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July 2011

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Thematic Focus: Environmental governance, Resource efficiency, Ecosystem management

The Rush for Land and Its Potential Environmental Consequence

Why is this issue important?

To feed a global population of 9.3 billion by 2050 (2.4 billion more than today, UNPD 2011) FAO estimates that global food demand will increase by 70 per cent (FAO 2009). Net investment in agriculture needs to exceed US$83 billion per year (50 per cent above current levels) to meet future demand (FAO 2009, OECD-FAO 2010). FAO projected that more than 80 per cent of future arable land expansion would take place in Latin America and Sub-Saharan Africa (Bruinsma 2009) (Figure 1), although both climate change and population growth will cause reductions in arable land in the same regions by the end of the 21st century (Zhang and Cai 2011).

In addition to the need for more agricultural production, a rise in food prices is contributing to concerns about global food security. Increasing urbanisation rates and changing diets in fast-growing developing economies are pushing up global food prices considerably (Cotula and others 2009, Zoomers 2010). A 50–200 per cent increase in food prices led to the global food crisis of 2008, with dramatic impacts on the lives and livelihoods of millions of people (FAO 2009, OECD-FAO 2010). Even after the price spike, the U.N. Food Price Index eclipsed its previous all-time global high, and by April 2011, it had climbed for ten consecutive months (FAO 2011).

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Figure 1: Arable land in use in 2005, and projected use by 2050 compared with total land suitable for rain-fed crop production Full Size Image

The rise in biofuel farming was seen as another contributor to the 2008 price hikes (Cotula and others 2009, Fairley 2011). Calculations suggest that achieving even modest greenhouse-gas reductions combined with successful development of second generation biofuels, could lead to 1500 million hectares of land being devoted to biofuel cultivation by the year 2050—a land area equivalent to the current global arable land (Field and others 2007).

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Figure 2: Investor countries and target countries in overseas land investment for agricultural production. Source: UNCTAD 2009, Cotula and others 2009, Deininger and Byerlee 2011, OI, 2011, IFPRI.ORG (accessed 8 June 2011) Full Size Image

Targets and mandates on renewable fuels introduced by several countries and States including the European Union, Canada, USA, China, India, and Japan have created a guaranteed market that has encouraged investment in biofuels production, both in Europe and overseas. The European Union, for example, has set a target of 10 per cent biofuel use in the transport sector by 2020 (IIASA 2009, IEA 2011).

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Table 1: Major players in the rush for land Full Size Image

The impacts of climate change are also raising concerns about the future of agriculture. If no adaptation measures are put in place a temperature increase as small as 1°C by 2030 will lead to a decline in yields of major cereal crops in the tropics and subtropics. Impacts of temperature increase of 3°C or more by 2100 could result in a significant loss of productivity in low-latitude regions and diminish effectiveness of adaptation measures (Padgham 2009).

What are the findings and implications?

The 2008 food crisis accelerated the scale and intensity of transactions in farmland (Sutherland and others 2010) in the Global South. Governments, through transnational corporations and national actors have moved into large-scale agriculture, speculating on potential windfall gains in sub-sectors such as food crops, biofuels, and environmental services. Over the last five years, leases, concessions, outright land sales, and "contract farming", often covering tens to hundreds of thousands of hectares, have enabled foreign control of these lands for decades to come (Zoomers 2010, Deininger and Byerlee 2011, LRAN 2011). The media's considerable attention to the vast scale and apparent speed with which the land is being transacted has led them to coin the catch-phrase "land grabs".

The biggest players in the rush for land are China and the Gulf States, while countries such as Japan, India, South Korea, Libya and Egypt are hunting for fertile farmland in places like Ethiopia, Mali, Sudan, Madagascar, and Mozambique, as well as in the Philippines, Indonesia, Laos, Thailand, Vietnam, Cambodia, Pakistan, Brazil, Argentina and even Ukraine (Zoomers 2011, Deininger and Byerlee 2011). A number of often small European Union companies are involved, sometimes with support from their national governments (UNCTAD 2009) (Figure 2). Compared to an average annual expansion of global agricultural land of less than 4 million hectares, large-scale land transactions worth 45.2 million hectares (11.3 million ha per year) were reported between 2006-2009 (Deininger and Byerlee 2011). More than 70 per cent of the most speculative major land demands are in sub-Saharan Africa where demand alone in 2009 was equivalent to more than 20 years of previous land expansion (Deininger 2011).

Private investors interested in the biofuel boom are actively looking for land in Argentina, Brazil, Laos, Malaysia, Indonesia, and in several African countries (Figure 2 and Table 1) (Sulle and Nelson 2009, Zoomers 2010). With a guaranteed market, cheap access to land and cheap labour, transnational corporations perceive agrofuel development as a good business opportunity. A recent analysis indicates that 37 per cent of the current land transactions will be devoted to food crops, 21 per cent on biofuels, and 21 per cent on industrial or cash crops with the rest distributed among nature conservation, livestock and plantation forestry (Zoomers 2010, Deininger 2011).

The desire to capture water resources to irrigate farmlands has also motivated the rush for land (UNCTAD 2009, D'Odorico and Ridolfi 2010). Middle Eastern states are among the biggest land investors in Africa, driven not by a lack of land, but a lack of water (Bailey 2011). Between 2004 and 2009, for example, Saudi Arabia leased 376 000 ha of land in Sudan to grow wheat and rice following declining underground domestic water. China and India have leased thousands of hectares of farmland in Ethiopia; both countries have well developed irrigation systems but in the case of China, for example, moving water from the water-rich south to northern China is likely to cost more than leasing land in Africa (Ananthaswamy 2011).

