in South Sudan

Land grabs, logging and carbon credits in South Sudan

A report released earlier this week by the Oakland Institute investigates the role that hedge funds are playing in land grabs in Africa. Hedge funds are investing in large scale industrial agricultural projects in Africa.

The result, according to the Oakland Institute is, “food insecurity, the displacement of small farmers, conflict, environmental devastation, water loss, and the further impoverishment and political instability of African nations”.

The Oakland Institute’s researchers looked at land deals in Ethiopia, Mali, Sierra Leone, Mozambique, Tanzania and South Sudan. The areas involved are vast. In 2009 alone, an area of 60 million hectares was bought or leased – that’s an area the size of France or the Central African Republic.

The reports by the Oakland Institute are available here: “Special Investigation: Understanding Land Investment Deals in Africa”. The reports have been reported by the Guardian and BBC News. A sentence in the Guardian article about one of the land deals caught REDD-Monitor’s eye:

The company, headed by former US Ambassador Howard Eugene Douglas, says it intends to apply for UN-backed carbon credits that could provide it with millions of pounds a year in revenues.

The company is Nile Trading and Development Inc (NTD), based in Dallas, Texas. The land deal is the largest in South Sudan. NTD has leased an area of 600,000 hectares for 49 years for the bargain price of US$25,000. It has an option for a further 400,000 hectares. The contract, which is available on the Oakland Institute’s website, allows the company the right to do just about anything with the land and forest covered by the deal, including:

(i) The development, production and/or exploitation of timber/forestry resources, including without limitation, the harvesting of current tree growth, the planting and harvesting of megafolia-paulownia, palm oil trees and other hardwood trees and the development of wood-based industries; and
(ii) Agriculture, including the cultivation of the jetropha [sic] plant and palm oil trees (and the exploitation of any resulting carbon credits).

When the trees are logged, the contract allows the land to be “subject to a reforestation or agricultural cultivation programme”. A briefing paper by the Oakland Institute explains that NTD also has the right “to explore, develop, mine, produce and/or exploit petroleum, natural gas, and other hydrocarbon resources for both local and export markets, as well as other minerals, and may also engage in power generation activities on the leased land.”

The land was leased by the Mukaya Payam Cooperative, which is described by Sudan’s Agency for Independent Media as a “fictitious cooperative”, made up of “a group of influential natives”, who “leased out the land behind the backs of the entire community”.

A UK citizen, Leonard Henry Thatcher, was “principally responsible” for negotiating the deal. Thatcher is a co-founder and director of Kinyeti Development, which describes itself as “a global business development partnership and holding company founded by professionals with decades of experience in international business, finance and diplomacy.” Kinyeti Development’s website explains that,

Mr. Thatcher was principally responsible for negotiating the major land lease contract in Southern Sudan that forms the basis of several Kinyeti projects conducted in conjunction with its strategic partner, Nile Trading & Development, Inc.

Thatcher is an investment banker who has worked in London and Hong Kong. Howard Eugene Douglas is the other co-founder of Kinyeti Development and is Managing Director of the firm. In the early 1980s, Douglas was U.S. Ambassador at Large and Coordinator for Refugee Affairs.

The Oakland Institute’s briefing paper states that Kinyeti Development and a company called the American Exotic Timber Group started their project to harvest timber from South Sudan in 2009. American Exotic Timber Group advertises the timber as follows:

We are focused on providing our customers in United States, China, Mid Eastern Region and around the world the best timber available from Northeastern African Tropic Jungle. The area is rich in old-growth timber that never been commercially harvested.
We have strong management and legally commercial harvested in sustainably managed forest and this is the high quality of product that we can offer our customers in a variety of value-added forms. Specialized African Species Iroko; African Walnut; Mahogany; Teak; Isoberlina DoKa.

The Oakland Institute notes that the vast area of this project “suggests that speculation is involved”.

While the Nile Trading and Development Inc project in South Sudan is not a REDD project (at least not yet), it is relevant to REDD in two ways. First, there is nothing on the agenda for REDD at the UN meetings currently underway in Bonn that is likely to do anything to stop hedge funds and speculators from investing in large areas of land and forest, such as this project in South Sudan. If anything, by offering the potential reward of carbon credits, UNFCCC is likely to encourage them.

Second, the Executive Secretary of the UNFCCC, Christiana Figueres, is rabidly in favour of carbon markets as the way of addressing climate change. In a speech to the Carbon Expo in Barcelona at the beginning of this month, she urged the gathered carbon traders “to keep the faith”, despite the “current lull in the carbon markets”. Of course she did not mention the fact that carbon markets are failing to address climate change.

Handing over control of the climate to financial firms through a carbon market is a recipe for disaster. As Anuradha Mittal, executive director of the Oakland Institute, said in a statement, “The same financial firms that drove us into a global recession by inflating the real estate bubble through risky financial maneuvers are now doing the same with the world’s food supply.” Now try replacing the words “food supply” with the word “climate”.

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  1. Come on now…You can,t paint traditional forest land grabs by multinational corporations with a REDD brush. Not yet, anyway. Properly designed and excecuted REDD rules would minimize or prevent overly aggressive harvesting. The higher the carbon price, the more incentive to leave standing timber. Replacing native primary forest with plantation cultures should never earn a carbon credit.

  2. @ric (#1) – I’m not painting land grabs with a REDD brush. Could you re-read the last three paragraphs, please? Just in case it still isn’t clear, here are the points I’m trying to make:

    1. Land grabs are happening throughout the global South. They are accelerating. The REDD agenda in Bonn is not addressing land grabs.

