2020 Securing

#GGSD natural 24 - 26 November

Forum capital

Issue Paper
Conference version

Land-use policies
for sustainability

Axelle Boulay
 OECD Green Growth and Sustainable
Development Forum
The GGSD Forum is an OECD initiative aimed at providing a dedicated space
for multi-disciplinary dialogue on green growth and sustainable development.
It brings together experts from different policy fields and disciplines
and provides them with an interactive platform to encourage discussion,
facilitate the exchange of knowledge and ease the exploitation of potential
synergies. By specifically addressing the horizontal, multi-disciplinary aspects
of green growth and sustainable development, the GGSD Forum constitutes
a valuable supplement to the work undertaken in individual government
ministries. The GGSD Forum also enables knowledge gaps to be identified
and facilitates the design of new works streams to address them.

Authorship & Acknowledgements

This issue note was prepared for the 2020 GGSD Forum to inform discussion
around the theme of Session 1 on “Securing natural capital on land”.
The author is Axelle Boulay, external consultant to the OECD. The note
benefitted from comments and suggestions by Jonathan Brooks, Guillaume
Gruère, Santiago Guerrero, Simon Buckle, Katia Karousakis, Jane Ellis,
Edward Perry, Hélène Blake, Aimee Aguilar Jaber, Kumi Kitamori and Enrico
Botta from the OECD.

The note was produced under the supervision of Kumi Kitamori, Head,
Green Growth and Global Relations Division, OECD.

The opinions expressed herein do not necessarily reflect the official views
of the OECD member countries. This document, as well as any data and map
included herein, are without prejudice to the status of or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the
name of any territory, city or area.
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Table of contents

1 Introduction ............................................................................................................... 4
2 Challenges towards more sustainable land use..................................................... 5
Loss of biodiversity ............................................................................................................. 5
Climate Change ................................................................................................................... 6
Zoonotic diseases and alien species invasion .................................................................. 7
Impacts on water resources ............................................................................................... 8
Food-related impacts .......................................................................................................... 8
Loss of livelihoods and lands of indigenous populations and local communities......... 9
3 The role of policies and business practices in incentivising sustainable land
use ............................................................................................................................... 11
The role of a coherent long-term vision and coordination for successful land-use
policies and business practices ....................................................................................... 11
Regulations ........................................................................................................................ 14
Reform of harmful subsidies that can drive sustainable land use ................................. 18
Subsidies, taxes, fees and trading schemes ................................................................... 19
Large-Scale Land Acquisitions......................................................................................... 25
Due diligence for Responsible Investment in Agriculture .............................................. 26
Voluntary certification schemes ....................................................................................... 26
4 Political economy of land-use policies ................................................................. 28
Distributional impacts on firms and households ............................................................ 28
Best practices to advance reforms .................................................................................. 30
5 Lessons learned and research gaps ..................................................................... 33
References .................................................................................................................. 36
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1 Introduction
Land use is central to several key societal challenges. Land-use sectors account for around 23% of global
anthropogenic greenhouse gases emissions (IPCC, 2019[1]) and land-use change is a key driver of
biodiversity loss (IPBES, 2019[2]). Poor management of ecosystems and encroachment of both humans
and livestock into wildlife habitats are considered as possible causes of the observed higher frequency of
zoonotic disease emergence, such as COVID-19.
A transformative change in land use is needed to end hunger (Sustainable Development Goals – or SDG
- 2), ensure clean water for all (SDG 6), mitigate greenhouse gas emissions (SDG 13), and protect life on
land (SDG 15). Furthermore, the growing relative homogeneity of farmed crop and animal varieties in some
countries increases the vulnerability of our food systems to shocks, such as new pathogens and invasive
species imported through international trade and travel. Human encroachment into natural habitats and
the competition between different land uses are expected to increase due to world population growth,
urbanisation and changing consumption and dietary patterns. A key question for many governments is
how to design and implement policies that promote land-use practices that support economic growth and
sustainable resource use, while addressing food security and climate change. Responding to this question
requires understanding how current and potential new policies perform in these respects.
Furthermore, possible trade-offs and synergies between different policy objectives need to be considered.
For instance, environmentally sustainable agriculture practices may induce lower agricultural productivity,
thus potentially increasing pressure on forested areas and more intensive practices elsewhere. At the
same time, poorly designed policies may incentivise riskier behaviour, such as subsidised insurance
encouraging planting of more water intensive crops in water scarce regions.
This issue paper reviews the policies, business practices and political economy challenges to ensure a
more sustainable use of natural capital on land. How can land-use planning, payment for ecosystem
services, and other policy measures help managing the synergies and trade-offs among competing land
uses? What are the distributional implications of such policies? As this is a wide research question, this
issue paper aims to offer a general overview of the role of key policies and their impacts to lay out the state
of play via literature review. Although land tenure security affects land use, which is a factor that should be
taken into account by policy makers as it is necessary for farmers to invest in sustainable land use, it is
outside of the scope of this paper that focuses on the various policies themselves and their impacts.
This literature review draws on a mix of peer-reviewed publications, grey literature, institutional sources
and reports. Keywords relating to the identified themes were identified for use in search engines such as
Google Scholar. In general, literature published in the period 2010–2020 was considered, although older
important publications were occasionally included too. Existing review papers or reports on the discussed
topics, including those from the OECD, were used as primary sources of information. In the absence of
recent review papers or reports, case studies were searched to add to the evidence base.
This paper is structured as follows. Chapter 2 reviews the challenges towards more sustainable land use
while Chapter 3 provides an overview of the policies that could overcome these challenges and Chapter 4
focuses on the political economy issues of the introduction of these policies. Chapters 5 and 6 highlight
the key outstanding issues and policy research questions. Land-use sectors are defined as Agriculture,
Forestry & Other Land Use (or AFOLU).
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2 Challenges towards more

sustainable land use

In past decades, several developments have been made towards more sustainable land use. For
instance, since 1960, the intensification of agricultural input use and concentrated animal feed, modern
crop varieties and better management practices have led to increased crop yields and livestock production
in developed and developing countries (OECD, 2020[3]). This contributed to the tripling of agriculture
production with only modest increase in cultivated land (around 10-15%) (OECD, 2020[3]) and important
gains in reducing both poverty (OECD, 2011[4]) and malnourishment (TCI, 2020[5]). In addition, intensive
agriculture decreases the need for land, and therefore lessens the intensity of impacts caused by forest
conversion to agriculture such as greenhouse gas emissions and biodiversity loss (OECD, 2013[6]). This
makes sustainable agricultural intensification an important response to global climate change (IPCC,
2019[1]).
However, several challenges remain. This section reviews existing literature providing evidence of the
following key impacts connected to unstainable land use: loss of biodiversity, climate change, zoonotic
diseases and impacts of invasive alien species, impacts on water resources, food-related impacts and loss
of livelihoods and lands of indigenous populations.

