~ 5ep tcraker L986. 3+2;3rt SD. : A3U 57 . - * n l a ~C3n .::gricclture 30 for :he Pccresc R~ralGro:~ps?by !Ian9 P. Binswanger, a::d Jaime B. Quizon, Septen5er :986. 3e2ort z.:58 A3U ? z ~ u L tion D+mity, %?Let a Access and Farzier-Generated Technical Change ic Sub-Saharan Africa by ?rajhu L. P i n g a l i and Hans P. Binswanget, September 1986. ?:epcrt So.: &?.U 5'9 C r e d i t ?!'arke:s, Yea.Lth and E a d c ~ ~ o z ti3 3crnL So-:th Indid bv Eans P. s 3lnsz.acger and &rk R. Rosenmeig, Decenber 1-5, 1986. :'eport So. : AliU 60 Resource Endcmnents, Fanning Sysrers and T e c h n c l o ~Priorities for S,J~-SaharanAfrica by Hans P . Binswanger acd Drabhu P i n g a l i , Sovember 1986. ?*part No. : AiCI 61 Xural ?actor brkets In China After the H3usehold Responsibility Systen Re?ort by Justin Yifu Lin, h'ovenber 1985. , ?.eport No.: AXU 62 Determinants of Marcen's T i m Allocation in F u r n l 3anglsdesh by Shahidxr X. Khandkx, February 3.981. .?.e~ort No,: MU 63 -.-.. ?hnagment Problems tn Irrigated Jav3: 3oyonJ 3.1~2 S e l f -Suf f i c i e n c y b y ..lndre7~S t o n e , ?far-,h 1987.