LARGE SCALE LAND ACQUISITION:

Transcription

1 LARGE SCALE LAND ACQUISITION: THE NEED FOR GOOD LAND GOVERNANCE As, June 27, 2011 Klaus Deininger, World Bank

2 The global picture

3 Commodity price rise triggers land demand Rice price (US $/t) Daewoo to cultivate Madagascar land for 0 0 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 20

4 Investor demand in Africa unprecedented Region Area cult. (M ha) /yr Demand in Mn. ha SSA EAP LAC ECA MENA SAS ROW Total 1,357 1,

5 Past experience not encouraging Sudan: Sorghum & sesame yields (t/ha) (vs. > 4t/ha in Australia) Sorghum Sesame 1970/ / / / s oil price shock as a major determinant; inflow from Middle East Land transfers very large (5.5 Mn ha official; up to 11 Mn ha encroached) Productivity & welfare impacts very limited due to conflict & soil mining

6 & neglect of rights a danger again Determinants of a country attracting investor interest/actual implementation Dependent variable Interest Implementation Suitable land non-forest ** *** Suitable land forest Yield gap ** Land rights recognition *** * Investment protection * Pseudo R

7 Actual land transfers lower but still large Total area transferred, no of projects and share of domestic investors, Country All projects Share domestic (%) 1000 ha # Median (ha) Projects Area Ethiopia 1, Liberia 1, , Mozambique 2, , Sudan 3, , Investment is often not predominantly foreign. Many ventures did not start production limiting potentially positive impacts.

8 Need to look at potential

9 Assessing potential: Methodology & use Identify potential per crop & grid cell (5 or 1 km resolution) Data on soil, slope, elev., rainfall, temp. to simulate crop growth Output prices for local output value; transport cost for global price -> best crop Input prices to compute net profit & implicit land rental value Cultivated land -> yield gap (actual/potential output) Productivity increase often only option; may be cheaper & socially more appropriate Area expansion risky & costly (soil tests, investment, compensation) Yield gap can be attributed to technology, infrastructure & institutions Leave options for expansion of existing farms (e.g. via mechanization) Uncultivated land -> possibly available/of interest to investors Identify areas of highest potential/threat, opportunity cost & need for scrutiny Priority areas for tenure regularization Land rental surface can form a basis for negotiation Investors benefit from that knowledge and in Brazil make lots of money from it The scenario used below Rainfed Maize, soy, wheat, sugar, cassava, groundnut, oilpalm; high input intensity

10 Potential output values

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13 Land availability by country World total 445 Mn ha (< 25/km 2 ) 306 Mn ha (< 10/km 2 ) 198 Mn ha (< 5/km 2 ) Key characteristics Highly concentrated > 90% in 32 countries Half of these in Africa Large rel. to current area > double in 11 countries > triple in 6 countries Sheer size is instructive Multiple constraints likely Need sophisticated investors Potential social dislocation High potential, non-cult., -forested, -protected land < 25/km ha Relativ e 1000 ha Relative Sudan 46, Tanzania 8, Brazil 45, Bolivia 8, Russian Fed. 38, Cent. Afr. Rep. 7, Argentina 29, Paraguay 7, Australia 26, Colombia 4, D.R. Congo 22, Ethiopia 4, Mozambique 16, Cameroon 4, Madagascar 16, Kenya 4, Chad 14, Mexico 4, Zambia 13, Mali 3, Indonesia 10, Papua N.G. 3, Angola 9, Burkina Faso 3, Uruguay 9, Belarus 3, Venezuela 8, South Africa 3, United States 8, Congo 3, Canada 8, Ukraine 3,

14 Expansion potential by crop Latin America s advantages Technology & land for expansion Human capital Infrastructure & market access Institutions: Property rights secure Thriving land markets Transparency Contract enforcement Financial markets Africa s opportunity Borrow technology Focus on regional markets Expand from existing production Rel. low opportunity cost of land * Challenges to be overcome Institutions Top countries with maize expansion potential (<25/km 2 ) Current production Available land Area (1000 ha) Yield (t/ha) Total < 6 h USA 31, ,647 1,538 Argentina 3, ,469 7,704 Australia ,870 2,890 Uruguay ,735 2,225 Brazil 14, ,388 10,406 Russian Fed. 1, ,458 2,170 Venezuela ,640 3,919 Zambia ,716 2,383 Sudan ,889 14,390 Madagascar ,753 4,654 Chad ,131 3,736 Mozambiqu e 1, ,592 4,206 World