Loss of biodiversity

Biodiversity on Earth is declining. The magnitude and speed at which the diversity of life on Earth is
declining today is comparable to what happened during the five great extinction crises of geological time
(Ceballos et al., 2015[7]). Around a million plant and animal species are now threatened with extinction
(IPBES, 2019[2]). Wild vertebrate populations have declined by 68% in around 40 years (WWF, 2020[8])
and insect populations have been decreasing in a number of regions. For instance, Hallmann et al. (2017[9])
finds that 76% of flying insect biomass 1 have disappeared in 30 years in Germany in protected natural
areas, and 67% in meadows in just ten years (Seibold et al., 2019[10]). However, this decline is not observed
everywhere. In the United States for instance, a recent study reports no net insect abundance and diversity
declines (Crossley et al., 2020[11]). The decline in insect population is particularly concerning given its
impact on animal pollination on which more than 75 per cent of global food crop types relies 2, including
key cash crops 3 like coffee, cocoa and almonds (IPBES, 2019[2]).
Agriculture and urban development can contribute to biodiversity loss due to land conversion.
Biodiversity loss in tropical and subtropical countries is mainly related to forest conversion to agriculture
(FAO, 2020[12]). In Africa for instance, high population growth together with the use of small-scale
agriculture are linked to a rate of deforestation that remains high (FAO, 2020[12]). In Southeast Asia, high-

1
the total weight of flying insects (regardless of species)
2
The rest of them rely on wind pollination.
3
a crop produced for its commercial value rather than for use by the grower
6|

biodiversity value natural forests have been converted into rubber and oil palm plantations (Ahrends,
2015[13]; Austin, 2017[14]; IPBES, 2019[2]). In Latin America, the main agro-industrial sectors responsible for
deforestation are livestock farming and soybean cultivation (IPBES, 2019[2]). Urbanisation may affect
biodiversity due to encroachment on natural and semi-natural ecosystems thus leading to loss of
biodiversity and unsustainable natural resources management (INTOSAI, 2013[15]). Importantly, the
impacts on fauna may extend well beyond the area deforested because larger habitats and fauna migration
patterns may be disturbed (OECD, 2019[16]).
The adoption of varieties with high yield potential allowed to increase food production per
cultivated land. However, this trend is sometimes associated with a decline in the genetic diversity
of cultivated species. Since 1960 agriculture production has tripled with only modest increase in
cultivated land (around 10-15%) (OECD, 2020[3]) and important gains in reducing poverty (OECD, 2011[4])
and malnourishment (TCI, 2020[5]). For instance, high-yielding rice and wheat have been used successfully
to reduce malnourishment in India (TCI, 2020[5]). However, this came at the cost of biodiversity in cultivated
culture as multiple local varieties have been abandoned in favour of high-yielding varieties. These modern
varieties are genetically more homogeneous and adapted to the practices that tend to be geared towards
higher per hectare productivity (e.g. use of irrigation, mineral fertilisers) (FAO, 2019[17]). Lower diversity of
cultivated crops, crop wild relatives and domesticated breeds indicate that agroecosystems are less
resilient to pests and pathogens (IPBES, 2019[2]).
Unsustainable agricultural practices can also lead to soil degradation and broader pollution, which
are drivers of biodiversity loss. Unsustainable agricultural practices (such as the cultivation of steep
slopes or overcutting of vegetation) can impact soils (i) physically (e.g. soil erosion due to wind exposure,
compaction due to tillage and heavy machinery), (ii) chemically (e.g. acidification due to excessive
application of ammonium-based fertilisers, pesticide contamination in soils and GHG emissions from
nutrient leaches); and (iii) biologically (e.g. loss of soil organic matter and fauna) (FAO, 2015[18]). It is
estimated that the well-being of 3.2 billion people worldwide is negatively affected by land degradation
(Montanarella, Brainich and Scholes, 2018[19]).

Climate Change

Deforestation and livestock farming are among the main drivers of climate change. Between 2007
and 2016, the contribution of land-use sectors (the AFOLU activities) to global net anthropogenic GHG
emissions was an estimated 23% (IPCC, 2019[1]). Most climate-adverse land-use changes are the ones
transitioning from a relatively low-emission land use (or even a carbon sink like healthy forests) to a higher-
emission land use like cattle farming or urban areas (IPCC, 2019[1]). Deforestation (caused by agricultural
expansion or urbanisation) leads to the disappearance of valuable carbon sinks 4 and carbon dioxide
emissions (carbon stored in trees is released into the air) (IPCC, 2019[1]). It also eliminates the cooling
effect from the biogenic volatile organic compounds emitted by healthy forests and thus adds to climate
warming and disrupts local (and potentially regional/global) weather patterns (Scott et al., 2018[20]). In the
agriculture sector, livestock production (mostly enteric fermentation) and rice padding have been the main
drivers of direct sectoral emission accounting respectively for about 66% and 24% of agricultural emissions
(IPCC, 2019[1]). Greenhouse gas emissions are correlated to the number of ruminants (methane) and the
energy used in animal-feed production (OECD, 2019[21]).
Sustainable forestry, agriculture and urban practices have the potential to contribute to both
climate change adaptation and mitigation (Mbow et al., 2019[22]). An example is the incorporation of low

