By Laura Reynolds
The Rights and Resources Initiative (RRI), a coalition of groups working for the rights of rural people to access and use their local natural resources, recently released two reports on the state of large-scale land acquisitions and investments, also known as land grabs.
The reports looked at the financial risk associated with international land investments and gave an overview of the setbacks and progress made in land tenure during 2012.
Investors, often from foreign countries, have turned to land development in recent years because of the high profits that can be made from activities such as mining, industrial food production, logging, and production of rubber or biofuels. But these investments often come with high costs as well, according to a December report from RRI. In addition to the human rights abuses and environmental destruction that can coincide with large-scale land acquisitions, investors can face an increase in their operational costs of as much as 2,800 percent.
The report, “The Financial Risks of Insecure Land Tenure: An Investment View,” profiles five foreign land investments that failed because of a lack of transparency or legality, resulting in financial hardship for the investors. In 2005, the Swedish ethanol producer SEKAB attempted to purchase 400,000 hectares in Zanzibar, Tanzania, to cultivate biofuel crops, but public outcry and the company’s failure to follow policy and environmental protocols led creditors to adandon the project and forced SEKAB to sell its assets at a loss of over $20 million.
In Grand Cape Mount, Liberia, the Malaysia-based multinational Sime Darby, the world’s largest producer of palm oil, had planned to develop 220,000 hectares for oil palm and rubber plantations after signing a 63-year concession with the national government. But land tenure disputes and large-scale rioting have repeatedly disrupted operations, putting the project’s long-term feasibility at risk.
“Far from being an ‘externality,’ land tenure can be a real threat to stable returns, and one that should be included in any risk assessment of a land-dependent investment,” the report argues. “The financial risks posed are multiple, ranging from slippage in construction times and unexpected cash flow loss due to suspensions to expropriation of assets following the loss of insurance coverage.”
A second RRI report, “Landowners or Laborers: What Choice Will Developing Countries Make?,” released in January, examines major developments in 2012 with regard to land grabs and land-tenure advocacy.
On a positive note, the 82-country Committee on World Food Security adopted the landmark Voluntary Guidelines for the Responsible Governance of Tenure of Lands, Fisheries, and Forests, which call for transparency in land deals, consultation with local communities, and respect for human rights. But other developments in 2012 were more worrisome: assassinations of land activists spiked, with 201 activists and protesters killed in Cambodia alone, and the Chinese and Indian governments were implicated in a rising number of internal land grabs. Each year, an estimated 4 million rural Chinese lose their land, many through forced eviction with minimal or no compensation.
Myanmar and Liberia were flashpoints for unjust land acquisitions. U.S. President Barack Obama, in his November 2012 visit to Myanmar to celebrate that country’s political reforms, argued that reforms “must ensure that the people…can have that most fundamental of possessions—the right to own title to the land on which you live and on which you work.” Myanmar is home to fierce disputes over mining, logging, and hydropower projects, and largely as a result of this resource extraction (much of it pursued illegally), its forest cover has declined from 46 percent in 1990 to only 20 percent in 2010.
In Liberia, local analysts calculated that around three-quarters of the country’s land had been allocated or promised to large investors—one of the highest such rates in the world. In late 2012, the Land Commission of Liberia reported that 95 percent of domestic Supreme Court cases involved land disputes.
Land grabs around the world continue to threaten rural dwellers with hunger, poverty, and displacement. Global market forces may curb these threats as investors realize the risks—to both their finances and their reputations—of becoming involved in land acquisition. But governments, international organizations, nongovernmental groups, and citizens can also support a more just global system of land-ownership and resource development.
What do you think about large-scale land acquisitions? Let us know in the comments.
Laura Reynolds is a Staff Researcher for the Worldwatch Institute’s Food and Agriculture Program.