Land-use policies for sustainability

2020 #GGSD Forum

Securing natural capital

24 - 26 November

Issue Paper Conference version

Land-use policies for sustainability

Axelle Boulay

OECD Green Growth and Sustainable Development Forum The GGSD Forum is an OECD initiative aimed at providing a dedicated space for multi-disciplinary dialogue on green growth and sustainable development.

It brings together experts from different policy fields and disciplines and provides them with an interactive platform to encourage discussion, facilitate the exchange of knowledge and ease the exploitation of potential synergies. By specifically addressing the horizontal, multi-disciplinary aspects of green growth and sustainable development, the GGSD Forum constitutes a valuable supplement to the work undertaken in individual government ministries. The GGSD Forum also enables knowledge gaps to be identified and facilitates the design of new works streams to address them.

Authorship & Acknowledgements This issue note was prepared for the 2020 GGSD Forum to inform discussion around the theme of Session 1 on “Securing natural capital on land”.

The author is Axelle Boulay, external consultant to the OECD. The note benefitted from comments and suggestions by Jonathan Brooks, Guillaume Gruère, Santiago Guerrero, Simon Buckle, Katia Karousakis, Jane Ellis, Edward Perry, Hélène Blake, Aimee Aguilar Jaber, Kumi Kitamori and Enrico Botta from the OECD. The note was produced under the supervision of Kumi Kitamori, Head, Green Growth and Global Relations Division, OECD. The opinions expressed herein do not necessarily reflect the official views of the OECD member countries. This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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Table of contents

1 Introduction ............................................................................................................... 4 2 Challenges towards more sustainable land use..................................................... 5 Loss of biodiversity ............................................................................................................. 5 Climate Change ................................................................................................................... 6 Zoonotic diseases and alien species invasion .................................................................. 7 Impacts on water resources ............................................................................................... 8 Food-related impacts .......................................................................................................... 8 Loss of livelihoods and lands of indigenous populations and local communities......... 9

3 The role of policies and business practices in incentivising sustainable land use ............................................................................................................................... 11 The role of a coherent long-term vision and coordination for successful land-use policies and business practices ....................................................................................... 11 Regulations ........................................................................................................................ 14 Reform of harmful subsidies that can drive sustainable land use ................................. 18 Subsidies, taxes, fees and trading schemes ................................................................... 19 Large-Scale Land Acquisitions......................................................................................... 25 Due diligence for Responsible Investment in Agriculture .............................................. 26 Voluntary certification schemes ....................................................................................... 26

4 Political economy of land-use policies ................................................................. 28 Distributional impacts on firms and households ............................................................ 28 Best practices to advance reforms .................................................................................. 30

5 Lessons learned and research gaps ..................................................................... 33 References .................................................................................................................. 36

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1 Introduction Land use is central to several key societal challenges. Land-use sectors account for around 23% of global anthropogenic greenhouse gases emissions (IPCC, 2019[1]) and land-use change is a key driver of biodiversity loss (IPBES, 2019[2]). Poor management of ecosystems and encroachment of both humans and livestock into wildlife habitats are considered as possible causes of the observed higher frequency of zoonotic disease emergence, such as COVID-19.

A transformative change in land use is needed to end hunger (Sustainable Development Goals – or SDG - 2), ensure clean water for all (SDG 6), mitigate greenhouse gas emissions (SDG 13), and protect life on land (SDG 15). Furthermore, the growing relative homogeneity of farmed crop and animal varieties in some countries increases the vulnerability of our food systems to shocks, such as new pathogens and invasive species imported through international trade and travel. Human encroachment into natural habitats and the competition between different land uses are expected to increase due to world population growth, urbanisation and changing consumption and dietary patterns. A key question for many governments is how to design and implement policies that promote land-use practices that support economic growth and sustainable resource use, while addressing food security and climate change. Responding to this question requires understanding how current and potential new policies perform in these respects.

Furthermore, possible trade-offs and synergies between different policy objectives need to be considered.

For instance, environmentally sustainable agriculture practices may induce lower agricultural productivity, thus potentially increasing pressure on forested areas and more intensive practices elsewhere. At the same time, poorly designed policies may incentivise riskier behaviour, such as subsidised insurance encouraging planting of more water intensive crops in water scarce regions.

This issue paper reviews the policies, business practices and political economy challenges to ensure a more sustainable use of natural capital on land. How can land-use planning, payment for ecosystem services, and other policy measures help managing the synergies and trade-offs among competing land uses? What are the distributional implications of such policies? As this is a wide research question, this issue paper aims to offer a general overview of the role of key policies and their impacts to lay out the state of play via literature review. Although land tenure security affects land use, which is a factor that should be taken into account by policy makers as it is necessary for farmers to invest in sustainable land use, it is outside of the scope of this paper that focuses on the various policies themselves and their impacts.

This literature review draws on a mix of peer-reviewed publications, grey literature, institutional sources and reports. Keywords relating to the identified themes were identified for use in search engines such as Google Scholar. In general, literature published in the period 2010–2020 was considered, although older important publications were occasionally included too. Existing review papers or reports on the discussed topics, including those from the OECD, were used as primary sources of information. In the absence of recent review papers or reports, case studies were searched to add to the evidence base.

This paper is structured as follows. Chapter 2 reviews the challenges towards more sustainable land use while Chapter 3 provides an overview of the policies that could overcome these challenges and Chapter 4 focuses on the political economy issues of the introduction of these policies. Chapters 5 and 6 highlight the key outstanding issues and policy research questions. Land-use sectors are defined as Agriculture, Forestry & Other Land Use (or AFOLU).

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2 Challenges towards more sustainable land use

In past decades, several developments have been made towards more sustainable land use. For instance, since 1960, the intensification of agricultural input use and concentrated animal feed, modern crop varieties and better management practices have led to increased crop yields and livestock production in developed and developing countries (OECD, 2020[3]). This contributed to the tripling of agriculture production with only modest increase in cultivated land (around 10-15%) (OECD, 2020[3]) and important gains in reducing both poverty (OECD, 2011[4]) and malnourishment (TCI, 2020[5]). In addition, intensive agriculture decreases the need for land, and therefore lessens the intensity of impacts caused by forest conversion to agriculture such as greenhouse gas emissions and biodiversity loss (OECD, 2013[6]). This makes sustainable agricultural intensification an important response to global climate change (IPCC, 2019[1]).

However, several challenges remain. This section reviews existing literature providing evidence of the following key impacts connected to unstainable land use: loss of biodiversity, climate change, zoonotic diseases and impacts of invasive alien species, impacts on water resources, food-related impacts and loss of livelihoods and lands of indigenous populations.

Loss of biodiversity Biodiversity on Earth is declining. The magnitude and speed at which the diversity of life on Earth is declining today is comparable to what happened during the five great extinction crises of geological time (Ceballos et al., 2015[7]). Around a million plant and animal species are now threatened with extinction (IPBES, 2019[2]). Wild vertebrate populations have declined by 68% in around 40 years (WWF, 2020[8]) and insect populations have been decreasing in a number of regions. For instance, Hallmann et al. (2017[9]) finds that 76% of flying insect biomass 1 have disappeared in 30 years in Germany in protected natural areas, and 67% in meadows in just ten years (Seibold et al., 2019[10]). However, this decline is not observed everywhere. In the United States for instance, a recent study reports no net insect abundance and diversity declines (Crossley et al., 2020[11]). The decline in insect population is particularly concerning given its impact on animal pollination on which more than 75 per cent of global food crop types relies 2, including key cash crops 3 like coffee, cocoa and almonds (IPBES, 2019[2]).

Agriculture and urban development can contribute to biodiversity loss due to land conversion.

Biodiversity loss in tropical and subtropical countries is mainly related to forest conversion to agriculture (FAO, 2020[12]). In Africa for instance, high population growth together with the use of small-scale agriculture are linked to a rate of deforestation that remains high (FAO, 2020[12]). In Southeast Asia, high1

the total weight of flying insects (regardless of species)

2

The rest of them rely on wind pollination.

3

a crop produced for its commercial value rather than for use by the grower

6| biodiversity value natural forests have been converted into rubber and oil palm plantations (Ahrends, 2015[13]; Austin, 2017[14]; IPBES, 2019[2]). In Latin America, the main agro-industrial sectors responsible for deforestation are livestock farming and soybean cultivation (IPBES, 2019[2]). Urbanisation may affect biodiversity due to encroachment on natural and semi-natural ecosystems thus leading to loss of biodiversity and unsustainable natural resources management (INTOSAI, 2013[15]). Importantly, the impacts on fauna may extend well beyond the area deforested because larger habitats and fauna migration patterns may be disturbed (OECD, 2019[16]).

The adoption of varieties with high yield potential allowed to increase food production per cultivated land. However, this trend is sometimes associated with a decline in the genetic diversity of cultivated species. Since 1960 agriculture production has tripled with only modest increase in cultivated land (around 10-15%) (OECD, 2020[3]) and important gains in reducing poverty (OECD, 2011[4]) and malnourishment (TCI, 2020[5]). For instance, high-yielding rice and wheat have been used successfully to reduce malnourishment in India (TCI, 2020[5]). However, this came at the cost of biodiversity in cultivated culture as multiple local varieties have been abandoned in favour of high-yielding varieties. These modern varieties are genetically more homogeneous and adapted to the practices that tend to be geared towards higher per hectare productivity (e.g. use of irrigation, mineral fertilisers) (FAO, 2019[17]). Lower diversity of cultivated crops, crop wild relatives and domesticated breeds indicate that agroecosystems are less resilient to pests and pathogens (IPBES, 2019[2]).

Unsustainable agricultural practices can also lead to soil degradation and broader pollution, which are drivers of biodiversity loss. Unsustainable agricultural practices (such as the cultivation of steep slopes or overcutting of vegetation) can impact soils (i) physically (e.g. soil erosion due to wind exposure, compaction due to tillage and heavy machinery), (ii) chemically (e.g. acidification due to excessive application of ammonium-based fertilisers, pesticide contamination in soils and GHG emissions from nutrient leaches); and (iii) biologically (e.g. loss of soil organic matter and fauna) (FAO, 2015[18]). It is estimated that the well-being of 3.2 billion people worldwide is negatively affected by land degradation (Montanarella, Brainich and Scholes, 2018[19]).

