The Land Security Agenda How investor risks in farmland create opportunities for sustainability

S Arabia 26,000,000 2,000,000,000 1,731,000 1,189,000,000 1,446,000,000,000 62,286,000 91,000,000 122,000,000,000 DRC 290,000 71,000,000 35,000,000 900,000,000,000 39,000,000,000 11,000 9,000

Tanzania 43,000,000 84,000,000,000 184,000

S Africa 49,000,000 45,000,000,000 1,498,000 Contents The Land Security Agenda How investor risks in farmland create Executive Summary 1 opportunities for sustainability

1 Introduction: a common 5 © Earth Security Initiative, London interest in risk March 2012 2 Land: the long-term view 15 Authors: Alejandro Litovsky, Founder and 2.1 Soil resilience 18 Director, Earth Security Initiative; and 2.2 Ecological limits 22 Paulina Villalpando, Associate, Earth Security Initiative. 2.3 Human rights 26

3 Next steps for an 31 Contact us at [email protected] operational agenda We are grateful to the Joffe Charitable Trust 4 Afterword 35 and the Swift Foundation for supporting Acknowledgements 37 the Earth Security Initiative to develop this agenda. References 38

Design: Rupert Bassett

The Earth Security Initiative The Earth Security Initiative is an organization created to deal with the Earth’s ecological limits as part of a new security and risk management agenda. It engages a range of stakeholders to target the risks involved, to integrate various areas of knowledge into actionable ideas, and to cross boundaries between financial markets, industry, government and civil society to improve how these risks are managed in specific investment and policy agendas.

1st Floor, New Zealand House 80, Haymarket London SW1Y 4TE United Kingdom

www.earthsecurity.org 1

Executive Summary The surge in farmland investments is expected to grow over the next decade. This is due The Land Security to a number of combined pressures: The Agenda growing global demand for commodities, rising commodity prices, ecological limits and farmland being a ‘real asset’ that offers diversification to the portfolios of investors at a time of volatility of global financial markets.

The need to increase food production, against the backdrop of resource limits, soil erosion, and social vulnerability, puts the question of land at the center of a new security agenda. New risks are being created for investors, for communities and for nations, which must now be acknowledged and dealt with.

As this report goes to print, the news that overseas investors have acquired over 10 per cent of Australia’s farmland and 9 per cent of water entitlements in its agriculture sector has struck a political chord in the country. Large grain-producing nations like Brazil and Argentina have passed laws to restrict the foreign ownership of land. In other global grain hubs, like Ukraine and Russia, compromised harvests due to droughts will likely result in export restrictions. In a globalized economy, the combination of scarcity, market pressures and weather volatility will make fertile land an increasingly precious resource.

This report focuses on sub-Saharan Africa where this process is critical given the governance challenges, the lower levels of land tenure by communities, and the fragility of human security. The Land Security Agenda

Population growth and climate change This report is about operationalizing a underpin this agenda. A worse-than-average response. It discusses why these issues form drought, exacerbated by climate change, may part of a new risk management agenda be all that is needed to realize the political, for investors as well as for countries whose humanitarian and ecological risks that are economic competitiveness and, in some cases slowly building momentum; a reason why their political stability, will be compromised. the US military refers to climate change as a Managing these risks, we argue, will require ‘threat amplifier’ of national security. an innovative approach to risk management: making human rights and ecological limits a International investments in land are firmly in central feature of a new investment paradigm. the spotlight of global scrutiny, but progress depends on moving from a ‘land-grabs’ Attention is drawn to the incentives of host debate to ‘land stewardship’ solutions. This governments required for change. This is shift, which we call a Land Security Agenda, especially important given that the majority of requires an improved understanding by land acquisitions still happen within national investors and political leaders of three borders, carried out by local actors. The Land priorities: managing soil erosion, protecting Security Agenda demonstrates why all actors human rights, and keeping within ecological— involved in this debate, even within polarized especially water—limits. positions, must realize their common interest in long-term value.

People, Soil, and Water A range of international investors is already searching for solutions to engage practically These issues are universally relevant to the with this debate. Their influence will vary farmland discussion; yet vary according considerably depending on whether they to the countries in question. Human rights are directly investing in farmland assets or concerns will be very relevant in countries indirectly into funds, where their rights to where informal property rights have not yet influence a project’s management decisions been formalized, but may be less relevant to will be more limited. In these cases, seeking investors that are only investing in farmland to change the accountability (and incentives) in developed countries. For these, however, of fund managers to align to this agenda water limits and soil erosion will still be will be more important. Among those with critical. whom we have engaged throughout the study are individual investment funds, people seeking change within the financial sector, and investor networks such as the UN-backed Principles of Responsible Investment. We welcome these developments, which must now be operationalized to ensure accountability, equitable prosperity and ecological sustainability. 3

A call to action For Investors

Upon reading this report, investors (fund 1 Define land security parameters managers, asset owners and risk managers) Establish a set of verifiable measures that can turn to their land and commodities allows stakeholders to distinguish those portfolios, as well as the investments currently land investments that advance equitable under due diligence, and begin to ask how and sustainable prosperity from those that soil resilience, the prosperity of local people do not. Based on these criteria, which and freshwater limits are being considered. we suggest must consider people, water We recommend beginning to assess the risks and soil, it is possible to advance their of countries where they consider investments integration into three important areas of according to how well their governments are the investment cycle: the identification of managing these issues. investment opportunities that build positive value; the due diligence process and the We similarly call on the offices of country performance reviews of fund managers. Presidents and Heads of State to become more aware that these risks undermine their 2 Build better country risk profiles country’s wealth, their stability and economic If the population of a given country is competitiveness. Political leadership is dependent on agriculture for livelihoods, needed to champion and enforce regulations shouldn’t issues like soil erosion, water that protect the country’s social and natural availability and lack of recognition capital. for people’s land rights increase that country’s sovereign risk? We think so. A This report puts forward five practical actions Land Security Index can be developed to that can contribute to create incentives in practically demonstrate how this can work, financial markets and with political leaders and generate interest by mainstream risk to advance change. We have identified rating agencies to incorporate these issues some of the actors who can participate in to their assessments. A set of guiding moving these ideas forward quickly, and policy priorities can be developed to guide will be focusing our work on catalyzing the governments in improving the situation of development of these opportunities further as the issues profiled. part of a Land Security Agenda. The Land Security Agenda

3 Develop global monitoring tools 5 Develop a high-level political Greater transparency and access to agenda Use the ranking of country risks information is needed at a territorial to advance a discussion at the level of level on the status of these trends, and Heads of State of the investment regulation as a proxy to how well authorities policies that are needed to address issues are managing them. Cross-sector of soil and water management, land collaborations can help streamline the rights and food security. Ultimately, it data that exists on soil erosion, water is up to host governments to encourage availability, social vulnerability, and investments that create long-term value climate change, and devise user-friendly for their countries and discourage those visualizations of this data by leveraging that increase their vulnerability. Heads available technology — all presented in of State are more likely to embrace this a way that is relevant to both investment agenda if it is framed as a vision of decisions and government planning. long-term economic productivity and competitiveness.

For Governments As resource scarcities and the growing pressure to access natural resources 4 Advance the formal recognition increasingly define our age, we hope this of land rights on a large scale brief report provides the first step to set The universal call for the ‘prior and the right tone and direction that ensure a informed consent’ of communities must be peaceful, equitable and sustainable future for supported, but will be of little practical the land and commodities agenda. value if communities do not hold the legal rights to their land, are not well informed about their rights and the commercial opportunities available to them. Civil society advancing good governance, land titling and capacity building, many of whom we have spoken with during this study are in a position to help create a Land Security Partnership that seeks to build technical and political momentum for the formal recognition of land rights on a large scale and the corresponding accountability of government agencies. 1.0 5

Introduction: Due to the volatility of global capital markets, investors see land investments as ‘real assets’ a common that offer diversification to their portfolios a at a time of great uncertainty. interest in risk We are told that a period that has lasted 100 years, in which the prices of almost all major commodities have declined, is permanently over.1 The steady climb of commodity prices over the last decade appears likely to continue, driven by resource limitations and increasing competition for scarce resources.