4
Sustainable forest management can maintain or enhance forest carbon stocks, and can maintain forest carbon sinks,
including by transferring carbon to wood products.
 |7

carbon agriculture in agricultural policies in Brazil 5 (Mbow et al., 2019[22]). Low-carbon agricultural policies
entail the reduction of deforestation, the restoration of degraded pasture areas, the adoption of integrated
agroforestry systems 6 and no-till agricultural techniques in order to reduce national GHG emissions
(Oliveira and al., 2017[23]; Mozzer, 2011[24]; Mbow et al., 2019[22]).
Land use changes may exacerbate some of the consequences of climate change, such as the risk
of wildfires. Land use change influences the risk of wildfires by changing the amounts of flammable
material that surrounds a fire (called fuel loads) and ignition frequency (Butsic, Kelly and Moritz, 2015[25]).
For instance, changes from active agricultural fields to shrublands and increase in livestock density tend
to increase fire ignition frequency (Butsic, Kelly and Moritz, 2015[25]). Decreased grazing and forest
regrowth increase fuel loads (Butsic, Kelly and Moritz, 2015[25]). Biodiversity loss is also related to an
increased vulnerability to wildfires that is sometimes caused by a combination of land clearing and drought,
as it happened recently in Indonesia’s tropical forests (TNC, 2019[26]) and in the world’s largest tropical
wetland, the Pantanal in South America (Mega, 2020[27]). Large fires have a direct negative impact on the
human well-being, caused by air pollution, cost of suppression activities, and loss of property and human
lives (Brockerhoff et al., 2017[28]).

Zoonotic diseases and alien species invasion

Urbanisation, deforestation, and ecosystem degradation are key drivers of the emergence and re-
emergence of infectious diseases (zoonoses) by altering biomes and host and pathogen population
dynamics (Jones et al., 2013[29]). Land-use changes often lead to increased exposure of humans and
domestic animals to pathogen-carrying wildlife (OECD, 2020[30]) and heighten the risk of virus spill-over
from wildlife to domestic animals and humans, known as zoonosis (Faust et al., 2018[31]). It is estimated
that about one billion people get sick and millions die every year from zoonoses (such as Chagas disease,
Dengue, Ebola virus disease, Plague, Rabies) (WHO, 2014[32]). Using modelling, Faust et al. (2018[31])
found that the risk of pathogen spill-over from wildlife to domestic animals and humans, and the reverse,
is highest in cases of habitat loss such as forest clearing for agriculture or mixed human use.
The consequences of agricultural intensification on zoonotic diseases risks are mixed. On the one hand,
agricultural intensification can reduce pressure on natural ecosystems by reducing the demand for land,
thereby reducing human and livestock interaction with pathogen-carrying wildlife(OECD, 2020[3]). On the
other hand, unsustainable intensification of livestock production carries a risk of zoonoses for which there
are epidemiological interactions between wildlife and livestock 7 (UNEP; ILRI, 2020[33]; Jones et al.,
2013[29]) For instance, higher density of poultry or pig populations favours the adaptation of an introduced
influenza virus and amplification for transmission between farms, to humans and to wildlife (Jones et al.,
2013[29]).
Land-use changes can facilitate the diffusion of invasive alien species. Ways that can link land-use to
invasive alien species can be categorized as follows:
• Some invasive alien species can capitalize on degraded ecosystems. For instance, the tsetse fly
(Glossina spp) invaded a degraded ecosystem in East Africa thanks to the newly installed Lantana
camara (a neotropical shrub). This fly carries sleeping sickness (Mack and Simberloff, 2000[34]).

5
Low Carbon Agriculture Plan (ABC “Agricultura de Baixo Carbono” in Portuguese), which is based on low interest
credit for investment in sustainable agricultural technologies
6
Integrated agroforestry systems are agricultural systems that strategically integrate two or more components among
crops, livestock and forestry. The activities can be in consortium, succession or rotation in order to achieve overall
synergy.
7
Livestock can act as an intermediate between wildlife and humans.
8|

• Deliberate importation and release of exotic species as commodities (e.g. for timber, windbreaks,
food, aesthetic reasons etc.) that become invasive (Hulme et al., 2008[35]). An extensive survey
concluded that invasive species represent a small (between 0.5 and 0.7%) but growing part of the
world’s tree and shrub species (Richardson and Rejmánek, 2011[36]). In order of importance, the
reasons for their introduction and dissemination are : horticulture (62%), forestry (13%), food (10%)
and agroforestry (7%) (Richardson and Rejmánek, 2011[36]).
• Accidental importation by opening up new transport infrastructures that allow invasive alien species
to spread into a new geographical region (for instance, land-use change and forest roads) (Hulme
et al., 2008[35]).
Invasive alien species can represent a threat to ecosystem services, food production and human
health. Many of them can affect the water supply (for example by reducing the water flow in canals and
obstructing pump water intakes for irrigation) (Mazza et al., 2014). Some of them decrease food
disposability by consuming crops or acting as crop or livestock pathogens (Mazza et al., 2014). Direct
threats to human health include: “(1) causing diseases or infections; (2) exposing humans to wounds from
bites/stings, biotoxins, allergens or toxicants; (3) facilitating diseases, injuries or death; and (4) inflicting
other negative effects on human livelihood” (Mazza et al., 2014[37]). For instance, the globally invasive
Indian Mongoose can carry rabies. Approximately half of the poisonous plants in the eastern U.S. in non-
agricultural areas are non-native and many are invasive.

Impacts on water resources

Excessive use of fertilisers may generate phosphorous and nitrate water pollution. Although the use
of chemically-reactive nitrogen in fertilisers has increased agriculture productivity and contributed to food
security and a lower need for land and thus less deforestation and wildlife contacts, excess nitrogen from
fertilisers pollutes water (via groundwater, drainage water and runoff for instance) (OECD, 2018[38]).
Eutrophication of coastal waters is caused by excess nitrogen and can lead to algal blooms on the water
surface and in turn to the creation of hypoxic water also called “dead zones” (OECD, 2018[38]). Urban runoff
is another source of land-use related water pollution (OECD, 2017[39]). Water quality management is
challenging because the sources of water pollution are diffuse, and their regulation entails high transaction
costs (OECD, 2017[39]).
Unstainable land-use practices may also lead to groundwater depletion and changes in
precipitations pattern. Groundwater depletion from intensive agricultural irrigation can cause lowering of
water tables and depletion of streams, rivers and lakes, especially for shallow unconfined aquifers in the
vicinity of rivers, streams or lakes (OECD, 2019[21]; OECD, 2015[40]). Irrigation is also associated with
changes in precipitation patterns, given evapotranspiration. Empirical evidence has shown that large-scale
deforestation can result in a significant decrease in precipitation in the Northern Hemisphere monsoon
regions (East Asia, North America, North Africa, and South Asia) and an increase in moderate precipitation
increases in the Southern Hemisphere monsoon regions (South Africa, South America, and Australia)
(Devaraju, Bala and Modak, 2015[41]).