Climate Change Deforestation and livestock farming are among the main drivers of climate change. Between 2007 and 2016, the contribution of land-use sectors (the AFOLU activities) to global net anthropogenic GHG emissions was an estimated 23% (IPCC, 2019[1]). Most climate-adverse land-use changes are the ones transitioning from a relatively low-emission land use (or even a carbon sink like healthy forests) to a higheremission land use like cattle farming or urban areas (IPCC, 2019[1]). Deforestation (caused by agricultural expansion or urbanisation) leads to the disappearance of valuable carbon sinks 4 and carbon dioxide emissions (carbon stored in trees is released into the air) (IPCC, 2019[1]). It also eliminates the cooling effect from the biogenic volatile organic compounds emitted by healthy forests and thus adds to climate warming and disrupts local (and potentially regional/global) weather patterns (Scott et al., 2018[20]). In the agriculture sector, livestock production (mostly enteric fermentation) and rice padding have been the main drivers of direct sectoral emission accounting respectively for about 66% and 24% of agricultural emissions (IPCC, 2019[1]). Greenhouse gas emissions are correlated to the number of ruminants (methane) and the energy used in animal-feed production (OECD, 2019[21]).

Sustainable forestry, agriculture and urban practices have the potential to contribute to both climate change adaptation and mitigation (Mbow et al., 2019[22]). An example is the incorporation of low 4

Sustainable forest management can maintain or enhance forest carbon stocks, and can maintain forest carbon sinks, including by transferring carbon to wood products.

|7 carbon agriculture in agricultural policies in Brazil 5 (Mbow et al., 2019[22]). Low-carbon agricultural policies entail the reduction of deforestation, the restoration of degraded pasture areas, the adoption of integrated agroforestry systems 6 and no-till agricultural techniques in order to reduce national GHG emissions (Oliveira and al., 2017[23]; Mozzer, 2011[24]; Mbow et al., 2019[22]).

Land use changes may exacerbate some of the consequences of climate change, such as the risk of wildfires. Land use change influences the risk of wildfires by changing the amounts of flammable material that surrounds a fire (called fuel loads) and ignition frequency (Butsic, Kelly and Moritz, 2015[25]).

For instance, changes from active agricultural fields to shrublands and increase in livestock density tend to increase fire ignition frequency (Butsic, Kelly and Moritz, 2015[25]). Decreased grazing and forest regrowth increase fuel loads (Butsic, Kelly and Moritz, 2015[25]). Biodiversity loss is also related to an increased vulnerability to wildfires that is sometimes caused by a combination of land clearing and drought, as it happened recently in Indonesia’s tropical forests (TNC, 2019[26]) and in the world’s largest tropical wetland, the Pantanal in South America (Mega, 2020[27]). Large fires have a direct negative impact on the human well-being, caused by air pollution, cost of suppression activities, and loss of property and human lives (Brockerhoff et al., 2017[28]).

Zoonotic diseases and alien species invasion Urbanisation, deforestation, and ecosystem degradation are key drivers of the emergence and reemergence of infectious diseases (zoonoses) by altering biomes and host and pathogen population dynamics (Jones et al., 2013[29]). Land-use changes often lead to increased exposure of humans and domestic animals to pathogen-carrying wildlife (OECD, 2020[30]) and heighten the risk of virus spill-over from wildlife to domestic animals and humans, known as zoonosis (Faust et al., 2018[31]). It is estimated that about one billion people get sick and millions die every year from zoonoses (such as Chagas disease, Dengue, Ebola virus disease, Plague, Rabies) (WHO, 2014[32]). Using modelling, Faust et al. (2018[31]) found that the risk of pathogen spill-over from wildlife to domestic animals and humans, and the reverse, is highest in cases of habitat loss such as forest clearing for agriculture or mixed human use.

The consequences of agricultural intensification on zoonotic diseases risks are mixed. On the one hand, agricultural intensification can reduce pressure on natural ecosystems by reducing the demand for land, thereby reducing human and livestock interaction with pathogen-carrying wildlife(OECD, 2020[3]). On the other hand, unsustainable intensification of livestock production carries a risk of zoonoses for which there are epidemiological interactions between wildlife and livestock 7 (UNEP; ILRI, 2020[33]; Jones et al., 2013[29]) For instance, higher density of poultry or pig populations favours the adaptation of an introduced influenza virus and amplification for transmission between farms, to humans and to wildlife (Jones et al., 2013[29]).

Land-use changes can facilitate the diffusion of invasive alien species. Ways that can link land-use to invasive alien species can be categorized as follows: •

Some invasive alien species can capitalize on degraded ecosystems. For instance, the tsetse fly (Glossina spp) invaded a degraded ecosystem in East Africa thanks to the newly installed Lantana camara (a neotropical shrub). This fly carries sleeping sickness (Mack and Simberloff, 2000[34]).

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Low Carbon Agriculture Plan (ABC “Agricultura de Baixo Carbono” in Portuguese), which is based on low interest credit for investment in sustainable agricultural technologies 6

Integrated agroforestry systems are agricultural systems that strategically integrate two or more components among crops, livestock and forestry. The activities can be in consortium, succession or rotation in order to achieve overall synergy.

7

Livestock can act as an intermediate between wildlife and humans.

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Deliberate importation and release of exotic species as commodities (e.g. for timber, windbreaks, food, aesthetic reasons etc.) that become invasive (Hulme et al., 2008[35]). An extensive survey concluded that invasive species represent a small (between 0.5 and 0.7%) but growing part of the world’s tree and shrub species (Richardson and Rejmánek, 2011[36]). In order of importance, the reasons for their introduction and dissemination are : horticulture (62%), forestry (13%), food (10%) and agroforestry (7%) (Richardson and Rejmánek, 2011[36]).

•

Accidental importation by opening up new transport infrastructures that allow invasive alien species to spread into a new geographical region (for instance, land-use change and forest roads) (Hulme et al., 2008[35]).

Invasive alien species can represent a threat to ecosystem services, food production and human health. Many of them can affect the water supply (for example by reducing the water flow in canals and obstructing pump water intakes for irrigation) (Mazza et al., 2014). Some of them decrease food disposability by consuming crops or acting as crop or livestock pathogens (Mazza et al., 2014). Direct threats to human health include: “(1) causing diseases or infections; (2) exposing humans to wounds from bites/stings, biotoxins, allergens or toxicants; (3) facilitating diseases, injuries or death; and (4) inflicting other negative effects on human livelihood” (Mazza et al., 2014[37]). For instance, the globally invasive Indian Mongoose can carry rabies. Approximately half of the poisonous plants in the eastern U.S. in nonagricultural areas are non-native and many are invasive.

Impacts on water resources Excessive use of fertilisers may generate phosphorous and nitrate water pollution. Although the use of chemically-reactive nitrogen in fertilisers has increased agriculture productivity and contributed to food security and a lower need for land and thus less deforestation and wildlife contacts, excess nitrogen from fertilisers pollutes water (via groundwater, drainage water and runoff for instance) (OECD, 2018[38]).

Eutrophication of coastal waters is caused by excess nitrogen and can lead to algal blooms on the water surface and in turn to the creation of hypoxic water also called “dead zones” (OECD, 2018[38]). Urban runoff is another source of land-use related water pollution (OECD, 2017[39]). Water quality management is challenging because the sources of water pollution are diffuse, and their regulation entails high transaction costs (OECD, 2017[39]).

Unstainable land-use practices may also lead to groundwater depletion and changes in precipitations pattern. Groundwater depletion from intensive agricultural irrigation can cause lowering of water tables and depletion of streams, rivers and lakes, especially for shallow unconfined aquifers in the vicinity of rivers, streams or lakes (OECD, 2019[21]; OECD, 2015[40]). Irrigation is also associated with changes in precipitation patterns, given evapotranspiration. Empirical evidence has shown that large-scale deforestation can result in a significant decrease in precipitation in the Northern Hemisphere monsoon regions (East Asia, North America, North Africa, and South Asia) and an increase in moderate precipitation increases in the Southern Hemisphere monsoon regions (South Africa, South America, and Australia) (Devaraju, Bala and Modak, 2015[41]).

Food-related impacts Unstainable land use contributes to several phenomena that can hinder food security. Climate change can affect yields and food nutritional quality and consequently food security and livestock rearing viability (IPCC, 2019[1]; OECD, 2019[21]). Unsustainable use of groundwater can have negative externalities with direct impacts on agriculture production itself as in the case of irreversible salinization of aquifers in coastal areas (OECD, 2015[40]). Biodiversity loss can affect all of the followings: (1) supporting ecosystem services (e.g. natural control of plant pests and diseases; soil fertility and animal pollination); (2)

|9 provisioning ecosystem services (e.g. food, fibre, medicines or freshwater needed as inputs); and (3) regulating ecosystem services (e.g. soil and air quality, climate regulation or pollination) (OECD, 2019[21]).

At the same time, agricultural production for certain dietary patterns and food waste, can increase pressure on land-use. Under current trends, diet composition would contribute to approximately 80 per cent increase in global agricultural greenhouse gas emissions from food production and to global land clearing by 2050 (Tilman and Clark, 2014[42]). Food wasted and lost is another major contributor to GHG and land clearing (FAO, IFAD, UNICEF, WFP and WHO, 2019[43]). The amount of food wasted and lost each year represents crops cultivated on 1.4 billion ha of agricultural land, which is about a third of the world total agricultural land (FAO, 2013[44]; OECD, 2020[45]).

Dietary changes, together with reductions in both food waste and over-consumption 8 could significantly contribute to sustainable land use (Mbow et al., 2019[22]; OECD, 2020[45]). Alexander et al (2016[46]) analyse the role of past and present developments in diets on global agricultural land use. They found that the quantity of per-capita food consumption is less important than the types of food commodities consumed in determining the agricultural land requirement because of the important land requirement for animal products and in particular ruminant species. Similarly, the IPCC Assessment of individual foods in terms of animal-based vs plant-based showed that meat - especially ruminant meat (beef and lamb) - is the single food with the greatest impact in terms of GHG emissions and/or land use. Changing diets can entail significant benefits on carbon sequestration from land-sparing: the lower the amount of meat in the diet, the higher the GHG mitigation potential (Mbow et al., 2019[22]).

However, trade-offs are involved with food loss and waste reduction or any dietary change. For instance, OECD (2019[47])’s modelling simulations show that food loss reduction or changes in diets do result in significant cuts in GHG emissions, but they would result in revenue declines for producers, including poor ones, and the potential of policies to achieve this is unknown. Reducing food waste could lead to more sustainable land use or reduced demand for land (Alexander, 2016[46]). In order to reduce food waste, overconsumption, and the demand for animal products that are produced unsustainably and to address the trilemma diet-environment-health globally, the Global assessment report on biodiversity and ecosystem suggests options like participatory on-farm research, the promotion of low-impact and healthy diets and the localisation of food systems (Chan, Agard and Liu, 2019[48]). In Brazil, recent studies have looked at measures to transform cattle ranching. Even if meat consumption does not decrease, improving sector productivity, together with adequate measures to avoid social and environmental rebounds of intensification, could reduce deforestation and spare land for restoration (Chan, Agard and Liu, 2019[48]).

