Cornelius Hirsch: Digging into foreign investment in agriculture

By Parul Tewari, IIASA Science Communication Fellow 2017

Two things are distinctly noticeable when you meet Cornelius Hirsch—a cheerful smile that rarely leaves his face and the spark in his eyes as he talks about issues close to his heart. The range is quite broad though—from politics and economics to electronic music.

Cornelius Hirsch

After finishing high school, Hirsch decided to travel and explore the world. This paid off quite well. It was during his travels, encompassing Hong Kong, New Zealand, and California, that Hirsch started taking a keen interest in economic and political systems. This sparked his curiosity and helped him decide that he wanted to take up economics for higher studies. Therefore, after completing his masters in agricultural economics, Hirsch applied for a position as a research associate at the Austrian Institute of Economic Research and enrolled in the PhD-program of the Vienna University of Economics and Business to study trade, globalization, and its impact on rural areas. Currently, he is looking at subsidies and tariffs for farmers and the agricultural sector at a global scale.

As part of the 2017 Young Scientists Summer Program at IIASA, Hirsch is digging a little deeper to analyze how foreign direct investments (FDI) in agricultural land operate. “Since 2000, the number of foreign land acquisitions have been growing—governmental or private players buy a lot of land in different countries to produce crops. I was interested in knowing why there are so many of these hotspots in the world— sub-Saharan Africa, Papua New Guinea, Indonesia—why are people investing in these areas?,” says Hirsch.

Farming in one of the large agricultural areas in Indonesia ©CIFOR I Flickr

Increased food demand from a growing world population is leading to an increased rate of investment in agriculture in regions with large stretches of fertile land. That these regions are largely rain-fed make them even more attractive for investors as they save the cost of expensive irrigation services. In fact, Hirsch argues that “the term land-grabbing is misleading. It should actually be water-grabbing as water is the foremost deciding factor—even more important than simply land abundance.”

Some researchers have found an interesting contrast between FDI in traditional sectors, such as manufacturing, and the ones in agricultural land. While investors in the former look for stable institutions and good governmental efficiency, FDI in land deals seems to target regions with less stable institutions. This positive relationship between corruption and FDI is completely counterintuitive. Hirsch says that one reason could be that “sometimes weaker institutions are easier to get through when it comes to such vast amount of lands. A lot of times these deals and contracts are oral and have no written proof—the contracts are not transparent anyway.”

For example in South Sudan, the land and soil conditions seem to be so good that investors aren’t deterred despite conflicts due to corrupt practices or inefficient government agencies.

One of the indigenous communities in Madagascar, a place which is vulnerable to land acquisitions © IamNotUnique I Flickr

One area that often goes unnoticed is the violation of land rights of indigenous communities. If a government body decides to sell land or give out production licenses to investors for leasing the land without consulting the actual community, it is only much later that the affected community finds out that their land has been given away. Left with no land and hence no source of livelihood, these communities are forced to migrate to urban areas.

A strain of concern enters his voice as Hirsch talks about the impact. “Land as big as two times the area of Ecuador has been sold off in the past—but it accounts for a tiny percentage of the global production area.” With rising incomes and greater consumption of meat, a lot of land is used to produce animal feed crops. “This is a very inefficient way of using land,” he says.

During the summer program at IIASA, Hirsch is generating data that will help him look at these deals in detail and analyze the main factors that are taken into consideration before finalizing a land deal. At the moment he is only able to give an overview of land-grabbing at the global level. With more data on the location of the deals he can look at the factors that influence these decisions in the first place such as the proximity between the two countries involved in agricultural investments and the size of their economies.

While there is always huge media coverage when a scandal about these land acquisitions comes out in the open, Hirsch seems determined to dig deeper and uncover the dynamics involved.

About the researcher
Cornelius Hirsch is a research associate at the Austrian Institute of Economics and Research (WIFO). At IIASA he is working under the supervision of Tamas Krisztin and Linda See in the Ecosystems Services and Management Program (ESM).

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Interview: Living in the age of adaptation

Adil Najam is the inaugural dean of the Pardee School of Global Studies at Boston University and former vice chancellor of Lahore University of Management Sciences, Pakistan. He talks to Science Communication Fellow Parul Tewari about his time as a participant of the IIASA Young Scientists Summer Program (YSSP) and the global challenge of adaptation to climate change.  