15 Countries vary widely Malawi Ghana Africa Rwanda 0.14 Area (ha/rural inhabitant) El Salvador Haiti Latin America & Caribbean Area (ha/rural Ethiopia 0.21 Peru 0.46 Tanzania 0.29 Honduras 0.46 D.R. Congo 0.35 Colombia 0.64 Sudan Zambia Brazil 2.25 Mozambique 0.40 Argentina 8.82 Madagascar 0.26 Uruguay Ratio of cultivated to total suitable area 1 - Yield Gap Ratio of cultivated to total suitable area 1 - Yield Gap

16 .. and so do appropriate actions Type 1 (Korea, China, Vietnam, India) Significant gains from technology & institutional change by smallholders in the past Intensification & (private sector) value addition as only sources of on-farm growth Off-farm employment a main engine for increases in farm sizes via (rental) markets Type 2 (Brazil, Argentina, Peru) Technological barriers to large farm expansion low - big recent investment inflows Land markets function relatively well, currently danger of bubbles Regulation needed to avoid distributional, environmental & social externalities Type 3 (Malawi, Rwanda, El Salvador) High yield gap often a consequence of past underinvestment in agriculture Land is a key safety net; danger of people being pushed out with no alternative Private investment to complement public initiative; contract farming Type 4 (Sudan, Tanzania, Zambia, Mozambique) Mechanization & larger farm size can be sustainable; incentive for private sector Institutions (property rights & land markets) a key challenge

17 Yield Gap BDI PAK EGY JOR RWA SLV MWI ROM POL NGA UKR TKM LTU BEN MOZ SDN AGO ZAR ZMB COG GHA TZA Type 3 Type 4 KAZ URY PHL MEX BRA ARG IND HUN CHL COL SVN PER GUY Type 1 VNM Type 2 CHN MYS RUS Suitable relative to cultivated area (in logarithms)

18 Potential & limits of mega-farms Agricultural production structures Predominance of owner-operation due to monitoring issues Ag. Production: 22% of value chain; 0.2% of market cap (7 firms) In contrast to processing/marketing Increases in farm size only with wage rate & out-migration (US) Plantations as an exception of plantations New forces may weaken this No-till technology; herbicide resistant crops Risk diversification GPS/satellites to monitor crop conditions Certification/integration of supply chains ->Increases area that can be managed to 10,000 ha/person Average farm siz ze (ha) Manufacture wage ( $s/hr) But true mega farms remain limited Imperfections in financial markets (Argentina) Substitute for missing public goods/infrastructure Paying full opportunity cost for land difficult Potential for development impact severely limited 50 Evolution of US farm size & wages Farm size Wage

19 A country perspective: Mozambique

20 Setting & results thus far Enormous unexploited potential Ideal market access Beira (transport) Recognition of community rights via 97 law Available land three times what is cultivated Hypothetical land values > $ 3,000/ha Drive to attract investment backfired Applications for 13 mn. ha in 18 months Land audit: Half of what was given is un- or underutilized Underlying reasons? Gaping holes in land right recognition (only 10%) Lack of strategy (potential, clustering, partnerships, climate) Weak & non-transparent processes (consultation, contracts) Environmental issues (EIAs lacking, weak, or not enforced) Weak ex-ante assessment of economic viability, Lease rates low & administratively set ($0.8/ha) Liquidation of failed ventures near-impossible Main lesson Attracting speculators is easy - getting capable/serious Residual land values; high input scenario A A A A A A

21 Actions taken Identify resource availability Zoning to assess agro-ecological suitability Link to local land use planning Provide basis for complementary inv. (possy. WB) Identify unproductive concessions & initiate return Overlaps: 1.4 m ha; 418 cases Drive to recognize rights Improve quality & consistency of data Community land delimitation/demarcation Local structures & decision-making authority Review of ways to cancel non-utilized concessions Increase lease rates a bit Land policy forum for range of issues incl. transfer Increased transparency Investment authority established; decentralized Formats for investment proposals More stringent monitoring (but limited gov t capacity Better regulation of consultation process

