Previous PageTable Of ContentsNext Page

La réforme agraire en Ecosse: un commentaire économique sur la proposition de «droit communautaire d'achat de la terre»

En 2001, le Scottish Executive a publié des propositions visant à réformer radicalement la législation foncière. La proposition la plus controversée et la plus ambitieuse vise à donner à des groupes communautaires s'étant dotés de la personnalité juridique le «droit d'achat» de terres lorsque celles-ci sont en vente sur le marché et de fournir des fonds publics pour aider à payer le prix d'achat. L'article passe en revue cette proposition et évalue dans quelle mesure la propriété foncière communautaire permet d'atteindre les objectifs économiques et sociaux du gouvernement. En général, ces propositions pourraient contribuer, dans une faible mesure, au développement rural durable, mais uniquement si les liens sociaux au niveau des communautés et les dispositions prises sur le plan de la gestion sont suffisamment souples et résistants pour faire face aux pressions externes et internes. Comme l'achat de terres coûte cher, d'autres approches comme le transfert de terres forestières domaniales ou la réintroduction d'une taxe sur les terrains de sport devraient être envisagées, car elles pourraient se révéler un moyen rentable d'obtenir des avantages économiques au niveau local de la gestion et de l'utilisation des terres.

Reforma agraria en Escocia: comentario de tipo económico sobre «el derecho de la comunidad a comprar la tierra» propuesto

En 2001, el ejecutivo escocés publicó propuestas para introducir reformas sustanciales en la legislación que regula la tierra. La más controvertida y ambiciosa de ellas consiste en conceder a grupos de la comunidad jurídicamente constituidos «el derecho a comprar la tierra» cuando ésta se comercialice y en proporcionarles fondos públicos para que puedan satisfacer el precio de compra. La finalidad del presente artículo es examinar esta propuesta y evaluar la probabilidad de que la propiedad comunitaria de tierra cumpla los objetivos económicos y sociales del Gobierno. Se confía en que las propuestas mejorarán modestamente las perspectivas de conseguir un desarrollo rural sostenible, siempre que los lazos sociales de la comunidad y los sistemas de ordenación sean lo bastante flexibles y resistentes como para soportar fuertes presiones, tanto externas como internas. Debido a que la compra de tierra es costosa, también deberían examinarse otros enfoques, como la transferencia de terrenos forestales públicos o la reintroducción de un impuesto sobre las fincas de recreo, que pueden revelarse medidas eficaces en función de los costos para sostener los beneficios económicos locales derivados de la utilización y ordenación de tierras.

Land reform in Scotland: an economic commentary on a proposed "community right to buy land"

D. Macmillan, K. Thomson and B. Slee

Department of Agriculture and Forestry, University of Aberdeen, Scotland, United Kingdom

In 2001, the Scottish Executive published proposals to introduce substantial reforms to legislation governing land. The most controversial and ambitious of these proposals is to give legally constituted community groups the "right to buy" land when it is placed on the market and to provide public funding to help meet the purchase price. The aim of this article is to review this proposal and to assess the potential of community landownership to meet the government's economic and social objectives. On balance, we expect that the prospects for sustainable rural development will be modestly enhanced by the proposals, but only if community social bonds and management arrangements are sufficiently flexible and resilient to withstand difficult external and internal pressures. Because land purchase is expensive, other approaches - such as the transfer of state forestry land or the reintroduction of a tax on sporting estates, which may prove to be cost-effective ways of sustaining local economic benefits from land use and management - should also be considered.


Certain monosyllabic words have the emotional impact of a bullet, with the power to kill dead any rational discussion of the economics of the subject - and politicians, whose stock in trade is words, know well how to use them. One of these words is "land".

(Clark, 1973)

Land reform has been the subject of controversial debate in Scotland ever since the Highland Clearances of the eighteenth and nineteenth centuries, when large numbers of people were evicted from their farms to make way for sheep and, subsequently, hunting interests. Following the creation of the Scottish Parliament in 1999, the land reform debate has gathered renewed momentum and risen once again to the top of the political agenda.

