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FAO and IFAD Collaborate on Study that Identifies Biofuels and Carbon Markets as Partial Drivers of International Land Acquisition Deals

© 26 May 2009: A collaborative study by the International Institute for Environment and Development (IIED), the UN Food and Agriculture Organization (FAO) and the International Fund for Agricultural Development (IFAD) suggests that increased demand for biofuels and, to a lesser extent, increased land values through emerging carbon markets, are among the factors that drive international land acquisition deals.

The study analyzes the drivers, risks and opportunities of the recent trend in large-scale acquisitions in developing countries based on a set of case studies in Sub-Saharan Africa. The study finds that interest in international land acquisition is driven primarily by food security concerns and related government-backed investment, food supply problems through constraints in agricultural production, the expansion of biofuel production, and increased demand through population growth and urbanization.

On biofuels production, the authors explain that government consumption targets and financial incentives have been a key driving force. While interest in biofuel investment may be dampened through the recent decline in oil prices, demand is likely to further increase in the long run.

Emerging carbon markets can play a role as sources of complementary revenues that make certain types of land deals more attractive, such as biofuels production or reforestation projects under a new mechanism for reducing emissions from deforestation and forest degradation (REDD). The report further analyzes the risks and opportunities of international land acquisition deals and provides a set of preliminary recommendations for investors, host governments, civil society organizations and international development agencies. [FAO Press Release] [IFAD Press Release] [The Study]