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Land Unchained?

Wednesday, September 16, 2020
By: Andy Currier
USAID project mapping and titling land in Petauke, Zambia in July 2018. Photo: Sandra Coburn
USAID project mapping and titling land in Petauke, Zambia in July 2018. © Sandra Coburn. Modified with illustration from xresch from Pixabay

 

This article is partly adapted from the Oakland Institute’s report, Driving Dispossession: The Global Push to “Unlock the Economic Potential of Land, ” released in July 2020, authored by Frederic Mousseau, Andy Currier, et al. Additional research assistance was provided by Katherine O’Neill.

Will Blockchain Technology “Unlock the Economic Value of Land”?

Over the past decade, few technologies can match the excitement that blockchain has generated across industries ranging from banking and finance, to law and supply chain management. As examined in the Oakland Institute’s latest report: Driving Dispossession: The Global Push to “Unlock the Economic Potential of Land,” land tenure administration is one notable application of blockchain that could potentially have significant implications for billions of people on the planet. The World Bank and several Western corporations are championing the technology as a solution to secure land rights and spur development. A number of governments are now in the process of working with startups to transfer land registries onto blockchain. But can the technology actually secure land rights?

Currently over 25 countries are in the process of providing individual titles and transferring land registries onto blockchain. Despite the high level of investment in the technology, at this point most countries remain in the early stages of implementation (see table).

Blockchain Land Titling Projects
Country Company (Country) Stage Years
Australia ChromAway (Sweden) Pilot testing 2018 —
Bermuda Bitfury (Netherlands) Planning 2018 —
Bolivia ChromAway (Sweden) Planning 2019 —
Brazil Ubitquity(USA) Pilot abandoned 2016 — 2017
Colombia UST Global (USA) Pilot testing 2018 —
Georgia Bitfury (Netherlands) Large-scale project in progress 2016 —
Ghana BenBen (Ghana), IBM; Bitland (USA) Planning 2017 -
Honduras Epigraph, Factom (USA) Pilot abandoned 2014 – 2016
India Blockchain Learning Group, Blockscale Solutions (Canada) Large-scale project in progress 2017 —
Japan Propy (USA) Planning 2018 —
Kenya N/A Planning 2020 —
Liberia Medici Land Governance (USA) Planning 2019 —
Mexico Medici Land Governance (USA) Planning 2019 —
Netherlands N/A Planning 2018 —
Nigeria HouseAfrica (USA/Nigeria) Planning 2019 —
Paraguay ChromAway (Sweden) Planning 2019 -
Peru ChromAway (Sweden) Planning 2019 -
Russia N/A Planning 2017 —
Rwanda Medici Land Governance (USA) Planning 2018 —
Saudi Arabia Avrio (Saudi Arabia) and EPSEO Blockchain (USA) Planning 2019 —
South Africa Seso Global (Nigeria) Pilot testing 2019 —
St. Kitts and Nevis Medici Land Governance (USA) Planning 2019 —
Sweden ChromAway (Sweden) Pilot testing 2016 —
Ukraine Propy (USA) Planning 2017 —
United Arab Emirates Tech Mahindra (India) Planning 2019 —
United Kingdom ConsenSys (USA) Pilot testing 2018 —
United States of America Medici Land Governance, Propy (USA) Large-scale project in progress (Wyoming), Planning (Vermont) 2018 —
Zambia Medici Land Governance (USA) Large-scale project in progress 2018 —

Proponents of the technology’s use for land administration argue that it has the potential to improve the security and transparency of land registries by storing all information on property boundaries and owners in an immutable, online source. Implementing the technology will therefore allow land registries to be secured at a much greater degree than they currently are, overcoming potential corruption that exists under a paper or simple digital registry system. Additionally, advocates claim that blockchain will clarify land ownership, helping reduce inadvertent land grabs that arise when public or customary land is mistakenly advertised as “available” to investors. A closer look however, reveals how these expected benefits are actually unlikely to materialize.

