Balancing the Numbers: Using Grassroots Land Valuation to Empower Communities in Land Investment Negotiations

Rachael Knight, Community Land Protection, Namati

Context

• Two kinds of investors: • 1) large-scale land concessions to foreign

investors;

• 2) smaller concessions to powerful national elites operating with impunity

• Power and information asymmetries investors frequently wrangle land concession contracts that include low or no rental payments at all (Cotula 2011: $2-$5 USD/hectare/year)

• In some cases, governments impose unjustly low rental rates as an incentive to attract foreign investment. (SL: $5/acre; $12/hectare)

Communities often unaware of the value of their lands

• Namati has observed that communities frequently agree to land transactions without understanding the what they will lose. Communities may:

• Believe that the only way to prosper is for an investor to build a business using community resources, creating jobs for community members in the process;

• Believe that the common land requested is “of little value” because no one is living or farming on it;

• Not have a good understanding of how much the land is worth to the community itself.

• Coerced or enticed into consenting to concessions, communities may agree to sell or rent their lands for far less than their actual value.

• Hypothesis: when communities fully appreciate the monetary value of their land, they tend to be much more motivated to protect it.

Context: Loss of common lands is deeply impoverishing

• Various communal land valuation studies have found:• Common lands are significantly undervalued by standard economic assessments.

• Common lands are a critical source of resources necessary for household survival, playing, “a vital role in maintaining the ecological balance and making it possible for the people to subsist”

• Poorer households rely more heavily on common areas than wealthier households

• Lacking common lands, communities will be less able to meet basic survival needs, and therefore become more impoverished.

• If a community grants a lease over their lands at a very low annual rental rate, the community may become poorer over time, rather than richer.

• However, a review of the literature indicates that to date, little work has been done linking common land valuation efforts to the terms of concession negotiations.

Namati’s Pilot Solution: A Community Land Valuation Exercise

• Calculates the replacement costs of common pool lands and natural resources.

• Done 2nd or 3rd meeting, in a community meeting of 100-200 people. • Step 1: Generate a list of resources that community members get from the

common land. • Step 2: Determine the unit in which each resource is sold at the local market. • Step 3: Determine the cost of the unit on the market.• Step 4: Determine how many units of each resource are used each week by a

“typical family.” • Step 5: Find out the cost per week, month and year for a” typical family” • Step 6: Calculate the total cost per year for one family.• Step 7: Calculate the total cost per year for the whole community. • Step 8: Find out the total cost per year in US Dollars.

Great to have able community members do the math on their cell phones.

BASIC VALUATION WORKSHEET

Challenges

• Community members’ desire to list and calculate the value of a combination of resources generated/used in the following four ways:

• Determining the “typical family”• Varying units of measurement in market• Varying frequency of use throughout year/seasons• Price consistency re: scarcity/plenty• Calculating the value of building materials for homes• Failing to account for ecosystem services and and intangible cultural, spiritual and

social resources (such as ceremonial sites, spiritual areas, and burial sites)

Example from Uganda

Analysis and Finding

Analysis

• Data is not scientifically rigorous. • Yet the averages indicate: concessions

agreements with very low annual rental rates will adversely affect community members’ ability to provide for basic household needs: • Average replacement cost of common resources

shared by an average of 863 households is $1,394,352 annually.

• Hypothetical : 1,000-hectare concession remunerated at $4 USD/hectare annually =$4,000/year.

• Even if Namati’s basic method of replacement cost valuation is wildly inaccurate, the data indicate a differential of more than 100x the hypothetical rental fee.

Impacts

• Original aim: Not to attain precise, accurate data but to illustrate to communities the very high value of common lands to community members themselves.

• Community members have been astounded by the resulting replacement costs:• “We are looking at gold and calling it rock.”

• Quick to adopt “free supermarket” analogy • Expressed feeling:

• More cautious about agreeing to potential investments

• More emboldened to demand benefits from land deals

• Enraged/upset about existing concessions/investors

• "People can secretly sign land document to get small money in their pockets but you see how rich our land is...”

• "The reason why we make bad decisions [about our land] is because we don't know the value our land or the resources on it...”

• For its intended purpose proving to be very effective.• May also have longer-term conservation/sustainable natural resource use impacts.

Next Steps and Potential Uses of Data/Findings

• Work with an economist and a valuer • Once a proper methodology is

established, share strategy widely • Goal: gathering and analyzing data from

across the world to inform community members, policy makers, investors.

1. Challenging international conceptions that undeveloped land has little worth, and thus requires investment to “unlock” its value.

2. Convincing national governments to change their imposed caps on rental payments to communities and support good contracts.

3. Avoiding future conflict between investors and enraged communities.

Additional Tools to Support Community-Investor Negotiations

• Land valuation is insufficient: need legal literacy; access to independent, competent legal support; transparent community decision-making; good national land policy.

• The valuation exercise is just one component of a variety of tools and resources:1. A pilot “Early Warning System”2. A “How to” guide for communities3. A “How to” video for communities 4. Rigorous legal education5. Casebase: www.communitylandcases.org6. ISLP/Avaaz/Namati partnership