    2. Figueres is very much in favour of carbon markets. The attraction of potential carbon credits is likely to encourage more land grabs. The higher the price of carbon, the more attractive the forest looks. Don’t forget that you can log the forest under REDD – you just have to prove that you’re doing so in a less destructive way than you would have otherwise done.

    Unless REDD addresses land grabs (as opposed to encouraging them), it will not work.

  3. @chris lang: “If anything, by offering the potential reward of carbon credits, UNFCCC is likely to encourage” hedge funds and speculators investing in large areas of land and forest, does sound like painting with the broad REDD brush to me. What makes you think that project like the Nile Trading and Development Inc project in South Sudan would ever meet the requirements of a REDD project?

  4. @cleibing (#3) – I don’t know whether the Nile Trading and Development Inc project would meet the requirements of a REDD project. And neither do you.

    But my point is not that this project is a REDD-type project. My point is that REDD is not addressing land grabs. I am assuming that you agree that land grabs are a problem and that unless we come up with some means of addressing land grabs, it is unlikely that there will be any reductions in emissions from deforestation and forest degradation (see this post for a variation on the same theme: “Can REDD protect Prey Long forest in Cambodia?”). Currently REDD does not address land grabs. By dangling the carrot of carbon credits, REDD is actually more likely to encourage land grabs than discourage them.

  5. ‘(and the exploitation of any resulting carbon credits)’ is quite a powerful phrase which leaves very little doubt that this may very well end up being a REDD-type project. Carbon credits are indeed failing to address climate changge. Carbon credits will allow the rich to get richer and the poor to be poorer as land grabbing will escalate.

  6. Well my point is that it is extremely unlikely these kind of projects will ever be able to generate REDD(+) carbon credits from productive forest plantations on land that were forests at the time of purchase.

  7. @cleibing

    What makes you think that?

    Given that Norway has paid good REDD money to *increase* deforestation in Guyana, and even more good REDD money not to prevent deforestation from plantations in Indonesia, and that voluntary REDD schemes ‘certified’ by known fraudulent forestry certification outfits are popping up all over the place, don’t you think that ANYTHING is now possible?

  8. @ X Witness: No I don’t. And I dont agree with the polemic list of supposedly failed attempts to provide a payment for environmental service schemes (PESs). There are encouraging examples from Brazil and Costa Rico as well as Mexico that well desgined PES can have positive effects, reduce deforestation and at the same time increase the living standards of rural comunities. REDD(+) is a great chance to achieve these positive effects on a much greater scale.

    Nobody argues that the proper design of such a scheme is a very challenging task and all the critics in the end boil down to problems related to additionality, continuity and leakage. The only difference: I think these can be overcome you think its impossible. End of story…

  9. @cleibing (#6) – Let’s assume that you are right and the Nile Trading and Development Inc project will never be a REDD project. My question is the following: How does REDD address this sort of land grab? The question is important for REDD. The price of food is increasing – making large scale industrial agriculture project more attractive to financiers (like hedge funds and speculators). The nature of this sort of finance is that through the investments and speculation the price of food will continue to increase (at least until the bubble bursts). There will be direct deforestation – some of the land involved will be forests. And indirect deforestation, as small scale farmers are displaced and move to clear land elsewhere. Deforestation will increase. My answer to the question would be that REDD does not discourage this sort of land grab, it encourages it.

    @cleibing (#8) – You write: “Nobody argues that the proper design of such a scheme is a very challenging task and all the critics in the end boil down to problems related to additionality, continuity and leakage.”

    I suspect that you’ve missed out the the word “not” from the first part of the sentence. I think we can agree that the design of REDD is a very challenging task – at least if it is going to be successful (and depending from whose perspective we are talking about REDD being “successful”).

    We can add several more problems to your short list of problems in designing REDD, including: permanence, corruption, carbon trading (in particular the fact that trading the carbon stored in forests will allow pollution elsewhere to continue, meaning that climate change is more likely to accelerate and vast areas of forests will go up in smoke), the need to uphold indigenous peoples’ and local communities’ rights, the dominance of the World Bank in REDD, the conflicts of interest (consultants are more likely to be employed on future lucrative contracts if they are positive about REDD than if they are critical), the role of polluting industry in promoting REDD (in part through the willing help of the BINGOs: CI, TNC, EDF, WWF etc.), defining “forests”, defining “degradation”, REDD can allow continued logging (the company just has to prove that the logging is less damaging than it otherwise would have been), and land grabs (which REDD, so far, does not even begin to address – apart from making trees worth more standing than cut).

    (And could you explain what you mean by “continuity”, please? I’ve not heard this one before.)

  10. @Chris Lang (#9)

    You are right that corruption and indigenous right issues should be added to the list of problems/issues that need to be addressed by a proper REDD scheme. I don’t agree that the strong involvement of the world bank in the design process is per se a bad thing or that consultants will generate biased or simply untrue reports just because they hope to be employed on future contracts. Following this line of argument you could say that climate change scientist will always paint doom and gloom scenarios just to ensure their research will be funded in the future.

    It will be a long long time until we see REDD carbon credits entering the compliance market (if ever) and in my point of view it is unlikely that REDD will end up as a pure market-based scheme.
    I don’t hope to change your mind about REDD with these posts of course, I just feel that REDD-monitor focuses too much on the pitfalls and enjoys painting a rather bleak picture. By all the (in many cases just) criticism it would be nice to read about good practice examples of PES once upon a time just to see that criticism is actually meant to be constructive.

    With ‘continuity’ I meant permanence or leakage in time actually.