Is the land grab debate a proxy war?

unicron

Is the land grab debate about property rights or consolidation?

So much to write, but so little time to do so. Instead I’d just like to end the week with a quick thought on the evolution of the land grabs debate. I’ve been slowly picking my way through Lorenzo Cotula’s fairly comprehensive book on large scale land acquisitions, an I was stuck by the following passage:

“Also, in some cases it is difficult to tell whether a reported deal relates to a new plantation, or to the acquisition of an existing plantation – for example, where a state farm is privatized. The two types of deals would have very different consequences for pressures on land, though even acquiring an existing farm can increase land competition – for instance, if an old state farm has been partly occupied by squatters who are evicted following the privatization, or if the deal involves expanding the existing plantation.”

Cotula is reflecting on the difficulties of discerning land purchases in the Land Matrix which involve some form of consolidation (land owner by multiple smallholder farmers being converted into large-scale farms) and those which do not change the scale of land ownership. This is an important distinction, as it implies entirely different concerns over large scale land acquisitions.

For a large part, the land grab debate has been presented as an issue of property rights: rural communities are having their (possibly customary) rights to land violated when governments lease or sell the land to large national or international firms. This implies direct welfare losses from losing control of a productive asset – imagine if someone showed up and stole your laptop or your main mode of transport (or your house).

But there is a second issue here: even if property rights were perfectly enforced  and all large scale land acquisitions were both fair and voluntary, they would still involve a significant amount of land consolidation, with smallholder plots being converted into much, much large farms. This raises an important question: once we sort out the rights issues, what form of agriculture would we actually like to encourage in these settings?

It is no secret that many NGOs, such as Oxfam, have a bias towards smallholder farming (let’s lead aside whether or not that bias is justified or not, it could very well be). Is the current onslaught on large scale land deals by these NGOs purely about protecting the rights of people, or is this just another front in a much larger war on land consolidation?

Land deals and local political economy

An investment fund-backed plantation in northern Mozambique, founded using land acquired from local villagers, learns the hard way what happens when not everyone is happy with the land acquisition:

But about a year after Chikweti’s launch, reports of arson and uprooted saplings began to emerge. Chikweti estimates that between 2007 and 2012, the company lost US$1 million to fires Р60 percent of these fires are thought to have been criminal and the remainder accidental. The highest number of fires to date occurred in 2012.

A September 2012 report by the human rights group FIAN said, ‚ÄúIn April 2011, peasants from Licole and Lipende uprooted and cut down some 60,000 pine trees on an area of 12 hectares with machetes and hoes, and destroyed some [company] equipment.‚ÄĚ Several people from the local community were subsequently arrested.

The answer? The plantation starts paying for some local public goods, such as schools. For the arson, an incentive scheme:

As part of the fund’s terms, the community receives $5 for each hectare that is not burned or vandalized.

‚ÄúThe fires are not always started by people in the communities where we work; it can be done by neighbouring communities in order to harm people they are upset with or because of jealousy,‚ÄĚ Bekker said.

I would be interested in knowing how they settled on $5.

On land grabs and rural-urban migration

Arthur-Dent

Planet destroyed to make way for hyperspace bypass. Forced to migrate.

Writing for The Guardian, Saskia Sassen argues that at least part of what we label `migration’, specifically rural-urban migration, is being driven by the rise of large-scale land deals in developing countries:

Migrating to the cities is one major option. When politicians drone on mindlessly about¬†more than half the world’s population becoming urbanised, they rarely bring up the diverse ways in which people are being pushed off their land. Where else can they go but cities?

These new migrations are a key marker of our epoch. (Another is the migration of high-level professionals.) They co-exist with older migrations. The rapid changes at point of origin also explain why most migrations are to cities. And they explain new types of migration, from rural areas to the global north (notably from several sub-Saharan countries to Europe).

In effect, expulsions are being rebranded as migrations, a phenomenon that will not cease anytime soon, given the ongoing search for land for crops, mining and water by governments and firms from a growing number of countries.

The causality of Sassen argument is not implausible – large-scale evictions are on the rise, and it’s perfectly possible that some of these people then make their way to urban areas. But is this having any meaningful effect on rural-urban migration? As is frequently the case on the Poverty Matters blog, we have someone desperately asserting something without much in the way of evidence to back up their claims.

