Land deals increase income, but not well-being
The case of Lao PDR
Much arable land in developing countries is inefficiently managed or lies fallow: Since this became the accepted, World Bank-endorsed narrative in 2008, it has shaped the agricultural policies of many developing countries. At the same time, it has opened the doors to private investors seeking to acquire land for the long term.
A country that has relied heavily on this model is Lao PDR. The Southeast Asian country has managed to generate an economic boom, reducing poverty and creating a significant number of jobs in rural areas. A Lao researcher examined the data as part of his doctoral studies at CDE, University of Bern, – and the results are sobering.
Planting eucalyptus seedlings in newly cleared forest (2007), Khammouan Province, Lao PDR
The global boom in agricultural land deals began in the noughties. Hoping to reduce their dependence on the world market, cash-rich countries and companies secured land for food and other high-value agricultural produce, such as biofuels and animal feed. Private investors speculated on profits, governments focused on food security for their populations – and developing and emerging countries saw it as a means to boost development.
Map of potential employment creation through large-scale land aquisitions (LSLA) as a share of total employment (Source: Land Matrix, Analytical Report III . Calculations based on data from the Land Matrix and International Labour Organisation (ILO 2020). Only concluded deals are included, with the exception of abandoned deals.)
But it is now clear that this development has a flipside: It comes with land use change that involves massive degradation of natural resources and the environment – and has negative consequences for local livelihoods worldwide, as smallholder farmers displaced by land deals have few other ways of making a living.
Such is the conclusion of global analyses and a growing literature on local case studies.
Land preparation for rubber plantations, Luang Namtha Province
Country-level findings are important for policymaking
But what does the situation look like at the national level? Concrete findings at this level are generally missing – even though they would be particularly important for policymaking in terms of informing nationally adapted approaches to making investments and land use more sustainable. The main reasons for the lack of national-level data are the “discretion” of the actors involved, on the one hand, and a general lack of reliable data in the countries concerned, on the other.
Transparency around land deals in G20 and non-G20 investing and target regions (Source: Land Matrix, Analytical Report III .)
Lao PDR, an exception
One exception is Lao PDR. Thanks to its long-standing cooperation with the Swiss Agency for Development and Cooperation (SDC) and the scientific support of CDE, the country has detailed spatial statistical and qualitative data on the wide range of its land deals.
In addition, Laos generally shows a favourable correlation between land concessions, rising incomes, and jobs. Mainly between 2004 and 2017, the Lao authorities granted concessions for 600,000 hectares of land for agricultural and tree plantation projects.
Laos’s economic growth is among the strongest in the region, driven largely by the commodity sector. Over the last two decades, exports of land-intensive goods to Thailand, China, and Vietnam alone increased by an annual average of 19 per cent.
China – Lao railway, construction site, Vientiane
Impressive poverty reduction figures?
Agricultural concessions have created 26,000 jobs. And between 2005 and 2015, poverty rates fell from 41 to 28 per cent in 1,402 villages affected by agricultural deals. “These findings contrast with those of other studies, according to which land deals actually increase poverty in developing countries,” says Vong Nanhthavong, a Lao researcher at CDE who has just completed his PhD on the topic.
Such figures are impressive – but only at first glance. “Most land concessions were granted along the Mekong River and important transport routes. There, the poverty rate is anyway lower than in remote regions,” says Vong. After all, he points out, the positive balance is based on a purely monetary measurement of well-being.
“But objectively, in rural Laos, this can only be assessed in terms of a combination of income, food security, and livelihood resilience – with ownership of livestock playing a crucial role.”
A villager on the guard of his cattle nearby sugarcane concession sites, Savannakhet Province
All that glitters is not gold
But how, under these conditions, are land deals and well-being related? To answer this question, Vong analysed socioecological data and interviews with villagers affected by land deals, in a sample of 294 villages.
And here it becomes apparent that not all that glitters is gold. After the investors began their activities on the land under concession, almost two-thirds of the villages investigated experienced a rise in income. At the same time, however, two-thirds of the villages saw a decrease in livestock farming.
Food security remained unchanged in 40 per cent of the villages, decreased in 42 per cent, and increased in only 17 per cent.