Food-related impacts

Unstainable land use contributes to several phenomena that can hinder food security. Climate
change can affect yields and food nutritional quality and consequently food security and livestock rearing
viability (IPCC, 2019[1]; OECD, 2019[21]). Unsustainable use of groundwater can have negative externalities
with direct impacts on agriculture production itself as in the case of irreversible salinization of aquifers in
coastal areas (OECD, 2015[40]). Biodiversity loss can affect all of the followings: (1) supporting ecosystem
services (e.g. natural control of plant pests and diseases; soil fertility and animal pollination); (2)
 |9

provisioning ecosystem services (e.g. food, fibre, medicines or freshwater needed as inputs); and (3)
regulating ecosystem services (e.g. soil and air quality, climate regulation or pollination) (OECD, 2019[21]).
At the same time, agricultural production for certain dietary patterns and food waste, can increase
pressure on land-use. Under current trends, diet composition would contribute to approximately 80 per
cent increase in global agricultural greenhouse gas emissions from food production and to global land
clearing by 2050 (Tilman and Clark, 2014[42]). Food wasted and lost is another major contributor to GHG
and land clearing (FAO, IFAD, UNICEF, WFP and WHO, 2019[43]). The amount of food wasted and lost
each year represents crops cultivated on 1.4 billion ha of agricultural land, which is about a third of the
world total agricultural land (FAO, 2013[44]; OECD, 2020[45]).
Dietary changes, together with reductions in both food waste and over-consumption 8 could
significantly contribute to sustainable land use (Mbow et al., 2019[22]; OECD, 2020[45]). Alexander et al
(2016[46]) analyse the role of past and present developments in diets on global agricultural land use. They
found that the quantity of per-capita food consumption is less important than the types of food commodities
consumed in determining the agricultural land requirement because of the important land requirement for
animal products and in particular ruminant species. Similarly, the IPCC Assessment of individual foods in
terms of animal-based vs plant-based showed that meat - especially ruminant meat (beef and lamb) - is
the single food with the greatest impact in terms of GHG emissions and/or land use. Changing diets can
entail significant benefits on carbon sequestration from land-sparing: the lower the amount of meat in the
diet, the higher the GHG mitigation potential (Mbow et al., 2019[22]).
However, trade-offs are involved with food loss and waste reduction or any dietary change. For
instance, OECD (2019[47])’s modelling simulations show that food loss reduction or changes in diets do
result in significant cuts in GHG emissions, but they would result in revenue declines for producers,
including poor ones, and the potential of policies to achieve this is unknown. Reducing food waste could
lead to more sustainable land use or reduced demand for land (Alexander, 2016[46]). In order to reduce
food waste, overconsumption, and the demand for animal products that are produced unsustainably and
to address the trilemma diet-environment-health globally, the Global assessment report on biodiversity and
ecosystem suggests options like participatory on-farm research, the promotion of low-impact and healthy
diets and the localisation of food systems (Chan, Agard and Liu, 2019[48]). In Brazil, recent studies have
looked at measures to transform cattle ranching. Even if meat consumption does not decrease, improving
sector productivity, together with adequate measures to avoid social and environmental rebounds of
intensification, could reduce deforestation and spare land for restoration (Chan, Agard and Liu, 2019[48]).
More data on food loss and waste and on impacts of food loss and waste policies is needed to inform
policies that could better balance trade-offs between environmental and economic impacts (OECD,
2019[47]).

Loss of livelihoods and lands of indigenous populations and local communities

Large-scale deforestation and unsustainable land use in general negatively affect livelihoods and lands of
indigenous populations (IPBES, 2019[2]). Increasingly resource extraction, commodity production, mining
and transport and energy infrastructure, are taking place in areas managed by indigenous populations and
local communities (IPBES, 2019[2]). The pressures lead to loss of subsistence and traditional livelihoods
and negatively affect health and well-being (from pollution and water insecurity) (IPBES, 2019[2]). The loss
of traditional livelihoods has repercussions on traditional management, the transmission of knowledge, the
potential for benefit sharing, and finally the ability of indigenous peoples and local communities to
sustainably manage, wild and domesticated biodiversity (IPBES, 2019[2]).

8
Consumption of a higher amount of calories than dietary needs.
10 |

Some key challenges towards more sustainable land use were reviewed in this chapter. They included:
loss of biodiversity, climate change, zoonotic diseases and alien species invasion, impacts on water
resources and loss of livelihoods and lands of indigenous populations. These impacts of unsustainable
land use can be, if not reversed, addressed through the introduction of new land-use policies or reforms.
The following chapter will review such policies.
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3 The role of policies and business

practices in incentivising
sustainable land use

After reviewing the challenges remaining to achieve sustainable land use in the previous chapter, this
chapter explores the policies and business practices that could overcome these challenges. First, the need
for broader policy coherence is reviewed. It is followed by an overview of the role played by various policies
and business practices with high potential impacts on land use sustainability with a focus on the following
policy instruments: (1) regulations, (2) taxes, fees, subsidies (including payments for ecosystem services)
and trading schemes, (3) large-scale land acquisitions, (4) due diligence for responsible investment in
agriculture, and (5) voluntary certification schemes.

The role of a coherent long-term vision and coordination for successful land-use
policies and business practices

This section presents some key elements that are of the upmost importance in the design of policies that
will overcome the challenges towards more sustainable land use.

Long-term vision

Policies with long-term vision are needed. For instance, given the time needed by most urban land-use
policies for their long-run effects to kick in, governments need to show long-term commitments to
implemented policies (OECD, 2018[49]).

Vertical coordination between international, national and sub-national sector institutions

There is also a need for vertical coordination between international, national and sub-national sector
institutions for coherence and policy alignment (Verburg et al., 2019[50]; Brack and Wolosin, 2018[51]). Many
natural resources require transboundary management, thus many land-related issues are best solved
internationally (OECD, 2020[30]). International collaboration and especially between producer and
consumer- country governments is key in addressing embodied deforestation 9 and taking trade measures
designed to control global trade in commercial agricultural products, such as soy, palm oil, beef and cocoa
(Brack and Wolosin, 2018[51]).