More data on food loss and waste and on impacts of food loss and waste policies is needed to inform policies that could better balance trade-offs between environmental and economic impacts (OECD, 2019[47]).

Loss of livelihoods and lands of indigenous populations and local communities Large-scale deforestation and unsustainable land use in general negatively affect livelihoods and lands of indigenous populations (IPBES, 2019[2]). Increasingly resource extraction, commodity production, mining and transport and energy infrastructure, are taking place in areas managed by indigenous populations and local communities (IPBES, 2019[2]). The pressures lead to loss of subsistence and traditional livelihoods and negatively affect health and well-being (from pollution and water insecurity) (IPBES, 2019[2]). The loss of traditional livelihoods has repercussions on traditional management, the transmission of knowledge, the potential for benefit sharing, and finally the ability of indigenous peoples and local communities to sustainably manage, wild and domesticated biodiversity (IPBES, 2019[2]).

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Consumption of a higher amount of calories than dietary needs.

10 | Some key challenges towards more sustainable land use were reviewed in this chapter. They included: loss of biodiversity, climate change, zoonotic diseases and alien species invasion, impacts on water resources and loss of livelihoods and lands of indigenous populations. These impacts of unsustainable land use can be, if not reversed, addressed through the introduction of new land-use policies or reforms.

The following chapter will review such policies.

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3 The role of policies and business practices in incentivising sustainable land use

After reviewing the challenges remaining to achieve sustainable land use in the previous chapter, this chapter explores the policies and business practices that could overcome these challenges. First, the need for broader policy coherence is reviewed. It is followed by an overview of the role played by various policies and business practices with high potential impacts on land use sustainability with a focus on the following policy instruments: (1) regulations, (2) taxes, fees, subsidies (including payments for ecosystem services) and trading schemes, (3) large-scale land acquisitions, (4) due diligence for responsible investment in agriculture, and (5) voluntary certification schemes.

The role of a coherent long-term vision and coordination for successful land-use policies and business practices This section presents some key elements that are of the upmost importance in the design of policies that will overcome the challenges towards more sustainable land use.

Long-term vision Policies with long-term vision are needed. For instance, given the time needed by most urban land-use policies for their long-run effects to kick in, governments need to show long-term commitments to implemented policies (OECD, 2018[49]).

Vertical coordination between international, national and sub-national sector institutions There is also a need for vertical coordination between international, national and sub-national sector institutions for coherence and policy alignment (Verburg et al., 2019[50]; Brack and Wolosin, 2018[51]). Many natural resources require transboundary management, thus many land-related issues are best solved internationally (OECD, 2020[30]). International collaboration and especially between producer and consumer- country governments is key in addressing embodied deforestation 9 and taking trade measures designed to control global trade in commercial agricultural products, such as soy, palm oil, beef and cocoa (Brack and Wolosin, 2018[51]).

9

Embodied deforestation is deforestation driven by agricultural commodity.

12 | Coherent policy design and horizontal coordination There are trade-offs and synergies in land management decisions. Land use objectives include economic objectives (e.g. agriculture, transport and energy /urban policies), environmental objectives and broader well-being objectives. Competition for land can result when several goals are pursued at the same time and there will be trade-offs and potential synergies in land management decisions (OECD, 2020[45]).

Example of such trade-offs include: •

Ensuring security of jobs in livestock industry can conflict with reducing GHG emissions through a reduction in meat consumption (OECD, 2020[3]).

•

Protecting forested land for carbon storage and biodiversity can conflict with agricultural land availability to provide sufficient land for growing food.

•

Reducing GHG emissions through large-scale deployment of new biofuels can conflict with food production, conservation of natural habitats for biodiversity or carbon storage.

•

Increasing urban density can conflict with health protection (OECD, 2018[49]).

Land-use policies should thrive to use an integrated landscape approach that can help to minimise trade-offs between policy objectives (Verburg et al., 2019[50]; OECD, 2018[49]). Reed et al (2020[52]) provide this definition: “Integrated landscape approaches are governance strategies that attempt to reconcile multiple and conflicting land-use claims to harmonize the needs of people and the environment and establish more sustainable and equitable multi-functional landscapes.”. International development organisations recommend the landscape approach. For instance, PROGREEN, a new World Bank MultiDonor Trust Fund launched in 2019 advocates the use of inter-sectoral (integrated) landscape approaches.

This approach is recommended at all stages of urban policymaking for instance (OECD, 2018[49]). This integrated approach is the essence of concepts used as paradigms for future urban development, such as the compact city, the smart city or transit-oriented development (OECD, 2018[49]).

It is important that sectoral policies are coherent with sustainable land use and land-use nexus issues (OECD, 2020[45]). Too often sectoral policies are designed without considering policies from other sectors. For instance, policy makers in OECD countries have often failed to take into account that investments in urban highways have served as incentives for low-density development (OECD, 2018[49]).

Urban planning has also too often failed to consider their impact on the transport infrastructure (OECD, 2018[49]). In many cases, economic, trade, and industrial (among others) policies tend to have an overwhelming impact on land-use policies. An example is the extent to which energy and trade policies on biofuels have impacted land use. Palm oil export levy has contributed to strengthen Indonesia biodiesel market and Indonesia oil palm plantations have expanded (OECD, 2020[45]). Based on country case studies, OECD (2020[44]) found that general trade policy often fails to consider land-use nexus issues potentially endangering policy coherence.. At the same time, open markets are increasingly important for food security. The regions experiencing population and demand growth are not those where supply can be increased sustainably. Trade acts as a buffer to domestic shocks and – on balance – reduces price volatility (OECD, 2020[3]).

Interdisciplinary and inter-sector (i.e. horizontal) cooperation is necessary when designing policies to achieve multiple goals, harness synergies and reduce trade-offs (OECD, 2019[53]). An example is the need for cooperation between land-use and transport sectors in order to design policies to control urban sprawl and mitigate its consequences (OECD, 2018[49]). Reed et al (2020[52]) argue that the implementation of landscape approaches requires a need for “concerted transdisciplinary actions that connect scales of governance to address the complex political economies in contested tropical landscapes”. They highlight some key barriers and opportunities for landscape approach implementation such as bridging sectorial and disciplinary divides and involving the private sector (Reed et al., 2020[52]).

In addition, horizontal cooperation is sometimes necessary between two cities or two regions. For instance,

| 13 the alignment of policies implemented by neighbouring local authorities as well as national, regional and local policies, can be key for controlling urban sprawl and tackling its consequences (OECD, 2018[49]).

Land-use policies should consider their global impacts (OECD, 2017[54]; OECD, 2018[55]; OECD, 2020[45]). Supply chain are increasingly global, they usually cross several regional and regulatory borders, which makes for complex material and monetary flows and sometimes many unintended impacts (Gardner et al., 2019). In addition to on-site impacts, there is a need to assess socio-economic or environmental impacts taking place elsewhere. An example of such impact is leakage caused by the introduction of a certain land-use policy instrument (e.g. international trade policy, environmental protection policy) aimed at reducing environmental pressure (OECD, 2020[45]). For instance, stringent timber harvest legislation reducing deforestation in forest concessions may consequently increase deforestation outside concessions (OECD, 2020[45]). REDD+ policy can cause leakage of timber harvest and deforestation elsewhere, making the balance of net carbon benefits negative.

Green stimulus packages as part of COVID-19-response measures Some economic stimulus packages and recovery plans for economies hit by the Covid-19 crisis are already incentivising sustainable land use. In the context of the global COVID-19 crisis, many governments have provided economic stimulus packages and recovery plans for economies hit by this crisis. At least 30 OECD countries, as well as Brazil, China, India, Indonesia, and South Africa, have included measures with the overall goal being to green economies. Some of the objectives include control of invasive alien species, forest conservation job creation, and economic stimulus through ecosystem restoration (OECD, 2020[30]). Several countries have introduced fiscal measures to address unemployment and boost economic activity, while also supporting biodiversity. For instance, New Zealand has started a new programme called “jobs for nature�. At term, 11 000 new jobs will have been created with a budget of NZD 1.3 billion (USD 0.9 billion). These jobs consist in invasive species control (e.g. wilding pines, wallabies and stoats), and habitat protection and restoration (New Zealand Ministry for the Environment, 2020[56]). These activities are usually labour intensive and easy to implement because worker-training is quick and projects do not usually require much planning (Hepburn et al., 2020[57]). The OECD also provided a number of recommendations for additional measures for sustainable land use (OECD, 2020[30]) (see Box 3.1).

However, some COVID-19 policy response have generated risks to land use sustainability.

Stringency of land-use policies and environmental regulation in some countries has been weakened (OECD, 2020[58]). Although most of these regulatory changes are temporary, they could drive to an increase in biodiversity-harmful activities and set a precedent for removing already in-force environmental regulation limits (OECD, 2020[58]). Additionally, some governments have postponed the entry-into-force of forthcoming regulations (OECD, 2020[58]). Also, illegal extraction of natural resources like timber has increased in countries in Africa, Asia, and South America due to reduced monitoring and enforcement efforts during lockdown (and also by a loss of rural livelihoods) (IUCN, 2020[59]; Waithaka, 2020[60]).

Ensuring enforcement during and after COVID-19 confinement is vital for safeguarding biodiversity and ecosystem services and would have the additional benefit of creating jobs (Strand and Toman, 2013[61]).

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Box 3.1.Measures for sustainable land use could be further included in stimulus packages The OECD has reviewed the stimulus package introduced by government as a response to the COVID19 crisis and provided a number of recommendations for measures to consider. These include: •

Removing and repurposing some of the agricultural support subsidies potentially harmful to biodiversity (e.g. for fertiliser purchase) (OECD, 2020[57]).

•

Maintaining and strengthening regulations on land-use (OECD, 2020[58]).

•

Redirect government revenue from land-use related taxes (see sub-section on taxes) towards green stimulus measures that improve land use sustainability (OECD, 2020[58]).

•

Using government-funded PES-type schemes to incentivise sustainable land use through improved farm management practices (OECD, 2020[30]). Investing in sustainable land use can help address the risks generated by biodiversity loss, while bringing other benefits to society (for instance, providing jobs and business opportunities) (OECD, 2020[58]). A recent study estimates that 20 000 to 70 000 full-time jobs would be generated if action is taken to restore 15% of degraded ecosystems in the European Union (OECD, 2020[58]; Dickie et al., 2017[62]).

Benefits for business could include cost reductions, new business opportunities (with for instance ecotourism or certified sustainable products), higher market share and new companies in charge of ecosystem restoration for instance (OECD, 2020[58]).