From an investment perspective, this so- called ‘paradigm shift’ in commodities means a shift towards owning resources on the ground (or the ground itself), of which the boom in the interest of farmland is one of the consequences.

Resource scarcity will one day lead to the emergence of entire new industries focused on resource efficiency and conservation. Today, however, it is leading to the accelerated competition to access resources, where land and water will be increasingly central.

As more voices pile into the ‘land-grabs’ agenda, media and civil society reports of investments leading to abuses in host “We know what the water situation countries, from Guatemala to Ethiopia, have is in different countries; agricultural raised widespread concerns over forced irrigation often means water reserves evictions, social vulnerability and ecological fragility. Given the lack of systematic and are being mined. There is a time limit verifiable information and the diversity of for how long that can be sustained. actors involved, it has been challenging to We see very serious long-term risks identify ways of responding to these concerns. gathering momentum.” Arjen Hoekstra Chief Scientist, Water Footprint Network The Land Security Agenda

A decade of soaring commodity prices 2 McKinsey Global Institute Commodity Price Index

260

240

220

200 ShockOil

180

160

140 World War I War World 120

100

080

060 II War World

040 Great Depression Great Postwar Depression Postwar 020 1910 2010 1940 1970 1950 1960 1930 1980 1920 1990 1900 2000

Source: McKinsey Global Institute Commodity Price Index, 2011

“We’ve always thought of these risks as rather long-term issues. Today we are beginning to realize that some of these risks may possibly play out in shorter time frames. We must develop ways to integrate these analyses into financial risk management.” Federico de Vita Risk Manager, Credit Suisse 7

Efforts to increase the responsibility of Most of the negative aspects that are today investments through a plethora of guidelines, attributed to the wave of land investments declarations and conferences, are all steps also constitute risks to the productivity of in the right direction. These include the FAO the land, the portfolios of investors, and the Voluntary Guidelines for Land Tenure; the competitiveness of a country. These are: Farmland Principles developed by some signatories to the UN-backed Principles — Soil The degradation of the soil and the for Responsible Investment (PRI); the Tirana loss of biodiversity, which affect its fertility, Declaration advanced by the International may disrupt the hydrological cycle (i.e. Land Coalition and a broad network of rainfall), and increase vulnerabilities to rights-based civil society organizations, and climate change. the World Bank’s Principles for Responsible — People The rights of local people whose Agricultural Investments.3 security depends on their land, which incudes their land rights and food security, However, these efforts have not yet generated as well as conditions for their economic a clear route to ensure that the deals taking prosperity. place are better regulated to be more — Water The depletion of freshwater accountable and ethical. Foot-dragging and the trade-offs that it creates with at multilateral forums evoke other global other critical water uses, ranging policy areas, such as the UN climate change from subsistence farmers to electricity negotiations, which have been similarly generation. slowed by the inability of stakeholders to build an effective discussion of market and Importantly, because the time horizon of many investment regulation into the political debate. land investment may extend over periods of up to 100 years these risks may play out

2010 during the life-cycle of an investment and Focusing the land discussion therefore matter to investment analysts and on long-term value asset holders, even more than they may matter to politicians who in most cases will be in The Land Security Agenda provides a new power for much shorter periods.4 Managing perspective for investors and businesses, these risks, on the other hand, will require government leaders and civil society to focus an innovative approach to risk management: on ways of ensuring equitable prosperity and embedding basic human rights, ecological long-term value. The evidence discussed in this limits and soil protection as proactive elements report shows why everyone’s interests are at of investment decisions. stake from an unsustainable land agenda. The Land Security Agenda

Foreign investment in land for food production Population, land and food security

Mali

Liberia

DRC

Foreign investment Arable land Agricultural land

Country Liberia Mali DRC S Uganda Tanzania Population (millions) 4 14 72 8 35 43 Annual population growth rate (%) 2.7 2.6 2.6 N/A 3.6 2.0 Agricultural land (thousand hectares) 2,610 41,101 22,450 N/A 13,962 35,500 Arable land (thousand hectares) 400 6,361 6,700 N/A 6,600 10,000 Foreign investment (thousand hectares) 650 473 235 N/A 869 1,084 Global Hunger Index 21.5 19.7 39.0 N/A 16.7 20.5 Global Hunger Level Alarm Serious Alarm N/A Serious Alarm 9

This graph combines recent estimates of land leased or sold to foreign investors for food production against the total arable land available in selected countries. It overlaps information on the food security situation in these countries (Global Hunger Index) as well as population figures, and, importantly, the rate of population growth.

The data on land investments has been compiled by GRAIN, an international non-profit organization. It focuses only on those deals led by foreign investors for the Ethiopia production of food crops initiated after 2006. The figures include deals for the production of sugarcane and palm oil, but exclude land investments for the production of non-food Uganda crops like jatropha (biofuels) or cotton. This data has not been independently verified.

Sources: CIA World Factbook, 2011; World Bank Country Data, 2011; Global Hunger Index 2011, International Food Policy Research Institute (IPFRI) [www.ifpri.org]; ‘GRAIN releases data set with over Tanzania 400 global land grabs’ GRAIN 2012 [www.grain.org]

Ethiopia 91 3.2 34,985 13,948 1,042 28.7 Alarm The Land Security Agenda

We are at an inflection point: In sub-Saharan Africa land is being leased a focus on Sub-Saharan Africa for up to 100 years at average prices of USD $800 to USD $1,000 per hectare yearly; six In this past decade, some 227 million times cheaper than in Brazil or Poland, and hectares of land have been reportedly leased over twenty times cheaper than Germany.8 in developing countries to foreign investors for The end goal of land deals vary considerably: agricultural development, a scramble greatly Some deals seek to secure food imports in accelerated by the worldwide spike in food nations that are water- or land-constrained by prices of 2007–2008.5 outsourcing its production to third countries; others seek to produce market-oriented The challenge has global proportions and commodities for export (food, agricultural raw is not just exclusive of developing countries. materials, timber or biofuels), and others are For example, overseas investors have now driven by market speculation on the value of acquired over 10 per cent of Australia’s land, where land is bought and in many cases farmland and 9 per cent of water entitlements it may be left idle. within the agriculture sector. Overseas buyers, mostly farmland investment funds, pension About one-fifth of land investments in Africa funds and hedge funds, own 45 million (and Asia) are destined to grow biofuel crops hectares of the country’s arable land.6 such as sugar cane or jatropha, which is not a food crop, but is still water intensive.9 In Roughly half of this land is in sub-Saharan Tanzania alone, ActionAid estimates of the African countries, where land and water are 6 million hectares that have been leased to largely available, governments are eager foreign investors, more than 1.5 million belong for foreign investment and willing to offer to UK-based biofuels companies.10 beneficial conditions, and land prices are conveniently low.7 Foreign investments are becoming significant in countries like Ethiopia, Ghana, This report focuses on sub-Saharan Africa, Madagascar and Mali. Key investors are where given the greater governance private firms and governments from Europe, challenges and the lower levels of land tenure Africa, the Gulf States, and South and East by communities, the agenda is most urgent. Asia, and a growing base of institutional investors, sovereign wealth funds, and private wealth owners, generally in deals made with host governments.11 11

Due-diligence According to Christina Olivecrona, a sustainability analyst with the Swedish pension Investment in farmland is attractive to investors fund AP2, “the due diligence process can because it is not correlated with more volatile help ensure that investment managers and asset classes; it has the potential for relatively operators have the policies, systems and stable cash flows and can provide some expertise needed to integrate environmental, protection against inflation. social and governance (ESG) considerations into their ownership activities.” In some cases, However, once the investment is made, the owners and operators may be required by extent to which investors—especially those investors to provide ESG-related disclosures institutional investors in pooled funds—can during the life of the investment relationship.12 control how the land is managed can be limited. It is common to delegate the task Soil management and water availability are of operating and managing the land to a recognized issues for investors in farmland. specialist operator. In some regions, adds Olivecrona, the due- diligence process may include investigating This is why the pre-investment due-diligence issues of land rights, including the analysis process is such an important checkpoint in this of countries’ legal and titling systems. The agenda. due-diligence process provides opportunities to further increase the information and transparency available for land rights and sustainability issues.

