Large Scale Land Acquisitions

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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]).