“It’s the biggest risk to look at,” said Sylvia Wisniwski, Managing Director of Finance in Motion investment advisory. “When land use conflicts arise, sometimes you can lose the entire investment. With big investments of 20 billion or so, you don’t have possibility of failure.”

“The first question an investor is going to ask is, ‘What’s my land tenure risk? How do I know I still have this asset? Is it really mine?’ ” said MaryKate Bullen, Associate Director of Sustainability and Communications at New Forests asset management firm.

“The bottom line is that if the individual or the household or the company doesn’t know if they’ll still have rights to land 10 years down the line, nothing will happen,” said Juergen Voegele, Senior Director of Food and Agriculture Global Practice at the World Bank. “Basic. Simple. And absolutely key.”

At the finance-focused Global Landscapes Forum Investment Case Symposium, land tenure was the primary issue that every discussion and panel addressed in common, repeatedly pointed to by members of the research, development and finance communities alike as the biggest risk for landscape investment.

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This sentiment is now enshrined in fact, with USAID’s recent publishing of the first ever private sector investor survey on land rights. Conducted jointly with Indufor North America and the European Investment Bank, the survey looked at 102 projects with a combined value of USD 5.2 billion. Land tenure risks were cited as the main cause for 66% of the 39 projects ultimately rejected, valuing 1.6 billion.

Sixty percent of companies reported tenure risks increasing in the past five years, naming community rights to resource access and local land disputes as the main sub-risks.

Every single company surveyed said they assessed land tenure risks before deciding whether or not to invest, and these assessments were often made using qualitative data such as mapping and community consultations. Government and quantitative information was little used, which Jeffrey Hatcher, Managing Director of Indufor North America and presenter of the study, noted as revealing, given that such companies often focus on numbers. Similarly, projects that did go forward used on-the-ground stakeholder engagement and community development to minimize risks, to mixed success.

The survey’s main takeaway was that local-level action plans – not top-down approaches – are the best way to improve tenure. But even still, land rights issues cannot always be mitigated to what investors feel is a safe degree.

MISSING INFORMATION

Seventy percent of land in developing countries is unregistered, often due to lack of capacity or funds to procure proper titling. Yet, formal land tenure often isn’t even the biggest problem from an investor’s point of view; encroachment and blurry customary land lines loom larger.

“What is the actual land use situation on the ground, and how does that differ from formal land tenure?” posed Bullen, who said finding the answer often requires visiting a land sale site and manually mapping it with GPS, ticking wherever there might be an encroachment.

Without confirming the tenure situation on the ground, it’s impossible to know the truth, echoed Wisniwski. One company she’s worked with backed out of purchasing land in Latin America after visiting and witnessing entrenched pockets of illegal cocoa production. The land owners had never – and would never have, she believes – alerted the investors to this situation.

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However, even if mapping is conducted, historical data remains to be dug up, which doesn’t always reveal the most attractive information. Land areas where companies used to operate or that were part of government concessions may have seen communities treated unjustly or suffer negative impacts. New companies coming in need to know the degree of fall-out and local resistance they’ll face.

“Legacy is increasingly challenging because you don’t have access to information on what happened,” said Bullen. “It’s difficult to win back trust that was lost a decade ago.”

On the bright side, Mark A. Constantine, from Social and Environmental Risk Management at the International Finance Corporation, said that by embracing new technology, companies can lighten the workload of due diligence and understand local situations before ever putting boots on the ground, cutting down time and money costs.

Blockchain technology, a topic spotlighted by the Symposium, could make waves in this arena. Unreliable government data on tenure derives from a lack of land professionals, high costs for requisites like notarization, corruption in the land sector, and the positioning of governance in urban rather than rural areas.

As peer-to-peer secure networks for sharing and storing information, blockchains can help locals work around such hurdles to document their landscapes and secure their rights remotely and without the costs of middlemen.

“Technology is changing the land sector. You don’t need surveyors to measure land anymore, smartphones can do it well enough,” said Frank Pichel, Interim CEO and Chief Programs Officer of the rights-focused technology company Cadasta Foundation.

“The fact that blockchain exists is making more people look at land rights,” said Aanchal Anand, Land Administration Specialist at the World Bank.

INDIVIDUAL VALUE

When it comes to securing land tenure, inclusivity has perpetually proven to work better than exclusivity. Fences, guards and government involvement are continually less successful in protecting land than involving communities in supportive ways, such as including outgrowers in production models.

To this end, the global finance dialogue is shifting more and more to include farmers as private-sector investors – but this means they should be treated as such. To reduce tenure risks, it is imperative that locals feel like a company’s success is also their own, at an individual level.

Paula Guimaraes, Head of Forest Certification and Conservation at pulp-and-paper The Navigator Company, said that companies getting local people on their side often requires taking things slowly. After Navigator obtained a land use license for 356,000 hectares in Mozambique in 2009, it spent years talking to locals on the ground before fully implementing a mosaic landscape project in 2015, which is now set to bring jobs and benefits to more than 7,000 people.

“Tenure is the cornerstone of inclusive models,” said Constantine.

Agri-business company Olam, which works with some 400,000 smallholders, has similarly sought to embody this in its three-part business ethos, focused on prosperous farmers and farming systems, building thriving communities around farms and regenerating the living world.

Michael Jenkins, Founding President and CEO of forest conservation non-profit Forest Trends, called for more investment to help grow the traditional business endeavors of local and indigenous communities, such as harvesting acai and brazil nuts, or producing forest-based artisan crafts. This can help give forests real, sustainable value, he said.

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In Ethiopia, a recent World Bank study found that 50% of the country’s highlands are eroded, costing the country 2 to 3% of agricultural GDP each year. The Bank’s solution was to improve land tenure security, specifically targeting young farmers to better manage natural resources.

Now, efforts have seen half a million households acquire land ownership certificates, giving people a real sense of reason to invest in their landscapes, said Laura Tuck, Vice President of Sustainable Development at the World Bank. And it’s started to work; household income is increasing, as is vegetation cover. More than 520,000 hectares of degraded land has since been restored.

Tuck concluded her remarks with a quote from Lester R. Brown: “No civilization has survived the destruction of its natural support systems. Nor will ours.”