9
Embodied deforestation is deforestation driven by agricultural commodity.
12 |

Coherent policy design and horizontal coordination

There are trade-offs and synergies in land management decisions. Land use objectives include
economic objectives (e.g. agriculture, transport and energy /urban policies), environmental objectives and
broader well-being objectives. Competition for land can result when several goals are pursued at the same
time and there will be trade-offs and potential synergies in land management decisions (OECD, 2020[45]).
Example of such trade-offs include:
• Ensuring security of jobs in livestock industry can conflict with reducing GHG emissions through a
reduction in meat consumption (OECD, 2020[3]).
• Protecting forested land for carbon storage and biodiversity can conflict with agricultural land
availability to provide sufficient land for growing food.
• Reducing GHG emissions through large-scale deployment of new biofuels can conflict with food
production, conservation of natural habitats for biodiversity or carbon storage.
• Increasing urban density can conflict with health protection (OECD, 2018[49]).
Land-use policies should thrive to use an integrated landscape approach that can help to minimise
trade-offs between policy objectives (Verburg et al., 2019[50]; OECD, 2018[49]). Reed et al (2020[52])
provide this definition: “Integrated landscape approaches are governance strategies that attempt to
reconcile multiple and conflicting land-use claims to harmonize the needs of people and the environment
and establish more sustainable and equitable multi-functional landscapes.”. International development
organisations recommend the landscape approach. For instance, PROGREEN, a new World Bank Multi-
Donor Trust Fund launched in 2019 advocates the use of inter-sectoral (integrated) landscape approaches.
This approach is recommended at all stages of urban policymaking for instance (OECD, 2018[49]). This
integrated approach is the essence of concepts used as paradigms for future urban development, such as
the compact city, the smart city or transit-oriented development (OECD, 2018[49]).
It is important that sectoral policies are coherent with sustainable land use and land-use nexus
issues (OECD, 2020[45]). Too often sectoral policies are designed without considering policies from other
sectors. For instance, policy makers in OECD countries have often failed to take into account that
investments in urban highways have served as incentives for low-density development (OECD, 2018[49]).
Urban planning has also too often failed to consider their impact on the transport infrastructure (OECD,
2018[49]). In many cases, economic, trade, and industrial (among others) policies tend to have an
overwhelming impact on land-use policies. An example is the extent to which energy and trade policies on
biofuels have impacted land use. Palm oil export levy has contributed to strengthen Indonesia biodiesel
market and Indonesia oil palm plantations have expanded (OECD, 2020[45]). Based on country case
studies, OECD (2020[44]) found that general trade policy often fails to consider land-use nexus issues
potentially endangering policy coherence.. At the same time, open markets are increasingly important for
food security. The regions experiencing population and demand growth are not those where supply can
be increased sustainably. Trade acts as a buffer to domestic shocks and – on balance – reduces price
volatility (OECD, 2020[3]).
Interdisciplinary and inter-sector (i.e. horizontal) cooperation is necessary when designing policies
to achieve multiple goals, harness synergies and reduce trade-offs (OECD, 2019[53]). An example is
the need for cooperation between land-use and transport sectors in order to design policies to control
urban sprawl and mitigate its consequences (OECD, 2018[49]). Reed et al (2020[52]) argue that the
implementation of landscape approaches requires a need for “concerted transdisciplinary actions that
connect scales of governance to address the complex political economies in contested tropical
landscapes”. They highlight some key barriers and opportunities for landscape approach implementation
such as bridging sectorial and disciplinary divides and involving the private sector (Reed et al., 2020[52]).
In addition, horizontal cooperation is sometimes necessary between two cities or two regions. For instance,
 | 13

the alignment of policies implemented by neighbouring local authorities as well as national, regional and
local policies, can be key for controlling urban sprawl and tackling its consequences (OECD, 2018[49]).
Land-use policies should consider their global impacts (OECD, 2017[54]; OECD, 2018[55]; OECD,
2020[45]). Supply chain are increasingly global, they usually cross several regional and regulatory borders,
which makes for complex material and monetary flows and sometimes many unintended impacts (Gardner
et al., 2019). In addition to on-site impacts, there is a need to assess socio-economic or environmental
impacts taking place elsewhere. An example of such impact is leakage caused by the introduction of a
certain land-use policy instrument (e.g. international trade policy, environmental protection policy) aimed
at reducing environmental pressure (OECD, 2020[45]). For instance, stringent timber harvest legislation
reducing deforestation in forest concessions may consequently increase deforestation outside
concessions (OECD, 2020[45]). REDD+ policy can cause leakage of timber harvest and deforestation
elsewhere, making the balance of net carbon benefits negative.

Green stimulus packages as part of COVID-19-response measures

Some economic stimulus packages and recovery plans for economies hit by the Covid-19 crisis
are already incentivising sustainable land use. In the context of the global COVID-19 crisis, many
governments have provided economic stimulus packages and recovery plans for economies hit by this
crisis. At least 30 OECD countries, as well as Brazil, China, India, Indonesia, and South Africa, have
included measures with the overall goal being to green economies. Some of the objectives include control
of invasive alien species, forest conservation job creation, and economic stimulus through ecosystem
restoration (OECD, 2020[30]). Several countries have introduced fiscal measures to address unemployment
and boost economic activity, while also supporting biodiversity. For instance, New Zealand has started a
new programme called “jobs for nature”. At term, 11 000 new jobs will have been created with a budget of
NZD 1.3 billion (USD 0.9 billion). These jobs consist in invasive species control (e.g. wilding pines,
wallabies and stoats), and habitat protection and restoration (New Zealand Ministry for the Environment,
2020[56]). These activities are usually labour intensive and easy to implement because worker-training is
quick and projects do not usually require much planning (Hepburn et al., 2020[57]). The OECD also provided
a number of recommendations for additional measures for sustainable land use (OECD, 2020[30]) (see Box
3.1).
However, some COVID-19 policy response have generated risks to land use sustainability.
Stringency of land-use policies and environmental regulation in some countries has been weakened
(OECD, 2020[58]). Although most of these regulatory changes are temporary, they could drive to an
increase in biodiversity-harmful activities and set a precedent for removing already in-force environmental
regulation limits (OECD, 2020[58]). Additionally, some governments have postponed the entry-into-force of
forthcoming regulations (OECD, 2020[58]). Also, illegal extraction of natural resources like timber has
increased in countries in Africa, Asia, and South America due to reduced monitoring and enforcement
efforts during lockdown (and also by a loss of rural livelihoods) (IUCN, 2020[59]; Waithaka, 2020[60]).
Ensuring enforcement during and after COVID-19 confinement is vital for safeguarding biodiversity and
ecosystem services and would have the additional benefit of creating jobs (Strand and Toman, 2013[61]).
14 |

