New model contract will help protect developing countries from harmful ‘land grabs’
Governments in the developing world now have a powerful new resource to help them negotiate contracts to reduce harmful effects of large-scale land investments
The International Institute for Sustainable Development (IISD) has released a Guide to Negotiating Investment Contracts for Farmland and Water, developed by its team of lawyers, social scientists and environmentalists. Based on a more than three-year investigation of 80 agricultural investment contracts, the user-friendly guide provides options for countries to develop rural economies, boost employment, build agricultural processing factories, protect against the impacts of climate change and ensure enough water for all.
The IISD guide is a proactive response to the ‘land grab’ phenomenon that has plagued many countries in Sub-Saharan Africa and South East Asia in recent decades, whereby an unprecedented number of foreign investors acquire land in developing countries for their own financial gain, often to the detriment of poor farmers and pastoralists. By one estimate there are almost 1,000 farmland investments covering almost 38 million hectares of land (Land Matrix, October 2014).
“This really is the first of its kind; an attempt at creating a model contract for developing countries to attract investment for agricultural production, while at the same time, safeguarding the needs of the poor and protecting the environment,” said Nathalie Bernasconi-Osterwalder, director of the Economic Law and Policy program and head of the Investment program at IISD.
“This practical guide tries to balance the different interests of investors, governments and communities, and ultimately help governments maximise the benefits and minimize the risks associated with foreign investment in their farmland,” said Carin Smaller, the principal author of the new guide.
IISD believes that the most important step to ensuring positive impacts of foreign investment is the ongoing development of domestic laws and regulations. It is the best legal mechanism to ensure a strong reflection of the national interest. However, many states do not have all the necessary domestic laws in place and end up negotiating contracts that include a wide range of economic, social and environmental issues that would normally be governed by domestic law. Given this reality, the IISD guide provides options for ensuring that contracts contribute to long-term benefits for all stakeholders and promote the tenets of sustainable development.