Potential environmental impacts of the rush for land

Monocultures and Biodiversity loss

Monoculture has been widely accepted as the most efficient type of large-scale agriculture. Indeed, high yields may result, at least for a time, but growing one crop, such as biofuels, over a large area for several years has a number of negative environmental impacts (Rosset 2011). Studies in Malaysia and Indonesia have shown that 80-100 per cent of fauna species in tropical rainforests cannot survive in oil-palm monocultures due to increased pressures from various crop diseases and pests (Donald 2004, Fitzherbert and others 2008), often requiring large scale use of chemical pesticides, fungicides and herbicides. In addition, increased fertilizer use to safeguard crop yield may increase pollutant levels in downstream waters and nitrous oxide emissions (OI 2011a) (Table 2).

Semi-mechanized sorghum and sesame production in Sudan illustrates the risks of large-scale farming and holds lessons for current investors. In an agro-ecological environment comparable to Australia, where yields are 4 t/ha, sorghum yields are only 0.5 t/ha and have been stagnant or declining (Deininger and Byerlee 2011).

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Loss of forests and pastures

Covering only about 7 per cent of the planet, tropical forests probably contain at least half of all species. Many of these species risk extinction if the forest area in which they live is destroyed (Fitzherbert and others 2008). Over the last decade, approximately 14 million hectares of forest per year has been converted to other uses or lost through natural causes, particularly in Latin America and Sub-Saharan Africa (FAO 2010) where many large-scale agricultural projects will be located.

Recent calculations suggest that carbon dioxide emissions from deforestation and forest degradation (excluding peatland emissions) contribute about 12 per cent of total anthropogenic carbon dioxide emissions with a range from 6 to 17 per cent (Werf and other 2009). Depending on the methods used to produce the feedstock and process the biofuel, some crops can even generate more greenhouse gases than do fossil fuels. For example, nitrous oxide, a greenhouse gas with a global warming potential around 300 times greater than that of carbon dioxide, is released from nitrogen fertilizers (FAO 2008).

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Table 2: Feedstock specific biodiversity effects. Source: IIASA, 2009 Full Size Image

Much of the land area under biofuel crops will come at the expense of forests and pasture (Melilo and others 2009, Fairley 2011). For example, the expansion of soya beans and sugarcane for the production of agro-fuels in Brazil has destroyed protected areas of the Amazon and Cerrado (Mendonça 2011). The Cerrado (savannah) holds nearly 160 000 species of plants and animals, many of which are endangered. Studies indicate that nearly 22 000km2 of savannah are cleared each year for sugarcane production (Mendonça 2011). With technological advances, use of biofuels in transport is expected to increase from the current 2 per cent to 27 per cent by the year 2050 (Fairley 2011).

At least 55-59 per cent of oil palm expansion in Malaysia and 56 per cent in Indonesia has been at the expense of forests (Koh and Wilcove 2008). Deforestation is one of the major environmental threats facing Ethiopia. Much of the land that has been given to investors (and that is marketed as available) is not presently under cultivation, rather much of it is covered by woodland or forest (OI 2011a).

Increased competition for water resources

Large-scale acquisitions of farmland will stimulate further competition for water, a situation that can only become worse in the future if the global demand for sustainable bioenergy production is taken into account (Rost and others 2009). In Ethiopia, for example, several key wetland areas have been given to investors and evidence of limits on water use are lacking. Further, of the lands listed as available for large-scale commercial agriculture, more than 70 per cent, or 1.5 million hectares, are located within the Nile watershed (OI 2011a). Ethiopia constitutes about 90 per cent of the total flow of the Nile and impacts of water use on downstream users in the future may raise concerns.

Similarly, the intention of the government of Mali is to extend the irrigated area from the current 100,000 ha to 960,000 ha through large land leases. This will involve a massive increase in the amount of water extracted from the Niger River, which is shared by nine countries within its watershed—Benin, Burkina Faso, Cameroon, Chad, Côte d'Ivoire, Guinea, Mali, Niger, and Nigeria (OI 2011b).

To meet the water and food needs of local communities, farming away from industrial, energy-intensive agriculture towards small-scale, agro-ecological farming has been proposed (IAASTD 2009), including improved water use in agriculture (IWMI 2007).

Legal and policy options

Governments that rely on imports to feed their populations and countries with large populations and food security concerns need a long-term strategy to secure greater food security in the future. Therefore, interest in land acquisition is likely to continue.

Host countries should clearly communicate to potential foreign investors their comprehensive economic plans in line with the country's sustainable development agenda, policies and laws (in water, land, forests, etc.). The plans should encompass systematic land use regimes, assessments of land rights and consent to land and associated natural resources, including technical and economic viability of the land. Host countries need to enhance their policy, legal and institutional capacity to manage their land transactions. Transparent, consultative negotiations in major land concessions are essential to obtain the best fiscal, social and environmental provisions.

Environmental policies and regulations have to be clearly articulated, implemented and enforced in the host countries. High quality environmental impact assessments (EIAs) should be conducted and vetted in a public process before any licensing and approval procedures are implemented. EIAs should be supplemented by social impact assessments and periodic, independent inspection to ensure environmental sustainability. Protected areas should be demarcated and areas unsuitable for agricultural expansion monitored against encroachment. The impacts of water use on downstream users, whether those users are immediately downstream, or in other countries should be assessed as a matter of priority.


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