Box 3.1.Measures for sustainable land use could be further included in stimulus packages
The OECD has reviewed the stimulus package introduced by government as a response to the COVID-
19 crisis and provided a number of recommendations for measures to consider. These include:
• Removing and repurposing some of the agricultural support subsidies potentially harmful to
biodiversity (e.g. for fertiliser purchase) (OECD, 2020[57]).
• Maintaining and strengthening regulations on land-use (OECD, 2020[58]).
• Redirect government revenue from land-use related taxes (see sub-section on taxes) towards
green stimulus measures that improve land use sustainability (OECD, 2020[58]).
• Using government-funded PES-type schemes to incentivise sustainable land use through
improved farm management practices (OECD, 2020[30]). Investing in sustainable land use can
help address the risks generated by biodiversity loss, while bringing other benefits to society
(for instance, providing jobs and business opportunities) (OECD, 2020[58]). A recent study
estimates that 20 000 to 70 000 full-time jobs would be generated if action is taken to restore
15% of degraded ecosystems in the European Union (OECD, 2020[58]; Dickie et al., 2017[62]).
Benefits for business could include cost reductions, new business opportunities (with for
instance ecotourism or certified sustainable products), higher market share and new companies
in charge of ecosystem restoration for instance (OECD, 2020[58]).
• Taking into account land-use related trade-offs (see sub-section on coherent policy design)
(OECD, 2020[30]).
• Better controlling land cover change especially surface artificialisation caused by urbanisation
and agricultural land clearing (OECD, 2020[30]).
• Introducing or extending carbon pricing taking distributional impacts into account (OECD,
2020[30]).
Source: (OECD, 2020[58]; Dickie et al., 2017[62]; OECD, 2020[30]).

A key criterion that policymakers must consider is time frame: sustainable stimulus packages should
address short and long-term challenges. In the short term, objectives include job creation and economic
activity boost, while long-term objectives include long-term growth, resilience to future shocks,
decarbonisation and sustainable growth trajectory.

Regulations

Environmental regulations are a key component of policy packages to achieve sustainable land
use. It is widely common for countries to issue regulations to discourage unsustainable input use, water
use, land clearance and urban sprawls (OECD, 2018[49]). This section will address the use of land-use
planning, urban containment policies, input use regulations and bans on natural resource use.

Land-use planning

There is a wide diversity of issues covered by land-use related laws and regulations. In France, for
instance there are four land-use related laws and several regulations covering issues from urban and
tourism development to environmental protection (see Box 3.2).
 | 15

Box 3. 2. Land-use related laws and regulations in France

There are four land-use related laws in France: (1) Law on solidarity and urban regeneration, (2) Law
on flexible rent ceilings, (3) Law on mountainous areas and (4) Law on coastal areas. They are
implemented via several regulations. For instance, the law on solidarity (1) has the objective to reach a
minimum of 20% of housing dedicated to low-income and poor people in cities of more than 50 000
inhabitants. The laws 3 et 4 set environmental protection standards while supporting tourism
development.
Source: (OECD, 2017[63])

Governments are giving increasing importance to land-use planning but efforts still have to be
made. Governments could (1) improve land-use planning governance, (2) mainstream land-use nexus
issues into sub-national strategies, plans and programmes, (3) use land use or spatial planning tools, and
(4) conduct land-use planning in a collaborative fashion (OECD, 2017[63]; OECD, 2020[45]). Land-use
planning in Indonesia already fulfils recommendations 2 and 3 but could further improve governance and
collaboration as detailed in Box 3.3.
1. Land-use planning governance is sometimes shared between national and sub-national
governments. In France for instance, land-use planning governance is quite complex because sub-
national governments are responsible for developing the strategic vision but not for developing the
corresponding policies (OECD, 2017[64]) (see Box 3.4).
2. In several countries, sub-national governments are either required to or can incorporate climate
and biodiversity concerns into their sub-national strategies, plans and programmes (OECD,
2020[45]). For instance, in France, the regional governments are required to include climate policies
in their regional plan for territorial planning (OECD, 2020[45]). France has established a National
Strategy for Sustainable Development which covers all aspects of the land-use nexus and makes
the case for action (OECD, 2020[49]). Although this is already useful, it is still missing the
identification of specific targets to be achieved (OECD, 2020[49]). In Brazil, sub-national
governments can, but are not required to, include climate policies (OECD, 2020[49]). Everywhere,
the inclusion of the valuation of ecosystem services into land-use planning would be useful to help
reduce trade-offs between the land-use nexus goals (OECD, 2020[49]).
3. In some countries, national development plans (or similar documents) include land use or spatial
planning tools and requirements. In Ireland for instance, environmental impact assessments -EIAs-
are successfully used to assess and limit the adverse impacts of development projects and to
ensure consistency between nexus areas (OECD, 2020[45]). EU law requires that Strategic
environmental assessments -SEAs- are conducted for major strategic programmes and
development plans taking place (OECD, 2020[45]).
4. A key recommendation for land-use planning is to conduct it in a consultative and co-ordinated
manner, and engage all the relevant Ministries and other key stakeholders (OECD, 2020[45]). This
is necessary to avoid misalignments and detect possible areas for joint efforts (OECD, 2020[45]).
16 |