How has your experience as a YSSP fellow at IIASA impacted your career?
The most important thing my YSSP experience gave me was a real and deep appreciation for interdisciplinarity. The realization that the great challenges of our time lie at the intersection of multiple disciplines. And without a real respect for multiple disciplines we will simply not be able to act effectively on them.

Prof. Adil Najam speaking at the Deutsche Welle Building in Bonn, Germany in 2010 © Erich Habich I en.wikipedia

Recently at the 40th anniversary of the YSSP program you spoke about ‘The age of adaptation’. Globally there is still a lot more focus on mitigation. Why is this?
Living in the “Age of Adaption” does not mean that mitigation is no longer important. It is as, and more, important than ever. But now, we also have to contend with adaptation. Adaptation, after all, is the failure of mitigation. We got to the age of adaptation because we failed to mitigate enough or in time. The less we mitigate now and in the future, the more we will have to adapt, possibly at levels where adaptation may no longer even be possible. Adaption is nearly always more difficult than mitigation; and will ultimately be far more expensive. And at some level it could become impossible.

How do you think can adaptation be brought into the mainstream in environmental/climate change discourse?
Climate discussions are primarily held in the language of carbon. However, adaptation requires us to think outside “carbon management.” The “currency” of adaptation is multivaried: its disease, its poverty, its food, its ecosystems, and maybe most importantly, its water. In fact, I have argued that water is to adaptation, what carbon is to mitigation.
To honestly think about adaptation we will have to confront the fact that adaptation is fundamentally about development. This is unfamiliar—and sometimes uncomfortable—territory for many climate analysts. I do not believe that there is any way that we can honestly deal with the issue of climate adaptation without putting development, especially including issues of climate justice, squarely at the center of the climate debate.

COP 22 (Conference of Parties) was termed as the “COP of Action” where “financing” was one of the critical aspects of both mitigation and adaptation. However, there has not been much progress. Why is this?
Unfortunately, the climate negotiation exercise has become routine. While there are occasional moments of excitement, such as at Paris, the general negotiation process has become entirely predictable, even boring. We come together every year to repeat the same arguments to the same people and then arrive at the same conclusions. We make the same promises each year, knowing that we have little or no intention of keeping them. Maybe I am being too cynical. But I am convinced that if there is to be any ‘action,’ it will come from outside the COPs. From citizen action. From business innovation. From municipalities. And most importantly from future generations who are now condemned to live with the consequences of our decision not to act in time.

© Piyaset I Shutterstock

What is your greatest fear for our planet, in the near future, if we remain as indecisive in the climate negotiations as we are today?
My biggest fear is that we will—or maybe already have—become parochial in our approach to this global challenge. That by choosing not to act in time or at the scale needed, we have condemned some of the poorest communities in the world—the already marginalized and vulnerable—to pay for the sins of our climatic excess. The fear used to be that those who have contributed the least to the problem will end up facing the worst climatic impacts. That, unfortunately, is now the reality.

What message would you like to give to the current generation of YSSPers?
Be bold in the questions you ask and the answers you seek. Never allow yourself—or anyone else—to rein in your intellectual ambition. Now is the time to think big. Because the challenges we face are gigantic.

Note: This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

A world on the move

by Julia M. Puaschunder, alumna of the IIASA Young Scientist Summer Program 2016.

The world is on the move. Currently, more than 250 million people live outside their countries of birth. Of the moving masses, an estimated 6% are refugees fleeing across borders to more favorable environments. The ongoing European refugee crisis has increased the pressure to reap the benefits from migration while alleviating the burdens of societal movement.

worldregions_2005-10

Estimates of directional flows between 123 countries between 2005-2010. Only flows containing at least 50,000 migrants are shown. “The Global Flow of People” (www.global-migration.info) is by Nikola Sander, Guy Abel & Ramon Bauer, and published in Science as “Quantifying global international migration flows” in 2014 (vol. 343: 1520-152).