Cost of hectare (2009)

Region Cost of hectare $US

Germany 22,000

United Kingdom 18,000

Sub-Saharan Africa 800 – 1,000

Poland 6,000

Argentina / Brazil 5,000 – 6,000

United States 7,000

Source: Emergent Asset Management The Land Security Agenda

Land governance — Ecological limits Water consumption, the use of chemicals and fertilizers are The focus on international investors and land usually not regulated by land contracts.15 acquisitions, while important to understand a Randomized analyses of land contracts growing geopolitical trend of access to land suggest that rights to water supply are and water, overshadows the fact that the sometimes taken for granted or not majority of land acquisitions happening today assigned in a consistent manner. The in sub-Saharan Africa (and elsewhere) are depletion of soils, groundwater pollution, carried out by actors within those countries.13 and increased inequalities in water access among farmers are among the main risks This does not change the basic fundamentals that are relevant to the long-term value of of this agenda, but puts the issues into the investments.16 perspective by bringing national politics, and a discussion of the political incentives of elites — Public management At the national to improve land governance, more centrally level, land reform and weak land tenure into the picture. Among the main issues that tend not to adequately protect the rights are affected by land governance are: of local communities, particularly among vulnerable groups. For host countries and — Formal rights to land Contracts political leaders, attracting investment between investors and governments may under weak legal frameworks and result in governments evicting communities without a strategic vision may make sense that lack formal rights to the land even if from a perspective of short-term gains, they have lived there for many generations. but damages the long-term economic The inability of investors to control how development prospects of a nation. governments deal with these issues is an The story is not just one of corruption: important factor in considering the options Governments may fear to impose stringent for action. regulations on investment if this means missing out on investment opportunities. — Farming small vs. big Since more than 70 per cent of African households depend As a result, today we are at a critical on agriculture for their livelihood and 80 inflection point. Either these investments will per cent of the continent’s agricultural bring much needed benefits to host countries sector is made up of subsistence and by lifting people out of poverty, modernizing smallholder farms, how local people economies and increasing efficiencies, and benefit from the growing wave of land keeping development within ecological limits, investments could be a substantial factor or they will be a driver of a new colonialism, in much of the region’s social and political leaving locals landless and worse off, and future.14 putting greater and unchecked pressure on freshwater, an increasingly precious asset. 13

About this report

This report by the Earth Security Initiative seeks to reframe the debate of ‘land-grabs’ in terms of solutions. It builds an argument for taking decisive action on ecological and human rights from a perspective of risk management, based on the prediction that resource pressures will continue to intensify globally. The solutions proposed seek to incentivize investors and political leaders to encourage investments that create long-term value, and deter those that deplete a country’s human and ecological capital.

The research process engaged a wide spectrum of actors, from investment funds to grassroots community groups. We have added a network of people that is not directly part of the land policy community, including institutions pursuing a more general transparency and good governance agenda in sub-Saharan Africa, and those pursuing greater sustainability in financial markets usually from within financial institutions, as well as those pursuing the development and adoption of ecological metrics. The involvement of these communities has opened remarkable opportunities for analysis and creative thinking, which we now hope to use to encourage collaboration and innovation. Case Study

Access to Information in Uganda For the Africa Freedom of Information Center (AFIC), a pan-African NGO that promotes In May 2008, a controversial land concession the right of access to information held by project in Uganda led to violent clashes authorities, transparency issues in land between communities and the Ugandan investments are increasingly on their radar. government. Three people died, and the Access to information is a critical piece of this plans were suspended. The project aimed to agenda. When AFIC requested to Uganda’s clear 10,000 hectares of the Land Commission access to the records of Reserve (a third of its surface), which is home beneficiaries of public lands for the period to numerous communities, 312 species of trees 2006 to 2010, the Commission denied it. and 315 species of birds, to make room for sugarcane plantations. Pursuing stronger transparency and access to information in relation to land issues is, In 2011 an initiative by Uganda’s President according to AFIC, an important area of work Museveni has again sought to go ahead with for governance advocates. According to the the project, and tensions are once again United Nations Environment Program, Uganda mounting with local people. The President, presents an alarming absence of land use according to the local media, is ‘ready for guidelines and a lack of awareness regarding a war on sugar’. The project in question the dangers and speed of soil degradation in is by the Sugar Corporation of Uganda the country. Limited (SCOUL), part of the -based Mehta Group. It is the third- Source: www.africafoicentre.org largest sugar manufacturer in Uganda and is, according to local reports, co-owned by the Ugandan Government.

Investor signpost

The lack of government transparency and accountability poses a number of risks for investors. Issues like the rule of law, a reliable land titling system, and sustainable land management policies are some of the signpost issues that investors should look for when assessing risks. Engaging with civil society organizations advancing good governance and transparency in host countries can offer innovative ways of identifying risk management options. 2.0 15

Since Egypt’s ‘bread riots’ in 1977, when Land: the long- major Egyptian cities erupted in violent protests against multilateral banks for the termination term view of state subsidies on basic foodstuffs, political risk analysts around the world have woken up to the critical role that food prices can play on political stability in developing countries.

Worldwide food riots in 2007 and 2008, and the contribution that food prices made to the ‘Arab Spring’ uprisings in 2010, suggest a growing connection between national security, population growth, agricultural systems strained by ecological limits, and food availability.

As the agricultural paradigm of industrial productivity faces growing social, economic and ecological constraints, investors seeking to manage the resulting risks will require an innovative approach to risk management: proactively stewarding ecological limits and human rights in their investment decisions.

Disregarding these issues may increase the likelihood of three types of risks for investors and governments, which may play out over “I think in general pension funds are different time-scales: on board; we want to do the right thing. All other investors should also — Reputational risk associated with high- profile naming-and-shaming campaigns get on board. Investing in countries which have taken place in the last three where there is lack of transparency years by civil society networks and the is risky. Investors should favor those media targeting investment projects, countries where there is rule of law, often by foreign interests, for negative impacts on local populations, such as the reliable land titling and sustainable displacement of people, or privileged land management.” advantage of water rights over locals; Jos Lemmens Senior Portfolio Manager for Commodities, APG, Netherlands The Land Security Agenda

— Economic risk associated with Land: the next risk nexus agricultural practices like tilling, which degrade the topsoil and the fertility of Population growth poses a fundamental the land; the growing resistance of pests challenge, especially given rising food to chemical pesticides; water shortages commodity prices, much of the planet’s due to intensive irrigation in areas prone arable land already being cultivated, and to drought; and the consequences of large proportions of it being devoted to grow clearing high-value biodiversity areas on biofuels and crops to feed livestock. rainfall generation and crop pollination, both critical to the sustainability of food The extraordinary amounts of water needed production. for irrigation further compete with human water consumption and hydropower plants, — Political risk associated with the potentially jeopardizing energy security. Land political instability and violence that may is quickly becoming the nexus that holds all result from large evictions of communities the trade-offs together, with recurring droughts previously living on the land; from the and climate change acting as an amplifier of effects that food price spikes have on these stresses. popular uprisings; and, potentially, the expropriation of assets by host How land is used, by whom, and with what governments, as has been the case with benefits is therefore likely to be a substantial international extractive companies in South factor in much of the profits, geopolitics and, America. possibly, the revolutions of the 21st century.