In Scottish society, there are deep-rooted concerns about the way land is owned and managed, especially in the Highlands. Perhaps in no other region of Europe is the power of land-owning interests so frequently argued over and criticized by such a wide spectrum of people. At the heart of these concerns are the highly concentrated nature of landownership1 and the dedication of large tracts of land to hunting activities.

Although game management on these estates provides some local jobs and injects income into what are relatively disadvantaged areas, the landowner often finds himself in conflict with the local community and with wider public opinion. Local problems include the damage done to agricultural crops from marauding deer (and counter-accusations about poaching) and the reluctance of estate owners to support local businesses, for example by releasing land for development purposes.

Among urban communities the general perception of landowners is also negative, although the issues are rather different. Many city dwellers find the notion of owning land purely for hunting offensive, and this animosity is further aroused when stories about illegal trapping and poisoning of rare predators by gamekeepers appear in the media. Wide-ranging restrictions on public access to private land, put in place to protect the owners' privacy, also anger the growing number of outdoor enthusiasts who throng to the hills at weekends.

In 2001, the Scottish Executive published proposals to introduce several reforms to legislation governing land. These include replacing the archaic "feudal" system of landownership, the creation of a comprehensive land register, the modernization of farming tenure and greater public access to the countryside. Perhaps the most controversial and ambitious of these proposals is the introduction of direct government intervention in the land market to support community landownership.

Common landownership (CLO), in general terms, is an ownership regime whereby a group of resource users share rights and duties towards a resource. Essentially, they are social units with definite membership and boundaries; they have certain common interests, at least some interaction among members, some common cultural norms, and often their own endogenous authority systems (Bromley, 1991).

Although common ownership persists in the mountainous regions of France, Italy, Norway and Switzerland, there is no strong tradition in Scotland. Hence there is considerable scepticism about the rationale for, and efficacy of, the proposed legislation. The purpose of this article is, therefore, to examine the potential of CLO to address the economic and social problems of rural areas and to assess the potential cost-effectiveness of the proposed legislation.


Four key historical events in the Scottish Highlands create the background to the current tensions surrounding landownership. These are: a) the break-up of the traditional clan system following the failure of the Jacobite rebellion; b) the boom and bust of the agrarian economy in the nineteenth century; c) the rise of the sporting estate in the Victorian era and d) the establishment of crofting tenure.

The situation of landownership prior to the 1745 rebellion2 has been described as "kinship modified by feudalism". Although there were many feudal features of highland landownership, the application of feudal powers was tempered by familial ties (Wightman, 1996). It was the weakening of these ties and the stronger assertion of private property rights following the Jacobite defeat that precipitated the social crises that engulfed the people in a downward spiral of starvation, disease, eviction and finally, for many, enforced emigration to the New World (Hunter, 1976).

Brief periods of relative prosperity in the eighteenth and nineteenth centuries did occur and were associated with imperial conflicts that brought high prices for black cattle, alginates (made from kelp, a type of seaweed), wool and mutton. By the mid-nineteenth century, however, Highland exports were subjected to increased competition from the new colonies, principally Australia and Canada, and profits could not be sustained.

As the prosperity of sheep farming faded, so the boom of sporting estates began, prompted initially by the purchase of Balmoral Estate by Queen Victoria in the late 1840s. Royal patronage of this kind encouraged other wealthy people, many of whom had made their fortunes in the Industrial Revolution, to acquire large tracts of land for sport (and enhanced social status) from cash-strapped aristocrats. The principal game species were red grouse and red deer, both of which require large areas of unpopulated and uncultivated land. While investments to improve game bags and visiting shooters created "prosperity of a sort" (Fraser Darling, 1947), relatively few jobs were created and the mass of the population was left to survive on smallholdings (referred to as crofts) that were barely large enough to meet family food needs.

Ireland had experienced similar social and economic problems to those of the Highlands in the nineteenth century, and the Irish land reform movement helped spread interest in land reform to Scotland. When crofters on the island of Skye in the Inner Hebrides followed the example of their Irish colleagues and held a rent strike, skirmishes between rent-strikers and the police received substantial publicity and shifted public opinion firmly in favour of reform. In 1886, the Crofters Act provided small farmers with security of tenure and the "right to buy".