Concerns were recently raised as to whether granting asylum to refugees—who often make up the most productive parts of their original populations—prevents (re)development in their fractionated home countries? An important consideration absent in these debates are the monetary gifts migrants send to their family members back home.

The World Bank estimates that migrants currently return around 450 billion US Dollars per year to the developing countries they came from, and this number is expected to rise. These monetary remittances have multiple positive impacts, including economic growth. As refugees are primarily younger to middle-aged, their remittances likely pay for their wives and children’s access to medical care and education, or support their parents when pension systems are missing.

Intergenerational monetary transfers are therefore the focus of my recent publication Gifts Without Borders. Contrary to conventional institutionalized sustainable development, remittances grounded in intergenerational care benefit from communication within families. Long-lasting family ties allow direct feedback. People truly care about their loved ones back home and families share their day-to-day experiences honestly. Intergenerational remittances beyond borders are thus a purer and potentially longer-enduring pathway to sustainable development, as these stable funding streams’ impact is more accountable than standard international aid.

Based on World Bank and OECD data covering almost all countries of the world, my forthcoming publication in the book ‘Intergenerational Responsibility in the 21st Century’ highlights that the intergenerational glue of a migrating population helps countries lacking socially responsible and future-oriented public sectors. Rather than blaming asylum-granting countries for removing the labor force from fragile territories, hosting refugees is portrayed as making use of human capital in stable economies, while refugees—at the same time—develop their former homelands by direct monetary contributions in a natural, transparent, and accountable way. In the age of migration, analyzing intergenerational networks and their financial flows is an important, but unexplored, facet of sustainable development. My findings open prospective research avenues on how we can align the economic outcomes of human capital mobility with sustainable development.

The IIASA Young Scientists Summer Program granted a vibrant setting to discuss my findings in a group of international, diverse, and multi-disciplinary future academic leaders during this summer, which was filled with beautiful moments in the historic Schloss Laxenburg in Austria. Recently IIASA also launched a Joint Research Centre of Expertise with the European Commission on Population and Migration, which aims to predict how migration will impact future economies and societies. In addition, the Advanced Systems Analysis (ASA) Program hosts the ‘Economic migration, capital flows, and welfare’ collaboration between ASA and the World Population Program to model dynamics of economic migration and investment. This research is also directly related to my New School Economic Review paper ‘Putty Capital and Clay Labor: Differing European Union Capital and Labor Freedom Speeds in Times of European Migration,’ which elucidates trade differences in capital and labor flows gravitating the benefits and burdens of globalization unequally and the potential problems arising for the European project from migration.

The Alpbach-Laxenburg Group Retreat 2016 on ‘New Business Models for Sustainable Development’

The Alpbach-Laxenburg Group Retreat 2016 on New Business Models for Sustainable Development. © Matthias Silveri | IIASA

 

Above all, attending the IIASA 2016 Alpbach-Laxenburg Group Retreat at the European Forum Alpbach helped to enhance my understanding of the relationship between migration and intergenerational responsibility. All these endeavors are targeted at contributing to sustainable development in a world on the move.

 

 

 

 

More information on the author of the post: www.juliampuaschunder.com

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

At the crossroads of scientific enlightenment and regression

By Daniel McMurray, BA LLB MIL Global Event Lead – Impact Hub, Managing Director & Global Head of Communications – Enterprise IQ Pty Ltd

“It is paradoxical, yet true, to say, that the more we know, the more ignorant we become in the absolute sense, for it is only through enlightenment that we become conscious of our limitations. Precisely one of the most gratifying results of intellectual evolution is the continuous opening up of new and greater prospects”.

– Nikola Tesla

It is hard not to feel that we live at a pivotal moment in history, with the world racing toward an epochal crossroad.

In one direction lies the path of reason, science, community and progress. A world where growing systemic challenges like climate change, resource scarcity, overpopulation, inequality, and environmental degradation can be addressed through logic, evidence, and rational, creative, and collaborative action. Where the ingenuity, collective genius, and relentless optimism of humanity can resolve complex problems such as poverty, disease, and ecological collapse, creating abundance of energy, health, education and well-being for all.

In the other direction, lies a different path. One of regression, unreason, and parochialism. A fact-free, fearful and frightening world of separation, science denialism, and superstition, ruled over by demagogues offering glib, unworkable solutions, convenient scapegoats to blame, and soothing illusory retreat into fragmented tribal realms.

