Land and Economics

Land, together with its associated buildings and construction, is one of the most important financial assets in any country. Every investment is in some way or another dependent on land and property. Without land no shop or factory can be built, no road or railway constructed, there can be no schools or hospitals, and there can be no government or private sector buildings. Without the security of title to land or buildings it is difficult to obtain investment funds and venture capital. Poor land administration is an impediment to the growth of an economy — banks for example are hesitant to meet the needs for financing without security of title, because of the higher costs and more significant risks. Legal security of land tenure facilitates mortgage-based investment financing for small and middle-scale businesses and underpins the physical infrastructure of almost all commercial operations.

Good land administration contributes to economic development in a number of ways. It provides security to investors and permits real estate to be traded in the market place. It also allows governments to raise taxes on the basis of the value of land and property, either at the time of land transfer (in the form of Stamp Duty or a transfer tax) or directly and annually on the estimated worth of the land or property. This is tantamount to a tax on wealth and has the further advantage that unlike personal income, buildings and the land on which they stand cannot easily be hidden from the tax collector. With good land administration, land and property taxes are easier to administer and can lead to the collection of substantial revenue.

The Functions of Land Administration

A land administration system provides a mechanism that supports the management of real property. The processes of land administration include the regulating of land and property development, the use and conservation of the land, the gathering of revenues from the land through sales, leasing, and taxation; and the resolving of conflicts concerning the ownership and use of the land (Dale and McLaughlin 1988). The basic building block in any land administration system is the cadastral parcel.

The cadastral parcel is a uniquely delimited tract of land within which a coherent set of definable property interests is recognized. In theory the parcel envelops a continuous volume of land and a continuous set of interests, although there are many exceptions to this rule.

Land administration functions may be divided into four components: juridical, regulatory, fiscal, and information management. These functions of land administration are traditionally organized around three sets of agencies responsible for surveying and mapping, land registration, and land valuation. Each of these agencies collects data and makes them available to the public.

The juridical component places greatest emphasis on the holding and registration of rights in land. It comprises a series of processes concerned with the original determination or adjudication of existing land rights, the allocation of land, for example, through original grants from the sovereign power, transfers, prescription, and expropriation. Other processes address the delimitation of parcels by defining the land for which the rights are allocated, demarcating boundaries on the ground, and describing these boundaries graphically, numerically, or in writing. Over time, the rights to land and the delimitation of parcels may give rise to doubts or disputes and there must therefore be further mechanisms for resolving these. Adjudication is the dispute resolution process while registration is the process of making and keeping records of property rights.

The regulatory component is mostly concerned with the development and use of the land. It includes land development and use restrictions imposed through zoning mechanisms and the designation of areas of special interest, ranging from historic districts to fragile ecosystems. The fiscal component focuses on the economic utility of the land. Its processes may be used to support increased revenue collection and production, and may act as incentives to consolidate or redistribute land or to use land for particular purposes.

Information management is integral to all three components described above: the juridical cadastre underpins land registration; the fiscal cadastre supports valuation and taxation; and zoning and other information systems facilitate planning and enforcement of regulations. Recognition that these components share common information requirements led to the concept of the multi-purpose cadastre as a community-oriented, parcel based system for integrating land related information collected and managed by different agencies (McLaughlin 1975). In recent decades there have been many efforts, for instance by Australian states and other jurisdictions, to develop information systems based on the cadastral parcel since this is the basic spatial unit of human activity.

The opportunities to develop land information systems have increased with recent advances in information technology, moves towards constructing national spatial data infrastructures (McLaughlin 1991; NRC 1993) and the creation of national land information services. While the function of a land administration system is to support the management of real property, including the physical earth and all things attached to it, the function of a land information system is to underpin this process.