The Financialisation of Nature: linking food, land grabs, climate & mining

Rising food prices, land grabbing, biofuels, carbon offsets, mining… In recent years, many of us in the Gaia and African Biodiversity Network (ABN) family have felt as if the threats to communities and ecosystems are not only intensifying, but multiplying.  Sometimes it feels like we are constantly racing to keep up, to analyse and challenge endless new threats, which seem to come from every direction.

Is it our imagination, we have asked ourselves, or have things got crazier than ever in the last few years?  And could there be a link or common cause between all these disparate issues?

Turning our planet into profit?

I recently went to a meeting that seemed to answer these questions and more.  The Paris conference on “The Financialisation of Natural Resources”, hosted by an alliance of European civil society groups, was a fascinating opportunity to make the connections between our many areas of work.  

Essentially, the 2008 collapse of financial markets has meant that investors who profit from buying and selling commodities have made huge losses.  Their need to recoup their losses  has led them to create new markets, accelerating a drive to create new products and spread their risk.

This has led them to view nature: ecosystems, water, minerals, food, land and even the very air we breathe, as potential new products.  And they don’t just sell or privatise the products themselves, but go beyond this to create “financialised” assets, or “derivatives”.  This might include betting on futures markets, hedging against inflation, speculating on contracts, or even betting on weather in relation to future crop production.  Often the value of these financialised assets seem far removed from the value of the original product, but this nonetheless drives the hunger for control over nature and to turn her into a financial resource.

This “financial enclosure of the commons” means that financial speculators based in European and US banks, often investing for pension funds and hedge funds, are treating food as a commodity to bet on, leading to disastrous price volatility and global food crises.  They speculate on agricultural land ownership, even if they don’t intend to develop it, and this is driving African land grabs.  The global carbon offsets market is seen as having huge potential for creating financial products which are pretty much based on abstract air (carbon offsets are literally a bet on avoiding projected carbon emissions against a disputable, or unknowable, baseline.)  The drive to create financialised products based on oil, coal and minerals is driving mining into new territories more aggressively than ever.  Water, as one of our most precious resources, is regarded as having huge potential for privatisation, tradeable rights and financialised products.  And now there are new efforts to create offsets based on habitats and ecosystems, which would essentially allow companies to destroy one ecosystem, as long as they pay for the preservation of another ecosystem elsewhere.

For me, seeing these links has been a revelation, an insight into the murky world that has been pulling the invisible strings in our lives and work.  So how can understanding this “assetisation” of nature help civil society groups to stop the food crises, the land grabs, the destruction of our climate and ecosystems?

African governments are currently all too willing to fall for the narrative told by Western governments, that these “investments” will bring benefits to Africa.  Perhaps they might see things differently if they realised that what is driving these mining, land grabbing and carbon offsetting “investments”, is simply a need for pension fund managers and hedge fund millionaires to spread their risk after the 2008 crash.

Those of us in the countries where these investors are based, must recognise that pension funds are one of the key drivers of this destruction.  This financialisation of nature therefore needs urgent regulation.  Millions of normal, good, ethical people invest in pensions – how would they feel if they knew about the social and environmental devastation that their pensions are having on their brothers and sisters in the South?

These are all potential strategies for civil society groups to think about, as we try to address the root cause of the multiplying threats to Africa’s communities and ecosystems.


About teresagaia

Teresa Anderson is the International Advocacy Officer for the Gaia Foundation and the African Biodiversity Network.
This entry was posted in Africa, Climate Change, Uncategorized and tagged , , , . Bookmark the permalink.

4 Responses to The Financialisation of Nature: linking food, land grabs, climate & mining

  1. Michael says:

    Not only western countries are grabbing the products of underdeveloped countries. Such developing counties as China are making huge inroads into the natural resources of Africa. Development needs resources, they are determined to catch up to the western world.

  2. Shamsher Ali says:

    without food no lives.

  3. Teresa Anderson says:

    Interesting article in the Independent today: “Goldman Sachs conquers Europe”, about how senior Goldman Sachs people are now the most powerful political players across Europe – including Italy and Greece’s new prime ministers. It’s the Goldman Sachs and JP Morgans who are driving this financialisation business so aggressively.

  4. Pingback: Privatising nature: solution or threat? | The Gaia Foundation's Blog

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