Which path we collectively choose to follow will determine the trajectory of the 21st century and beyond. Will we choose the enlightened path of working together collectively, collaboratively, and consciously for the greater good? Or will we choose the path of darkness, disintegrating into unconscious, unreasonable and irrational behavior that hastens systemic collapse?

At such a pivotal moment, the choice of “New Enlightenment” as the theme for the recent European Forum Alpbach was a timely, prescient and crucial framing.

Attending the forum with my European-based colleagues from Impact Hub – a globally connected network of social entrepreneurs, innovators, and change-makers as official partners for the event – inspired hope that the path of enlightenment, reason and collaborative action is fundamentally achievable.

Members of the Alpbach Laxenburg Group and Impact Hub hike in Alpbach, Austria in August 2016. © Matthias Silveri | IIASA

Members of the Alpbach Laxenburg Group and Impact Hub hike in Alpbach, Austria in August 2016. © Matthias Silveri | IIASA

One of the highlights of the event for our contingent was a facilitated hike into the Tyrolean alps with Pavel Kabat (Director General & CEO of IIASA) and other key thought leaders from the Alpbach Laxenburg Group – including Jeffrey Sachs (Director of The Earth Institute from Columbia University), Tarja Halonen (the former President of Finland), Björn Stigson (former President of the WBCSD), Justin Yifu L in (Director of the Centre for New Structural Economics at Peking University), Pascal Lamy (former Director-General of the WTO), and  many more cross-sectoral leaders from business, government, NGOs and civil society.

Gathered together in the scenic environs of the Boglalm Chalet, this diverse and eclectic group focused our discussion around how we can work together to achieve the Sustainable Development Goals.

Professor Sachs’ definition of an “entrepreneur” struck a chord. He described entrepreneurs as those with the vision to take elements from diverse sources, creatively combining and re- combining in new ways, key insights from different sectors, research fields, technologies, or existing systems to present a new solution or way of thinking.

In that group, representing a mix of the established elite and the challengers of tomorrow, the old and the new from business, government, science, social enterprise, and civil society, it was refreshing to feel the positive energy and inspired thinking that can come from embracing and making space for an open, cross -pollination of ideas.

It brought to mind a universal truth – that humanity is at its best when we work together collaboratively, breaking down barriers, dissolving silos of thought and entrenched interests and, like Professor Sachs’ concept of real entrepreneurship, combining ideas in new, innovative and creative ways. The path of enlightenment is not the domain of any one group. Political leaders can’t fix things alone – lacking the power, methodologies, community currency, and instruments required. They need business leaders, scientists, innovators, and change-agents from the social sector and civil society to bridge the gaps in dialogue, bring fresh insights and recombine them in radically new ways.

As Albert Einstein famously said, “We cannot solve our problems with the same level of thinking that created them”. The path of enlightenment can only be reached through collaborative action. It is a conscious choice and one that we must come together to choose in order to avert catastrophe.

“Really, the only thing that makes sense is to strive for greater collective enlightenment”.

Elon Musk

Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Female-headed households hit harder by climate change

By Raya Muttarak, IIASA World Population Program

Taking action on climate change is one top priority of the Sustainable Development Goals (SDGs), especially since its adverse impacts can undermine sustainable development. At the same time, reducing gender inequalities and empowering women and girls is fundamental in making progress across all the goals.

These two issues are also closely linked:  in certain circumstances, women are more vulnerable to the effects of climate change than men, for example, due to weaker physical ability, lower socioeconomic status, and greater social, economic and political barriers in coping capacity.

This is why, in recent work, we have been exploring the differential impacts of climate change on subgroups of population such as by gender, age, education, and income. The rising number of households headed by women across the world and, in particular, in southern Africa calls for special attention to their economic welfare. In general female-headed households are more likely to be in poverty. Under the context of the changing climate, it is likely that weather extremes, rainfall variability, and natural disasters associated with climate change will exacerbate economic disadvantages of female-headed households.

