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The Land Grabbers — the review

by David Zetland from Aguanomics

The Land Grabbers — the review

Fred Pearce sent me a review copy of his new book, The Land Grabbers: The New Fight over Who Owns the Earth, which I enjoyed very much for its detailed description of the pros and cons resulting from foreigners investing in land in developing countries.

In the book, Pearce appears to see more cons with land deals than I do. Perhaps that’s because he saw only bad land deals, or perhaps he associates ALL large-scale agriculture with exploitation, inefficiency and environmental degradation. Any of you who read my paper (“The Political Economy of Land and Water Grabs”)* will know that I am annoyed that we do not have a good definition of when a land deal is a “bad” grab or “good” foreign direct investment (FDI). Pearce appears to call ALL deals grabs, but I think there are many well-run, sustainable farming operations that produce profits for the farmer, good jobs for locals, and quality food for markets.

Anyway, here are my notes on the 300pp+ book, which has six parts and 27 chapters covering “grabs” from buy-side and sell-side locations in Europe, N and S America, Africa and SE Asia.

  • Many grabs convert “fallow” land to industrial-scale agriculture, but local communities often “cultivate” this land in long rotations of crops, grazing and recovery. Their methods are not just sustainable; they are cheaper and more productive for meeting a diverse range of local needs. Nomadic herders have practiced sustainable land management for centuries.
  • Such methods are also egalitarian. Poor farmers can eat, but poor urban residents will suffer from political corruption and/or favoritism.
  • That said, Pearce seems over-suspicious of markets (and financial instruments) that can improve food security and supply, views that I recently called shortsighted and misleading.
  • Food security, for example, is often used as an excuse for protectionism that favors local food growers over consumers. Grabs directed at security also fuel “countervailing” grabs in which market supplies are replaced by managed supplies that will waste calories, inputs and environmental flows. Yes, the Saudis are engaging in grabs, but that was only after their failure to grow wheat at home (a bad idea that wasted water) and their exposure to volatile food markets. The trouble with their “grab” strategy is that they will not be able to export food if large-scale shortages arise and their “indigenous” farms are wasting water now that they will need in the future. It’s far more efficient, for example, to rely on markets for supplies, store a year’s supply of grain in case of market failure, and save water for cultivation should market interruptions last longer than a year.
  • Land grabs are also often water grabs. The weak property rights that allow land grabs (by definition, a grab takes land from other users) are almost surely accompanied by even weaker rights over water and even greater misuse of that water.
  • Grabs, as a business strategy, often depend on corrupt dictators who will not be around as long as the 50-99 year contracts may promise, making it difficult to invest over the long term or care about sustainability.
  • Even worse, most grabs are arranged in distant bureaus, where “buyers” and “sellers” may not have a clear idea of what they’ve agreed, let alone who else may be interested/affected by their agreement.
  • It seems that Pearce considers deals involving foreigners to be “bad” while deals with locals are “good,” but local thieves are not just more common, but more thorough, since they know the maximum local tolerance for greed.
  • That said, it’s great to improve local productivity. It just takes a lot longer because locals do not just “copy/paste” good ideas from other areas. The upside is that locals who develop “organically” will have diversified, robust systems that will contribute to market stability. Pearce would agree with this assessment, I am sure, but local is not the ONLY way to go…
  • Remember remember remember that foreigners cannot just show up and exploit (at least not in these post-colonial days) — they need corrupt local partners, and THOSE people are the ones with power to make or break a deal (as I discussed in my paper).
  • Unsustainable operations are a bigger problem than grabs. They are fueled by a combination of short-term thinking (high discount rate) that may be fed by over-capitalization (need to generate cash to pay off debt), poor property rights (get money before land is gone), tragedies of the commons (get water before neighbors take it), etc. These problems occur in ALL countries, but they can be minimized by stable, sensible policies.
  • Land grabbers may be taking “marginal” land (often conservation areas, etc.) but only because domestic farmers have already taken prime land, often before environmental perspectives had any weight.
  • Pearce appears to laud reverse grabs, e.g., when Chavez or Mugabe break large farms into smaller holdings, but those “fair” actions are often driven by corruption or revenge. Even worse, the land often ends up with cronies who cannot farm instead of poor farmers who can.
  • Remember that there would be NO land grabs if individuals or communities had title to their land! That’s why many grabs are occurring in Africa — about 80 percent of the land there is “managed” using informal, communal methods.
  • Pearce also covers the interesting case of “green grabs” — where environmentalists take land out of production (or protect it), to keep it pristine. These grabs sometimes exclude locals from their traditional lands; they can also be sustainable (e.g., locals live in the lands under traditional conditions, while earning money from fees paid by foreign tourists who want to hunt beasts with cameras or guns).
  • Pearce loses his way when discussing “grabs” in Australia that are really FDI. That’s not the case in Cambodia, where corruption underpins land seizures, but it’s not good to mix up fair deals (even if they upset nationalists who prefer to avoid competing with foreigners for land) with theft.
  • There’s an interesting discussion of grabs in Malaysia and Indonesia, in which rainforests are cut down for timber and palm oil plantations. It’s not just that these grabs impoverish locals of their traditional lands, or that the biofuels produced on the land may actually be “carbon positive” but that the wood products produced from them are certified “good” by the FSC when they really are not. The main point is that eco-labels are meaningless unless there’s a 100 percent accurate way to prevent counterfeits — and that’s hard in corrupt countries.
  • Take this last point with my point on property rights and long term views above, and you will see how real sustainability results from accurate pricing of resources that belong to a community over the long term (50+ years).
  • The world’s largest sugar farm in Sudan uses 2.4mafy (~3,000 GL), or 4 percent of the Nile’s flow!
  • Water grabs, no surprise, reduce environmental flows that nourish wetlands that traditional users depend on for food, fiber and fish. No rights = hunger.
  • Mega farms may be unsustainable, but subsistence farms cannot generate enough production. Perhaps the middle way — small-scale, mixed-use farms managed by owner/entrepreneurs who innovate and adapt to local conditions — are the best way to feed the world over the long run. Oh, and don’t forget that these guys need to trade and benefit from trade.