In the twentieth century, despite further reforms such as the Small Holders Act of 1911 and the formation of the Highlands and Islands Development Board in 1965, with stronger powers than any other UK development agency, land reform receded in political and economic importance. In part, this reflected a growing recognition that the land, depleted by centuries of cultivation, was barely capable of supporting families at anything more than subsistence level, but it was also a consequence of the growth in oil- and tourist-related businesses, which provided better employment prospects - especially for younger people.

With the exception of "club farms" - combining communal management of the sheep flock with private rights over arable areas - which flourished briefly in the middle part of the nineteenth century, CLO did not feature during the land reform period. Although it does offer some advantages in terms of economies of scale, the government, perhaps wary of the development of the socialist movement in Russia, avoided any direct legislative encouragement of community ownership.

It was not until the early 1990s, when three estates came under the ownership of local crofting trusts (Assynt, Borve and Annishader/Melness), that community ownership began to emerge on any significant scale. The driving force behind the formation of these trusts was economic necessity. With agriculture failing, the community recognized that only with the freedom to diversify into other enterprises - such as renewable energy and tourism - that ownership would bring, could they survive.

The sale of Assynt, in particular, caught the public's imagination as the crofters were facing the threat of the land being subdivided and sold off to outside interests. The purchase price of £300 000 was successfully raised by the crofters with help from public donations and financial assistance from several public organizations. The Assynt Crofters Trust, which now owns the land, is governed by a board of directors, each of whom is elected by a democratic vote taken in each of the 13 townships making up the estate (MacKenzie, 1999).

Several years after Assynt, the Hebridean island of Eigg was placed on the market, with an asking price of £2 million. After years of conflict with the previous estate owners, the residents decided to buy the island for themselves. The Isle of Eigg Heritage Trust was formed, which included the Scottish Wildlife Trust and Highland Council, and with the help of public donations - including one contribution believed be close to £1 million - the Trust purchased the island in 1997.

Although less than 1 percent of land in Scotland is communally owned and the impact of recent community ownership ventures on local economic opportunities has not been evaluated, the Scottish Parliament is preparing to pass legislation that will place CLO at the centre of its land reform policy. In the next section we briefly summarize the current proposals before examining the potential of CLO to enhance the sustainable development of remote rural areas.


The Scottish Executive has stated that the primary aim of their land reform programme is to establish a series of measures that will "remove the land-based barriers to the sustainable development of rural communities" (LRPG, 1999). Sustainable development is defined as development that enhances economic well-being, social equity and the environment.

The main vehicle for delivering sustainable rural development is the "community right to buy" land if, and when, it is to be sold. Key aspects of this legislation are:

  1. The "right to buy" will be restricted to communities that live on, or in close proximity to, the land in question.
  2. The price to be paid will be determined by a government-appointed valuer and will be based on the current market value.
  3. A Scottish Land Fund will be created from the proceeds of the National Lottery to help communities meet the valuation price. Grants and loans at favourable rates and worth up to £1 million are available.
  4. Communities will be given time to raise the additional funding by introducing a minimum period between notice to sell and the closing date.
  5. The "right to buy" will backed up by a new power of compulsory purchase that will be used if the owner attempts to evade community purchase, for example by gifting land or by trading in shares.


This section examines the potential contribution of government-sponsored CLO to the three linchpins of sustainability: economic efficiency, social equity and the environment.

Economic efficiency

In Scotland, as in most modern market economies, the principal rationale for direct government intervention on economic grounds is the neoclassical concept of market failure. Market failure arises when inadequate institutional arrangements prevent the market mechanism from allocating resources efficiently. The overall aim of government intervention is therefore to take measures to adjust or replace these failing institutional arrangements.

The rationale for some of these measures can be related to conventional "market failure" arguments such as problems with information and transaction costs. For example, some proposed community buy-outs have failed or have not been attempted because the community simply lacked the necessary organization and finance to bid within the limited amount of time between the notification of a sale and the closing date. In other cases, estate owners have preferred to sell secretly to a fellow sporting enthusiast who would manage the land according to "traditional" sporting practices.

