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.