Investment contracts for agriculture: maximizing gains and minimizing risks
This joint IISD, World Bank and UNCTAD discussion paper marries two substantial bodies of research to show how investment contracts can be set up to promote sustainable development. It presents the top five positive outcomes and the five downsides from private sector investments in large- scale agricultural projects. It is important that such investments are sustainable not only in the long term, but also beneficial in the short term with minimal risks or negative effects. This paper looks at one approach to achieving this namely, carefully devised contracts with investors, and in doing so offers a number of concrete solutions. The paper presents the top five positive outcomes and the five downsides from private sector investments in large scale agricultural projects. This is derived from empirical evidence gathered by the United Nations Conference on Trade and Development (UNCTAD) and the World Bank after visiting large-scale agricultural projects (UNCTAD and World Bank 2014). The paper also proposes legal options to maximizing the main positive outcomes and minimizing the main downsides through better drafting of contracts between investors and governments for the lease of farmland. This derived from work conducted by the International Institute for Sustainable Development (IISD), which studied almost 80 contracts and produced a guide to negotiating contracts for farmland and water, including a model contract. Investment contracts are one tool among a range of other legal and policy instruments available.