When land governance systems, whether formal or informal, offer security of tenure to land users, those users may be more likely or able to invest sustainably and productively in their land. For example, farmers with tenure security may be more willing to invest in longer-term improvements to their farm. In general, land users with tenure security are also better positioned when other actors are interested in using their land for investment activities: they can decline to transfer some or all of their rights, or can decide to do so in exchange for compensation, stronger environmental and social protections, and the sharing of other benefits on an ongoing basis as they deem appropriate.

Conversely, where land governance systems are weak or conflicting, and when landholders have insecure land rights, land users may be less incentivized to invest sustainably in their land. They are also at greater risk of having their land rights—which may be legitimate but not formalized—violated when investors seek to use the land for other purposes. In such situations, insecure tenure combined with outside investment interests can lead to forced evictions, damaged livelihood strategies, and other land rights violations.

Even when land rights are relatively secure, such rights can be threatened when a government is willing to expropriate privately held land in order to make that land available for an investment. Governments generally retain the right to compulsorily acquire land for a public purpose. The extent to which facilitating a private investment is considered to serve a public purpose is debatable, but is generally dealt with in domestic law [3]. In addition, many governments retain rights to subsurface minerals, meaning that investments in extractive industries can pose even greater threats to individuals’ or communities’ rights over surface land.

Companies that invest in land, or that have land-related operations in their supply chains, face financial, operational, reputational, and legal risks linked to insecure tenure [4]. This has led to the private sector’s increased awareness of land rights issues, and growing interest among some companies in understanding how to ensure that operations respect land rights [5]. The appropriateness of private sector support for formalizing land rights in contexts where companies seek to undertake investments remains an issue to be grappled with—while this has been recommended by some guidance documents, such efforts could also have detrimental impacts to the extent that they simply enable land transfers away from users with weak bargaining power and limited alternative options.

Host governments continue to pursue land investments for a range of reasons. Incoming foreign direct investment (FDI), for example, can bring capital, jobs, technology and knowledge transfer, and infrastructure development. For some low-income but resource-rich countries, resource development is seen as an important component of national strategies for economic growth. A shift to a low-carbon future may also require new types of land investments in many countries. In some places, communities located near potential land investments may also be interested in the potential benefits that such investments can bring.

Yet ensuring that investments provide their expected benefits is not easy. For example, although employment has been one of the primary anticipated benefits of many land investments for agricultural projects, the number of jobs created is sometimes much lower than expected, and, of the jobs created in practice, many are precarious and low-paying. Accordingly, the net livelihood impacts of land investments for agriculture could actually be negative when livelihood displacement is considered [13]. Similarly, while some research has found that FDI in the agricultural sector can strengthen food security within a host state,[14] others have concluded that primary-sector FDI, such as investments in land and agriculture, reduces food security [15]. At the very least, improved food security from such investment may require a stronger regulatory approach than is possible in weak governance contexts [16]. Of course, the impacts of a land investment result in large part from how it is structured, implemented, governed, and monitored. At a project level, many investments may result in both positive and adverse impacts [17].

Communities and land users who negotiate directly with investors may also struggle to ensure that their expected benefits materialize. A review of community-investor agreements found that many of the benefits promised to communities are written in vague, caveated, or potentially unenforceable language [18]. The potential for exploitative agreements is so high that civil society organizations like the Sustainable Development Institute in Liberia have created early warning systems to help communities access legal and other support once approached by investors [19].

Aside from the question of benefits, stakeholders—including investors, host and home governments, and communities—also confront challenges in ensuring that land investments meet the standards set out in the guidelines and principles described above. While some pilot efforts are being undertaken to apply specific guidance to specific projects [20], these are currently exceptions rather than the norm. Responsible land investment has many dimensions; particular challenges may arise for investors, governments, communities, and other stakeholders in ensuring that investments’ impacts and benefits are gender-sensitive [21], respect land rights and human rights [22], and are environmentally sustainable, including being both sensitive to water impacts [23] and compatible with climate change goals [24]. When investments do not adequately address these issues and do not result in expected benefits, grievances [25], and even conflict [26], are likely to arise.

Addressing such issues for ongoing projects can be even more difficult than getting them right from the outset. Investors, for example, may face a range of “legacy land issues” that flow from activities undertaken before they acquired a specific operation [27]. Such situations require strong due diligence, and can raise many complicated questions regarding how to address concerns [28]. Host governments, meanwhile, may find themselves at risk of legal liability when addressing the grievances of land users affected by land investments [29].

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