LONDON, Aug 14 (Reuters) - A race to grab land in developing countries and exploit food supply fears and payments to conserve forests could spark conflicts in areas of land disputes, development and civil rights groups say.
Investors say higher land valuations are just what's needed to settle claims which may have festered since colonial days.
But much marginal and forested land is common property, which in the past has given poor local communities little benefit from logging, mining and oil concessions.
"No-man's land and hinterland is suddenly valuable," said Andy White, coordinator for the Washington-based Rights and Resources Initiative, a development NGO.
"Communities had been told the land was theirs. Now it's contested," he said, explaining that a community in Liberia had told him that in one week they had separate visits from a mining company, a logging company and a biofuel company. "They were told by the government -- 'go out and prospect'."
Spiralling commodity prices have driven speculative interest in farms and forests in emerging markets where productive land can cost one 10th of the price in industrialised countries.
"There are still very good prospects," said George Lee, manager of hedge fund firm Eclectica's agriculture fund, which invests in companies which buy land, comparing grazing land prices in Uruguay at $3,000 per hectare with $20,000 in Britain.
Benchmark wheat prices have dipped by a third since a peak last September but remain 50 percent above a 2007 low.
Land and food prices are expected to remain high as a growing, richer world demands more land for settlement and food, while climate change threatens more droughts.
Steps to fight climate change and secure energy supplies are partly to blame for stoking land prices, by fuelling interest in alternative energy including biofuels produced from food crops such as palm oil, soy, sugar and grains.
Added to that, payments to preserve vast tracts of tropical forests could be the next big environmental market, winning broad support in U.N.-led climate talks as a way to lock up in trees the greenhouse gas carbon dioxide.
Scrupulous investors say they follow ethical principles on land purchases:
"You don't want to be a hostile element in the environment ... it's an investor choice, you see a lot of abuse," said Kimberly Tara, chief executive of FourWinds Capital Management, an investor in water, biofuels and farms.
"In places like Ghana you can do all sorts of things. You can take a logging concession, you can strip the land and destroy it, give nothing back to local communities."
In Ghana, the constitution details how to split rents for logging concessions between government agencies and local communities, but that is routinely flouted as the Forestry Commission takes a 60 percent fee first, say NGOs.
"There's been very little effort to make sure that any of that money actually gets down to communities as opposed to being captured by local elites," said Kyeretwie Opoku, coordinator of Ghana-based NGO, Civic Response.
The Rights and Resources Initiative cites research showing ongoing foreign investments in biofuel production in Africa, including a 3-million-hectare investment by a Chinese company in the Democratic Republic of Congo.
Now investors are circling a possible new market meant to help preserve tropical forests.
Heavily forested, tropical nations are lobbying U.N. climate talks to be allowed to sell lucrative carbon offsets in exchange for protecting millions of hectares of rainforest.
Rich countries accept that they must bear the burden of global targets to curb greenhouse gases, and some are keen to achieve such targets by buying carbon offsets -- funding forest conservation is considered a cheap way to do that.
Rights to forested lands can be hotly disputed between indigenous peoples, local communities and central government, raising doubts over who will get the carbon cash.
"Carbon markets could be the match that sets it all off," said Andy White of the Rights and Resources Initiative.
Without their involvement, local communities which depend on the forests for their livelihood will collude in illegal logging to make money another way, NGOs say.
Carbon market investors say the prospect of returns will help disentangle conflicts.
"It will encourage the resolution of disputed land claims, a lot of these are not being resolved simply out of inertia," said Eric Bettelheim, executive chairman of UK-based Sustainable Forestry Management (SFM).
"Even in the diamond business, consumers and producers found out that people get angry, won't buy from conflict areas. The oil and gas industry are dealing in commodities which are very hard to trace ... by and large carbon offsets are much more exposed to public scrutiny, subject of legislation."
SFM is paying authorities for a share of hoped-for avoided deforestation carbon offsets on a 500,000-hectare tract of rainforest in Peru and will share any profits with local people.
Rules for such investments in carbon sinks are not set yet, under U.N. talks expected to agree a climate treaty next year.
"There's no point in blaming bankers wanting to make profits," said Barry Gardiner, British Prime Minister Gordon Brown's special envoy for forests.
"Our job as an international community is to make sure these markets work effectively to deliver carbon sequestration, protect indigenous people's rights and deliver ecosystem services."
(Reporting by Gerard Wynn; editing by Christopher Johnson)
Article found on The Guardian: http://www.guardian.co.uk/business/feedarticle/7724979.