•

Taking into account land-use related trade-offs (see sub-section on coherent policy design) (OECD, 2020[30]).

•

Better controlling land cover change especially surface artificialisation caused by urbanisation and agricultural land clearing (OECD, 2020[30]).

•

Introducing or extending carbon pricing taking distributional impacts into account (OECD, 2020[30]).

Source: (OECD, 2020[58]; Dickie et al., 2017[62]; OECD, 2020[30]).

A key criterion that policymakers must consider is time frame: sustainable stimulus packages should address short and long-term challenges. In the short term, objectives include job creation and economic activity boost, while long-term objectives include long-term growth, resilience to future shocks, decarbonisation and sustainable growth trajectory.

Regulations Environmental regulations are a key component of policy packages to achieve sustainable land use. It is widely common for countries to issue regulations to discourage unsustainable input use, water use, land clearance and urban sprawls (OECD, 2018[49]). This section will address the use of land-use planning, urban containment policies, input use regulations and bans on natural resource use.

Land-use planning There is a wide diversity of issues covered by land-use related laws and regulations. In France, for instance there are four land-use related laws and several regulations covering issues from urban and tourism development to environmental protection (see Box 3.2).

| 15

Box 3. 2. Land-use related laws and regulations in France There are four land-use related laws in France: (1) Law on solidarity and urban regeneration, (2) Law on flexible rent ceilings, (3) Law on mountainous areas and (4) Law on coastal areas. They are implemented via several regulations. For instance, the law on solidarity (1) has the objective to reach a minimum of 20% of housing dedicated to low-income and poor people in cities of more than 50 000 inhabitants. The laws 3 et 4 set environmental protection standards while supporting tourism development.

Source: (OECD, 2017[63])

Governments are giving increasing importance to land-use planning but efforts still have to be made. Governments could (1) improve land-use planning governance, (2) mainstream land-use nexus issues into sub-national strategies, plans and programmes, (3) use land use or spatial planning tools, and (4) conduct land-use planning in a collaborative fashion (OECD, 2017[63]; OECD, 2020[45]). Land-use planning in Indonesia already fulfils recommendations 2 and 3 but could further improve governance and collaboration as detailed in Box 3.3.

1. Land-use planning governance is sometimes shared between national and sub-national governments. In France for instance, land-use planning governance is quite complex because subnational governments are responsible for developing the strategic vision but not for developing the corresponding policies (OECD, 2017[64]) (see Box 3.4).

2. In several countries, sub-national governments are either required to or can incorporate climate and biodiversity concerns into their sub-national strategies, plans and programmes (OECD, 2020[45]). For instance, in France, the regional governments are required to include climate policies in their regional plan for territorial planning (OECD, 2020[45]). France has established a National Strategy for Sustainable Development which covers all aspects of the land-use nexus and makes the case for action (OECD, 2020[49]). Although this is already useful, it is still missing the identification of specific targets to be achieved (OECD, 2020[49]). In Brazil, sub-national governments can, but are not required to, include climate policies (OECD, 2020[49]). Everywhere, the inclusion of the valuation of ecosystem services into land-use planning would be useful to help reduce trade-offs between the land-use nexus goals (OECD, 2020[49]).

3. In some countries, national development plans (or similar documents) include land use or spatial planning tools and requirements. In Ireland for instance, environmental impact assessments -EIAsare successfully used to assess and limit the adverse impacts of development projects and to ensure consistency between nexus areas (OECD, 2020[45]). EU law requires that Strategic environmental assessments -SEAs- are conducted for major strategic programmes and development plans taking place (OECD, 2020[45]).

4. A key recommendation for land-use planning is to conduct it in a consultative and co-ordinated manner, and engage all the relevant Ministries and other key stakeholders (OECD, 2020[45]). This is necessary to avoid misalignments and detect possible areas for joint efforts (OECD, 2020[45]).

16 |

Box 3.3. Land-use planning in Indonesia Land-use planning in Indonesia has the following characteristics: 1. Land-use planning governance is centralised.

2. Land-use nexus issues are included into national development plans.

Indonesia’s medium-term development plan (RPJMN 2015-2019): includes forest conservation and the National Biodiversity Strategy and Action Plan (NBSAP). Environmental issues, including ecosystems and climate change, are taken into account.

Indonesia’s long-term development strategy (2005-2025): includes environmental sustainability as one of the nine development missions. This strategy also aims at exploiting Indonesia's comparative advantage in agriculture and mining to reach food self-sufficiency and middle-income status.

Indonesia’s medium-term national development plan (RPJMN 2020-24): provides an opportunity to ensure greater effort to reconcile developmental policy goals with the climate change, land use and ecosystems targets.

3. Land-use planning uses land use or spatial planning tools.

In preparation of RPJMN 2020-24, the Ministry of National Development (BAPPENAS) undertook modelling to strengthen policy coherence between sectoral targets and to facilitate discussion between stakeholders.

4. Land-use planning should be conducted in a more collaborative fashion.

In Indonesia, forestry, agriculture, energy and spatial planning are the responsibility of four different ministries (respectively the Ministry of Environment and Forestry, the Ministry of Agriculture, the Ministry of Energy and Mineral Resources, and the Ministry of Agrarian and Spatial Planning).This makes inter-ministerial co-ordination mechanisms necessary. Ministry of Environment and Forestry is responsible for the implementation of biodiversity/ecosystem policy and climate policy and it should synchronise these policies because they are still created independently.

Source: (OECD, 2020[49])

| 17

Box 3.4. Complexity of land-use planning governance in France The combination of local and national governance makes land-use planning complex in France. In France, the national government does not develop a national spatial land-use plan although it is responsible for all policies including land-use planning policies (OECD, 2017[64]). The regions are responsible for a strategic vision of land-uses. Below them, the “communes” (i.e. cities or towns) or groups of small “communes”, the lowest level of governance, have the responsibility of developing a key role in land-use plan and giving construction permits. Recent reforms have given more responsibilities to regions. These multi-layered governance arrangements result in an integrated approach to land-use planning. Although successful overall, this approach carries the following risks: poor financial and overall capacity of communes to implement the land-use plan, lack of consensus may keep key issues unaddressed and low public engagement.

Sources : (OECD, 2017[64])

Urban containment policies Urban containment policies set limits to urban development with the objective of protecting forestland and farmland around urban areas, decreasing the costs of providing public services and incentivising infill development (in vacant land within the urban area) (OECD, 2018[49]). Most used urban containment policies are greenbelts and urban growth boundaries (OECD, 2018[49]). A greenbelt can be defined an area of natural open space around or adjacent to an urban area in order to prevent the expansion of this urban area (OECD, 2018[49]). Greenbelts are usually identified at the national or regional level and implemented through acquisition of open space, purchase of development rights, or regulation of private property (OECD, 2018[49]). Greenbelts are used in the UK, Germany, Korea, Australia, Canada and the US (OECD, 2018[49]). Like greenbelts, urban growth boundaries are also used to prevent urban encroachment, but they are meant to be regularly evaluated and, if necessary, pushed further away to allow the urban area to grow. Urban growth boundaries are more appropriate than greenbelts in urban area likely to face population and economic growth. Likewise, urban service boundaries designate the area within which public services, such as water supply and sewerage, are restricted to (OECD, 2018[49]).

The opportunity costs of urban containment policies should be carefully evaluated. Indeed, they are known to successfully incentivise infill development, but they also tend to create urban areas further away from the first urban centre, beyond the urban containment area. Such development comes with longer commuting distances, and thus increased greenhouse gas emissions and costs of transportation.

Companies tend to prefer staying within the contained area and it drives housing prices up. Relocation incentives may be used for companies to move close to their labour pool (outside greenbelt) inducing the creation of new urban centres. Unintended negative impacts of containment policies can be kept to a minimum with higher level of governance centralisation, higher amounts of developable land and higher density within the contained area and more flexible policies.

Regulations: input use and bans Input use regulations are commonly used in agriculture (DeBoe, 2020[65]). They can ban the more toxic pesticides and restrict the amount of inputs (for instance fertiliser) that can be used (DeBoe, 2020[65]). Wellknown examples are:

18 | •

in the European Union: the European Water Framework Directive, the Nitrate Directive, and the Birds and Habitat Directives (DeBoe, 2020[65]).

•

in the United States, the US EPA regulates production practices of Concentrated Animal Feeding Operation (CAFO) under provisions of the 1972 Clean Water Act (DeBoe, 2020[65]).

Well-designed input use regulations can be highly environmentally beneficial (DeBoe, 2020[65]).

Although input regulations do not seem to put financial burden on farmers, they do financially weigh more on smaller farms and their impact varies with the availability for alternatives (for instance in the case of a ban on specific pesticides) and the ability to transfer these costs to consumers (DeBoe, 2020[65]). Because excessive use of inputs (especially fertilisers) leads to agricultural pollution, input use regulations can simultaneously increase input use efficiency and reduce pollution (Piot-Lepetit and Moing, 2007[66]; DeBoe, 2020[65]).

When there is sufficient capacity to monitor land use and attribute production to individual producers, most stringent tools are bans. However, they may not be the right tool for land degradation-related issues because environmental parameters are hard to monitor, and leakage is likely to happen. For instance, studies on logging bans have found mixed results. Challenges included: •

When logging bans are established, registered logging companies leave the forests creating a vacuum and, if enforcement is deficient, illegal logging starts happening in this new vacuum, sometimes at a pace exceeding legal logging before the bans. Logging bans that were supposed to protect the forests generated more deforestation (FAO, 2019[67]).

•

In other cases, when logging bans are established, forests loose financial value and thus, once logging has stopped, land is turned into an area that can be developed for social and economic benefits (e.g. industrial purposes). It is the case with economic land concessions in Vietnam 10 (FAO, 2019[67]).

•

Moreover, some countries where logging bans were established did not have alternative domestic wood sources (e.g. planted forests and trees outside forests) and had to import wood from countries with weaker environmental regulations (FAO, 2019[67]). Logging bans that were supposed to protect the forests generated deforestation elsewhere.