22 Parallels in other case study countries Gaps in legal & policy framework Requires expropriation/extinction of existing rights (e.g. ZMB) Unclear/duplicative institutional responsibility (e.g. ETH) Low land payments/participation; non-collection (e.g. LBR) Requirements for liquidating non-profitable investments rarely considere Weak institutional capacity & implementation Lack of information & consultation -> Neglect of property rights Neglect of economic/technical viability (e.g. GHA) Limited capacity to do or monitor ESIAs (e.g. SDN) Weak land administration -> Boundary conflicts, overlap Agreements are not written/monitored Communities with little voice, capacity, and ability to resist Negative effects shifted to locals who receive damage but no benefits Non-viable projects encroach on local rights to make ends meet Vulnerable & women left out poor people subsidize (foreign) speculators Historical examples of this leading to political backlash, conflict

23 Challenges and opportunities Characteristics of the land sector Specificity of time & place -> laws & practice political & contextdependent Technical complexity -> need for wide range of expertise Institutional fragmentation -> coordination problems Evolution over time -> Not a static picture No comprehensive & coherent vision or indicators Programs often ad hoc, sporadic, without focus/continuity/strategy Fragmented indicators, non-comparable over time & link to actions not clear Actions not clear & value judgments often buried in fine print Implications Support often ad hoc & based on traditional sectors Limited inclusion in other programs (CAADP, DPLs) Cross-country learning from good practice difficult Ability to measure progress or impact constrained Roadmap with critical path & mechanism to ascertain progress essentia

24 What can be done?

25 Key country responsibilities Strategy and general framework: How to provide critical infrastructure Leveling the playing field in the policy arena for an inclusive ag. growth strategy How to identify & disseminate information on land availability in high potential areas Quantifying and maximizing food security & employment benefits (direct & indirect) Ways (zoning, safeguards, taxes) to promote rational & sustainable land use Negotiation and structuring of actual deals Recognition of land & resource rights at project & aggregate level Mechanisms to encourage fair & inclusive negotiations with enforceable results Contractual arrangements and partnerships to share benefits & incentives Effective ways of liquidating non-performing enterprises Monitoring and disclosure Providing reliable country-level data on large-scale land transfers Standards and mechanisms for project-level reporting, disclosure, and verification Ideally to feed into multi-stakeholder processes at country level (EITI example)

26 Use stakeholders comparative advantage 1. Government: Improve land governance Identify areas with potential & provide complementary public goods Recognize, register, and help enforce property rights (incl. valuation) Improve & streamline institutional framework for markets to operate 2. Private sector: Get things done on the ground Close the yield gap by transferring technology & providing market access Document potential for benefit sharing Extend coverage/disclosure of existing approaches (e.g. Equator Principles) 3. Civil society & academics: Contribute to greater transparency Advise, monitor, implement to build civil society & community capacity Give communities voice; empower them to negotiate & push enforcement Publicize promising examples; link back to policy 4. Global community: Capacity building support to interested governments Technical support & complementary infrastructure, institutional capacity Assistance in negotiation to overcome imbalances Fora to monitor impact & share examples of good practice

27 But what is good land governance? Legal & institutional framework Laws & institutions recognize existing rights and allows users to exercise them at low cost, in line with their aspiration, in ways that benefit society as a whole. Policies are clearly stated & their implementation regularly monitored. Land use planning & taxation Land use planning and taxation avoid negative externalities at reasonable cost and support effective decentralization Management of state land State land is clearly identified and managed efficiently to provide public goods; expropriation is used as a last resort for public purposes only with quick payment of fair compensation and effective appeals mechanisms; divestiture of state lands is done in a transparent way that maximizes public benefit Public provision of land information Land information accessible at reasonable cost, comprehensive, current, and reliable Dispute resolution & conflict management Interested parties have access to institutions that have well-defined mandates to authoritatively resolve dispute and effectively manage conflict

28 How can this be made operational? Step 1: Identify ideal role of institutions in land sector Create legal & institutional framework to define property rights to land, allow cost-effective enforcement & encourage investment Provide reliable & complete information on land rights to allow lowcost verification, transfer, and use of land as collateral Regulate agents behavior to avoid negative externalities & allow effective public service provision Step 2: Put the issue on the agenda in a monitorable way Assessment of key areas: Broad-based, rely on existing info Monitoring: Focus on key priorities to measure progress Research: Identify causal linkages to improve overall outcomes Step 3: Link to regional/global efforts Political commitment at highest level (AU LPI; FAO VG) Focus on scope for transferability of innovations/arrangements Potential for cross country assessment in the long term A land center can have significant benefit

