Population growth and rising incomes, together with a growing middle class in emerging powers, are increasingly putting the world’s natural resources under extreme pressure. By 2030 demand for food, water and energy is expected to rise by 30-40%.

Water, energy and land (WEL) are intimately connected and this WEL nexus manifests itself in new challenges and opportunities for developing countries. For example, producing more food requires more water, energy and more land – which is a particular challenge for developing countries frequently targeted for investment in land for agricultural production. Trying to tackle climate change by producing bio-fuels also adds pressure on land and water, and the growing scarcity of WEL resources is rapidly altering the value of ecosystem services.

In this context of increasing resource scarcity and climate change, effective natural resource management is ripe for a major development policy discussion – which is why the next European Report on Development (ERD 2011- 2012) will research this issue  in the run up to the next RIO+20 Earth Summit in June 2012.

Led by ODI, ECDPM and DIE, ERD2012 will draw on European and global research to discuss the role of public and private sectors in the effective management of natural resources for inclusive and sustainable growth. It will have a particular focus on water, land and energy, and will reach out to key stakeholders throughout the process.

The ERD outline was initially discussed in Brussels in April. Last week the consortium held its first substantive consultation in a meeting organised by ECDPM in Maastricht. The meeting considered governance and political economy aspects as part of a wider research methodology, and then focused on land – namely the management of investment in land for inclusive and sustainable growth – as one of the WEL resources.

The main challenge I set for the meeting was what I termed ’land’s conundrum‘.

Global resource scarcity has put a premium on ecosystem services such as land, which has attracted a range of foreign investors in poor countries. Based on existing data and back-of-the-envelope calculations, foreign land deals over 2004-2009 account for one sixth of arable land in Ethiopia, Ghana, Liberia, Madagascar, Mali, Mozambique and Sudan together. Countries such as Ghana, Mozambique and Madagasgar contracted out some 4% of all their land mass in just a few years.

This increased competition for land – whether for food, renewable energy such as palm oil, biofeuls, speculation, conservation etc. – should have provided a golden opportunity for land-rich countries. However a recent review suggests that these foreign deals have not yet led to any signficant – and expected – development effects (measured in jobs, technology transfer, rents, land rehabilitation etc.). So the conundrum is – why not?

Is this because of bad measurement of these development effects, poorly intentioned investors, weak and inadequate laws such as land tenure systems, or weak governance, ineffective institutions and collusive and harmful deals between state actors and land buyers? And if less detrimental – or even good – land deals exist, what characterises these?

Our two-day consultation discussed these and other issues. The high quality presentations established that it is important to examine a number of key political economy and governance aspects such as:

• transparency and leadership
• the role of FAO voluntary guidelines on land use
• the potential importance of investor perspectives in a historical context
• the evolution of land tenure
• the role of small holders.

We also discussed other important areas, e.g. that the benefits from avoided deforestation, compared to other land uses, work for inclusive and sustainable growth only when policies for other WEL resources are appropriate.

With many land deals taking place in contexts of weak governance, we might need to ask ourselves whether we should be surprised that there appear to be such few positive effects. Furthermore, does this land conundrum relate to a wider hypothesis that open, transparent and well governed relationships between state and investors are a crucial element in how natural resources can be managed effectively for inclusive and sustainable growth?

Stay with us for more questions – and answers – as our research progresses. Post comments here, or come to one of our forthcoming consultations. The next one will be held by DIE in Bonn, 8-9 June 2011 and will consider water and energy, followed by AERC in Nairobi, 11-12 July 2011. We will also be at the EADI/DSA conference in York at the end of September 2011.

Author: Dirk Willem te Velde is the ERD Team Leader

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