It’s hard to read too much into cross-country scatter plots, but indulge me for a moment by taking a look at the following figure, which combines data from the Land Matrix database of large-scale land deals and World Bank data on urbanisation rates and arable land:

urbgrab

On the Y axis we have the average rate of urbanisation a country faced between 2000-2011 (the period covered by the land matrix data) and on the X axis we have the total number of hectares reported sold divided by the ¬†(average estimated) arable land in that country. The left graph uses data on all countries that I could get World Bank Data for (using wbopendata) and the right graph restricts the sample to countries where there has been at least one reported land deal during the period covered. As can be seen, there’s very little in the way of any convincing relationship in any direction between land grabs and urbanisation. The latter is my best back-of-the-envelope proxy for rural-urban migration, although obviously it will also be correlated with within-city growth.

Now, you should interpret this with some caution, as some of the numbers look a bit high (I encourage readers to look into the data themselves, as this is a bit slapdash). I should note that there still doesn’t appear to be a relationship between the two when¬†I use levels instead of changes, or if I use the number of people living in slums as an outcome, nor when I use the total number of land deals a country has seen, the total number of hectares lost, log hectares, or, as above, hectares a percentage of arable land. Nor is there a relationship when I disaggregate the land grab and urbanisation data by year, or when I use lagged values of land grabs. ¬†There is also no relationship when I use a sample including countries which never have a land deal, and restricting it to only countries which have land deals.

Now, this isn’t identified in any reasonable sense – so you should take this purely as descriptive (lack of) evidence. But I think it is safe for us to call most rural-urban “migration” what it is: “migration.”

There are a number of reasons why this is the case. First, it’s not clear that the next-best opportunity for a displaced farmer is the nearest city. Indeed, despite the fact that many land¬†seizures are detrimental to local communities, they sometimes provide job opportunities for recently-displaced land owners. This is not necessarily welfare-enhancing, but would go some way to mitigate the effect that Sassen purports in her article.

Furthermore, there’s growing evidence¬†(also¬†here,¬†here¬†and here)¬†that tenure insecurity actually leads to less, not more, ¬†internal migration and migration abroad, as weak property rights not only force landowners to maintain a physical presence to guard their ownership, but also reduce land liquidity, making it harder to sell and get the hell out of dodge. So we’d actually already expect to see more migration from areas with stronger property rights, which will also be the areas which are going to be shielded from large scale land grabs. This doesn’t necessarily speak to Sassen’s main hypothesis (and might even be hiding any evidence of it), but just shows that the reality might be a little bit more complicated than “migration is just another word for land grabbing.”

Some more thoughts on land grabs and tricky statistics

I suppose you could label this post as my response to Ricardo and Marloes’s response to my post on their recent media brief on the correlation between governance and land grabs. First, I should say that this is all very exciting – it’s nice to have an actual debate about this. NGOs frequently ignore substantive criticism of their¬†analytical¬†work (to be fair, so do a lot of academics), so I must commend Ricardo and Marloes for their enthusiasm and willingness to get in touch and have a reasonable argument about all this.

I think we’ll likely to continue to disagree about when results should be presented (or at least¬†how they should be presented), so I’ll turn my attention to their three main technical points:

 

1) It’s not realistic to assume that investors target poor countries

True, but poor countries themselves might be more likely to put land up for sale. Discerning the difference between targeting and supply-side effects will always be difficult because we only observe actual land deals (in essence, the quantity `consumed’). But this is beside the point – spend fifteen minutes in an economics seminar and you’ll learn that a common way of challenging identifying assumptions is to come up with an equally-credible alternate story. I’ve shown that, at least in this very basic setup, income is a better predictor of a country having a land deal than governance. While my alternate story might be considered implausible (even if it does fit the data better), I really only put it up to point out how equally-flimsy the assumption of investor targeting is.

 

2) My last table is badly specified and then I forget to estimate a hurdle model.

Before delving into the technicalities of this argument, let’s briefly talk about burden of proof. It is Oxfam’s job here to convince us all that investors are targeting countries with poor governance, or at least that there is some consistent correlation between the two. By this very basic metric, I assert that the current analysis falls short, as it doesn’t provide enough evidence to reject the null of no relationship. One doesn’t always need to present and prove an alternate hypothesis, complete with fancy, well-specified econometrics, in order to disprove the one being asserted.

As far as the specification of the first two columns in Table 4 – sure, this is pretty much atheoretic wandering. I’m not going to assert that I’m cleanly identifying any individual channels, but seeing if Oxfam’s relationship stands up (I’m actually trying to help you here guys) once we start controlling for all these things. Multicollinearity doesn’t seem to be preventing some results from shining through. But yes, this is playtime with Stata, although I admit as much up front. See my point about burden of proof here.