This section provides a more detailed review of the trends and risks, as they relate to the long-term value of investments and a country’s competitiveness. The obvious “Unsustainable investments can be inter-dependencies between these three productive for the first few years issues –for example the importance of water but tend to collapse soon after, security to human conflict, or the role of local communities in ensuring the stewardship of the especially if inadequately surveyed. soil– will be explored in a subsequent stage of Historical evidence such as the UK’s this work. agricultural schemes in East Africa 60 years ago shows this.” Dr. John Ingram NERC Food Security Leader, University of Oxford 17

Sustainability risks affecting long-term value

Climate Change Population Growth

Soil Resilience

Long-term Value

Human Rights Ecological Limits

Food Security

Definition: Country Risk

A collection of risks associated with investing in a foreign country. These risks include political risk, exchange rate risk, economic risk, sovereign risk and transfer risk, which is the risk of capital being locked up or frozen by government action. Country risk varies from one country to the next. Some countries have high enough risk to discourage much foreign investment.

Source: Investopedia 2.1

Soil resilience Investors are beginning to understand the extent to which soil erosion challenges the long-term productivity of agricultural investments. For investor Jeremy Grantham, for example, who is the co-founder of an investment fund with US$93 billion in assets under management, soil erosion figures among the main concerns in meeting the growing demand for commodities. ‘In Australia’ he argues in one his recent quarterly analyses, ‘where records go back into the nineteenth century, it is also clear that more than 70 per cent of arable land has been degraded to some considerable degree. For the planet as a whole, soil losses are certainly higher than replacement, and for some areas, notably in Africa, they are disastrously higher.’ 17

Among the issues affecting the resilience of land is the heavy reliance and over-use of chemical fertilizers and pesticides. In the past 50 years, global fertilizer use increased by 500 per cent (over 800 per cent for nitrogen alone) causing widespread pollution.18 Its excessive use is widely regarded as one of the most critical processes causing the rapid “The African Union can’t act degradation of the Earth’s ecosystems.19 decisively on this issue because Managing the levels of fertilizer use is an there is no mechanism to bind important part of this agenda. This is further supported by the economic argument that sovereign African governments to rising oil prices are increasing the costs of such regulations.” pesticides and fertilizers.20 Dr. Gaynor Paradza Institute for Poverty, Land and Agrarian Studies, South Africa 19

In the United States, to cite an example where Food security and natural capital data is available, an exponential growth in pests that are effectively adapting to A part of this paradigm shift implies pesticides is leaving US farmers either unable conceiving the fertility of the soil and the to shoulder the costs of additional chemicals diversity of supporting ecosystems as ‘natural or experimenting with untested chemical assets’ that must be taken into account in the cocktails that are likely to increase the toxicity agricultural economic equation. of water supplies and the soil. Investment analysts have signaled that the growing For Gathuru Mburu of the African Biodiversity resistance of pests to chemical pesticides Network (ABN), governments are failing to should be a cause for concern for investors in recognize the role that biodiversity plays in agrochemical companies.21 the resilience of family farming in Africa. The factors that once drove solutions under the Ecological limits are forcing farmers to banner of a ‘Green Revolution’ –i.e. increases acknowledge the importance that a healthy in agricultural output by heavily relying on environment has on long-term agricultural chemicals, mono-crop intensive cultivation productivity. Balancing the use of fertilizers models and reduced seed diversity, could with methods that build on nature’s resilience now backfire as we enter an era of ecological are a particular opportunity to think about limits. Biodiversity and soil nutrients make the long-term land developments. soil more resilient to droughts, thus improving the resilience of the food system. Mburu Recently, after 30 years of scientific research, reports that Africa is losing the resilience of the Rodale Institute in the United States found its arable land and its ability to cope with the that organic farming, although providing extreme weather events that are now more lower yields in the first years, in the long term recurrent. A less biologically diverse system is outperforms conventional chemical farming in a less resilient system.24 terms of crop yields, sustainability and profit. It is the longest-running scientific comparison Preserving soils through traditional means and between organic and conventional looking to indigenous seeds and agriculture agriculture.22 Large-scale farming, however, derived from Africa’s biodiversity, says Mburu, outperformed small-scale farming in the must be seen as a resilience strategy to feed a productivity per unit of labor.23 Further growing population while adapting to climate research must be done to explore how this change. comparison may play out in non-US contexts. The Land Security Agenda

Interestingly, in sub-Saharan Africa, where farmers either cannot afford or cannot access chemical options, natural ways of fixing nitrogen into the soil are driving agricultural innovation. One example is ‘fertilizer tree systems’: by planting certain types of nitrogen-fixing trees alongside crops, farmers have managed to boost crop fertility, while increasing the biological diversity needed to face more frequent droughts.25

The agricultural methods and technologies used by farmers matter. The loss of ecological services is sped up by agricultural techniques such as tilling and monocultures and, conversely, slowed down by crop rotation and no-till farming, which takes natural nutrient cycles into account. As commercial deals increase large-scale agriculture projects in sub-Saharan Africa, the opportunity must not be lost to promote new models for stewarding the fertility of the soil.

Mainstream trade and agricultural policies have rarely supported the application of ecological principles to the production of agricultural commodities. The risk of disregarding issues of soil fertility, and the resilience of the food system given climate change, is not just important at the level of investments, but also important to the productivity conditions in host countries. Case Study 21

Mali’s Water Limits A study by IIED finds that a contract for 100,000 hectares of land signed by the In Mali, the current area cultivated with rice country’s Minister of Agriculture in 2008 and sugarcane (two water intensive crops) grants the company unrestricted access to is estimated to be 100,000 hectares. Due to canal and groundwater resources during the increased water scarcity, independent experts wet season, but says the investor must restrict conclude that Mali has the water capacity to dry season crops to those with low water irrigate 250,000 hectares only, despite the requirements. Just a year earlier, in 2007, government’s claims to have 1 million hectares the Minister of Habitat, Land and Urbanism still available for agricultural development. signed another land deal, this time with a sugarcane company. The water for this will A recent study of the contractual arrange- be supplied from existing canals and will be ments of large-scale land acquisitions in Mali paid for through volumetric billing. Despite identified a significant lack of consideration of being signed by the same government, argues water constraints. How water rights should be the study, the two contracts provide for water dealt with in land contracts is the main point in very different ways. It is also worth noting of contention. Currently, two large investments that it is the Ministry for Mining, Energy and in Mali are said to require more than half of Water Resources that manages water in Mali. the critical reserve of water available in the region for the dry season. These investments Sources: GIZ, Germany; IFPRI, Global Hunger have secured the right to the exclusivity Index 2011; ‘Land deals in Africa: what is of water service in a drought emergency in the contracts?’ IIED 2011; UNDP Human situation. Further complicating matters, there is Development Indicators 2011 no one single way in which Mali’s government deals with water rights in land investment contracts.