Bottom Line: I give this book FOUR STARS for its vivid description of the problems related to land grabs that benefit outsiders at a cost to locals whose land is taken from them. Read it to understand the choices between hunger and food, rebellion and stability but don’t forget that property rights (legal, traditional or communal) would stop unfair grabs while allowing local people to benefit from their resources, locally and globally.


* The working paper is no longer online, due to spurious copyright claim by the publisher of the book where it eventually appeared. Email me if you want to see it.

reposted from Aguanomics

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Miya Water’s quest to plug leaks

Via David Zetland’s Aguanomics. I continue to follow David’s thinking on how to plan, price, and ultimately use water in a 21st century manner. He offers interesting notions on the roles of government/pricing (and markets). There is currently big bucks involved and only to grow in importance and critical decisions to be made. Water is also an intensely watershed based arena (local) except when it is not. Re-posted with permission.

Miya Water’s quest to plug leaks

While in Jerusalem, I had the opportunity to speak with Tami Gaoni Feldman of Miya Water.
Her company is in the business of reducing non-revenue water (NRW), or water that goes into pipes but never reaches a customer’s meter gets paid for.
 
Well-managed water systems might have a NRW rate of 5 percent (due to fire hydrants, flushing the system, minor leaks, etc.). In a poorly-managed and maintained system, NRW rates range from 40 to 90 percent. The most common causes of high NRW rates are theft of water, non-payment of bills, leaking pipes and miscalibrated meters.
 
IBNET tracks NRW rates for about 2,000 utilities.
 
Tami told me that Miya is working with one of two utilities in Manila, where the 300 staffers in the NRW division tackle 100 leaks per day and overall system losses of 300 ML per day (about 240 acre feet per day). Miya has had some success so far in reducing NRW from 67 to 50 percent.
Miya uses three main tools to reduce NRW: monitor and fix leaks, manage system pressure to reduce leaks in low-demand periods (middle of the night), and increase payment for services. As a first step, Miya makes sure there are water meters at big junctions, to make it easier to track down branches with high 24/7 baseline use.
 

These technical details were interesting, but Miya faces an additional problem: water managers and politicians facing water shortages prefer to increase supply (via desalination, reclamation, groundwater pumping, etc.) instead of reducing NRW losses.
 
This behavior does not make sense from a cost-benefit perspective. A decent NRW program will increase revenue per unit of treated water pumped into the system. Those revenues mean that NRW programs “pay for themselves.”
 
I hate to say it, but this feature is even more attractive than my “raise prices” recommendation: it’s an engineering solution (water managers like those) that will not increase prices (politicians like those).
So why is it hard for Miya to sell its services?
 
I see two main reasons. First, a good NRW program requires up-front financing to pay for staff, software, meters, and so on. For most cash-strapped utilities, additional money is hard to come by. So why not get a loan from a bank or development agency? Because (according to Tami, but within my understanding) bankers are not familiar with NRW programs. They are more comfortable with making loans on physical assets like desalination plants that can be pledged as collateral.
 