Reform of harmful subsidies that can drive sustainable land use Reform of selected sectoral subsidies could drive sustainable land use. Large subsidies and support policies set up for other purposes (income support) are encouraging farmers and other land use actors to maintain or increase unsustainable practices. This is the case for some energy and many agricultural subsidies. It is estimated that potentially environmentally harmful agricultural support amount to USD 345 billion per year in 54 countries in 2018-19 (OECD, 2020[68]). OECD keeps a list of environmentally harmful supports to fossil fuels 11 and one of environmentally harmful support to agriculture 12. Examples of environmentally harmful energy subsidies include biofuel production, and electricity subsidies for groundwater pumping in Mexico (Gruère and Le Boëdec, 2019[69]). Examples of agricultural subsidies 10

Objectives of economic land concessions are: 1) developing an intensive agricultural base and promoting capital investment in industrial agriculture; 2) increasing employment in rural areas to improve and diversify livelihood opportunities; and 3) generating revenue from concession fees, taxation (FAO, 2019[67]). and other charges

11 12

OECD Inventory of Support Measures for Fossil Fuels www.oecd.org/site/tadffss

OECD Producer and Consumer Support Estimates https://www.oecd.org/unitedstates/producerandconsumersupportestimatesdatabase.htm

database

| 19 include market price support, support per unit output, and unconstrained support per unit input. These agricultural subsidies are the most trade distorting and potentially harmful for the environment and they are the most common financial instruments used (OECD, 2020[68]). These measures encourage producers to keep their production practices and produce beyond market demand. Input support also encourage the excessive use or misuse of potentially polluting pesticides and fertilisers (OECD, 2020[70]; OECD, 2019[71]).

The use of agricultural subsidies across the world is declining because they can be disruptive and create perverse incentives to overproduce or move towards monocultures (OECD, 2020[68]). Sud (2020[72]) argues that “countries need to review support that directly or indirectly incentivises excessive input use in order to provide the right signals to producers and free up finances that can then be redirected towards other uses”.

Non-output related support (decoupled from production) like payments for conservation areas, wildlife or biodiversity, has proven effective at improving biodiversity and is increasingly being used in European countries (Sud, 2020[72]).

Reform should consider its possible unintended outcomes. For instance, removal of agriculture subsidies may deprive small-scale farmers of key financial capital and they may shift to slash-and-burn agriculture, generating additional deforestation (OECD, 2017[73]).

Subsidies, taxes, fees and trading schemes Economic instruments implemented by governments, such as environmentally-motivated subsidies, payments for ecosystem services schemes, taxes, fees and tradable permits, provide price signals to both producers and consumers to behave in a more environmentally-sustainable way (OECD, 2020[74]). As DeBoe (2020[65]) defines them, economic instruments create or alter the relative incentives faced by farmer, so that at least some farmers voluntarily choose to improve their environmental performance. Taxes and other instruments that impose a price for performing a negative behaviour and some subsidies also provide continuous incentives to innovate in order to achieve objectives in a more cost-effective manner, and most are also able to generate revenue (OECD, 2020[74]).Economic instruments are the so-called “positive incentives” embedded in the 2011-2020 Aichi Biodiversity Targets, notably Target 3.

Subsidies for sustainable land use and Payments for ecosystem services A number of subsidies are used to promote sustainable land use. Examples include subsidies for sustainable practices on-farm (organic or environmentally friendly agriculture, for pesticide-free cultivation), land and native vegetation conservation, forest management and reforestation, and for structural adjustment towards “greener” agricultural systems (DeBoe, 2020[65]). For instance, farmers are sometimes subsidised for purchasing “green” technologies such as fuel-efficient farm machinery or waterefficient irrigation systems. The net environmental impact of such subsidies depends on the programme design (DeBoe, 2020[65]). Often multiple subsidies are in place at the same time (see Box 3.5.). There are currently 183 environmentally motivated subsidies directed at land management in force across 25 countries 13 (OECD, 2020[74]; DeBoe, 2020[65]).

13

The existence of an instrument does not guarantee its enforcement. Moreover, the level of stringency might not be adequate for the desired environmental outcome (OECD, 2020[75]).

20 |

Box 3.5. Agricultural subsidies in Belgium In Flanders (Belgium) for instance, environmentally related grants include: investment support for sustainable and organic farming (investment in physical capital), subsidies for buffer management, subsidies for mechanic weed control, subsidies for recovery, development and maintenance of small landscape elements, subsidies for the reduction of pesticide and fertiliser use in ornamental crops cultivation, subsidies for voluntary cutback of the pig herd and public funding for the investigation and remediation of contaminated soils.

Source: (OECD, 2020[75])

Programmes that exchange value for land management practices intended to provide or ensure ecosystem services 14 are increasingly used worldwide. These include Payments for ecosystem services (PES), Biodiversity offsets and Land conservation agreements. They are detailed below.

Payments for ecosystem services (PES) are increasingly discussed as a tool to promote sustainable agriculture practices. PES services schemes are incentive mechanisms introduced to account for positive externalities or characteristics of public goods that existing markets do not account for.

Suppliers of an ecosystem service with positive externality are paid to keep providing this service. PES schemes targeted towards sustainable land use 15 are increasingly used and cover a wide range of scales, time-frame and contexts: international programs are implemented in the EU with the agri-environmentclimate measures (DeBoe, 2020[65]), national-scale programs 16 are implemented in Canada, China (see Box 3.6.), Costa Rica (Pagiola, 2008[76]), Ecuador (Wunder and Albán, 2008[77]; De Koning et al., 2011[78]), France, Mexico (Muñoz-Piña et al., 2008[79]), Tasmania, the United States (OECD, 2019[80]), Scotland (Smith et al., 2013[81]) and several Brazilian and Australian states (Pagiola, Carrascosa von Glehn and Taffarello, 2013[82]). Most countries in Latin American have some sort of smaller PES (usually watershedscale), like Colombia (Blanco, 2006[83]) and Nicaragua (Pagiola, Honey-Rosés and Freire-González, 2017[84]). Many cities have PES scheme to purchase upstream watershed forest protection to ensure the city’s ongoing access to clean water. Well-known examples are New York city and the City of Yokohama (FAO, 2019[67]).

PES-type schemes signed for period of over twenty years or in perpetuity or upon satisfaction of specified conditions are usually referred to as Land Conservation Agreements (covenants or easements). They can use fixed price offers or, more commonly, a market-based approach, such as competitive tender (Smith et al., 2013[81]). Competitive tender type agri-environmental mechanisms based on an environmental performance index have been used by governments to purchase ecosystem services.

The most studied example is the USDA Conservation Reserve Programme, a competitive tender 17 type agri-environmental mechanism based on an environmental performance index (OECD, 2019[80]). Australia 14

An ecosystem is a dynamic complex of plant, animal, and microorganism communities and the non-living environment, interacting as a functional unit. Ecosystem services are the benefits people obtain from ecosystems (Millennium Ecosystem Assessment (Program), 2005[136]).

15

Including via the use of environmental cross-compliance mechanisms or agri-environmental schemes

16

considered “hybrid” because they embed regulatory-type requirements into a broader policy mechanism that a farmer can choose to participate in (DeBoe, 2020[65]).

17

A tender is a sealed bid purchase auction.

| 21 is another leader in auction type schemes and the best known in Australia is the BushTender scheme for vegetation protection in Victoria (Rolfe, Whitten and Windle, 2017[85]). Conservation Covenants in Tasmania are another case of successful implementation of combined fixed price offers and tenders (Smith et al., 2013[81]).

PES schemes funded by the private sector are usually implemented at smaller scale than government schemes. An example of private sector PES is that of South West Water and the Westcountry Rivers Trust who combine use restrictive covenant to structure a payment to farmers for implementing upstream watershed protection practices 18 in England (Smith et al., 2013[81]).

Overall, PES can be effective to incentivise sustainable land use if certain factors are taken into account: •

The selection process should be designed carefully. Tender-type PES have been found to be more cost-efficient than simpler PES approaches such as funding eligible proposals in the order in which they are received (Smith et al., 2013[81]). The market-based approach to PES increased the ecosystem benefits significantly (Smith et al., 2013[81]). Regarding tenders ranked based on an environmental performance index, it should be noted that once all the most cost-effective tenders have been signed in the earlier stages of the scheme, cost-efficiency of the overall scheme diminishes with the participation of less cost-effective offers (Smith et al., 2013[81]).

•

Practices encouraged by the scheme should be, once adopted, financially viable without payment. Because one of the challenges of PES is that bad practices (e.g. deforestation) often resume when payment (e.g. for conservation) stops (Etchart et al., 2020[86]), a key to success is to pay for good and productive land-use practices (e.g. silvopastoral practices), as demonstrated in Nicaragua (Pagiola, Honey-Rosés and Freire-González, 2017[84]) and Colombia (Pagiola, HoneyRosés and Freire-González, 2014[87]). Landowners who received the payment adopted environmentally beneficial practices and continued after payments ceased.

•

Leakages 19 should be controlled for. For instance, some evidence suggest that Viet Nam national-scale reforestation programs led to the displacement of forest extraction to other countries equivalent to 39% of the regrowth of Viet Nam’s forests from 1987 to 2006 (Meyfroidt and Lambin, 2009[88]) and approximately 50% of these wood imports were illegal (Lambin and Meyfroidt, 2011[89]).

•

Long-term PES (e.g. Land Conservation Agreement) have duration specific challenges: (1) Costs to monitor and enforce the agreements over time are often high (Smith et al., 2013[81]). (2) In case the design of agreements is not adapted to the way societal needs and preferences evolve over time, amendments may be needed are they are costly (Smith et al., 2013[81]).

18

limiting livestock numbers, planting cover crops after harvesting, refraining from planting maize in sensitive areas, and maintaining specified uses of manure stores or other infrastructure (Smith et al, 2013)

19

Leakage happens when a degrading land-use practice relocates outside of the area of PES intervention.

22 |

Box 3.6. The government-driven China’s Conversion of Cropland to Forest Programme, also known as the Sloping Land Conversion Program or “Grain for Green” Launched in 1999 in response to widespread flooding in 1998, China’s government operates the largest publicly funded watershed conservation project in the world: the Conversion of Cropland to Forest Programme, also known as the Sloping Land Conversion Program or “Grain for Green”. Its goal is to mitigate the effect of soil erosion and restore ecosystems by planting trees on former steep areas of cropland or uncultivated barren land. China has invested billions of dollars for afforestation and to provide compensation for participating farmers. Like in a PES scheme, 32 million farming families receive annual subsidies to plant and manage trees on their (mostly low productivity) agricultural lands totalling 28 million hectares (Zhang et al., 2017[90]). Uchida, Xu and Scott (2005[91]) pointed out that the success of such programmes in the developing world depends on their ability to reduce erosion and sustain income of participating farmers by means of a cost-effective and sustainable change. According to FAO (2019[67]), the clear policy directive supporting it, the important allocation of resources, and effective institutional arrangements at all scales to implement and monitor it made this programme successful in addressing soil erosion on private land. However, the program has mixed results in terms of biodiversity because it promotes monoculture tree plantation among others. Recommendations based on empirical research are to (1) promote the conservation and expansion of native forest and (2) mixed-plantation arrangements over monocultures (Wang et al., 2019[92]).

