Course:ECON371/UBCO2011WT1/GROUP1/Article 6: Agribusiness Boom Threatens Key African Wildlife Migration

Agribusiness Boom Threatens Key African Wildlife Migration

Summary

This article discusses wildlife migration problems in Ethiopia due to a recent increase in corporate agribusiness in the area. Large international firms have leased 400,000 hectares of land in the area, much of it situated in Gambella National Park. This land is incredibly fertile, as much of it has never been farmed before. Gambella National Park provides water necessary for several endangered species' survival during their migration time, including the Nile lechwe and white-eared kob, both types of antelope, and the giant shoebill stork. Disruption of this land would be detrimental to these species, and would impede the natural migration patterns of many other species as well. Unfortunately, the park was never formally "gazetted" in the government, so it now has no protection. In the past few decades, the area was protected from foreign investment by the civil war surrounding it, but now that the wars are over, the area could be subject to vast environmental destruction.

Environmental groups and the local population alike are concerned with this recent influx of international agribusiness. There are many problems coming from the companies' use of the land. For instance, the company Karuturi has been draining a large swamp which is one of the "last refuges of the endangered Nile lechwe," and has also built roads which directly impede wildlife migration patterns. The Karuturi concession alone will have build over 600 kilometres of roads in the area, and are clearing 500 hectares daily. One of the local Anuak people, Omot Ochan, reported that many of the animals which they used to hunt in the area have now completely disappeared. He also claimed that much of the land being leased by the companies actually belonged to the local people, but nobody was willing to acknowledge their ownership.

Many Ethiopian environmentalists are also concerned that the land is being sold much below the value of its social worth. Not only did the land benefit the wildlife and local people, but it also could have easily been transformed into a tourist hotspot, like those in Kenya and Tanzania. The land is being cleared without thought to preserving its aesthetic appeal, which could have brought visitors to the area.

There aren't any particular solutions to these problems given in the article. It mainly describes the problems and the views of the different parties, but definitely sides with the environmentalists and local population.

Analysis

The main problem in this situation, like we have seen with many other articles, is that there is an external cost present which is causing the producer to use too many resources relative to the efficient solution. In this case, the external costs are borne by the animals in the Gambella, by causing their habitat and migration routes to be destroyed, and the local population, in the form of their land being cleared and the animals which they once depended on disappearing. It also affects anyone who would have travelled to the region to see the landscape and wildlife, so in this way it also affects the local and regional economies.

Not only is the producer clearing too much of the land, they are not using it sustainably. Swamps and rivers are being rerouted without regard for the animals who depend on them, and roads are being built directly through animal migration routes. If this park could be officially declared as a national park, the land would be protected from this sort of behaviour, but the government has no incentive to protect it, as they are generating large revenues from leasing it out. In this case, it might be up to environmental groups to pay firms to use the land more sustainably, or at least pressure the government to see the environmental results of their lack of regulation.

This situation also has problems regarding property rights. The local people have had difficulties in obtaining standing, so there is no ability for them to fight for their property rights. It wouldn't be hard to show a causal linkage between the damages caused and the firms; and the damages would be fairly easy to measure. For instance, they could measure how many animals are migrating through other areas, and then measure how many animals are migrating through the areas which have been cleared and waterways rerouted. A problem, however, arises in that the local people don't have the money to bargain with the firms to try to reach an efficient solution. Their willingness to pay is probably much greater than their ability to pay, so it is unlikely that an efficient solution can be reached.

These issues relate quite well to the land-use issues discussed in the textbook. It describes various policy options to solve the problem of private ownership of land leading to ecological trouble. The first two options, "prohibition of specific land uses" and "development controls" seem unlikely to work in this situation, since the government doesn't seem to want to impede development at all. The third suggestion, "economic incentives," might help. Some of the revenue that the government gets from the corporations could be given back to them if they incorporate sustainable practices into their farming and land clearing methods.

It is also clear that the land needs to be priced much higher. Karmjeet Singh Sekhon, local project director of Karuturi, was quoted as saying that the soil has more than five percent organic matter, which is vastly better than the one percent they have in India. This lets them not use any fertilizer or herbicides. Even though the land is much better, it is still very inexpensive, which provides a huge incentive for international agribusiness companies to lease as much land as possible. A potential no-cost solution to the land grab which is currently occurring would be to raise the price of the land. The government should be in favour of this, as it would mean more revenue for them, and the local people would be happier if less of their land was being cleared. Potentially, the revenue gained from this price increase could go towards compensating the local people for their loss of land and lifestyle. The extra revenues could also go towards subsidizing more sustainable practices for the international firms.

Prof's Comments

I certainly agree that there is an underpriced externality here, which is the value of the habitat. However, it isn't clear how large this externality is. Property rights are an issue, as the Ethiopian government is making decisions that don't seem to have any regard for the local inhabitants. In effect, the local inhabitants have been disposessed of their property.

Now, the outcome may be efficient, from the perspective of maximizing overall wellbeing. If the production from this converted land is of sufficiently high value, it may be worth more than the loss of habitat. Efficiency doesn't necessarily mean preservation.

8/10