Challenging the Assumptions of Blockchain Land Titling

Most of the land on the planet is not registered under a system of private titles. Globally, up to 65 percent of land is governed by local communities or Indigenous People through collective or customary tenure systems. Across the Global South, land registries are often incomplete, as governments only recognize a fraction of these lands under customary systems, officially demarcating them as government-owned, public land. So while three quarters of the world’s poorest people live in rural areas where land is a key asset, over a billion of these people lack legal documents formalizing their ownership of the land. In Sub-Saharan Africa, for instance, 90 percent of rural land is not formally documented. This lack of formal documentation is however not seen as a problem for many, who consider land – like water – as a common good, with high social and cultural values, that must be shared and preserved for current and future generations.

For blockchain technology to be used in the administration of land, claims over land ownership first would have to be determined, documented, and verified. The World Bank, one of the major proponents of the use of blockchain for land registration, claims that countries without the required records need simply to “clean up” their registry in order to make blockchain work. However, this “clean up” is a much larger and more expensive undertaking than suggested by the Bank, given it requires “documenting” rights in the first instance, demarcating parcel boundaries,resolving disputes, and, establishing the necessary procedures and laws for a“modern” land administration infrastructure. As recently as 2018, only a third of all countries – including just two in Sub Saharan Africa – maintained land records digitally. In many countries where legal institutions are weak or susceptible to corruption, the process of formalizing ownership claims through individual titles can do little to improve tenure security, allow governments to solidify their claims to “vacant” land, and make it available for “investment,” as detailed in Driving Dispossession.

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Ultimately, shifting land registries to blockchain requires countries to move towards systems of private land ownership, which will require registration and digitalization. All of the 25 ongoing blockchain land projects around the world are focused on providing individual titles to land while ignoring the millions of hectares managed under customary or collective tenure systems. Thus, blockchain does nothing to help countries that maintain communal land systems and who have abstained from privatizing land and instead encourages countries to move towards individual, private land ownership. The process of transferring land away from customary systems to facilitate blockchain private titles risks further marginalizing disadvantaged groups and allowing wealthy and powerful interests to access and solidify their claims to land that does not belong to them.

Zambia, one of the most advanced countries in the application of blockchain technology for land titling is clearly on this path to privatization. At the time of independence in 1964, there was no private land in Zambia, with 94 percent of the country under customary tenure and the remaining six percent under state control. This started to change in the early 1990s, when the World Bank and the International Monetary Fund (IMF) required the government to change land laws towards privatization as a condition for the restructuring of its international debt.As a result of this and subsequent legal changes, Zambia saw a drastic reduction of customary land, from 94 percent to less than 60 percent today.This so-called formalization of land tenure resulted in shifting the control over land from people to the government, thereby making it available for lease to private interests. In the years after the Lands Act was passed, conversions of customary land to leasehold increased, displacement became common, and while investors reaped the benefits, local villagers suffered through “social and economic exclusion, elite capture, displacement, intra-community conflict, and the enclosure of common pool resources.”

Unlocking the Economic Potential of Land Through Blockchain

Chiapata, Zambia in July, 2018. © Sandra Coburn
Chiapata, Zambia in July, 2018. © Sandra Coburn

 

Instead of protecting land rights for communities, blockchain titling programs are actually geared towards promoting private investment. While the process of transitioning land registries onto blockchain ignores customary tenure systems, it opens the door to corruption, and can lead to dispossession, it simplifies the process of acquiring land for companies and therefore “unlocks the economic potential of land” for the private sector.

This motivation was made explicitly clear in Zambia. In 2018, the Zambian government signed a memorandum of understanding (MOU) with Medici Land Governance (MLG), a blockchain company and subsidiary of the US-based online retailer Overstock.com, to “develop a program for systematic land governance within the country.” MLG’s initial project used blockchain to create and digitize land titles and issued 50,000 titles“to serve as proof of concept for a systematic, streamlined process to scale up the country’s land titling program.”

