Tenure insecurity and private sector risk

Key Related Visuals/Resources

Overview

Indigenous Peoples and local communities customarily own more than 50 percent of the world’s land, but only have legal ownership over 10 percent. This gap leaves them vulnerable to private sector projects on their lands without their consent. As investors and corporations push into increasingly remote rural areas seeking land for agriculture, mining, logging, infrastructure, or other projects, conflicts between communities and the private sector increase.

These conflicts can be devastating for Indigenous Peoples and local communities, who frequently face criminalization by their own governments and even outright violence for simply defending their lands and livelihoods: in 2018, Global Witness documented 164 killings of land rights and environmental defenders. And while companies frequently promise benefits to communities whose lands they operate on, all too often these benefits fail to materialize.

Such disputes also harm companies. Conflicts with communities can cause work stoppages, stalled investments, and even project abandonment—all of which affect company profits. Research shows that conflicts usually occur when communities are forced to leave their homes, and that companies generally cannot buy their way out of these disputes. While investors and companies increasingly recognize these risks and some have made commitments to respect community land rights, implementing these commitments across sprawling global supply chains has proven challenging.

Community rights recognition and enterprise provide an alternative to traditional models that involve companies acquiring large land holdings. Rights recognition can result in improved livelihoods, incomes, and other development indicators—and the evidence finds that lands held by local peoples actually benefit more people than plantations.

Key Messages and Data Points

For companies and investors in sectors such as agriculture, mining, timber, and infrastructure, insecure community land rights for Indigenous Peoples and local communities is a significant financial risk. Failure to respect communities’ rights can lead to disputes that harm companies and communities alike. [Source: TMP Systems and RRI 2016 (IAN: Managing Tenure Risk)]

When companies operate in areas where community land rights are not recognized, tenure disputes can cause financial costs to investors. [Source: TMP Systems and RRI 2016 (IAN: Managing Tenure Risk)]

• The number of tenure disputes is growing globally, with reported cases rising 300% between 2003 and 2014, as companies search for vast tracts of land for projects in energy, infrastructure, and agribusiness.
• The idea that there is a vast amount of land available for investment is a myth: An examination of nearly 73,000 mining, oil & gas, logging, and agriculture developments in 10 developing countries found that people already lived in 93-99% of them.
• Over half of the companies involved in tenure conflicts examined in one study (54 percent) suffered materially significant impacts. Around a third of cases experienced a severe impact, such as suspension of production, project cancellation, or large fines.

The primary cause of disputes is not compensation; it is the communities being forced to leave their homes.

• Companies cannot typically buy their way out of disputes. Of 362 conflicts examined, only 7 percent were primarily driven by issues of compensation.
• The most significant driver of conflict was the displacement of local peoples from their homes—accounting for 46% of conflicts. Environmental destruction was the second largest driver of conflict, acting as the primary driver of 26% of conflicts. [Source: TMP Systems 2016 (IAN: Managing Tenure Risk)]
• More than three quarters of all conflicts occur at the start of the project or when the project expands, as companies often fail to seek the FPIC (free, prior, and informed consent) of communities. [Source: TMP Systems 2014 (Communities as Counterparties)]

Unresolved conflicts over land tenure significantly increase the financial risks for companies and investors in infrastructure, mining, agriculture and forestry. They can increase operating costs by as much as 29 times normal—and even lead to outright abandonment of up-and-running operations. Land tenure risk is statistically significant across all sectors in developing countries. [Source: TMP Systems 2012 (Financial Risks of Insecure Land Tenure), TMP Systems 2013 (Global Capital Local Concessions)]

Securing community land rights is a more promising path toward poverty reduction and sustainable economic development than plantation agriculture. Almost a third of the world’s population depends on community-held lands for their livelihoods and sustenance, with the poorest households most dependent. Land use by rural communities is more sustainable, benefits more people, and generates better environmental outcomes than large-scale plantations and extractive projects. [Source: RRI 2017 Securing Community Land Rights: Priorities and Opportunities to Advance Climate and Sustainable Development Goals]

The private sector can be an ally in securing indigenous and community land rights.

• Corporations need to implement policies on human rights and land rights that are consistent with international standards such as the UNDRIP and the Voluntary Guidelines on the Responsible Governance of Tenure. The Interlaken Group has created the Land and Forest Rights Guide to help companies implement their commitment to land rights even in areas with weak land and forest governance.
• In all their operations, companies should:
  • Identify—and where possible help to legally secure – the tenure rights of local communities and households.
  • Seek the Free, Prior, and Informed Consent of communities before development plans are finalized—and ensure that consultations are inclusive of indigenous and community women, who often have different resource uses than men.
  • Ensure strong environmental protections, which can help reduce the risk of conflict with local communities. Communities typically rely on natural resources for their livelihoods and are likely to react strongly if their forests, drinking water, or air is damaged.
  • Support community mapping to help communities to define their territories and help investors and companies to avoid tenure risk. Mapping costs only US $3.78 per hectare on average, but can significantly reduce risk.
  • Conduct regular, independent, transparent audits on their performance on human and land rights. [Source: RRI and the Interlaken Group 2019, Respecting Land and Forest Rights: A Guide for Companies]