Now stop and think about this for a second. What happens if a water utility fails to repay a loan on a NRW program? There’s no collateral to grab. What happens if it fails to repay a loan on a plant? Yes, there’s collateral, but then what? Are the bankers going to drag a plant from Dhaka back to Geneva? So the “collateral excuse” is hollow.
 
That leaves conservatism and one other excuse: managers and politicians like new facilities that they can pose in front of, cut ribbons for, etc. There’s no photo opportunity at a non-leaking pipe.
We couldn’t think of any other reasons, but maybe you can.
 
Until then, I will conclude that NRW reduction programs are an underutilized method of improving utility performance.
 
Bottom Line: Every water utility should have a program to track, report and reduce its NRW rate — for its financial stability, environmental stability, and the good of its customers

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The water data hub is LIVE!

Who gets water at what prices in the US still appears to be considered a local issue in the US at its core, and at best regional during droughts that cross borders or as it pertains to agricultural use and ‘retail’ (cities and burbs).

 The issue of private versus public ownership is not very visible yet in US news, nor our need to repair our infrastructure (see my series on water  links to Part 1-5) .  And our friends in Texas haven’t sent any recent alerts to me on their current problems (have any of us followed any other drought concerns on the national stage?). Water distribution questions did actually make national news in 2007/2008 droughts along the east coast and southwest but quickly disappeared.  However, the fault lines on who has access to water, news on how we actually obtain fresh water,  and questions on price structures became quite sharp and very legal in a only a year or two.

The question on an international scale remains largely invisible to US and perhaps is time to revisit.  The IMF and World Trade Organization ownership rules are considered arcane and not relevant unless it involves the occasional town water supply and a company like Nestle’s.

Ian Wren and David Zetland have begun the Water Data Hub to help centralize primary source material worldwide. The authors announced the hub to help centralize data at David’s Aguanomics:

I’ve been looking for a centralized source of water data for over a year, a place where I could go to find data on any kind of water question.

Although that quest led me to IBNET — a fantastic resource on water utility data in many countries — I was unable to find a good centralized index of water data.
Even more depressing, I was unable to get any interest or support out of organizations (USGS, World Bank, OECD, et al.) whose missions might imply support for just such an idea.

So, I decided to set up my own water data hub (WDH) — a central location that links to water data, no matter where it is, who owns it, or what dimension of water it describes.

Last November, I asked for help on this project, and Ian Wren (from San Francisco) joined me.

It’s thanks to Ian’s hard work (weekends and evenings!) that I can now invite you to visit waterdatahub.org!

So, please go there and add data sources. The WDH, like any network, gains value with the number of links.

Oh, and don’t forget that anyone can add a link to the hub. You only need a WDH account (free and easy to set up). So, go ahead and add your favorite data source from the World Bank, Exxon-Mobile, the Nature Conservancy, et al.

Note by my wording that the WDH does not host, own or control data. It’s basically an index of data controlled by other organizations.
 
The big goal now is to make a census of data, so that we know what exists, what’s missing and what overlaps.
Future developments:

  • WDH 1.1: You can add records for data that exist but are not available to the public. This will make it easier to contact data owners to ask for access and — hopefully — to pressure them to release it to the public.
  • WDH 1.2: Anyone can comment on the quality of data sources held elsewhere; this will help everyone understand the uses and limitations of data — information that is not necessarily available from data owners.
  • WDH 2.0 (2013): We will start the very difficult process of “normalizing” data from many sources (using translation tables) to make it possible to assemble a data table from 2+ sources linked to the WDH.

Note that the WDH will make it easier for anyone who analyzes data to do their job; analysis is too difficult to automate.

As you might expect, I am running WDH as a stand-alone, academic, non-profit. At the moment, we do not need money as much as your time.

Bottom Line: Please add new spokes to the WDH (get it?) and tell others about the water data hub.

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World Water and ho hum

David Zetland at Aguanomics suggests that the problems worldwide with water for drinking and as importantly sanitation receives little attention. I like the poll on his site which suggests for the US that floods or droughts are the main driving force getting us to notice, or special interests.

World Water WTF

Today (March 22) is the annual circus of “look at me” articles, press releases, conferences and speeches by people and for people with attention-spans of a goldfish.
Not my scene, so I am I’m giving you a break from the fracas, with BONUS funnies that put things in context

and help with priorities

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