Sources: (Wang et al., 2019[92]; Zhang et al., 2017[90]; FAO, 2019[67]; Uchida, Xu and Scott, 2005[91])

Biodiversity offsets 20 are measurable conservation outcomes that result from activities designed to deliver additional biodiversity benefits in compensation for losses. They are based on the polluter pays approach (OECD, 2016[93]). There are three types of offsets (one-off project based; payment in-lieu; banking). There exists a considerable body of literature on biodiversity offsets. A market-based approach to biodiversity offsetting means that, in order to offset their biodiversity impacts, project developers can purchase conservation or offset ‘credits’ attached to wildlife sites registered by landowners. Biodiversity offsets include habitat creation or restoration (Smith et al., 2013[81]). In 2016, there were at least 100 biodiversity offset programmes (some of them being close forms of compensatory conservation) in at least 56 countries among which Australia, Brazil, Canada, the People’s Republic of China, Colombia, France, Germany, India, Mexico, New Zealand and South Africa (OECD, 2016[93]). Governments have introduced biodiversity offsets in the European Union, Australia, Canada, South Africa) (OECD, 2016[93]).

Biodiversity offsets are usually mandatory when used by governments, and usually implemented voluntarily by the private sector. Developers for instance may voluntarily purchase biodiversity offsets to compensate for the impacts of their development projects. Voluntary biodiversity offsets are often used by infrastructure construction or extractive industries that have visible and significant negative impacts on biodiversity. Biodiversity offsets are sometimes required by financial institutions as a condition to fund a project (OECD, 2016[93]).

20

Payments for Ecosystem Services can be distinguished by a particular focus on the ‘beneficiary pays principle’, whereby the beneficiaries of ecosystem services provide payment to the providers of ecosystem services. Conversely, Biodiversity Offsetting is based on the ‘polluter pays principle’, since developers pay for the provision of compensatory habitat expansion or restoration elsewhere (Smith et al, 2013).

| 23 Taxes Taxes on property, agricultural inputs and natural resources use can efficiently incentivise sustainable land use. The use of taxes for biodiversity has been increasing across the world. There are currently 206 biodiversity-related taxes in force across 59 countries 21 and 96 taxes directed at land management in force across 9 countries (OECD, 2020[74]). Based on the polluter pays principle, biodiversity-related taxes embody the negative externality generated by the use of natural resource or the emission of a pollutant. In doing so, they incentivise more sustainable and environmental-friendly behaviours. Additionally, governments can redirect revenue from their land-use related taxes towards conservation activities like forest protection, reforestation, agroforestry and sustainable forest management. This is what Colombia and Costa Rica are already doing with their carbon tax revenue (WEF, 2020[94]).

Property taxes Property taxes are a common economic instrument used in land-use policy. They are recurrent ad valorem tax on real estate owned. It is commonly collected by the local authority often on both land and land improvements. Lower tax rate in areas beyond the greenbelt induce the creation of lower density urban areas further away from the first urban centre, beyond the greenbelt (OECD, 2018[49]). Such development comes with longer commuting distances, and thus increased greenhouse gas emissions and costs of transportation.

Taxes on agricultural inputs Because of low elasticity in pesticide demand, studies have shown that high tax rates on specific pesticide may lead to more significant behavioural changes than low taxes on a large range of pesticides (Sud, 2020[72]). However, targeting pesticides with higher environmental and health risks involves high transaction costs (Sud, 2020[72]). A recent study from Sud (2020[72]) reviews many examples of pesticide taxes in OECD countries. Revenue from taxes on pesticides and fertilisers is sometimes earmarked to promote sustainable agriculture or to compensate for distributional effects on farmers (see section on distributional impacts).

Fees and charges Entrance fees to national parks, mining or quarrying charges could also incentivise sustainable land use. There are currently 179 biodiversity-related fees and charges in force in 48 countries and only 58 directly directed at land management in force across 9 countries (OECD, 2020[74]). The idea behind inlieu fee schemes is close to an offset: entities pay a fee that will be used for conservation activities which offset the activities undertaken by the fee-paying entities (DeBoe, 2020[65]).

Tradable permit systems Tradable permits are market-based policy instruments that set a limit on the total amount of a natural resource that can be exploited. Users can be granted individual permits which they can trade.

Permit allocation is conducted through auctions or can be grandfathered (i.e. allocated to existing users of the resource free of charge, typically in perpetuity). There are four broad types of permit systems: 'quota' system (also referred to as cap-and-trade programmes), a 'credits' system, with 'averaging' of limit values for similar products manufactured and 'transferable usage rights' licensing the use of natural resources

21

Biodiversity-related taxes generate approximately a revenue of USD 7.5 billion a year (average 2016-2018)

24 | (OECD, 2001[95]). For instance, tradable development rights allow a right to develop a parcel of land to move from one parcel to another (OECD, 2001[95])(see Box 3.7).

Based on the OECD database (OECD, 2020[75]), most common environmental domains of the tradable permit systems are : fishing, hunting, water, energy and greenhouse gas emissions. There are currently 42 active biodiversity-related tradable permit schemes in 26 countries (OECD, 2020[74]). At least 4 of these schemes allow for the auctioning of part or all permits (OECD, 2020[74]). The largest system is the EU Emission Trading Scheme (EU ETS) for CO2 and CO2/Carbon but similar schemes are in place also in other countries or regions (like China, India or New South Whales). There are currently only 6 tradable permits systems strictly directed at land management (e.g. for landscape preservation) in force in France, New-Zealand and the United States (OECD, 2020[74]).

Key benefits of tradable permit system include certainty over total negative externalities and their possible revenue raising potential. If they are auctioned, tradable permits can generate finance. In Alberta, for instance, a minimum of 60% of funds generated by the hunting auction are to be invested in projects for the long-term benefit of Rocky Mountain bighorn sheep (OECD, 2020[74]). The use of clearing permit (rather than a clearing ban for instance) allows the government to control the total amount of land clearing as well as to ensure the high agricultural value of the land cleared (Rolfe, Whitten and Windle, 2017[85]). Indeed, farmers with valuable agricultural land can buy permits from farmers with less valuable agricultural land (Rolfe, Whitten and Windle, 2017[85]).

In some cases, high monitoring costs make the use of trading scheme particularly complex (OECD, 2001[95]). Initial allocation of tradable permits and subsequent behaviour (in terms of emissions and abstractions) must be precisely monitored (OECD, 2001[95]). Some ecosystem services are particularly difficult to quantify (and thus to monitor) with meaningful and robust indicators (Balvanera and al., 2017[96]).

Similarly, agricultural emissions have so far been excluded from the EU ETS (except NO2 emissions from the production of chemical fertilisers) due to concerns surrounding the accuracy of monitoring, reporting and verification (European Commission, 2018[97]).

| 25

Box 3.7. Tradable development permits Tradable development permits can be used for a range of policy objectives including land conservation, prevention of urban sprawl, preservation of historic landmarks, densification of urban areas or promotion of commercial growth in downtown areas. The United States is the country using tradable development rights the most, before China, the Netherlands, Germany and France (Rama, 2011[98]). For instance, the United States has permit systems related to land use: (1) the Montgomery County Land management, (2) the Tradable development rights for pinelands management and (3) the Transferable rights for wetlands conservation. In Victoria State in Australia, tradable development rights are used to help planning officers weigh in the 73 objectives that they should take into account and balance tradeoffs between them (Rama, 2011[98]). Tradable development rights have distributional benefits. They allow to use markets to compensate for and achieve more equitable land-use planning: for instance, a landowner in an area constrained by conservation objectives can be compensated with tradable development permits) (OECD, 2018[49]). The two most important factors in their success is (1) developers’ need for bonus development, and (2) the attributes such as infrastructure to serve bonus development and political and community acceptability in the receiving areas (OECD, 2018[49]; Rama, 2011[98]). Tradable development rights can fail when: (1) transaction costs are too high (for instance, the costs (time and money) of incurred in search of information about prices of Tradable development rights); (2) developers have to meet additional requirements ; and (3) there are other instruments exist that can increase receiving area density (OECD, 2018[49]).

Source: (OECD, 2018[49]; Rama, 2011[98])

Large-Scale Land Acquisitions An increasing number of Large-Scale Land Acquisitions (LSLAs) is impacting land use governance and practices in recipient countries. LSLAs most typically happens when “large agribusiness companies from countries rich in financial capital but poor in suitable land for agriculture are acquiring large tracts of land in countries with land reserves� (Lambin and Meyfroidt, 2011[89]). As Zoomers (2010[99]) points out, LSLAs also mean displacement of land use and are sometimes initiated by foreign governments.

LSLAs rarely incentivize sustainable land use albeit their potential to leverage new governance and management arrangements. A World Bank study finds that surveyed LSLAs are mostly interested in generating positive environmental and socioeconomic impacts but are mostly achieving the opposite (Verburg et al., 2019[50]). Key conclusions can be drawn from a recent joint empirical research by FAO, IFAD, UNCTD and the World Bank (2010[100]): LSLAs often create positive socioeconomic impacts on surrounding communities (for instance, contract farming opportunities) but some LSLAs have been found to overexploit soils and water sources, and overuse pesticides. In addition, their finding that the most profitable LSLAs were also the ones with the most positive impacts calls for a careful selection of potential investors (World Bank, 2014[101]). LSLAs negotiations must include environmental impact assessments prior to the investment and LSLAs agreements must include binding agreements on land stewardship in general and sustainable land use in particular (Verburg et al., 2019[50]). LSLAs have been criticised for not having a robust environmental impact assessment and environmental management system available to the public (FAO, 2010[100]). A number of studies have identified negative outcomes from LSLAs, including high deforestation rates in Brazil (Gibbs and al, 2015[102]) and Cambodia (Davis and al., 2015[103]); rapid and massive land conversion to grow crops that are not used for local subsistence (Boudreaux, 2016[104]).

26 | Positive change was identified in Cambodia where some LSLAs for sugar production had been exposed as high-profile “land grabs” whith land acquisition not being compensated for (Beban, So and Un, 2017[105]).

The use of outright force and repressive regulation and legitimation completely shifted the situation towards land titling campaigns in LSLAs areas and responsible investment certification (Beban, So and Un, 2017[105]). Based on quantitative analysis of empirical data from Indonesia, Chen, Kennedy and Xu (2019[106]) found that policy-driven moratoria on existing LSLAs were effective to reduce tropical deforestation.

