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 (link). Similarly, while some research has found that FDI in the agricultural sector can strengthen food security within a host state (Slimane, M., Huchet-Bourdon, M. & Zitouna, H. The Role of Sectoral FDI in Promoting Agricultural Production and Improving Food Security. International Economics, 145, pp. 50-65), others have concluded that primary-sector FDI, such as investments in land and agriculture, reduces food security (Mihalache-O’Keef, A. and Li, Q. 2011. Modernization vs. Dependency Revisited: Effects of Foreign Direct Investment on Food Security in Less Developed Countries, 55 International Studies Quarterly 55(1), pp. 71-93). At the very least, improved food security from such investment may require a stronger regulatory approach than is possible in weak governance contexts (Häberli, C. and Smith, F. 2014. Food Security and Agri-Foreign Direct Investment in Weak States: Finding the Governance Gap to Avoid ‘Land Grab’. 77(2) . Modern Law Review 189, Vol. 77, Issue 2, pp. 155-342). 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 (link).
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 (CCSI. Forthcoming. Is this Really Benefit Sharing? Understanding Current Practices Around Community-Investor Agreements Tied to Land Investments). 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 (link).
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 (link), 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 (link), respect land rights and human rights (link), and are environmentally sustainable, including being both sensitive to water impacts (link) and compatible with climate change goals (link). When investments do not adequately address these issues and do not result in expected benefits, grievances (link), and even conflict (link), 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 (link). Such situations require strong due diligence, and can raise many complicated questions regarding how to address concerns (link). Host governments, meanwhile, may find themselves at risk of legal liability when addressing the grievances of land users affected by land investments (link).