A further and more serious possible market failure being addressed is that of land monopoly. One of the main criticisms voiced by the land reform lobby concerns the power landowners can wield over the development aspirations of local people. As most private estates cover relatively large contiguous estate areas, often in excess of 5 000 ha, individual owners can exercise monopoly control over the supply and price of land in an entire locality. Furthermore, entry to the land market is restricted by the way land is made available. Although the price of the land is relatively low on a per hectare basis, the entire estate, rather than just a few hectares, is normally placed on the market. The associated price tag, which can run into millions of pounds, effectively creates a barrier against entry to the market for everyone but the "super" rich.

The monopolistic power of owners with regard to community purchase is further enhanced by the fixed nature of the asset. Unlike other factors of production, land is spatially fixed in location: hence no two parcels of land share exactly the same characteristics in terms of geographic location, biophysical potential or, indeed, cultural heritage. Because community groups have strong ties to the land on which they live, they must deal with only one owner - land somewhere else would simply be of little interest.

This therefore raises the question of to what extent the transfer of land to community ownership would end the problems associated with private land monopolies - primarily access to land. Clearly, this issue will be dependent on the governance of the community group. Institutional arrangements should be flexible enough to allow individuals from within, and even from outwith, the community to access land for development purposes and to avoid domination by "single interest" factions. For example, the most efficient Japanese fishing cooperatives tend to allow trading in shares within the cooperative, with mechanisms to sell community assets to outside interests also available (McKean and Ostrom, 1995).

Another potentially efficient outcome of CLO relates directly to resource management and use. From an economic point of view, land can be characterized as an inseparable bundle of localized resources the use of which, in conjunction with other resources (construction or equipment capital, labour or time, manufactured inputs) can lead to the production of marketed (e.g. food and timber) and non-marketed (e.g. biodiversity, recreation) goods.3 In contrast to traditional estates, where the owners focus principally on sporting and private pleasure, CLO offers the possibility of reorganizing these resources more efficiently through the following mechanisms.

Many of these potential gains will only be realized if the institutional arrangements are sufficiently flexible. Experience from around the world has shown that communal management can break down if institutional arrangements are inadequate, for example if management rules are inadequately enforced or decision-making is slowed down by the innate conservatism of some members of the rural community or by major antagonisms within the group. Adopting appropriate incentive mechanisms would appear to be the key: simplistic egalitarian arrangements such as income pooling are often inadequate because they encourage free-riding as a dominant strategy, particularly if the group is not underpinned by strong social relationships (Platteau and Seki, 1999). Flexibility in management is also required, with devolved decision-making structures that allow specialization and independent management of specific resources such as forests, game or agriculture, but within a coordinated CLO framework.

Social equity

Although concerns about social equity are less acute than during the Clearances of the eighteenth and nineteenth centuries, when unfettered market forces led to great imbalance in the distribution of wealth, equity remains an important consideration for government.

While the legislation will broaden landownership and benefit some rural communities, it does not necessarily follow that the overall impact of the legislation on the distribution of wealth will be positive. For example, the "right to buy" legislation will provide existing landowners with full compensation based on the market price, using funds drawn from the National Lottery.4

The use of Lottery funding for this purpose raises some concerns with respect to equity and fairness. Under current proposals it is planned to allocate 75 percent of funds allocated to Scotland under the "Green Spaces and Sustainable Communities" programme of the Lottery funding scheme. In the rest of the UK, this money is intended to be used to improve the use and enjoyment of green space, especially in urban and urban fringe areas (NOF, 2000). Hence, people from some of most deprived areas of Scotland in social and environmental terms (many of whom will doubtless buy lottery tickets) will be denied funding for environmental projects as a result of this legislation.


The impact of CLO on the environment is a matter for conjecture, as it will depend on the management objectives of individual groups. However, early evidence from various CLO groups suggests that greater investment in environmental enhancement has taken place than under private ownership. Possible reasons for this include:


Given that there is a case for intervention to encourage CLO on grounds of sustainable development, there remains the question of cost-effectiveness. The government's plans for CLO include a budget of £11 million for land purchase. The market price of individual sporting estates averages around £3 million and it is therefore clear that land purchase is both expensive and unlikely to increase significantly the area of land under CLO. This section examines the potential of other, perhaps more cost-effective, options for encouraging community development.