Box 3.3. Land-use planning in Indonesia

Land-use planning in Indonesia has the following characteristics:
1. Land-use planning governance is centralised.
2. Land-use nexus issues are included into national development plans.
Indonesia’s medium-term development plan (RPJMN 2015-2019): includes forest conservation and
the National Biodiversity Strategy and Action Plan (NBSAP). Environmental issues, including
ecosystems and climate change, are taken into account.
Indonesia’s long-term development strategy (2005-2025): includes environmental sustainability as
one of the nine development missions. This strategy also aims at exploiting Indonesia's comparative
advantage in agriculture and mining to reach food self-sufficiency and middle-income status.
Indonesia’s medium-term national development plan (RPJMN 2020-24): provides an opportunity to
ensure greater effort to reconcile developmental policy goals with the climate change, land use and
ecosystems targets.
3. Land-use planning uses land use or spatial planning tools.
In preparation of RPJMN 2020-24, the Ministry of National Development (BAPPENAS) undertook
modelling to strengthen policy coherence between sectoral targets and to facilitate discussion
between stakeholders.
4. Land-use planning should be conducted in a more collaborative fashion.
In Indonesia, forestry, agriculture, energy and spatial planning are the responsibility of four different
ministries (respectively the Ministry of Environment and Forestry, the Ministry of Agriculture, the
Ministry of Energy and Mineral Resources, and the Ministry of Agrarian and Spatial Planning).This
makes inter-ministerial co-ordination mechanisms necessary. Ministry of Environment and Forestry
is responsible for the implementation of biodiversity/ecosystem policy and climate policy and it
should synchronise these policies because they are still created independently.
Source: (OECD, 2020[49])
 | 17

Box 3.4. Complexity of land-use planning governance in France

The combination of local and national governance makes land-use planning complex in France. In
France, the national government does not develop a national spatial land-use plan although it is
responsible for all policies including land-use planning policies (OECD, 2017[64]). The regions are
responsible for a strategic vision of land-uses. Below them, the “communes” (i.e. cities or towns) or
groups of small “communes”, the lowest level of governance, have the responsibility of developing a
key role in land-use plan and giving construction permits. Recent reforms have given more
responsibilities to regions. These multi-layered governance arrangements result in an integrated
approach to land-use planning. Although successful overall, this approach carries the following risks:
poor financial and overall capacity of communes to implement the land-use plan, lack of consensus
may keep key issues unaddressed and low public engagement.
Sources : (OECD, 2017[64])

Urban containment policies

Urban containment policies set limits to urban development with the objective of protecting
forestland and farmland around urban areas, decreasing the costs of providing public services and
incentivising infill development (in vacant land within the urban area) (OECD, 2018[49]). Most used urban
containment policies are greenbelts and urban growth boundaries (OECD, 2018[49]). A greenbelt can be
defined an area of natural open space around or adjacent to an urban area in order to prevent the
expansion of this urban area (OECD, 2018[49]). Greenbelts are usually identified at the national or regional
level and implemented through acquisition of open space, purchase of development rights, or regulation
of private property (OECD, 2018[49]). Greenbelts are used in the UK, Germany, Korea, Australia, Canada
and the US (OECD, 2018[49]). Like greenbelts, urban growth boundaries are also used to prevent urban
encroachment, but they are meant to be regularly evaluated and, if necessary, pushed further away to
allow the urban area to grow. Urban growth boundaries are more appropriate than greenbelts in urban
area likely to face population and economic growth. Likewise, urban service boundaries designate the area
within which public services, such as water supply and sewerage, are restricted to (OECD, 2018[49]).
The opportunity costs of urban containment policies should be carefully evaluated. Indeed, they are
known to successfully incentivise infill development, but they also tend to create urban areas further away
from the first urban centre, beyond the urban containment area. Such development comes with longer
commuting distances, and thus increased greenhouse gas emissions and costs of transportation.
Companies tend to prefer staying within the contained area and it drives housing prices up. Relocation
incentives may be used for companies to move close to their labour pool (outside greenbelt) inducing the
creation of new urban centres. Unintended negative impacts of containment policies can be kept to a
minimum with higher level of governance centralisation, higher amounts of developable land and higher
density within the contained area and more flexible policies.

Regulations: input use and bans

Input use regulations are commonly used in agriculture (DeBoe, 2020[65]). They can ban the more toxic
pesticides and restrict the amount of inputs (for instance fertiliser) that can be used (DeBoe, 2020[65]). Well-
known examples are:
18 |

• in the European Union: the European Water Framework Directive, the Nitrate Directive, and the
Birds and Habitat Directives (DeBoe, 2020[65]).
• in the United States, the US EPA regulates production practices of Concentrated Animal Feeding
Operation (CAFO) under provisions of the 1972 Clean Water Act (DeBoe, 2020[65]).
Well-designed input use regulations can be highly environmentally beneficial (DeBoe, 2020[65]).
Although input regulations do not seem to put financial burden on farmers, they do financially weigh more
on smaller farms and their impact varies with the availability for alternatives (for instance in the case of a
ban on specific pesticides) and the ability to transfer these costs to consumers (DeBoe, 2020[65]). Because
excessive use of inputs (especially fertilisers) leads to agricultural pollution, input use regulations can
simultaneously increase input use efficiency and reduce pollution (Piot-Lepetit and Moing, 2007[66]; DeBoe,
2020[65]).
When there is sufficient capacity to monitor land use and attribute production to individual
producers, most stringent tools are bans. However, they may not be the right tool for land
degradation-related issues because environmental parameters are hard to monitor, and leakage is
likely to happen. For instance, studies on logging bans have found mixed results. Challenges included:
• When logging bans are established, registered logging companies leave the forests creating a
vacuum and, if enforcement is deficient, illegal logging starts happening in this new vacuum,
sometimes at a pace exceeding legal logging before the bans. Logging bans that were supposed
to protect the forests generated more deforestation (FAO, 2019[67]).
• In other cases, when logging bans are established, forests loose financial value and thus, once
logging has stopped, land is turned into an area that can be developed for social and economic
benefits (e.g. industrial purposes). It is the case with economic land concessions in Vietnam 10
(FAO, 2019[67]).
• Moreover, some countries where logging bans were established did not have alternative domestic
wood sources (e.g. planted forests and trees outside forests) and had to import wood from
countries with weaker environmental regulations (FAO, 2019[67]). Logging bans that were supposed
to protect the forests generated deforestation elsewhere.