Their final point is a technical one – I’m interested in whether, conditional on a country selling any land, governance is correlated with the number of land deals. Technically, this specification is subject to a form of bias due to selection on unobservables: for example, if hotter countries are more likely to sell land, and there is a correlation between temperature and the governance indicators, then estimates in columns (3) and (4) of Table 4 will be biased.¬† [OK this is not what their point was – see Paul’s comment below.]¬†Ricardo and Marloes would be happier if I estimated a model which took this selection into account.

But the problem is: as I point out at the end of my piece, I don’t really buy the selection equation in the first place, and this factors into their third point:

 

3). They take issue with my worry about “bias” in how land deals are reported.¬†

I’m worried the Land Matrix is a better measure of “number of reports on land deals” than “number of land deals” and that the measure of “have there been any substantial land deals” in the past ten years is really just a measure of “has anyone bothered to submit a news report to the land matrix on your country in the past ten years.” Ricardo and Marloes make a purely theoretical argument that reporting in the UK should be better than reporting in developing countries. If we were talking about general media reporting, I would be inclined to agree, but I’d be surprised if anyone is scanning British newspapers for land deals and submitting the data to the Land matrix.

Furthermore, consider the ¬†final hurdle a land deal must clear to get into the Land Matrix: “entail the conversion of land from local community use or important ecosystem service provision to commercial production.” This seems like it should only be possible in societies where a significant percentage of the population is involved in agriculture and where large scale commercialisation is yet to happen. Sure, the quality of the British government is one of the reasons there aren’t many dodgy deals going on, but we have to remember that Great Britain has already gone through the long process of moving from smallholder farming to relatively large-scale commercial production. Yet Ricardo and Marloes want to code Great Britain ¬†a zero and include it in the selection equation – I’m just not convinced.

How do we move forward? I’m happy that both Marloes and Ricardo want to continue working on this. This is definitely the best outcome – I can think of several ways that one could try and take it a little bit further

  • Let’s start exploiting the time dimension: we have a panel – let’s use it – although I do have a fear that, as several have pointed out, there won’t be enough meaningful variation in the WDI indicators across time to actually identify anything.
  • Number of deals and size¬†– these are, save for my kitchen sink regressions, currently unexploited. As is information on whether or not deals are international or national.
  • Let’s get more data!¬†I’m hesitant to throw a stake into the ground and say it’s time to make a call, especially when the data is as limited as it is. If we could get our hands on district level data (or, in my wildest dreams, GIS data) on land deals, we could start to say so much ¬†more about what’s going on.

Finally, a word to idle academics out there – I implore you to pay more attention to this stuff. We have a hard enough time encouraging replication of our own studies, but I think the world would be a much better place if we sat down from time to time and just tried to recreate “killer facts” that otherwise dominate the discourse. I didn’t start my analysis with any intention to go after Oxfam’s results, but it only took a little while with the data before I realised that the story was much more complex, and worth a second look.

Again, thanks to Ricardo and Marloes for a fun debate (I’ve offered them a second reply if they’d like).

 

Response from Oxfam: Governance, land grabs and tricky statistics

by Ricardo Fuentes-Nieva and Marloes Nicholls

It is encouraging to read the post from Aid Thoughts. We appreciate the time he put into Oxfam’s analysis on large scale land deals. Indeed, we were hoping that our blog would spark debate and bring more attention to this topic.

As a quick summary, we took two databases, the Land Matrix and the World Governance Indicators and found that land deals are more likely to occur in countries with lower levels across different governance indicators.¬† We specified that ‚ÄúThis analysis is only the first step towards a more in depth research project. Next steps include a more in depth analysis on the determinants of the number and location of deals‚ÄĚ

Aid Thoughts seems to take issue with the use of this kind of analysis when they are so preliminary. There are two things to say to this:  Firstly, and as Aid Thoughts acknowledges, there is other evidence in the development literature that points to the fact that land deals are concentrated in poorly governed countries. Our conclusions were not based only on our analysis and we used the best evidence at hand (both internal and external) to generate a better understanding of the problem (which Aid Thoughts actually helped with his critical review). So, we stand by our decision to publish the preliminary results.

Now, there are a couple of things to discuss on the technical front of his critique. Here are some:

 

1) Investors or governments?

