This article is part of a special lead up series to the Global Landscapes Forum 2016 – The Investment Case. This one-day experts symposium – to be held in London on June 6 – aims to accelerate investment in landscapes by connecting funds to farms and forests.
Issues of provenance – regarding what is on your table, or what your table is made of – are increasingly important in the world today.
Amid rising awareness of the hastening depletion of the Earth’s resources, both producers and consumers are striving for sustainable supply chains that can be tracked and trusted.
But creating systems that can faithfully trace items from farm to table is difficult, requiring verifications and monitoring immune from tampering across wide, potentially global networks.
Recent technological advances may offer solutions, so consumers can rest assured their coffee is organic, the wood of their kitchen table was harvested legally and even that their property rights are secure.
Steven Lawry, a research director at the Center for International Forestry Research (CIFOR) who studies land tenure and resource governance, said certain innovations could help ensure that commodities meet rigorous environmental, social and government standards.
“The kind of authentication processes for sustainable supply chains that are currently in place are costly and there is a lot of leakage. Blockchains could offer that validation at lower costs,” he said.
The vast, transparent distributed ledgers known as blockchains, of which bitcoin is the best known, move and store information immediately without the need for intermediaries. Because of the security and encryption involved, blockchains offer trusted, tamper-proof information.
And, they could do so at a low price when the technologies are at industrial strength.
FAST AND CHEAP
Juan Carlos Castilla-Rubio researches, develops and scales innovations at the intersection of technology, finance and sustainable development as chairman of Space Time Ventures.
He said the use of digital innovations to enable and disrupt financial services, referred to as fintech, may help unlock the large-scale finance needed to address climate change, sustainable development and food security across the globe.
“The financial system has historically been the highest technology user since its inception hundreds of years ago. However, because of the nature of dealing with money, with insurance, with trust, the adoption of newer technologies has not been as fast, deep or wide as it could be,” Castilla-Rubio said.
We’re in the early stages of fintech. There is huge excitement. There is a lot of early experimentation, but there is no definitive answer whether and how this can be transformational in terms of unlocking the trillions of dollars required to meet the sustainable development agenda.
He added, “We’re in the early stages of fintech. There is huge momentum and huge excitement, in particular about the innovation potential of the combination of blockchains, internet of things and artificial intelligence.”
But, the use of these technologies is still in the early days.
“There is a lot of hype – the venture capital industry is spending billions a year,as are banks and insurance companies. There is a lot of early experimentation, but there is no definitive answer whether and how this can be transformational in terms of unlocking the trillions of dollars required to meet the sustainable development agenda,” he said.
The many applications of blockchains are a new frontier, one with the potential to clarify one of the oldest frontiers of land rights in the most modern of ways.
And those within the sector are exploring how such transparent databases could validate property rights and create authoritative records, despite the present challenges.
SOLID GROUND
Frank Pichel of the Cadasta Foundation, which works on land and resource rights and data, said the toughest issue in land administration is the initial demarcation of land, adjudication of conflicts and documentation of rights.
“There has been a lot of general discussion and interest surrounding blockchains. People and groups looking into it that were fairly new to the land sector realized that land administration is more complex than they had thought – particularly in emerging economies. But the question remains, can we put land records on the blockchain and make them more secure?”
There has been a lot of general interest surrounding blockchains. People looking into it that were fairly new to the land sector realized that land administration is more complex than they had thought... But the question remains, 'can we put land records on the blockchain and make them more secure'?
He sees the most promise with virtual notarization services that can document the date, time and parties involved in a transaction and the recording of property rights in the U.S. and Europe, where mature systems are already in place and initial registration has long since occurred.
One of the issues, according to Lawry, is that information like property ownership must be accurate when it enters a blockchain, and in many parts of the world government recordkeeping is imprecise, erroneous or non-existent.
All the blockchain can do is reflect the state record. In many settings that record is not going to be accurate for a whole host of reasons.
“All the blockchain can do is reflect the state record. In many settings that record is not going to be accurate for a whole host of reasons,” Lawry said.
Those records are extremely important for smallholder farmers, especially in emerging economies where many require support.
Castilla-Rubio said, “Blockchains would enable the issuing of land titles without the usual high transaction costs in the developing world, and could be enabled at scale. This is a prerequisite for blended financing that would in turn support the sustainable intensification process of smallholder farmers.”
Concurring with Lawry, he added, “It is not necessarily a panacea because once you put information in a blockchain you can’t take it out – which is good if it is clean and accurate when it enters the blockchain.
“But you can’t reverse a blockchain if fraud is involved.”
TECHNOLOGY AND POWER
Who controls information is of course an age-old issue.
Pichel said of his work with land registries, “We wrestle with equalizing how land information can be recorded, as people with the power to record tend to be more affluent.”
It is such technologies as blockchains that hold out the promise to rebalance power and revolutionize the way information is controlled, with its perhaps radical decentralizing and equalizing properties.
And this is exactly where success in sustainable development lies.
In one move toward addressing challenges and looking to the application of such ideas on the ground, a session at the upcoming Global Landscapes Forum 2016: The Investment Case in London on June 6 will address this cutting-edge topic.
The one-day experts symposium will bring together diverse representatives from finance, development, government and the corporate sector to discuss how to use fintech to improve sustainable development.
Castilla-Rubio, who will be participating in the session, said, “I am trying to answer a deceptively simple question that actually is not: ‘How can fintech innovations help or hinder us to harness the financial system to help us achieve sustainable development at scale?'”
We want you to share Forests News content, which is licensed under Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0). This means you are free to redistribute our material for non-commercial purposes. All we ask is that you give Forests News appropriate credit and link to the original Forests News content, indicate if changes were made, and distribute your contributions under the same Creative Commons license. You must notify Forests News if you repost, reprint or reuse our materials by contacting forestsnews@cifor-icraf.org.