Investor signpost

Water availability is a fundamental condition for productive land. Investing where there are sound water management capacities, clarity about water rights, and water security for local communities are important signposts for investors. Where these conditions are only partially met, working with water management organizations may offer innovative ways of identifying risk management options. 2.2

Ecological limits Farmland is of little value without water. And so access to water is a condition for the viability of any agricultural project.26 Agriculture uses 11 per cent of the planet’s land surface, but accounts for 70 per cent of global freshwater consumption. As water scarcity intensifies, the trade-off between the water demand for agriculture and the water demand for electricity generation will present regulators with difficult choices regarding water restrictions.27

These trade-offs, at the moment, are seldom planned for in advance. For example, the construction of the US$2 billion hydropower dam Gibe III in Ethiopia’s Omo River is likely to alter the flow of water into Lake Turkana, which provides 90 per cent of the region’s water. It is estimated that the dam could cause water levels to drop somewhere between ten to twelve meters, affecting fish stocks on which locals depend, and reducing their access to potable water.28

Countries facing water stress are among the major investors in farmland: China has a history of severe drought and poor water “The ecological aspects of the quality; Saudi Arabia, Kuwait, Qatar, and land agenda are not being Bahrain are among the world’s most water- properly discussed. The long- stressed countries; and India’s groundwater stocks are rapidly depleting.29 Water scarcity term environmental impacts of is set to compromise food production in these investments can have dire places like China, South Asia, the Middle consequences.” East, and North Africa. These are among the Michael Taylor main investors in farmland in sub-Saharan Africa, Latin America and Eastern Europe, International Land Coalition which are still well endowed with land and water resources. 23

Freshwater resources can vary considerably Outsourcing agricultural production is a way from year to year depending on factors of relieving pressures over domestic water such as rainfall, aquifer recharge, the rate of resources and transferring these pressures withdrawals for consumption and irrigation, somewhere else. With global water demand and climate change. projected to outstrip supply by 40 per cent within the next 20 years, the competition to A critical measure of water security for a secure water resources will grow significantly region is its capacity to meet Environmental in the next two decades.33 Flow Requirements (EFR), which measures the quantity, timing, and quality of water It is estimated that by 2050, the predicted flows required to sustain freshwater, estuarine increase in ‘virtual water’ exports could ecosystems and human livelihoods in a given cause up to an 18 per cent reduction in the territory.30 EFR thinking is not sufficiently water available for small-scale agriculture integrated to investment considerations. worldwide.34 This timescale will fall within the Furthermore, as the case of Mali illustrates lifespan of many of the land deals that are (see box), the rights over water associated being made today. with land investments, especially during the dry season, and how this impacts the water Furthermore, different crops require different available to other users, need everyone’s full quantities of water. Second-generation biofuel attention. crops such as jatropha, a crop favored in African biofuels projects, are highly water intensive and known to reduce water Commodities and their ‘virtual water’ availability for food crops.35 Sugarcane plantations for biofuel purposes in ’s When a commodity is produced and then Tana Delta are reportedly contributing to traded, it is virtually carrying water from water scarcity, raising tribal tensions, and one country to another. This is now known affecting wetlands, which play a major and quantified as ‘virtual water’. The global role in regulating the region’s water cycle.36 volume of international virtual water flows Tanzania, on the other hand, where irrigation embedded in agricultural and industrial conflicts are reportedly frequent between products averaged 2.3 billion m3 per year upstream and downstream farmers and during the period 1996–2005.31 Major net pastoralists, is just one example of how the exporters of ‘virtual water’ include North availability of water may be inevitably tied America and South America (especially the to the prospects for peace and security in the United States, Canada, Brazil and Argentina), region.37 South Asia (India, Pakistan, Indonesia, Thailand) and Australia. The largest net importers of ‘virtual water’ include North Africa and the Middle East, Mexico, Europe, Japan and South Korea.32 The Land Security Agenda

Water footprints per capita Population, land and water consumption

Sources: Water Footprint Network [www.waterfootprint.org]; CIA World Factbook, 2011; World Bank Country Data, 2011.

UK

France

United States

Mali

Liberia

Brazil

Virtual footprint

Domestic footprint

Country USA UK France Brazil Liberia Mali Population (millions) 313 62 65 206 3 14 Annual population growth rate (%) 0.9 0.6 0.5 1.1 2.7 2.6 Freshwater resources (billion m3) 2,818 145 200 5,418 200 60 Irrigated land (thousand hectares) 23,000 195 2,695 4,500 3 236 Water footprint per capita (m3/year) 2,842 1,258 1,786 2,027 1,235 2,044 Virtual water footprint (%) 20.2 75.2 4 7. 3 9.2 12.3 3.6 25

The water footprint per capita is the total Since the water footprint is calculated amount of freshwater used to produce goods per capita, the data also includes total and services in a country. The virtual footprint population figures. Other important data is the percentage of that footprints that is includes how much freshwater is available happening outside the country, i.e. using in a country (internal river flows, rainwater other countries’ water, which is embedded in and groundwater) and the areas of land imported goods. that are being artificially irrigated, including controlled flooding. UK

France China

Saudi Arabia

India

Mali Ethiopia

DRC Uganda

Tanzania

Australia South Africa

DRC S Africa S Sudan Uganda Tanzania Ethiopia S Arabia India Australia China 71 49 8 35 43 91 26 1,189 22 1,336 2.6 –0.4 N/A 3.6 2.0 3.2 1.5 1.3 1.1 0.5 900 45 N/A 39 84 122 2 1,446 492 2,813 11 1,498 N/A 9 184 290 1,731 62,286 2,550 64,141 552 1,255 N/A 1,079 1,026 1,167 1,849 1,089 2,315 1,071 2.9 22 N/A 4.7 6.8 2.3 66.1 2.5 11.8 10 2.3

Human rights Where government accountability is low, land investments, even if entered into by well-meaning investors, can have dire consequences on local poor communities. The effects on human security may be significant, whether because communities are forcibly evicted from the public lands they have cultivated, often without formal rights, for generations, or because new irrigation schemes jeopardize water availability for small-scale subsistence farming.

Growing exposure

The social vulnerabilities that can be created by this booming industry are growing in visibility, and a few high-profile cases have shown just how material these reputational and political risks are for investors and companies.

For example, the Oakland Institute’s investigative research has exposed investors behind controversial farmland projects in Africa. This has led a number of investors to publicly withdraw from these projects, “When investments arrive, recently including a top university endowment communities are safer if they have in the United States that had invested in a secure land rights. Participatory commercial project in Tanzania.38 land planning, documentation and In other cases, however, the difficulty to assess registration need more support.” the accuracy of information poses a challenge Tanja Pickardt to this agenda. Ethiopia, for example, is said Land Policy and Land Management, to have been discussing the leasing of 3 million hectares to foreign investors at a time Deutsche Gesellschaft für when 2.8 million Ethiopians were suffering Internationale Zusammenarbeit from serious famine.39 Investigative journalists (GIZ), Germany report that at least 70,000 people would need to be resettled to clear areas targeted for land investments in the country. 27

Ethiopians claim that opposition to these But even in the cases where communities may actions is low due to the fear of imprisonment have the formal rights to their land, a practical and retribution.40 Government officials have lack of capacity to fully understand and claim emphatically denied both these claims. As their rights – or how to best leverage those media interest in this topic continues to grow, rights for an economic advantage – can be however, these reports will find it easier to an obstacle to a fair negotiation. make its way to the top of the business and investment reputational risks. Land rights and In the absence of robust legal governance ‘the mystery of capital’ safeguards, bridging the gap between formal and informal land rights held by communities Over ten years ago, Peruvian economist may require a more proactive approach from Hernando de Soto published an influential investors. History shows that, as with other book called The mystery of capital: why areas where governments have been slow to capitalism triumphs in the West and fails respond to social or environmental issues, for everywhere else. De Soto found that what example in relation to labor standards, the distinguishes those countries that succeed at private sector is likely to be held to account.41 capitalism from others that fail is primarily the legal structure of property and property It is reasonable to anticipate that a proactive rights. At one time, he argued, every approach to risk management will include developed nation in the world has undergone ways of involving and benefitting local a transformation from the predominantly communities, not just through a prior and informal ownership of land to a formal, informed consent to these deals, but also unified legal property system. Developed with options that build their capacities and countries seem to have forgotten that this is livelihoods. what has allowed people to leverage property into wealth.43 In sub-Saharan Africa, most vulnerable populations have lived in public lands over Today’s land-grab debate could do well generations under an informal regime of to recover some of these arguments. For customary land rights. The absence of formal example, ensuring the ‘prior and informed legal rights and the supporting documentation consent’ of communities to land deals is puts these communities at a disadvantage. crucially important, but can be of little In the Democratic Republic of Congo’s urban practical value if communities do not hold areas of Kinshasa, to cite an example, 77 per the legal rights to their land, or are not well cent of residents reportedly own their own informed about the rights and commercial plots of land, but only about 30 per cent hold opportunities that can be most advantageous rights that are formally recognized by law.42 to them. Similarly, investors must be better informed of the opportunities available to them to invest in agricultural projects that build the resilience and economic capital of local communities. The Land Security Agenda

Local civil society can help advance a well Investors and business innovation coordinated set of actions that build greater access to information, drive the inclusion of While some investors may have greater customary rights into land ownership records control than others over the agricultural as a matter of government policy, increase the projects they invest in, there is an opportunity accountability of government agencies, and to accelerate interest in business innovation improve the availability of sound legal and and in those projects that include smallholder- commercial advice to communities helping farming communities as parts of a value them assess their options. chain.