Female-headed households are more economically vulnerable to climate-related shocks for three big reasons, which researchers call a “triple burden”. First, persistent gender disparities in the labor market and other productive activities, including limited access to formal credit markets and land contribute to greater economic disadvantage for female-headed households. Second, these households often have a higher total dependency ratio–that is, women take care of a higher proportion of dependent children and the elderly. Third, women who are heads of households with no other adult help have a “double day burden” where they have to fulfil both domestic duties and make money outside the home. That means that female heads face greater time and mobility constraints and may have to work fewer hours or choose lower-paying jobs.

Female-headed households are more economically vulnerable to climate-related shocks for three big reasons, which researchers call a “triple burden”. Photo: Pablo Tosco/Oxfam

Female-headed households are more economically vulnerable to climate-related shocks for three big reasons, which researchers call a “triple burden”.
Photo: Pablo Tosco/Oxfam

Add climatic shocks to an already disadvantaged family, and the livelihood disruption can be a catastrophe.  However, there have been very few studies of how female-headed households actually fare in the context of climate change. In our new study published in World Development, we used  household survey data from South Africa and local rainfall data over the period 2006-2012 to examine how female-headed households fare economically when facing variation in rainfall. The study provides new empirical evidence on economic welfare of households headed by women following climatic shocks.

The new and unique part of our study is that we are able to control for observed and unobserved characteristics of households using a statistical technique called fixed effects estimation, which enables us to control for the household-specific effects on income. It also lets us account for different income trajectories in households with different demographic compositions. Furthermore, we were able to evaluate the impacts of income shock on economic vulnerability of female-headed households using rainfall variability as an exogenous source of risk. Income loss due to other variables such as death of a household member or losing a job are likely to be endogenously determined by household characteristics, that is, female heads have lower level of education and hence are more likely to fall into unemployment. But because rainfall variation is not connected to household factors, we were able to measure the causal effect of climate variability on incomes, comparing different household types.

Our study shows that female-headed households in South Africa are indeed more vulnerable to climate variability than households headed by two adults, and not just because of the greater economic disadvantages that they start with. Even after controlling for household socioeconomic characteristics, female heads still fare worse when facing economic shocks. This might be due to limited access to family support and protective social networks who can step in to help in time of crisis.

Our analysis also reveals that not all types of female-headed households are vulnerable to rainfall variability. This finding is especially important for designing a policy to reduce vulnerability of female-headed households. Given different routes into female headship, we show that never-married female heads, women with a non-resident spouse (for example, where the husband has moved to work in another region), and widows have greater economic vulnerability to climate variability. The group of female-headed households where the female head has never been married is the largest of these groups. Households with adults of both genders where the female works but the male does not work and households of separated or divorced women are no more vulnerable than male-headed households.

We also found that vulnerability to climate impacts is related to the effect of rainfall on agriculture. We find that female-headed households face greater economic vulnerability only in the districts where rainfall has a large effect on loss in agricultural yields. Regardless of household engagement in agriculture, crop losses in a district can affect food and livelihood security through surges in food prices and shortfalls in local demand.

Although our study focuses on South Africa, the results showing that female-headed households are more vulnerable to climate variability call for particular interventions to their vulnerability in the context of climate change. The number of female-headed households is rising, with an exceptionally high proportion in southern African countries (36.3% in Lesotho (2006), 43.9% in Namibia (2013), 47.9% in Swaziland (2007). As climate variation and extremes also increase, policies to reduce vulnerability to climate change need to explicitly consider the plight of this subgroup of population.

References

Flatø, M., Muttarak, R., & Pelser, A. (2016). Women, weather, and woes: The triangular dynamics of female-headed households, economic vulnerability, and climate variability in South Africa. World Development. doi:10.1016/j.worlddev.2016.08.015

Muttarak, R., Lutz, W., & Jiang, L. (2015). What can demographers contribute to the study of vulnerability? Vienna Yearbook of Population Research, 13, 1–13. doi:10.1553/populationyearbook2015s001

Rosenhouse, S. (1989). Identifying the poor : is “headship” a useful concept? (No. LSM58) (pp. 1–62). Washington, DC: The World Bank. http://documents.worldbank.org/curated/en/1989/07/442370/identifying-poor-headship-useful-concept. Accessed 24 February 2015

Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.