Livelihood-related losses
In addition, 68 per cent of the villages surveyed experienced clear livelihood-related losses in the wake of land deals – especially where large-scale land deals or multiple land deals per village occured. These include losses of arable and pasture land, as well as loss of access to forest resources such as wood and non-timber forest products (e.g. fruits, animals, medical plants). “But particularly the poorest sectors of the population depend on the forest and its products for survival,” Vong Nanhthavong points out.
Further, more than half of the villages complained that they had less water available for their agricultural activities – affecting the irrigation needed for their traditional rice fields. In the end, a meagre 11 per cent of the villages surveyed experienced no changes in access to natural resources.
Wage labour instead of resource-based income
At a stretch, this could all be explained as a transitional phenomenon – especially since Laos, in line with the World Bank and some development economists, is striving for the clear goal of transforming from subsistence to market-oriented agriculture. In other words, modernizing and industrializing the sector. For farmers who have been living off their own small plots, this means switching to wage labour for plantation owners.
Workers are paid at the end of the day, Sekong Province.
The government sets targets for investors…
To meet their goals of poverty reduction, the government of Laos has set a cap on the number of foreign workers allowed. Accordingly, up to 15 per cent of jobs involving physical labour may be given to foreign workers per land deal, and up to 25 per cent of jobs involving management and technical expertise. Last but not least, investors are also required to train local people to meet the technical requirements of the jobs.
… that often turn out to be meaningless
In practice, however, the contractual agreements often turn out to be paper tigers, as Vong Nanhthavong’s detailed investigations show. Only a minority of people in the study villages who had had to give up their farmland for a deal had actually received training (click on the chart for full view).
Especially foreign companies investing in perennial crops (e.g. rubber, pulpwood, coffee) hired significantly more foreign labour for technical consulting and management (43–69 per cent) than the quotas permitted by the government. And Lao investors, for their part, created jobs primarily for their own family members rather than for the local population.
Types of training received
“In more than a third of the villages surveyed, the former land users were evicted from the land as well as excluded from the wage labour opportunities that the land deals created,” Vong Nanhthavong concludes.
Planting eucalyptus seedlings in newly cleared forest, (2007) Khammouan Province
On the whole, the disadvantages outweigh the benefits
Nonetheless, farmers affected by the land deals had access to the above-mentioned 26,000 jobs. But around 90 per cent of these were seasonal and low-skilled jobs such as clearing, digging holes, planting, and weeding.
“Many of these do not offer longer-term prospects, as they are often only required for preparing and setting up a plantation, while a significant share of operational jobs, such as harvesting, went to migrant workers from the countries of investors” explains Vong.
And while the farmers are often paid less than the national minimum wage, specialized migrant workers may be offered higher paid jobs as manager or expert.
Most land deals, the researcher concludes, have made the local population’s situation more precarious.
Only in the few villages where land concessions did not lead to the loss of individual farmland and access to natural resources was preserved, were farmers able to maintain their traditional livelihoods.
Land rights – a prerequisite for greater well-being
“In cases like that, the new jobs can become an important source of cash income. But this alone is not enough to increase well-being or compensate for the loss of land and natural resources.” That’s why securing local people’s land use rights is key, he says. They are an essential prerequisite for greater well-being.
In this respect, an important role can be played by international codes of conduct that aim to protect local people’s land rights and prevent adverse impacts of land deals on their livelihoods. One of the best known is the right to free, prior and informed consent to land deals (FPIC), promoted by the UN Food and Agriculture Organization (FAO).
Participatory mapping exercise of developed concession areas, Khammouan Province
Ensuring participation not only in the approval phase
“The principle of FPIC enables consultation processes to take place at community level – and, in a some cases, affected villagers were actually able to negotiate land allocation as well as some economic benefits,” says Vong Nanhthavong. However, his research has also shown that FPIC per se is no guarantee for positive outcomes.
“A land deal can have positive effects during the start-up phase that then turn out to be negative during the course of operation,” explains the scientist. This makes it all the more important, he says, to use FPIC to ensure that local communities have a say not only in the approval phase, but throughout the duration of a land deal.
Newly established rubber plantation along the Mekong River, Luang Namtha Province
More information
Scientific publications by Vong Nanhthavong et al.:
Related topics