Land rights are seen as the first building Arguably, agribusiness still largely operates block in creating the conditions for food in the bygone world of the ‘Green Revolution’, security. Olivier De Schutter, the UN Special where reliance on chemicals and an intensive, Rapporteur on the right to food, has suggested mono-crop cultivation have been means to that ‘our failure to help small-scale farmers boost agricultural output. Instead, what might to access markets, and to live decently from a transition to a ‘Green Economy’ model look farming, is a key cause of hunger.’ He has like? added that ‘we must empower smallholders to negotiate decent terms with buyers, and Just like transport business models are we must explore the most inclusive business gravitating towards distributed networks, such models. Governments must not shirk their as car-sharing schemes in large cities, so too responsibility to oversee arrangements agricultural models could better integrate between farmers and buyers, and to equip networks of smallholder farmers into a radical smallholders to rise up the value chain.’ rethink of their production models, and in doing so build the resilience of communities We draw attention to the work of that is needed to cope with the challenges organizations like Landesa (formerly the Rural described here. Incentives for pursuing these Development Institute), which over 40 years innovations are more likely to arise from fully has helped bring secure land rights to more understanding the challenges involved in the than 105 million families in 45 countries. current model than from appeals to global In 2011 alone, Landesa helped 3.4 million ethics and sustainability. families receive documentation of their legal rights to land, legal aid and education of Farmers’ cooperatives are already playing their land rights, or official recognition of their a key role in some regions in aggregating land tenure. This transformation, which they and coordinating supply, building skills and aptly describe as going from ‘land insecurity’ capacity and increasing the quality of outputs. to secure rights to land — has boosted Where technical assistance is needed to help agricultural productivity in the developing these communities up their game, bilateral aid world by billions of dollars per year, improved agencies are likely to step in to better direct health, nutrition and school enrollment in the investments that they are already doing in hundreds of villages across the globe.45 this area. 29

A wave of innovation is already underway. It In already volatile and environmentally ranges from farmer-owned businesses in the stressed regions, such as the Horn of Africa, cocoa-producing sector in Ghana, to contract land investments may amplify the risk of farming with farmers in the sugarcane conflict, especially in those cases where sector in Uganda and Tanzania. Business communities are relocated to already heavy innovations that are good for local people, populated or resource-stressed regions. soils and water stewardship must now come In 2011, a group of scientists at Columbia more centrally to the investment spotlight.46 University established a strong correlation between patterns of global climate changes and the emergence of violent conflict since Land: A matter of national security 1950’s to the present, particularly in the tropics where global climate change is most In countries with the highest population pronounced.49 growth rates in the world, ensuring livelihoods and food production can become a matter Drier and warmer years result in higher of national security. In Mali, a substantial surface temperatures, reduced water proportion of the 805,000 farm households availability, lower agricultural yields, and in the country subsist on cultivating less than higher food prices, all of which have been 1 hectare. Conversely, the area covered by found to raise the instability of already recent large land investments, which could stressed regions in Africa, from Uganda to create smallholder farming opportunities for Darfur.50 some 700,000 people, is now concentrated in the hands of 22 companies, and will create only a few thousand jobs.47

For over five years the US military has been actively evaluating the security and military implications of climate change. In regions “Land issues could become a matter like sub-Saharan Africa climate change of national security.” is considered a ‘threat multiplier’, given Gilbert Sendugwa ecological stresses, population growth, Africa Freedom of Information people’s overwhelming dependence on agriculture, and the recurrence of climate Center (AFIC), Uganda change effects such as extreme droughts.48 Case Study

Liberia’s Community Land Titles From 2009 to 2011, the International Development Law Organization (IDLO) Liberia has one of the highest land concession and the Sustainable Development Institute rates in Africa. About 556,845ha, or 6% of (SDI) implemented this concept through the its total landmass, has been reportedly leased “Community Land Tiling Initiative” in 20 to foreign investors for palm oil production communities in Rivercess County, Liberia. The alone. Due to speculative land deals, intervention investigated how to best support thousands of hectares are reported to remain communities to complete community land idle, but cannot be accessed by traditional documentation processes so as to successfully land users. claim, protect, and leverage their land rights for community-based prosperity. The project When land concessions displace communities found that communities were not only keen to or lead to environmental degradation of formalize the titles to their community lands, lands still held by communities, if local people but the highly participatory documentation lack the formal rights (or the equivalent processes proved to its potential to resolve documentation) for their customary land conflicts, strengthen democracy and encourage claims, it may be difficult for them to demand participatory governance systems in rural and receive compensation for their losses. communities. New legal procedures that allow entire communities to document their customary land Sources: Interview with Rachael Sydney Knight, claims according to the outer boundaries of Land Titling Initiative, International Development the community represent a fast and efficient Law Organization; USAID Land Tenure and way of safeguarding customary land http://usaidlandtenure.net claims.

Investor signpost

Where land titles are not formalized, farmland investments are creating a series of human rights challenges. These must be considered a critical investment risk and managed accordingly, ensuring that local people have secure land rights and will benefit from the investments. A fuller understanding of risks related to land rights, as well as the solutions to manage these risks proactively, may be achieved by consulting and collaborating with organizations advancing land rights in the regions in question. John Richardson, CEO, JMR Portfolio Intelligence 3.0 31

Next steps for Success ultimately depends on ensuring that investments are made in support of equitable an operational prosperity and sustainability; and on national governments enforcing stringent regulations agenda that protect and steward their human and natural capital.

This report puts forward five practical actions that can contribute to create incentives in financial markets and with political leaders to advance change. We identify some of the actors who can participate in moving these ideas forward quickly, and will be focusing our work on catalyzing their development as part of a Land Security Agenda:

For investors

1 Define land security parameters Establish a set of verifiable measures that allow stakeholders to distinguish those land investments that advance equitable and sustainable prosperity from those that do not. Based on these criteria, which we suggest must consider people, water and soil, it is possible to advance their “Access to information is essential in integration into three important areas of order to monitor land acquisitions; the investment cycle: the identification of and hold governments accountable investment opportunities that build positive value; the due diligence process and the if community rights are violated.” performance reviews of fund managers. Mukelani Dimba The Open Democracy Advice This process is seen as a valuable dialogue Center, South Africa between information holders, and a basis for discussing new areas of collaboration across disciplines. One of the metrics we have identified as central to this agenda is the ‘water footprint’. The Land Security Agenda

This is advocated by the Water Footprint This involves a discussion of the indicators Network (WFN) and provides a spatially that can best translate issues like soil and temporally explicit indicator of direct erosion, water footprints and human and indirect water use of consumers and rights into values that are relevant to producers. WFN is further encouraging the risk profile of countries. The process forms of water governance that reduce the involves a discussion with financial market negative ecological and social impacts leaders, including risk rating agencies and of the water footprints of communities, providers of investment decision support countries and businesses. We see tools such as MSCI, one of many actors opportunities for organizations like WFN increasingly interested in ratings that and others working on the related issues incorporate environmental and social risk of soil fertility, agricultural methods, and factors, which ‘may not be captured by land governance and transparency to work conventional analyses, such as conflicting collaboratively with investors in exploring water demands.’ 52 the applications of their data.51 The absence today of a risk-rating 2 Build better country risk profiles instrument that translates these values If the population of a given country is into quantifiable risks and country risk dependent on agriculture for livelihoods, profiles prevents these issues from being shouldn’t issues like soil erosion, water embedded in market behavior and availability and lack of recognition portfolio investment decisions. for people’s land rights increase that country’s sovereign risk? We think so. A 3 Develop global monitoring tools Land Security Index can be developed to Greater transparency and access to practically demonstrate how this can work, information is needed at a territorial and generate interest by mainstream risk level on the status of these trends, and rating agencies to incorporate these issues as a proxy to how well authorities to their assessments. A set of guiding are managing them. Cross-sector policy priorities can be developed to guide collaborations can help streamline the governments in improving the situation of data that exists on soil erosion, water the issues profiled. availability, social vulnerability, and climate change, and devise user-friendly visualizations of this data by leveraging available technology—all presented in a way that is relevant to both investment decisions and government planning.