Due diligence for Responsible Investment in Agriculture Due diligence of land-based investments is becoming increasingly organised. The Committee on World Food Security (CFS) has developed two key products for due diligence: the 2012 Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries, and Forestry (the CFS “VGGT”), and the 2014 Principles of Responsible Agricultural Investments (the “CFS-RAI”). The sustainable management of natural resources is one of the ten core principles for Responsible Investment in Agriculture and Food Systems (CFS-RAI Principles). Based on these principles, USAID (2015[107]) has developed a guide with recommendations for best practices related to the due diligence and structuring of land-based investments, with the goal of reducing risks and facilitating responsible projects that benefit both the private sector and local communities. This guide is also designed to help companies identify practical steps to align their policies and actions with provisions of other relevant instruments (USAID, 2015[107]). Following a two-year multi-stakeholder process, OECD and FAO (2016[108]) jointly developed Guidance for Responsible Agricultural Supply Chains. Their environmental risk mitigation measures include “Seek to avoid negative impacts on, and support the conservation of biodiversity, genetic resources and ecosystem services, and when avoidance of such impacts is not possible, implement measures to minimise impacts and restore biodiversity and ecosystem services through an adaptive management approach.” (OECD/FAO, 2016[108]). IFC Performance Standard 6, para 26, also states that ‘Where feasible, the client will locate land-based agribusiness and forestry projects on unforested land or land already converted’.

Voluntary certification schemes Voluntary certification schemes can be broadly defined as eco-labelling schemes. They were initiated in the 1970s to provide seals on products with the best environmental characteristics on a single environmental issue, often in a specific sector (OECD, 2013[6]). In the 1980s and 1990s, several private standards were developed and there is nowadays a multiplication of certification schemes of varying scope and nature (OECD, 2013[6]). Examples include quantitative “footprint” schemes for GHG and broader environmental impact (OECD, 2013[6]). Voluntary certification schemes can be initiated by NGOs, private companies and multi-stakeholder roundtables. Some voluntary certification schemes include mandatory requirements to be fulfilled by any party choosing to use the label (OECD, 2013[6]).

A number of certification schemes are developed by NGOs to ensure sustainable and responsible production. Adherence is voluntary and subject to regular audits by the NGO. NGO-led certification typically targets food, agriculture or forest products and are called Voluntary Sustainability Standards (Prag, Lyon and Russillo, 2016[109]). Examples include Fair Trade, Rainforest Alliance, Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC). Rainforest Alliance began certification 30 years ago and now 2.2 million certified farmers or 4.7 million hectares of coffee, cocoa, tea and banana plantations in 70 countries. In the forest sector, there is a global duopoly shared by the FSC and the PEFC, both privately developed with strong government recognition and a push to ensuring standards are locally compatible. FSC and PEFC certified forests account for most of the

| 27 agriculture and forestry land under sustainable certification. The area of forest under FSC and PEFC is commonly used as an indicator of sustainably managed forests.

In some countries, certification standards have been successfully adopted into national laws. In Guatemala, FSC certification is required for all forest concessions. In the EU, producers of imported biofuels have to be certified (Verburg et al., 2019[50]; Fortin and Richardson, 2013[110]).

Multi-stakeholder commodity roundtables are like NGO-led certification except the fact that the different actors involved in the production of a commodity are the ones leading the process. Together, these actors have developed for instance: •

the Principles and criteria for sustainable palm oil production which certifies palm oil producers, processors, or traders, as well as manufacturers, retailers, banks and investors involved in palm oil supply chains,

•

the standards of the roundtable on sustainable biofuels which certifies biofuel operators,

•

Principles and criteria for responsible soy production certifying soy growers and soy growers’ groups,

•

the Better Sugar Cane Initiative (Bonsucro) Standards for sugarcane producers.

Supermarkets and other food retailers have also developed their own production criteria that must be met for them to distribute the product. Currently, the most used private certification board is the Global Good Agricultural Practice (G.A.P.) standards.

This chapter has provided an overview of the key elements common to all successful land-use policies, has delved into the range of policy instruments that could overcome today’s challenges towards more sustainable land use. The next chapter will focus on the political economy issues connected with the introduction or reform of these policy instruments.

28 |

4 Political economy of land-use policies

Some of the salient issues that arise in the political economy of land-use policy are similar to those characterising environmental or biodiversity policy reforms: (1) competitiveness issues, (2) distributional implications on households, (3) vested interests, and (4) political acceptability (OECD, 2017[73]). Empirical research has shown that the distribution of real or perceived costs and benefits influences policy choice and design in general and the ambition and pace of reforms in particular (OECD, 2017[73]; Zachmann, Fredriksson and Claeys, 2018[111]). In this context, analysing distributional impacts of reforms and possible mitigation or compensatory measures could speed-up the introduction of new policies or policy reforms (OECD, 2015[112]; Zachmann, Fredriksson and Claeys, 2018[111]; OECD, 2014[113]). This chapter details key distributional impacts of biodiversity reforms and of green urban policies, and solutions to adjust or avoid them. It then delves into land governance issues towards more sustainable land use.

Distributional impacts on firms and households Distributional impacts of biodiversity reforms The risk that reforms can have a negative impact on firm competitiveness is a common concern in environmental policy reforms. A country or region applying more stringent policies may affect the competitiveness of domestic firms and create an incentive to relocate in other countries or regions with less stringent regulations (the so called “pollution haven” hypothesis ) (OECD, 2017[73]). Such ‘competitiveness concerns’ may also generate a “race to the bottom”, where policy makers ease regulations in order to retain or attract firms (OECD, 2017[73]).

The literature on the impact of biodiversity policy reforms on firm competitiveness is particularly limited. Most of studies on the competitiveness impact of environmental policy reforms focused on the impact of carbon pricing and find limited evidence of negative impact of more stringent emission policies on firms (OECD, 2020[30]). The OECD (2017[73]) reviewed examples of studies on competitiveness impacts of environmental policy reforms in sectors or areas related to biodiversity and found limited evidence of negative impacts. ECOTEC (2001[114]) focused on the introduction of a pesticide tax reforms in Sweden and Denmark and found no evidence of negative impacts on firms (OECD, 2017[73]). No negative competitiveness impacts were found in a study on the introduction of an Environmental User Fee System (EUFS) to address oxygen pollution in the Philippines (ECOTEC, 2001[114]; Catelo and al., 2007[115]; CBD, 2011[116]; DELTARES, n.d.[117]; GWP, n.d.[118]); as in (OECD, 2017[73])].

Similarly, studies on the impact of PES and the creation of protected areas on income have mixed results. Hegde and Bull (2011[119]) found some evidence of regressive impacts since male-headed and high-income households were being favoured as project benefit recipients of a small scale agroforestry based carbon sequestration PES project in rural Mozambique (Hegde and Bull, 2011[119]). The Mexico’s Payments for Hydrological Services Program has been found to generate small but positive poverty alleviation effects (Alix-Garcia, Sims and Yañez-Pagans, 2015[120]; Sims and Alix-Garcia, 2017[121]). Alix-

| 29 Garcia, Sims and YaĂąez-Pagans (2015[120]) found that targeting forests at greater risk could increase additionality in terms of forest protection but would decrease the potential for poverty alleviation by reducing participation of poor households (because they usually live close to forests at lower risk). The creation of national parks in Costa Rica has led to increase in the wages but only in areas with tourism (Robalino and Villalobos, 2015[122]) while Sims and Alix-Garcia (2017[121]) find that protected areas in Mexico had overall neutral impacts on livelihoods.

Policies to green the agricultural sector may also have indirect consequences on households’ budget through variation in food prices. For instance, policies to decrease global GHG emissions in food production may affect crop prices. In principle, such changes could have regressive implications as lower income households are likely to spend a higher share of their income on food. However, food consumption preferences vary remarkably across a number of socio-economic dimensions (e.g. geography, religion, income) and it is challenging to make broad conclusions (Zachmann, Fredriksson and Claeys, 2018[111]).

Distributional impacts of green urban policies Policies to promote infill development can have important distributional implications as they can affect house values directly. Urban containment policies may strongly affect the value of land as they can change its commercial value. Investment in public transportation, often used to support densification of inner suburbs, often increases the values of areas served by the newly built infrastructure. Reform to building height, which may be used to increase densification, can also affect the prices of existing dwelling stock (Ihlanfeldt, 2007[123]). In this context, it should be noted that poorer households are less likely to be directly affected by such policies since they are less likely to own housing. However, they may suffer from second round consequences as rent prices may vary due to increase in the property values due to policy intervention (OECD, 2018[49]). Urban containment policies were found to have regressive impacts in Germany (Jehlinga, Hecht and Herold, 2018[124]). The topic of infill development needs to be further researched (Jehlinga, Hecht and Herold, 2018[124]).

Reforms to urban parking policies may have progressive impacts. Incorporation of parking costs in local taxes is likely to be regressive as low-income households are less likely to own cars. In this context, reforms to increase the prices of parking permits prices may lead to progressive outcomes (Russo, van Ommeren and Dimitropoulos, 2019[125]). In addition, large amounts of land is allocated to car parking, which encourages car ownership and use, thus further promoting urban expansion. At the same time, the saturation of on-street parking in busy downtown areas suggests that parking prices are too low. However, local communities are likely to oppose increase in tariffs for curb-side parking. Earmarking some of the revenues from parking revenues for local project can help to increase support for policy reforms. For example, 30% of on-street parking fees in central Mexico city are earmarked for local projects that are selected through a public consultation process (Russo, van Ommeren and Dimitropoulos, 2019[125]) (see Box 4.1).

30 |

Box 4.1. The ecoParq program, a successful paid on-street parking in Mexico city In 2017, Mexico City also replaced its minimum with maximum parking requirements, which amount to a maximum of three parking spaces per housing unit for residential parking (Government of Mexico City, 2017[126]; Institute for Transportation and Development Policy, 2017[127]). Thirty per cent of onstreet parking revenues are recycled into projects for the revitalisation of local neighbourhoods such as accessible quality sidewalks, improved parks and lighting. Funds are allocated to selected projects decided upon via a community consultation process. The community is actively engaged in selecting the recipient projects (OECD, 2015[128]; RĂ­os Flores, Vicentini and Acevedo-Daunas, 2015[129]).

