Social and environmental effects

Investments can improve the living conditions of the local population, bring jobs, strengthen the infrastructure and can also help to protect the environment.

Investors often highlight the win-win situation arising for the affected communities and themselves. However, in too many cases of foreign direct investments in land have negative consequences outweighed the potential advantages for the host community.

Areas affected by investments are often remote, widely untouched nature reserves inhabited by small scale and subsistence farmers. These farmers can have an important function in safeguarding the local ecosystem with their knowledge and traditional agricultural techniques. However, if the local population is evicted from the land and investors take over, the delicate balance between human land use and the environment may be violated. Investors and agribusinesses tend to employ industrial large-scale agriculture which is, in fact, one of the major causes of environmental damage.

Unsustainable use of fertilisers and pesticides can negatively affect soil and water quality rendering the land unusable for years. Large-scale monoculture and the introduction of foreign plant species, as often the case in land investments (e.g. palm tree, jatropha or eucalyptus plantations), are likely to adversely affect biodiversity and severely disturb local ecosystems. Land clearance techniques and large-scale agriculture are known to foster erosion in areas that are already facing similar problems.

Only if foreign investors introduce practices and standards that are more sustainable than the ones already applied by the local population can negative effects be mitigated. Eventually, the design of each individual project and the prevailing conditions found in the target countries determine, case by case, the real consequences for people and environment.
An example case from Cameroon shows how complicated the situation is. Herakles Farms, a US-based agricultural firm is currently planning to cultivate a 60,000-hectare (roughly the size of Singapore) oil palm plantation certified as sustainable by the RSPO (Roundtable of Sustainable Palm Oil) in close vicinity to some of Cameroons most biodiverse nature reserves. It is questionable wether wildlife and local population will experience any positive effect through this project.

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