Former Overstock.com CEO, Patrick M. Byrne

“There are also trillions of dollars in value in global mineral reserves that cannot be accessed by the mining firms…where land governance is not clearly established.”

Patrick Byrne, Former CEO, Overstock.com, July 15, 2019

Less than a year later, the company signed a second MOU, this time with the Lusaka City Council, to issue “no fewer than 250,000 certificates of title” to people living in Zambia’s capital.As expressed by its former CEO Patrick Byrne, Overstock.com’s interest in land titling is closely tied to the World Bank’s motto that private property rights can help unlock the economic potential of land. In communications with investors, Byrne cited “trillions of dollars in value in global mineral reserves that cannot be accessed by mining firms” due to unclear land governance systems. The explicit goal is that private titles will allow mining companies to enter into agreements with landowners to exploit vast natural resources, and ensure that the wealth extracted through mining is enjoyed by land rights holders and corporations. Under this scenario, Overstock.com would also benefit financially from unlocking this “dead capital,” though exactly how this will be negotiated remains unknown.

What is known in terms of revenue models is that in Zambia, the company expects to receive a cut of the tax revenues generated through government land titling and the resulting increase in taxes. In addition, Byrne has commented that donor countries pay healthy sums for land titling projects,suggesting that international development aid dollars could potentially support MLG’s efforts globally.

This motivation to benefit the private sector is shared by many of the blockchain startups that have been engaged in land titling projects. Seso Global plans to “unlock US$100 billion trapped in Nigeria’s real estate market using blockchain technology”while in the United Arab Emirates, Tech Mahindra’s project to shift the land registry onto blockchain promises to “create value which can bring benefits to citizens and multiple entities associated with municipalities (like property developers, banks).”

The day after MLG signed its first MOU in Zambia, it also penned an agreement with the World Bank to collaborate in other countries to “support the design, implementation, and evaluation of pilot programs that will create systems to ensure secure land tenure.” The Bank’s lead economist on land issues, Klaus Deininger, commented: “Joining forces with MLG allows the Bank to provide client countries access to cutting edge technology, work with the countries on adapting the technology to their context, and then document the impact of the updated process. We are excited about the opportunities this collaboration offers us to generate transformative innovations and make the case for greater public and private investment in an area that is key for development.” According to Byrne, the Bank is now helping open doors for blockchain-based land titling “all over the world.” However, details of the partnership with Overstock.com remain confidential and have not been made public by the World Bank. The World Bank’s Access to Information Department was “unable to fulfill” the Oakland Institute’s request for information regarding the partnership and other ongoing blockchain land titling projects.

Exploiting More Natural Resources or Preserving the Commons

The Bank’s involvement in facilitating blockchain titling contradicts its commitment to safeguarding customary tenure systems that have been shown in many cases to provide tenure security and safeguard natural resources. In a 2019 paper, the World Bank itself acknowledged that “customary land has proven to be highly resilient, continuous and flexible” and that safeguarding [customary land] rights should be a “development priority.” Despite this statement, the Bank’s programs facilitating blockchain titling continue to directly undermine customary and collective forms of land governance, putting millions at risk of losing their land and livelihoods.

As demonstrated by the Zambia case, shifting land registries onto blockchain is a part of the broader move to “unlock the economic potential of land” in order to put more land and natural resources into exploitation by private interests. While implementing the technology can be attractive to corporate interests eager to access land, it can be a tool of dispossession for those whose livelihoods depend on land governed under customary tenure systems. As a number of governments consider applying blockchain to land titling, they must understand and pay heed to the true motivations and implications of this technology.

Author

Andy Currier headshot

Andy Currier

Andy is a Research Associate supporting the Institute’s work on land rights, food sovereignty and international development.

He holds a Master’s Degree in Public Policy from the UCLA Luskin School of Public Affairs with a concentration in Global Environment and Resources. Andy’s past research experience centers on evaluating strategies for developing countries to adapt to the impacts of climate change with a focus on agroecology and sustainable seed systems.