Source: (Russo, van Ommeren and Dimitropoulos, 2019[130])

Best practices to advance reforms Recycling the revenue from environmentally related taxes or putting into place transitional measures can help to reduce resistance in the most affected sectors. The cost of policy reforms to address unstainable land-use tend to be concentrated on selected social groups while benefits often are more widespread, as often happens with environmental reforms (e.g. the impact of climate change policies for coal miners). In this context, countries could consider earmarking part of the revenues of newly introduced environmental taxes to support affected social groups or also introduce transitional payments (see Box 4.2).

| 31

Box 4.2. Examples of earmarking and transitional measures to address political economy concerns Example 1: Creation of a new tax on pesticide to address agricultural pollution in France and recycling tax revenue into technical assistance In France, a first step in advancing the creation of a new pesticide tax, called the diffuse pollution tax, has been to find ways to minimise the potential costs to farmers (OECD, 2017[73]). The economic instrument chosen to do this has been the recycling of the revenue from this tax to fund the Ecophyto I plan (that started in 2008), Ecophyto II plan (in 2016), and the Water Agencies (OECD, 2017[73]). With the Ecophyto plans, farmers do not receive any monetary compensation but opportunities for peer interaction and free technical assistance (Lapierre, Sauquet and Subervie, 2019[131]). The idea is to demonstrate that it is possible to decrease pesticide use and maintain yields. Up to 3000 farms benefited from this assistance so far. A recent empirical study found that the Ecophyto plans are successful in reducing pesticide use for a similar cost per hectare than that of the average European agri-environmental scheme (Lapierre, Sauquet and Subervie, 2019[131]).

Example 2: Use of transition payments to lessen/soften the negative impact of removing payments per head of cattle in Switzerland In Switzerland, farmers with intensive cattle operations in the lowland region of the country were negatively affected by the agricultural reform because payments per head of cattle were removed (OECD, 2017[73]). To minimize these negative impacts, transition payments were included in the reform package to help offset expected income losses for these farmers (OECD, 2017[73]). Moreover, the revenue from removing these payments per head of cattle was reallocated to food security payments (OECD, 2017[73]).

Sources example 1: (OECD, 2017[73]; Lapierre, Sauquet and Subervie, 2019[131]) Sources example 2: (OECD, 2017[73])

Introducing reforms through a multi-stakeholder and participative process can help to build consensus for the reform. Broad comprehensive stakeholder engagement is recommended in general at an early stage of decision-making to help build support for new policies or policy reforms (OECD, 2018[49]). Participation can take place at a different level, including the discussion on strategic objectives and of how to use earmarked funds (see Box 4.2). Other examples of implemented deliberative processes include the process of “Grenelle de l’environnement” 22 in France and The Irish Citizens’ Assembly 23 in Ireland. In the context of climate change, several countries have started to seek inputs from the civil society (e.g. the Citizens' Convention on Climate (Convention Citoyenne pour le Climat or the German initiative to randomly recruited citizens to participate in the creation of the Germany’s LT-LEDS). OECD conducts research on ways to engage stakeholders in deliberative, collaborative, and participatory decision making using new technologies (OECD, 2020[132]). Participation of local communities is especially important in regions of the world where the main type of land governance (in terms of land area) is customary (Verburg 22

In 2007, France organised roundtables as part of the “Grenelle Environment Forum” to identify the issues that should be at the center of environmental policies in the following years (Whiteside and Boy, 2010[134]).

23

The Irish Citizens’ Assembly (2016-2018) involved 100 randomly selected citizen members who considered five important legal & policy issues. It was selected by the OECD as a winning case of the first call for innovative Open Government cases (OECD, 2020[135]).

32 | et al., 2019[50]). Although, customary land governance is threatened by globalisation and outside interests, it is also more and more protected by national laws (Verburg et al., 2019[50]).

Showcasing economically successful models can help to build support for the reforms. Modelling or prospective work can contribute convincing stakeholders that the overall effect of the reform scenario is better than the business as usual scenario (OECD, 2017[133]; OECD, 2017[73]). Such work also helps to withstand pressure from vested interest (OECD, 2017[133]). In Switzerland, the government used robust scientific and economic robust evidence to build support for reform of agricultural subsidies (OECD, 2017[133]). In France, the government should showcase pre-existing profitable organic farming (see Box 4.3).

Box 4.3. Demonstrating the profitability of organic farming in France In France, opposition to a further decrease in agricultural pesticide use (modulating the existing tax) is fierce and sometimes driven by fear of loss of competitiveness (OECD, 2017[73]). Demonstrating that a reduced use of pesticide is compatible with competitiveness may be a solution (OECD, 2017[73]). This can be done showcasing the experience of farmers already engaged in reducing pesticide (OECD, 2017[73]).

Source: (OECD, 2017[73]).

This chapter has provided and overview of the political economy (distributional implications and best practices) of the introduction of policies or reforms that could address the current impacts of unsustainable land use. In the next chapter, some selected lessons learned from Chapter 2, 3 and 4 will be summarised.

| 33

5 Lessons learned and research gaps The previous chapters have provided an overview of the challenges towards more sustainable land use, the policies that could overcome these challenges and the political economy of the introduction of such policies or reforms. This chapter summarises some key lessons learned from the previous chapters (Chapters 2, 3 and 4).

Some key challenges towards more sustainable land use were reviewed in Chapter 2, include: loss of biodiversity, climate change, zoonotic diseases and alien species invasion, impacts on water resources and loss of livelihoods and lands of indigenous populations. These impacts of unsustainable land use can be, if not reversed, addressed through the introduction of new land-use policies or reforms.

Chapter 3 highlighted the need for a coherent long-term vision and vertical and horizontal coordination for successful land-use policies and business practices. Policy coherence should rely on an integrated landscape approach to understanding the issues at stake and developing solutions to address them.

Governments could (1) improve land-use planning governance, (2) mainstream land-use nexus issues into sub-national strategies, plans and programmes, (3) use land use or spatial planning tools, and (4) conduct land-use planning in a collaborative fashion (OECD, 2017[63]; OECD, 2020[45]). Acknowledging that developing policies for sustainable land use is challenging and highly context-specific, Chapter 3 discussed a number of land-use policy reforms that can be relevant in certain settings. In any case, policy development should be based on a mix of instruments which would provide both immediate remedies to the consequences of harmful land-use patterns and long-term solutions to unsustainable land use.

Chapter 4 provided and overview of the political economy (distributional implications) of the introduction of policies or reforms that could address the current impacts of unsustainable land use. It focused on the distributional impacts of (1) biodiversity reforms and of (2) green urban policies. (1) The risk that biodiversity reforms can have a negative impact on firms’ competitiveness is a common concern in environmental policy reforms. The literature on the impact of biodiversity policy reforms on firm competitiveness is particularly limited. Similarly, studies on the impact of PES and the creation of protected areas on income have mixed results. Policies to green the agricultural sector may also have indirect consequences on households’ budget through variation in food prices. (2) Policies to promote infill development can have important distributional implications as they can affect house values directly. Reforms to urban parking policies may have progressive impacts. Recycling the revenue from environmentally related taxes or putting into place transitional measures can help to reduce resistance in the most affected sectors.

Introducing reforms through a multi-stakeholder and participative process, and showcasing economically successful models, are two ways to help build support for the reforms. Key additional lessons, not covered in the previous chapters, include the followings: •

The interaction among different policy instruments should be considered (in the development of land-use policy for instance) (OECD, 2018[49]).

•

A mix of regulatory and market-driven policy initiatives is needed (FAO, 2019[67]). Although in economic theory, the general rule is one policy instrument for one market failure (e.g. carbon pricing for under-pricing of carbon externalities), in reality, this rule is almost never followed.

Realisation of the limitations of regulatory approaches is encouraging the pursuit of market-driven approaches and of a mix of regulatory and market-driven policy initiatives (FAO, 2019[67]). It should

34 | be taken into account that the higher the number of policy instruments, the more difficult are the coordination and coherence.

•

The benefits of sharing (good and bad) experiences and adapting principles and solutions to local circumstances are commonly highlighted in the literature. Previous studies have shown this in the case of urban policies and of agricultural policies (OECD, 2018[49]).Land tenure is one of the key local variables to be considered for sustainable land-use policy (Verburg et al., 2019[50]).

Finally, policy design would benefit from monitoring and evaluating the effectiveness of policy instruments for sustainable land use (OECD, 2020[30]; Verburg et al., 2019[50]). In order to evaluate and draw lessons from the use of a variety of policy instruments in a range of contexts, it is needed to establish and monitor progress towards targets that are specific, measurable, actionable, realistic and timebound (SMART) (OECD, 2020[45]). These indicators should include the distributional consequences of using these instruments (OECD, 2020[30]). Countries would benefit from an indicators framework to measure, monitor and evaluate progress towards the green recovery (OECD, 2020[30]). More generally, indicators of policies implications on local livelihoods and well-being in the country itself and globally should be tracked. In addition, transparency and accountability would both gain from the development of indicators and SMART targets (OECD, 2020[45]).

Based on this literature review, it seems that most sustainable land-use measures used have been relatively permissive. In the context of COVID-19, one could expect for such measures to become more stringent. However, it has been the opposite in some countries as, for instance, stringency of land-use policies has been weakened temporarily (OECD, 2020[58]). Although some economic stimulus packages and recovery plans for economies hit by the COVID-19 crisis are already incentivising sustainable land use, such measures could be further included in stimulus packages.

This literature review has shown that existing literature suffers from certain weaknesses that offer suggestions for new research on the followings.

•

The section on food security and trade-offs between goals (in Chapter 2) has revealed that more data on food loss and waste and on impacts of food loss and waste policies is needed to inform policies that could better balance trade-offs between environmental and economic impacts (OECD, 2019[47]). Policy design would benefit from additional research on the impacts of land conversion on disease outcomes.

•

The section on policy coherence (in Chapter 3) mentioned that a certain land-use policy aimed at reducing environmental pressure can generate leakage (unintended impacts (like leakage) (OECD, 2020[45]). Research on the quantification of the links between international trade and land use is needed to shed light on such unintended impacts. In addition, although the use of integrated landscape approaches is recommended, there is still little empirical research on these approaches (Reed et al., 2020[52]).

•

The section on land-use planning (in Chapter 3) recommended including the valuation of ecosystem services into land-use planning (OECD, 2020[49]). In order to do this successfully, the changes in ecosystem services resulting from different policy options, and the value of these changes to society need to be quantified (OECD, 2020[49]). Countries should consistently integrate ecosystem services mapping and valuation, into land-use planning systems (OECD, 2020[49]).

•

In addition, while stakeholder engagement is desirable (section on land-use planning in Chapter 3), ways for sectorial institutions and stakeholders to work together are sometimes still unclear.

Sectorial institutions and stakeholders should move towards a more coherent/integrated landscape approach. Who should lead such a process, and what would be the incentive for them to participate? (OECD, 2018[49]; Reed et al., 2020[52]).

•

Chapter 4 has shed light on the distributional impacts of land-use policies. Gathering of data and research on the distributional effects of individual policies is needed to help the design of policies

| 35 that minimise trade-offs (Zachmann, Fredriksson and Claeys, 2018[111]). More research is needed on infill development in particular (Jehlinga, Hecht and Herold, 2018[124]).

36 |

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