Almost a third of land licensed for commercial exploitation in emerging economies is also used by communities, potentially triggering tensions with local people who fear the assets they need to survive will be taken from them, a new study shows.
The analysis for the Rights and Resources Initiative, a global coalition of groups working on forest tenure reform and policy, is the first attempt to quantify the risks associated with local land rights for investors who enter into agreements with governments to exploit natural resources, the report said.
The study was carried out by The Munden Project, a climate risk consultancy.
The findings come amid rising international interest in sourcing commodities from developing countries in sectors including agriculture, forestry and mining.
The countries studied were Argentina, Brazil, Cambodia, Cameroon, Chile, Colombia, Indonesia, Liberia, Malaysia, Mozambique, Peru and the Philippines.
In Cameroon, 83 percent of commercial timber concessions overlap indigenous territory, potentially risking the income of local people, the study shows.
In a separate report for the Rights and Resources Initiative released in February, The Munden Project estimated that the operating costs of a three-year investment of around $10 million could be as much as 29 times higher than normal if the project was forced to stop its activities because of local opposition.
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“The point of this (research) is to inform private-sector investors who are interested in large-scale land deals, and to provide them with a baseline to think about this issue,” said Bryson Ogden, a private sector analyst with the Rights and Resources Initiative.
“We are not saying that these deals don’t need to happen. Developing countries want foreign investment, and local people want these opportunities as well… The world needs resources, we need industry, we just need to make sure they are happening in ways that are good for all the parties involved,” Ogden told Thomson Reuters Foundation.
The study urges investors to carry out local-level mapping of their concession, then to examine the national context, including corruption levels, land laws, and the frequency of legal disputes and violent protests over land-based projects. Based on this information, the risks should be managed by engaging with communities and obtaining their buy-in.
The report does not specify how this should be done, but cites a small number of examples where companies have offered business opportunities, new road and electricity infrastructure, and a system allowing communities to monitor the environmental impacts of a project.
Lou Munden, CEO of The Munden Project, said it was important to involve local people in the economic activities generated by the concession, such as creating jobs. This might be easier with farming and forestry projects than mining.
The common practice of investors building facilities like schools and hospitals for local people in places where they operate does not compensate for “the value of where they lived for generations,” Ogden said. Munden said this approach “implies you can buy them off.” Both called for the development of a new model that addresses land tenure risk in a more inclusive way.
“Investors should assess communities as counter-parties in the deal,” Munden told Reuters. “If you understand their claims, that is pretty important because you can probably satisfy them, but the downside of not doing so is likely to be significant.”
Researchers said in the study that they had examined hundreds of qualitative reports on land tenure conflict, and that “the vast majority of conflicts we reviewed were perfectly avoidable.”
The report was released to coincide with a conference in Switzerland this week that aims to expand global efforts to map and document community lands, legally recognize and ensure respect for local land rights, and boost private-sector support. The two-day meeting is organised by the Rights and Resources Initiative, the International Land Coalition, Oxfam, the International Union for Conservation of Nature and HELVETAS Swiss Interco-operation.
“Multinational companies and investors worry about (land tenure risk) because when there is a conflict, it really does damage to their reputation,” Munden said. “I think that if they can avoid it a reasonable cost, they would like to do so.”