Regional Findings

Africa

• A study of tenure disputes in Africa by RRI and TMP Systems found that 63% of disputes related to private sector land and natural resource investments in Africa began when communities were forced to leave their lands. Over two-thirds of the cases involved a significant work stoppage or legal intervention, demonstrating that tenure disputes are often financially significant for investors. [Source: RRI and TMP Systems 2017, Tenure and Investment in Africa]
• In West Africa, plantation agriculture—especially palm oil projects—drive a majority of disputes. Community displacement was the primary driver of 70% of the tenure disputes examined, while issues related to compensation were the primary driver for 30%. 60% of the tenure disputes resulted in work stoppages, which impact companies’ and investors’ profits, and 30% resulted in violence. [Source: RRI and TMP Systems 2017, Tenure and Investment in Africa]
• In Southern Africa, community displacement was the primary driver of 82% of the tenure disputes examined. 73% of the tenure disputes resulted in work stoppages, and 73% triggered violence—the highest rate of violence for such dispute in the world. [Source: RRI and TMP Systems 2017, Tenure and Investment in Africa]
• Infrastructure and public utilities are driving a majority of disputes in East Africa, and communities have made use of stronger legal frameworks to bring lawsuits against companies that violate their rights. Community displacement was the primary driver of 36% of the tenure disputes examined, while compensation was the primary driver for 27%. 73% of the tenure disputes resulted in work stoppages. [Source: RRI and TMP Systems 2017, Tenure and Investment in Africa]

Southeast Asia

• An analysis of tenure disputes in Southeast Asia conducted by RRI and TMP Systems found that only 6 of 51 recent cases of land-related conflicts in Southeast Asia have been resolved, while 74% of cases have lasted more than six years. [Source: RRI and TMP Systems 2018, Tenure and Investment in Southeast Asia]
• Across the region, 47% of cases involved violence, with 18% resulting in fatalities. More than three quarters of tenure conflicts examined (76%) started before operations began, suggesting a lack of initial good-faith negotiations with affected communities. Displacement of local peoples—forcing entire communities to leave their customary lands—was the primary driver of almost half of these disputes (45%). [Source: RRI and TMP Systems 2018, Tenure and Investment in Southeast Asia]
• On average, the Southeast Asian conflicts examined were just 33 kilometers from a national border, compared with 61 kilometers in Africa. Border regions typically have less oversight from governments and third-party observers, presenting a greater level of investment risk. [Source: RRI and TMP Systems 2018, Tenure and Investment in Southeast Asia]
• Almost two thirds of the disputes (65%) led to significant material impact for project backers, either as a result of direct action or regulatory intervention, compared to 52% in the rest of the world. Almost three quarters (71%) of the cases involved legal action. [Source: RRI and TMP Systems 2018, Tenure and Investment in Southeast Asia]

Country-level Messaging and Data Points

Brazil

• In an examination of 13 forest concessions covering 59,130.02 square kilometers, people were already living in 100% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 115 oil and gas concessions covering 239,832.62 square kilometers, people were already living in 96-100% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]

Colombia

• In an examination of nearly 10,000 mining concessions in Colombia covering over 50,000 square kilometers, people were already living in 97-99% of them. [Source: TMP Systems and RRI 2014 (Communities as Counterparties)]
• In an examination of 229 oil concessions in Colombia covering over 155,000 square kilometers, people were already living in 98-100% of them. [Source: TMP Systems and RRI 2014 (Communities as Counterparties)]

Peru

• More than 40% of Peru’s land has been allocated by the government for timber, mining, and oil & gas drilling operations. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 105 forest concessions covering 79,351.73 square kilometers, people were already living in 98-100% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 59,159 mining concessions covering 269,894.01 square kilometers, people were already living in 92-100% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 70 oil and gas concessions covering 203,258.17 square kilometers, people were already living in 97% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]

Liberia

• More than 35% of Liberia’s land has been allocated by the government for timber, mining, and oil & gas drilling operations. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 15 agriculture concessions covering 6,911.93 square kilometers, people were already living in 100% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 222 logging concessions covering 32,758.16 square kilometers, people were already living in 100% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]

India

• Previous analyses have seriously underestimated the role that land-related conflicts play in stalling investment projects in India, and the magnitude of the cost imposed by these conflicts on the Indian economy and society. Out of 80 high-value stalled projects examined in a study by RRI and the Bharti Institute of Public Policy, more than a quarter (21 projects) are stalled due to land disputes. [Source: RRI and Bharti Institute of Public Policy 2016, Land Disputes and Stalled Investments in India]
• The total investment at risk in these 21 projects is Rs.1,92,620 crores (Rs.1,926.2 billion), or 300% more than previous estimates. [Source: RRI and Bharti Institute of Public Policy 2016, Land Disputes and Stalled Investments in India]
• Land acquisition of both common and private lands is a major cause of stalling of projects: contrary to the common perception of disputes being limited to privately-held lands, at least 15% of the stalled projects were on common lands. The total investment value of stalled common-lands projects was Rs.118,800 crores (Rs.1,188 billion), or US $17 billion. [Source: RRI and Bharti Institute of Public Policy 2016, Land Disputes and Stalled Investments in India]
• 14 of the 21 stalled projects examined by RRI and the Bharti Institute of Public Policy cite acquisition of private land as the root of the dispute. [Source: RRI and Bharti Institute of Public Policy 2016, Land Disputes and Stalled Investments in India]

Indonesia

• More than 30% of Indonesia’s land has been allocated by the government for timber, mining, and oil & gas drilling operations. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 1,845 palm oil concessions covering 155,245.18 square kilometers, people were already living in 98-99% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 557 logging concessions covering 302,505.81square kilometers, people were already living in 96-98% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In an examination of 570 wood fiber concessions covering 128,829.03 square kilometers, people were already living in 98-100% of them. [Source: TMP Systems 2014 (Communities as Counterparties)]
• In Indonesia, palm oil corporations have engulfed over 59% of community forests in West Kalimantan, yet the industry contributes less than two percent to Indonesia’s GDP and has not increased rural employment. Inequality has risen, and Indigenous Peoples’ land rights were largely transferred to corporations. [Source: RRI 2015 (Industrial Oil Palm Development)]