AidThoughts replaces governance indicators with income per capita because they better explain the existence of land deals. This leads him to suggest that “Maybe investors aim for countries who are more willing to sell off land, not because they are poorly governed, but just because they are poor.” This is an interesting idea but if we put aside the regression tables and reflect for a moment, is it sensible to think that land investors are attracted to countries for being poor? Why would investors be attracted to the characteristics of poverty, such as poor infrastructure, limited public services and low levels of education and health? A more interesting hypothesis that AidThoughts raises, and which we think is worth exploring too, is that it might not ¬†be investors who target countries, but bad governments who sell the land of their citizens.

 

2) Truncated sample bias.

AidThoughts recognizes that running OLS with two control variables, as reported in Table 3, is not serious analysis (and yet he managed to muddle the significance of the estimators in his table). But what’s really puzzling is that, in order to prove his point, he then goes on to throw the entire kitchen sink of governance indicators into the next table (Table 4). These indicators are highly correlated amongst them, and it is difficult to find a sensible explanation to specify the model that way.

He then goes on to say of this table:

“In column (1), prior controlling for income, only one of the relationships we expected to see has returned: countries rated low on the rule of law index are more likely to have land deals. Political stability/violence is also associated with land deals, but unfortunately that wasn‚Äôt part of Oxfam‚Äôs theoretical model. Now, voice and accountability is positively correlated with land deals! Of course, most of these relationships vanish when we toss in income, although it is worth noting that the rule of law measure keeps its significance and sign. So the relationship between governance and land sales seems to be a lot more complex than the Oxfam brief is suggesting.”

That’s a lot of explanation for a badly specified model that includes highly correlated regressors. But that’s not even the most puzzling part of that table. AidThoughts then tries to explain the number of land deals with the same variables but he does not correct for the truncated sample (look how his sample drops from 212 and 183 in the first two columns to just over 50 in the last two). Ignoring the bias in the observed sample is a mistake and something we had identified as a problem, and that’s why we suggested exploring ¬†a double hurdle estimation to understand the issue better.

 

3) Reported land deals bias.

Aid Thoughts briefly mentions the potential problem of bias in the Land Matrix, but we don’t agree that he identified the right direction of bias. He argues that land deals are more likely to be reported in developing countries by diligent activists than in developed countries like the UK. On the contrary, we argue that land deals are much less likely to be ignored in richer countries with freer press, more access to information and better organized civil societies. Does Aid Thoughts seriously believe that a land deal can be more easily concealed in the UK than in the DRC?

Overall, we are very encouraged by Aid Thoughts‚Äô response. He mentions that he can be convinced of the problem with more data and more, better data is on its way according to conversations we’ve had with the people managing the Land Matrix.¬†So here’s our proposal for Matt: let’s work together – rigorously and objectively – on this issue in the next few months to try to better understand what’s driving the land rush. The problem deserves as much attention as we can give to it.

Governance, land grabs and tricky statistics

there-will-be-blood

“I’m a family man- I run a family business. And I heard your town scored low on the World Bank’s governance indicators.”

The last decade has been marked by a sudden increase in large scale land purchases in developing countries, a `land rush’ which has purportedly¬†been¬†driven by concerns over food security, food prices and a growing market for biofuels. The speed, size and lack of transparency over many of these deals, as well as their implications for the welfare and food security of those already living on the land, has led many to dub these large scale purchases as “land grabs.” This is a rather loaded term, but has successfully (and unfortunately) framed the context as one where anonymous, uncaring investors are systematically snatching land away from the poor and needy.

News reports suggest that at least some of this is happening – following the excellent Let’s Talk Land Tanzania¬†for just a few days reveals how¬†problematic some of these purchases have been. Yet, despite the ruckus these deals are creating, we still know precious little about their size and scale, the motivations and expectations of investors, the welfare impact on those in “grabbed” countries and the welfare impact on those in “grabbing” countries.

This lack of knowledge should be alarming rather than disarming, but while this is the perfect time for careful, dispassionate analysis and data collection, many have chosen to instead reinforce the simple “good” vs “evil” story I highlighted above. Take, for instance, this media briefing which Oxfam released last week, based on preliminary research on the relationship between country governance and land deals.