29 Assessment: The LGAF methodology Land Governance Assessment Framework (LGAF) principles Constructive rather than evaluative: Good practice virtually everywhere Local expertise & ownership rather than imposition of outside experts Non-political: Aims to be objective, replicable, actionable Pilot application in 5 countries - detailed manual prepared Scope for additional modules (e.g. large scale, forest, markets) Step 1: Put together background information Tenure typology and key issues for each tenure type Information on all the dimensions based on existing data (by experts) Preliminary ranking & identification based on existing information Identification of tentative policy priorities Step 2: Validate ranking & identify priority actions Ranking panels with participation by a broad range of stakeholders Priority recommendations based on this input Peer review to strengthen links among assessment, monitoring, research Country-level validation workshop & publication of results Step 3: Agree on a process for follow-up Policy measures (rule-based indic s): Easily monitored by experts on regular basis Outcome-based indicators: Not more than 5-10 but requires significant effort

30 Monitoring: Combine admin, survey data Types of indicators and data sources Rule-based (are good institutions in place?) expert opinion Coverage & customer satisfaction: Admin. (rel. to universe); selectivity Outcome based: Household surveys link to research Potential administrative indicators Share of economically relevant land area mapped No. of registered land transfers & women s rights Tax revenue receipts by different entities Volume (no., area, value) of expropriation cases No. and incidence of land-related conflicts Challenges Although they should be routine measures, few of these currently available Admin. data to provide disaggregation & repetition Survey data to link to outcomes Setting them up has some cost - requires political & technical support But can link into existing processes, e.g. reporting to African Heads of State

31 Research to push the frontier Why is research needed? Define minimum standards & peer network for evaluations to be credible Document causal links between actions and higher-level outcomes Quantify payoffs from or WTP for specific deliverables (survey standards approp e?) Identify ways of achieving outcomes better/more effectively Explore transferability of approaches across countries Possible approaches (& trade-offs) Basic analysis of productivity determinants & land market functioning Analysis of past policy changes or programs with clear roll-out Slight modifications of existing approaches (e.g. paralegals) New ways of delivering services Advantages of a link to land governance Understanding of institutional arrangements a precondition for relevant research Potential synergies enormous (quality control, data access) Debate on land is political; local capacity & input essential to make case for reform Lack of researches input in policy debate has harmed both sides

32 Partnership for good land governance Structure and objectives Core partners WB, FAO, IFAD, UN-Habitat, IFPRI; advisory comm (CSOs/FOs; private sector; academic networks; donors & foundations; regional political bodies (AU, OAS, APEC, UN-ECE) Build on and provide input into existing initiatives in this area Act as a catalyst to bring together actors for an effective follow-up Create the preconditions for significant expansion of (Bank) support to the secto Create the preconditions for significant expansion of (Bank) support to the secto Specific activities Application of diagnostic assessment in Nigeria, South Africa, Ghana, Rwanda, Malawi, Georgia, Madagascar, Mali, Cameroon, DRC, Senegal, Ukraine Integration of tenure typology & admin data for monitoring indicators in 3 countries In-country workshops to validate followed by Africa-wide workshop later this yea Support to operational approaches The CLTS can make important contributions The entire idea originated in a grant from the Norwegian Governance TF Substantive review of assessments; household surveys; research Operational support in implementation of programs

33 Summing up Land acquisitions pose a potent & qualitatively new challenge Interest not in individual plots close to infrastructure/foreigners Potentially large amounts of money/land involved (funds, REDD) Many contractual models & production arrangements untested Can create tremendous opportunities but also has risks Case studies: From female empowerment to destruction of livelihoods Rights for local communities & direct negotiation Objective basis for what land can be worth Assistance to compensate for knowledge gaps Transparency of deals, disclosure & local monitoring of impacts Good land governance is a key government responsibility Serious investors will go where the framework is right (reputational risk) Provides a unique opportunity for collaboration

34 Thank you!