33

The little information available about The International Land Coalition (ILC) is land deals, and about the situation on already developing information networks the ground on issues such as land rights, on the ground, and is planning to develop water availability, or soil degradation, is a such an interface from a civil society barrier to progress. Technology available perspective. Currently over 2,000 deals today creates extraordinary possibilities have been recorded across 100 countries for this agenda. Combining on-the-ground and at least half of them have been intelligence and data gathering with verified by relying on country networks. satellite mapping and user-friendly web The data draws on national inventories of interfaces already freely available, can approved land deals with research carried provide ways of monitoring and tracking out by country partners.53 The ILC can the risks and opportunities in this agenda. be further supported to make information A few years ago, Google Earth partnered available that shows where long-term with indigenous tribes in the Amazon value is being stewarded. rainforest to use handheld devices to feed on-the-ground information on deforestation into a global technology interfaces. For governments

Drawing on experiences like these, we 4 Advance the formal recognition of envision investors, technology companies, land rights on a large scale and civil society in sub-Saharan Africa The universal call for the ‘prior and working together to advance information informed consent’ of communities must be systems that shed light on the status of supported, but will be of little practical trends like community land rights and value if communities do not hold the legal registration, water availability, soil rights to their land, are not well informed erosion, or population growth rates; all about their rights and the commercial constituting ‘layers of data’ of relevance opportunities available to them. Civil to the management of long-term value. society advancing good governance, land As a result of this information, investors titling and capacity building, many of considering an area of interest may work whom we spoken with during this study are proactively with communities in resolving in a position to help create a Land Security pending land rights issues in collaboration Partnership that seeks to build technical with rights-based organizations. and political momentum for the formal recognition of land rights on a large scale and the corresponding accountability of government agencies.

The Land Security Agenda

Achieving rights and greater transparency 5 Develop a high-level political of land ownership is not a new agenda. agenda Use the ranking of country risks Land reform will not be easier now than to advance a discussion at the level of it has been for the past two centuries. Heads of State of the investment regulation But we see a considerable opportunity to policies that are needed to address issues build momentum for a focused, ambitious of soil and water management, land agenda that unites organizations around rights and food security. Ultimately, it a common purpose: to advance the is up to host governments to encourage recognition of land rights as a mean to investments that create long-term value increase economic development, and to for their countries and discourage those support this process with capacity building that increase their vulnerability. Heads and government accountability programs. of State are more likely to embrace this agenda if it is framed as a vision of Civil society already advancing long-term economic productivity and transparency, access to information and competitiveness. good governance in the region (some whom we have talked to include the Ultimately, it is political incentives to Africa Freedom of Information Centre in ensure land is stewarded for the long- Uganda; Twaweza in Tanzania and East term that will make the most difference. Africa, and the Open Democracy Advice Initiatives such as the Open Government Center in South Africa), and especially Partnership (OGP), launched by Presidents those organizations already advancing of various nations in 2011 to advance the formal recognition of land rights and good governance and transparency providing communities with legal and are innovative platforms from where to commercial advice, including the Land advance new political visions.54 We see Titling Initiative and Landesa, among many an opportunity to initiate a discussion on others. land investments and market regulations at a top political sphere in various regions, where countries may develop plans for attracting responsible land investments as a means to secure their long-term economic competitiveness. 4.0 35

Afterword The Land Security Agenda advocates a move from a ‘land-grabs’ debate to ‘land stewardship’ solutions. Achieving long-term value for the land agenda will depend on communities enjoying effective land rights and retaining their land assets as part of productive value chains. It will depend on the fertility of the soil being actively protected and including a sound understanding of the role that biodiversity plays in sustaining productivity and hydrological (i.e. rainfall) patterns. And it will depend on water rights being adequately managed at a territorial level to ensure sustainability.

These three imperatives: thriving people, fertile soil and biodiversity, and available water, must now be included in stringent and enforceable national laws, management systems, and the investment equation. New mechanisms must be created to increase the availability and transparency of information on these trends and incentivize financial markets and political leaders to operate within these limits.

A vision of long-term value must also translate “Innovative investment models could to new business models that go beyond the aggregate production in new ways ‘either-or’ debate of large-scale vs. small-scale that allow communities to retain their farming. Cooperatives can help aggregate and coordinate supply so that investors and assets, while supporting them to companies can rely on communities retaining produce efficiently and sustainably.” their assets and being part of the productivity Jodie Thorpe equation. Where technical assistance is Private Sector Policy needed to help these communities up their game, development agencies are likely to Adviser, Oxfam, United Kingdom step in to better direct the investments that agencies are already doing in this area. The Land Security Agenda

Keeping development within ecological The proactive management of these risks limits, however, may challenge mainstream offers an extraordinary opportunity to move development thinking. A paradigm shift the sustainability agenda forward and to look that connects pro-poor development with at productivity in a new way. ecological stability is essential, and is implied We hope this brief report helps set the tone by the fundamentals of the Land Security and the direction for this agenda; a blueprint Agenda. Climate change challenges these we can now use to develop new proposals goals. A worse-than-average drought, for action that can help ensure a peaceful, exacerbated by climate change, may be prosperous, equitable and sustainable future all that is needed to realize the political, for the land and commodities agenda. Time humanitarian and ecological risks that are is of the essence, and everyone has a stake in now building momentum. trying to make the land agenda work for the long-term. With global financial markets in turmoil, investors are regarding land-assets as a more stable and attractive investment option. As with most other sustainability related issues, most investors will think it is unfair that a broader human rights and sustainability agenda lands on their desks. However, incorporating these issues is essential to fully understand the risks and opportunities that lie ahead. Given the scale of ecological and resource constraints, coupled with population growth pressures, food security concerns, and climate change, we believe that framing the land agenda broadly in terms of security is now needed. 37

