Abstract
Abstract: The Brazilian Forest Code restricts landowners’ uses of the land. Changes in property rights are therefore the core element of the program. In this paper the new institutional literature on property rights is used to analyze the main difficulties involved in such a re-specification of rights. Four concepts from this literature are described and applied to better understand the issues that have hindered the program in the past and that affect the current version of the program initiated in 2012: (i) property rights as a ‘bundle of rights’, (ii) evolution of property rights, (iii) path dependence; and Ostrom’s 8 design principles. The paper argues that the key issue for the Forest Code is the level of uncertainty of the gap between the de jure and de facto specification of property rights.
Highlights
In 2012 Brazil revised its Forest Code legislation which regulates private land use and management by mandating landowners to set aside in native vegetation and leave unused an area equal to 20% of total property area (80% in the Amazon)
Other Brazilian policies that involved intervening directly with individuals’ property rights, such as the land reform program or the occupation of the Amazon, pale in comparison in terms of magnitude and reach, as they did not apply to all or even most properties in the country. As those policy experiences have shown, interventions that require altering property rights tend not to be as straightforward as they can initially seem, often eliciting unexpected behavior and yielding unintended consequences. These difficulties are compounded by the fact that the Forest Code legislation is one of the most draconian land laws in the world, requiring landowners to set aside significant fractions of their properties, with non-trivial impacts in terms of foregone production possibilities and reduced rental streams that must be fully absorbed by the owners without compensation
The original document went too far in this other direction, contributing to the hyperinflation that followed, but over time many of the excesses of that document were revised and it has been an important instrument in the unprecedented fall in equality in Brazil from 1995 to the present (ALSTON et al, 2016). This social change is important because it is the fundamental cause of what this paper has identified as the central problem of property right to land in Brazil: the divergence between de jure and de facto rights
Summary
In 2012 Brazil revised its Forest Code legislation which regulates private land use and management by mandating landowners to set aside in native vegetation and leave unused an area equal to 20% of total property area (80% in the Amazon). It is almost never possible or economically rational to fully enforce the formal property rights specified by laws and regulation so that the de facto property rights that provide the incentives for land use choices are generally disjoint from the de jure property rights on paper This wedge between de jure and de facto may not be very consequential if there is wide agreement and certainty that what truly applies are the de facto rules that everybody has been abiding by. Because many of these experiences have much in common with what is being pursued by the Forest Code, the cases that are analyzed hold many lessons and insights for this grand policy experiment.
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