There’s a new gold rush on, but it’s not about gold. It’s about land. More specifically, it’s about buying and selling land, food, water, and ultimately, resilience. A number of countries, short on arable land and water, are investing in a sort of global insurance policy. Countries like China, Saudi Arabia and South Korea, with significant portions of their countries operating beyond their own water budgets, are busy making up the difference by buying up lands in water and soil-rich areas of Africa, South America and South Asia, growing crops on the acquired land and then shipping the crops (and the embedded or “virtual” water that went into growing them) back to their respective countries. The sellers, on the other hand, are giving up land, water and future resilience for, in some instances, pocket change (see Lester Brown). One might call this the “global resiliency market,” and as with any market, there are serious risks for all who participate.
Climate uncertainty and resiliency
For countries like China and Saudi Arabia, buying land abroad and exporting crops back helps meet their current food demands, and frees up domestic water resources for other uses – like the extraction and processing of coal and oil. It also provides an additional buffer to future water uncertainties that will be exacerbated by climate change, and that could possibly threaten the food security of these nations. In the face of climate uncertainty, the acquired lands help build the resiliency – at least in the short-term – of importing nations.
However, this may come at the serious expense of the exporters, currently the poorer, more vulnerable of the two nations striking the deal. In some instances, the exporter nations lack the capital to build infrastructure to utilize existing water and land, so selling that land to other countries seems like a good option. But by selling these lands, they are also selling the opportunity to have access to the water and land in the future. While the money for the land may currently be valued greater than the water-rich land itself, this may not hold true in an uncertain climate future – especially if that future brings less water. Furthermore, this exchange does not account for the countries that border the exporting nations, who share a water basin and water budget, but do not reap any profits from the deal (see our post on the Nile Basin). In essence, countries are trading future resiliency in the form of land and water.
Unknowns of “global resiliency market” create additional uncertainty
The uncertainties of future climate conditions are compounded by the uncertainties inherent in this global exchange of food, water, and land. To date, researchers are still mapping out the contours of the food-water-land nexus, and there are numerous gaps that remain unfilled. For example, complete data in this space can be hard to come by, not least because of a lack of transparency concerning the processes and terms of property easements. Another major unknown involves the invisibility of water in the food-water exchange. For a host of reasons, including the difficulty of measuring actual water availability and use, and in putting a true value or price on water (it is invaluable, and as such, must be afforded to all), water is being shipped out of country almost completely unaccounted for, and at no cost to the importer. The murky nature of these land deals, and the lack of data on the embedded water exports, adds another degree of risk.
The cost of resiliency
As in many other markets, the externalities of the things being bought and sold (food, land and water) are not quite reflected in the price. In this case, the cost of diminished resiliency is missing, due to both the uncertainties of the climate future, and the shadowy nature of the deals themselves. How much does it really cost for a poor country to give up large tracts of land, and the water that goes with it, to another country? It’s hard to tell, but in the face of a changing climate, it will likely cost a lot more than the immediate sale price.
At this point in time, resiliency seems to be an undervalued asset. How long it will remain so is unclear. But the pressures of a changing climate and the risks of exporting food and water from a land of hungry and thirsty people, are reason enough to reevaluate.