The surge in farmland and commodities investments is causing widespread concern about ‘land-grabbing’ and the accelerated loss of biodiversity, water depletion, soil erosion, and human rights abuses. These investments are expected to grow substantially over the next decade, given a number of interlinked pressures: the growing global demand for commodities and rising commodity prices; natural resource limitations and farmland being a ‘real asset’ that offers diversification to investors’ portfolios at a time of volatility in global financial markets. The need to increase food production in the next decade, against a backdrop of pressures on land and water, puts the question of land at the centre of a new security agenda.
In March 2012, a report by the Earth Security Initiative (ESI) involved investors and activists in exploring how to create new economic and political incentives for sustainable land investments. The report portrays land assets as being at the heart of a nexus of risks derived from competing food, energy and water demands in different countries. Sustainability issues, it argues, will be increasingly key in the economic and political stability of nations; they therefore present a set of risks for those investing in land-related assets and projects. But scarcity and competition could also open up a new opportunity for investments to focus on long-term value creation. How to influence these investment decisions?
This is where data comes in. As the next step, the ESI is developing the Land Security Index. The index will provide an independent analysis of country data on five trends that are not usually analysed together: water limits, land degradation, food security, governance and climate change. It will suggest how these data might provide new insights into long-term country risk metrics. ESI will continue to involve global investors in working out how this information can best be included in the investment decision cycle, the ultimate aim being to demonstrate how considering these sustainability metrics is in the interest of both financial markets and governments.
Alejandro Litovsky is founder and director of the Earth Security Initiative. Email email@example.com