The two Oxfam researchers, Ricardo Fuentes-Nieva and Marloes Nicholls, use data from the World Bank’s Worldwide Governance Indicators (WGI) and the Land Matrix, which gathers data on media reports of land deals, to show that countries that had any land deals between the years 2000 and 2011 had significantly lower WGI scores than those that hadn’t had any. Here is the figure which they use to make their case:

land-grabs-and-governance

Again, this figure reveals that, across the four governance indicators considered by Fuentes-Neiva and Nicholls, countries with land deals consistently score worse than those without. How does Oxfam interpret these results?

Oxfam believes that investors actively target countries with weak governance in order to maximise profits and minimise red tape. Weak governance might enable this because it helps investors to sidestep costly and time-consuming rules and regulations, which, for example, might require them to consult with affected communities. Furthermore in countries where people are denied a voice, where business regulations are weak or non-existent, or where corruption is out of control it might be easier for investors to design the rules of the game to suit themselves.

So we have a pretty clear story here, right? Well, maybe not. Let me give a bit more structure to the above results by showing them as a series of bivariate regressions of the probability of observing a land deal in any given country between 2000 and 2011 and the average governance indicators for this period (the same data used in the Oxfam briefing).

oxfam1

Each column shows the results from regressing the probability of the country having at least one land deal during this period on each measure separately: voice and accountability, regulatory quality, rule of law and corruption (note that higher is `better’ for each of these measures). So far so good: in isolation, each of these variables is significantly* and negatively correlated with the probability of a land deal (i.e. countries that score poorly on each of these indicators individually are more likely to sell off land).

Yet, it’s a little strange that each of these seems to have about the same magnitude of an effect. We might expect some indicators to matter more. Also, for some reason, the Oxfam brief has left out two other WDI measures: political violence/stability and government effectiveness. Here is what the authors say about this exclusion:

Two of the Worldwide Governance Indicators Рpolitical stability and the absence of violence and government effectiveness were excluded from the analysis since there is no evident mechanism that would lead these aspects of governance to improve prospects for  investors.

OK – so we have a somewhat solid theoretical reason for excluding these variables. Presumably, we should not see the same negative correlation between these two WDI measures and land grabs. Table 2 below includes two extra columns in which I re-run the above results, but including both of the excluded indicators (PS and GE).

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Never gonna give you up

Liz Alden Wily notes that land grabbing in sub-Saharan African is enabled partly by the lack of formal, private land ownership:

For all the commentary on how the great buy-up of African lands might impact on the rural poor, they are rarely the legal landowners. Their governments are. For a century¬†African land laws¬†have protected private property, but have largely limited this protection to lands with registered titles. Up to 90% of sub-Saharan¬†Africa’s land area is currently untitled. Without legal owners, these lands fall to the state.

A couple thoughts on this – Wily goes on to (correctly) point out that the real problem is with bad governments which hastily sell off land on the cheap for easy revenue today at the expense of the next generation. Still, while transferring de jure¬†ownership to the people through extensive land titling would guarantee that they would at least benefit somewhat from these massive land sales, it wouldn’t¬†necessarily¬†stop the transfer from happening, for a couple of reasons.

For one, while many African governments seem to be willing to part with land for relatively paltry sums, we never witness the¬†counter-factual. Without the rural farmer being the initial holder of that land title, we can’t really infer anything about his minimum price to let go of that land. It could be higher, lower or equal to that of the government – we really don’t know. So while, in an ideal setting, transferring that property right from the government to the population will at least guarantee they benefit from land deals, it won’t¬†necessarily¬†stop them from happening – buying land directly from rural farmers might still be a good deal for foreign investors.

Furthermore, while we might still believe that land titles convey some sort of protection from the government, remember that governments themselves are the ones that create, issue and enforce property rights. Truly awful governments will not be interested in effectively expanding these rights in the first place, so pointing out how useful they are doesn’t always get us very far.

One example from Tanzania: following legislation which paved the way for private land rights, the government set out to pilot titling programs in several districts. After demarcation and registration had finished in one of these districts, land officials quickly realized they had made a mistake – the titles they issued comprised every inch of land in, with nothing left that the government could use. The government learned its lesson: since then, any major demarcation efforts are preceded by a `scheme of¬†regularization’, a plan which lays out all the space the state might want to use (usually for infrastructure improvements).

So the government can essentially thwart any large-scale attempt to solidify property rights by grabbing what it deems is necessary.¬†Of course, this doesn’t mean land titling is useless (if I thought it was, I might as well give up now on my research work) – but these programs are probably not going to act as immediate solutions to land grabs.