Option A: private fundraising

Several successful community buy-outs have relied, for the most part, on public donations. Direct financial assistance from government would be unnecessary if CLO could be supplied privately. However, charitable donations are inefficient from an economic point of view (i.e. do not produce an optimal level of community ownership) for two reasons.

First, public appeals for community land purchase are vulnerable to free-riding. In other words, some individuals will not contribute to an appeal for funds even when they are willing to pay because they expect that others will contribute sufficient funds to purchase the land. Second, public appeals face high transaction costs associated with information provision, contractual details concerning ownership rights and the actual collection of donations.

A compromise approach would be to require aspirant community groups to raise a significant proportion of the capital required (e.g. 50 percent). Such a condition would not only reduce the burden on public finances but would also a) reduce the potential for rent-seeking and b) help identify communities that are most likely to succeed. For example, communities that were unable to raise their share of funding would be unlikely to be sufficiently motivated or organized to sustain a viable land-owning enterprise.

Option B: Transfer of land in state ownership

The current debate on landownership has overlooked the fact that the Forestry Commission (FC), a government agency, is the single largest landowner in Scotland, with approximately 700 000 ha of land (Wightman, 1996). Because most forests are unprofitable, transferring the land to local community groups would be a relatively cost-effective way of achieving community ownership. For example, a cost-benefit analysis of replanting commercial forests, which incorporated monetized values for a range of non-market benefits, revealed that almost 40 percent of the forest area in Scotland, failed to achieve a 6 percent rate of return (Macmillan, 1993).

Although these forests are characterized by poor financial returns from timber, local groups may be better placed to make the woodland more viable through diversification into a wider range of woodland and tourist activities. In its capacity as a government agency, the FC has to focus on timber production and meeting strict revenue targets from timber. Unlike normal businesses, FC managers are judged not in terms of profit and loss, but by pseudo-measures of efficiency such as timber and environmental targets, as well as various other actions or achievements. Revenues go directly to the Treasury rather than being reinvested locally and the annual budgeting process provides little or no incentive to increase revenues or reduce costs over agreed levels at the start of the year. State foresters are therefore not expected, nor are they given sufficient incentives, to be agents for local economic development.

By comparison, a local community group will be more focused on local benefits from forestry and will also possess greater local knowledge of the forest resource and potential market opportunities. In North America, for example, there is considerable evidence that locally owned forests perform better than Federal forests, both in terms of keeping costs down and increasing revenues. In Montana, for example, locally owned forests earn approximately US$2 for every dollar spent, whereas national forests manage to earn only 50 cents for every dollar spent (Leal, 1995).

Option C: Cross-compliance

Cross-compliance has been widely advocated as a means of persuading rural landowners to engage in beneficial actions. Essentially, cross-compliance creates conditionality with regard to the receipt of public funding and imposes requirements on a farmer (or other landowner), normally with respect to the environment.

There are a number of applications of cross-compliance in farm policy. For example, area payments are conditional on an agreed level of set-aside. Avoidance of overgrazing is theoretically a condition of compliance for the receipt of livestock grants, and forest management practices must be complied with in order to receive forestry grants.

In relation to community development, conditions could be introduced to encourage landowners to enhance the local economic benefits of their activities, for example by employing local people rather than outside contractors, or providing visitor facilities for tourists. The potential for cross-compliance is limited, however, as grant aid has little effective leverage with regard to sporting land. Hunting is largely unsupported by public funds and most estate owners, being extremely wealthy, are less inclined to change their behaviour or management practices in order to gain the modest subsidies available.

Option D: Taxation

One of the last acts of the previous Conservative government in the United Kingdom was to abolish sporting rates based on number of deer shot. The reintroduction of a land tax would provide the government with an alternative mechanism for encouraging sustainable land use.

Taxation differentials offer a potential economic instrument for ensuring compatibility between private and public objectives in land use. In the past, taxes could relate to income tax (as used in forestry with Schedule B/D switch), inheritance tax (as used in heritage relief), or business taxes such as rates (which have been largely eliminated in the rural land-using sector).

