INVESTING IN TREES AND LANDSCAPE ... - PROFOR

supermarket in Africa, and growing international demand are leading buyers to prefer suppliers who
can provide large, regular quantities of products of consistent quality, and to concentrate sources of
supply to lower transport and transaction costs (Weatherspoon and Reardon 2003). As land values
rise in these areas, economic pressure increases to convert natural areas to production, industry, or
human settlements and their associated infrastructure, and to divert water and other resources to
these economically important hubs.
Some types of capital-intensive agro-industrial investments drawing on relatively low-value but
bulky raw materials—such as pulp mills and sugar mills—are associated with strong geographic
concentration of land use, as economics strongly favor procurement within a limited radius around
the plant. The need for high-cost refrigeration and incentives to shorten supply chains means that
intensive dairy production tends to concentrate very near urban demand centers all over Africa.
Investment in transport and market infrastructure in Africa is accelerating and often has real benefits
for rural communities. This infrastructure can be a curse or a blessing from an ecological perspective.
On one hand, transportation access can make previously inaccessible forest lands, woodlands, and
wetlands available for land clearing and agricultural development, as in the Congo Basin (Wilkie
et al. 2000). However, the opposite effect is also possible. A reduction in transportation or other
marketing costs may create incentives to transition away from systems in which degradation is being
driven by continuous production of annual staple crops on small plots with little input or investment,
to higher value, more ecologically friendly conservation farming practices and to perennial products
that can be shipped to market. Producers may also decide to improve the quality and management
of products that previously could not meet the standards of international markets. This could drive
investment and improved management that may have ecological co-benefits. However, roads and
production facilities servicing resource-intensive or polluting tree and agricultural products need to
steer clear of the most ecologically sensitive areas.
Investment clusters
Further spatial concentration of agricultural and forest market activity is fostered by the development
of “clusters” that thrive on the concentration of knowledge in a particular subsector. The presence of
complementary economic activity creates externalities that enhance incentives and reduce barriers for
new business creation, the clustering of trained workers, managerial expertise in a particular product,
and ancillary services. International studies find that industries located in regions with strong clusters
(i.e., a large presence of related industries) experience higher growth in new business formation, startup
employment, expansion of existing firms, and start-up firm survival (Delgado, Porter, and Stern
2010). Agricultural industry clusters have been documented in Africa (Juma 2010), and intentional
creation of clusters has been promoted by donors and facilitated by government support.
Opportunities for Market Growth that Restores Landscapes
To achieve desired ecosystem functions across a large landscape may require modifying land
management in many different niches: in cropfields, pastures, wetlands, riparian areas, forested
areas, and protective strips around infrastructure. Market demand for products from each of these
niches needs to incentivize land use and management choices that produce ecosystem services
(Oberthur et al. 2009). If not, other policies—such as government land management, regulation,
and subsidies—will be required.
Chapter 2. WHERE DO PRIVATE MARKET INCENTIVES CONVERGE WITH LANDSCAPE RESTORATION GOALS?
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