Acknowledgements Donor Platform for Rural Development; Arthur Mist, World Vision South Sudan; Anuradha We would like to thank Katie Swanston of Mittal, Oakland Institute; Festo Ntibalizi, the UN-backed Principles for Responsible Tanzania Land Protection Association; Investment for her useful feedback to earlier Christina Olivecrona, AP2; Gaynor Paradza, versions of the report, as well as the following Institute for Poverty, Land and Agrarian people for their contributions and time, in Studies, South Africa; Jonathan de Pasquallie, alphabetical order: UN-backed Principles for Responsible Investment, South Africa; Tanja Pickardt, GIZ; Rob Bailey, Chatham House; Ricardo Bayon, Mark Poston, DFID; Kavita Prakash- Mani, Eko Asset Management; Michael Bosch, GIZ, Syngenta International; Rakesh Rajani, Mali; Chris Brett, Olam International; Lorenzo Twaweza; John Richardson, JMR Portfolio Cotula, International Institute for Environment Intelligence; Gilbert Sendugwa, Africa and Development; Federico de Vita, Credit Freedom of Information Center, Uganda; Paul Suisse; Anupama Dokeniya, World Bank; Simon, Earth Capital Partners; Sonja Swift Mukelani Dimba, Open Democracy Advice and John Swift, Swift Foundation; Michael Center, South Africa; Alex Evans, Center Taylor, Laura Meggiolaro, Annalisa Mauro on International Cooperation, NYU; Jemma and Silvia Forno, International Land Coalition Green, JP Morgan; Arjen Hoekstra, Water (ILC); Jodie Thorpe, Oxfam; Martin Tisne, Footprint Network; Liz Hozken, Gaia Transparency and Accountability Initiative; Foundation; Dr. John Ingram, University of Charles Wanguhu, Africa Center for Open Oxford; Alex Jacobs, PLAN International; Governance, Kenya. Aida Kiangi, ActionAid Tanzania; Rachael Knight, Land Titling Initiative, IDLO; Ivo We are especially grateful to the Joffe Knoepfe, OnValues; Devlin Kuyek, GRAIN; Charitable Trust and the Swift Foundation Jos Lemmens, APG; Gathuru Mburu, African for supporting the Earth Security Initiative to Biodiversity Network; Monika Midel, Global develop this agenda. The Land Security Agenda

References 10 ‘UK firm’s failed biofuel dream wrecks lives of Tanzania villagers’ The Guardian, 30 1 ‘Resource Limitations 2: Separating the October, 2011. Dangerous from the Merely Serious’, by 11 ‘Agricultural investment and international Jeremy Grantham, GMO Quarterly Letter, land deals: evidence from a multi-country July 2011. study in Africa.’ Lorenzo Cotula et al., Food www.gmo.com Security, Vol. 3, pp. S99–S113 2 The price index is based on the average 12 Interview with Christina Olivecrona, of 4 commodity indexes: food, agricultural Sustainability Analyst with the Swedish raw materials, metals and energy. McKinsey Pension Fund AP2, February 2012. Global Institute Commodity Price Index, 13 ‘Deal or no deal: the outlook for agricultural 2 011. land investment in Africa’ Lorenzo Cotula 3 FAO’s Voluntary Guidelines for Land Tenure. and Sonja Vermeulen, International Affairs, www.fao.org/nr/tenure/voluntary-guidelines Vol.85, pp.1233–1247. The Tirana Declaration. 14 ‘Africa Evolves, Next Steps for Development’ www.landcoalition.org/about-us/aom2011/ London Business School Africa Day 2010. tirana-declaration 15 ‘Are land deals driving ‘water grabs’?’ Jamie World Bank’s Principles for Responsible Skinner and Lorenzo Cotula, International Agricultural Investment. Institute for Environment and Development www.responsibleagroinvestment.org ( I I E D ), 2 011. 4 Land deals in Africa: What is in the 16 ‘The New Green Revolution: How Twenty- contracts? Lorenzo Cotula, IIED, London, First-Century Science Can Feed the 2 011. World’ Olivier De Schutter and Gaëtan 5 ‘Land and power: The growing scandal Vanloqueren, Solutions, September 20, surrounding the new wave of investments in 2 011. land’ Bertram Zagema, 151 Oxfam Briefing 17 ‘Resource Limitations 2: Separating the Paper, Oxfam International, 2011. Dangerous from the Merely Serious’, Jeremy 6 ‘Overseas farmland investors buy 11 per Grantham, GMO Quarterly Letter, July 2011. cent of Aussie farms’, 15 Sept 2011, DGC www.gmo.com Asset Management. 18 ‘Solutions for a cultivated planet’ Jonathan http://dgcassetmanagement.com Foley, Nature, 2011, Vol.478, pp.337–342. 7 ‘African Land, Up for Grabs’ Ashwin 19 ‘Agri-investing for the long term: The Parulkar, World Policy Journal (2011), Vol. investment case for responsible investments 28, pp. 03–110. in agriculture.’ OnValues, 2011. 8 Figures provided by Emergent Asset 20 ‘The impact of ecological limits on Management, from BBC news research population growth’, The Guardian, October ‘Africa investment sparks land grab fear’, 14, 2011. BBC News, 5th August 2009. 21 ‘GM Freeze. Weed Resistance in RR Crops 9 ‘Biofuels and ‘Land Grabs’ in Poor Nations’ – An Update.’ GM Freeze Briefing Paper New York Times, June 12, 2009. October 2011. 22 The Farming Systems Trial: Celebrating 30 39 ‘Ethiopia at centre of global farmland rush’ Years, Rodale Institute. The Guardian, March 12, 2011. www.rodaleinstitute.org/fst30years 40 ‘Understanding Land Investments Deals in 23 Ibid note 16. Africa – Country Report: Ethiopia’, 24 Interview with Gathuru Mburu, co-ordinator The Oakland Institute, 2011. of the African Biodiversity Network, 41 ‘Apple Cited as Adding to Pollution in China’ December 2011. The New York Times, September 1, 2011. 25 ‘Trees ‘boost African crop yields and food 42 USAID. Country Profile: Democratic Republic security’, BBC News, October 16, 2011. of Congo, 2011. 26 ‘Is Water the Hidden Agenda of Agricultural http://usaidlandtenure.net/usaidltprproducts/ Land Acquisition in sub-Saharan Africa?’ country-profiles/democratic-republic-of- Woodhouse, P. and Ganho, A.S. Global congo Land Grabbing Conference, Institute of 43 Hernando de Soto (2000) ‘The mystery of Development Studies, 2011. capital: why capitalism triumphs in the West 27 ‘Competition for water for the food system’ but fails everywhere else’, Basic Books, New Kenneth Strzepek and Brent Boehlert, 2010, York. Phil. Trans. R. Soc. B., Vol. 365, págs. 44 www.srfood.org 2927–2940. 45 www.landesa.org 28 ‘Ethiopia: Gibe III – a dam too far?’ Luc van 46 ‘Alternatives to land acquisitions: agricultural Kemenade, December 20, 2011. http:// investment and collaborative business farmlandgrab.org/post/view/19794 models’, edited by Lorenzo Cotula and 29 ‘In the Rush for Land, Is it All About the Rebeca Leonard, 2010, IIED/SDC/IFAD/ Water?’ Christina Daggett, New Security CTV, London/Bern/Rome/Maputo. Beat, July 26, 2011. 47 ‘Understanding Land Investment Deals in 30 Ibid note 27. Africa: Mali’, The Oakland Institute, 2011. 31 ‘National water footprint accounts: the 48 ‘National Security and the Threat of Climate green, blue and grey water footprint of Change’ Center for Naval Analysis, April production and consumption’, Mekonnen, 2 0 0 7. M. M. y Hoekstra, A. Y., Water Footprint www.cna.org/reports/climate Network 2011. 49 ‘Civil conflicts are associated with the global 32 Ibid note 31 climate’, Hsiang, Solomon M., Meng, Kyle 33 Ibid note 29 C. and Cane, Mark A. 2011, Nature, Vol. 34 Ibid note 33 476, pp. 438–441. 35 ‘Biofuels and ‘Land Grabs’ in Poor Nations’, 50 ‘Water, international peace and security’ New York Times, June 12, 2009. Mara Tignino, International Review of the 36 ‘Biofuels land grab in Kenya’s Tana Delta Red Cross 2011. fuels talk of war’, The Guardian, July 2011. 51 www.waterfootprint.org 37 ‘Water scarcity in Tanzania – conflict or 52 www.msci.com/products/esg/iva cooperation?’ Facius, Janne L. Roskilde 53 www.landcoalition.org University, 2008. 54 www.opengovpartnership.org 38 www.oaklandinstitute.org Country Population Freshwater resources (m3) Irrigated land (hectares)

UK 62,000,000 145,000,000,000 195,000

Mali 14,000,000 60,000,000,000 Liberia 236,000 3,000,000 200,000,000,000 3,000

Brazil 206,000,000 5,418,000,000,000 4,500,000