The application of this instrument has many similarities with the principle of cross-compliance. If potential for relief were to be offered on a reintroduced sporting rate, this could provide leverage on landowners to deliver community benefits in terms of employment or making land available for development. In order to meet both environmental and social objectives, 50 percent relief could be given for a whole-estate conservation plan and a further 50 percent relief for a community development plan indicating how the landowner would embody community objectives in estate development proposals. If sporting rates were levied because of non-compliance, they could be hypothecated to either environmental or community purposes within a defined locale.

The principal argument against such a proposal is that the transaction costs of agreeing the level of tax (and potential exemptions) might be high. Also, if rates were set at a higher level, this might discourage landowner investment that would not necessarily increase the efficiency of land use. Further, it would be necessary to devise a transparent and acceptable procedure for agreeing exemptions, although it appears that committees deliberate over Challenge Fund-aided forestry and planting grants for forestry and agri-environmental proposals without undue difficulty. There would also need to be a mechanism for checking compliance, and a recognition of the possibility that local conflict could be promoted rather than resolved.


It is difficult to speculate on the aggregate implications of CLO on sustainable rural development but our analysis suggests that the government should "proceed with caution". While the "right to buy" legislation provides an opportunity to release the latent development energies of remote rural communities, there are also likely to be difficulties with securing investment funds and antagonisms at community level that could result in high transactions costs and delayed decision-making.

Experience in Scotland and overseas suggests that community ownership will work best where social bonds are strong, and management arrangements are sufficiently flexible and resilient to withstand exogenous shocks. If CLO is to succeed, considerable investment will therefore be required for capacity building at a local level.

Policy integration is vital to the success of CLO. Complementary measures such as cross-compliance and taxation would help the land reform agenda and create a climate for further changes. With subsidies from the Common Agricultural Policy (CAP) contributing over 50 percent of farm income in the more marginal farming areas, satisfactory reform of the CAP will also be essential if CLO is to prosper.


Bromley, D.W. 1991. Environment and economy: property rights and public policy. Oxford, UK, Blackwell.

Clark, C. 1973. The value of agricultural land. Oxford, UK, Oxford University Press.

Fraser Darling, F. 1947. A natural history of the Highlands and Islands. London, Collins.

Hunter, J. 1976. The making of the crofting community. Edinburgh, Scotland, UK, John Donald.

LRPC. 1999. Recommendations for action. Edinburgh, Scotland, UK, Land Reform Policy Group, The Scottish Office.

Leal, D.R. 1995. Turning a profit on public forests. PERC Policy Series PS4. Bozeman, Montana, USA, Political Economy Research Centre (PERC).

McKean, M. & Ostrom, E. 1995. Common property regimes in the forest: just a relic from the past? Unasylva 180, 46: 3-15.

MacKenzie, J. 1999. Business planning: the Assynt experience. In G. Boyd & D. Reid, eds. Social land ownership. Inverness, Scotland, UK, Not-for-Profit Landowners Project.

Macmillan, D.C. 1993. An economic analysis of replanting commercial forests in Scotland. Journal of Agricultural Economics, 4(1): 51-65

Platteau, J-P. & Seki, E. 1999. Heterogeneity and social esteem in income-pooling groups: evidence from Japan. (Mimeo)

NOF. 2000. Green spaces and sustainable communities: information for award partners. London, New Opportunities Fund (NOF). Available at

Wightman, A. 1996. Who owns Scotland? Edinburgh, Scotland, UK, Canongate.

1 Wightman (1996) estimates that 50 percent of the Scottish land area is owned by fewer than 600 individuals, companies or trusts.

2 The 1745 Jacobite rebellion was the last in a series of rebellions led by the exiled Stuart monarchy. The Stuarts drew much of their military support from the Highland clans who, like the Stuarts, retained allegiance to the Roman Catholic faith.

3 Indeed, the complexity of assessing the impact of land reform legislation derives not so much from the variety of uses to which land can be put (labour and finance are perhaps even more varied in their purposes), but from the inseparability of the different aspects of the "bundle".

4 A percentage of profits from the National Lottery is dedicated to supporting the arts, tourism, the environment and various community initiatives.

Previous PageTable Of ContentsNext Page