Reform of harmful subsidies that can drive sustainable land use

Reform of selected sectoral subsidies could drive sustainable land use. Large subsidies and support
policies set up for other purposes (income support) are encouraging farmers and other land use actors to
maintain or increase unsustainable practices. This is the case for some energy and many agricultural
subsidies. It is estimated that potentially environmentally harmful agricultural support amount to USD 345
billion per year in 54 countries in 2018-19 (OECD, 2020[68]). OECD keeps a list of environmentally harmful
supports to fossil fuels 11 and one of environmentally harmful support to agriculture 12. Examples of
environmentally harmful energy subsidies include biofuel production, and electricity subsidies for
groundwater pumping in Mexico (Gruère and Le Boëdec, 2019[69]). Examples of agricultural subsidies

10
Objectives of economic land concessions are: 1) developing an intensive agricultural base and promoting capital
investment in industrial agriculture; 2) increasing employment in rural areas to improve and diversify livelihood
opportunities; and 3) generating revenue from concession fees, taxation (FAO, 2019[67]).

and other charges

11
OECD Inventory of Support Measures for Fossil Fuels www.oecd.org/site/tadffss
12
OECD Producer and Consumer Support Estimates database
https://www.oecd.org/unitedstates/producerandconsumersupportestimatesdatabase.htm
 | 19

include market price support, support per unit output, and unconstrained support per unit input. These
agricultural subsidies are the most trade distorting and potentially harmful for the environment and they
are the most common financial instruments used (OECD, 2020[68]). These measures encourage producers
to keep their production practices and produce beyond market demand. Input support also encourage the
excessive use or misuse of potentially polluting pesticides and fertilisers (OECD, 2020[70]; OECD, 2019[71]).
The use of agricultural subsidies across the world is declining because they can be disruptive and create
perverse incentives to overproduce or move towards monocultures (OECD, 2020[68]). Sud (2020[72]) argues
that “countries need to review support that directly or indirectly incentivises excessive input use in order to
provide the right signals to producers and free up finances that can then be redirected towards other uses”.
Non-output related support (decoupled from production) like payments for conservation areas, wildlife or
biodiversity, has proven effective at improving biodiversity and is increasingly being used in European
countries (Sud, 2020[72]).
Reform should consider its possible unintended outcomes. For instance, removal of agriculture
subsidies may deprive small-scale farmers of key financial capital and they may shift to slash-and-burn
agriculture, generating additional deforestation (OECD, 2017[73]).

Subsidies, taxes, fees and trading schemes

Economic instruments implemented by governments, such as environmentally-motivated subsidies,

payments for ecosystem services schemes, taxes, fees and tradable permits, provide price signals to both
producers and consumers to behave in a more environmentally-sustainable way (OECD, 2020[74]). As
DeBoe (2020[65]) defines them, economic instruments create or alter the relative incentives faced by farmer,
so that at least some farmers voluntarily choose to improve their environmental performance. Taxes and
other instruments that impose a price for performing a negative behaviour and some subsidies also provide
continuous incentives to innovate in order to achieve objectives in a more cost-effective manner, and most
are also able to generate revenue (OECD, 2020[74]).Economic instruments are the so-called “positive
incentives” embedded in the 2011-2020 Aichi Biodiversity Targets, notably Target 3.

Subsidies for sustainable land use and Payments for ecosystem services

A number of subsidies are used to promote sustainable land use. Examples include subsidies for
sustainable practices on-farm (organic or environmentally friendly agriculture, for pesticide-free
cultivation), land and native vegetation conservation, forest management and reforestation, and for
structural adjustment towards “greener” agricultural systems (DeBoe, 2020[65]). For instance, farmers are
sometimes subsidised for purchasing “green” technologies such as fuel-efficient farm machinery or water-
efficient irrigation systems. The net environmental impact of such subsidies depends on the programme
design (DeBoe, 2020[65]). Often multiple subsidies are in place at the same time (see Box 3.5.). There are
currently 183 environmentally motivated subsidies directed at land management in force across 25
countries 13 (OECD, 2020[74]; DeBoe, 2020[65]).

13
The existence of an instrument does not guarantee its enforcement. Moreover, the level of stringency might not be
adequate for the desired environmental outcome (OECD, 2020[75]).
20 |

Box 3.5. Agricultural subsidies in Belgium

In Flanders (Belgium) for instance, environmentally related grants include: investment support for
sustainable and organic farming (investment in physical capital), subsidies for buffer management,
subsidies for mechanic weed control, subsidies for recovery, development and maintenance of small
landscape elements, subsidies for the reduction of pesticide and fertiliser use in ornamental crops
cultivation, subsidies for voluntary cutback of the pig herd and public funding for the investigation and
remediation of contaminated soils.
Source: (OECD, 2020[75])

Programmes that exchange value for land management practices intended to provide or ensure ecosystem
services 14 are increasingly used worldwide. These include Payments for ecosystem services (PES),
Biodiversity offsets and Land conservation agreements. They are detailed below.
Payments for ecosystem services (PES) are increasingly discussed as a tool to promote
sustainable agriculture practices. PES services schemes are incentive mechanisms introduced to
account for positive externalities or characteristics of public goods that existing markets do not account for.
Suppliers of an ecosystem service with positive externality are paid to keep providing this service. PES
schemes targeted towards sustainable land use 15 are increasingly used and cover a wide range of scales,
time-frame and contexts: international programs are implemented in the EU with the agri-environment-
climate measures (DeBoe, 2020[65]), national-scale programs 16 are implemented in Canada, China (see
Box 3.6.), Costa Rica (Pagiola, 2008[76]), Ecuador (Wunder and Albán, 2008[77]; De Koning et al., 2011[78]),
France, Mexico (Muñoz-Piña et al., 2008[79]), Tasmania, the United States (OECD, 2019[80]), Scotland
(Smith et al., 2013[81]) and several Brazilian and Australian states (Pagiola, Carrascosa von Glehn and
Taffarello, 2013[82]). Most countries in Latin American have some sort of smaller PES (usually watershed-
scale), like Colombia (Blanco, 2006[83]) and Nicaragua (Pagiola, Honey-Rosés and Freire-González,
2017[84]). Many cities have PES scheme to purchase upstream watershed forest protection to ensure the
city’s ongoing access to clean water. Well-known examples are New York city and the City of Yokohama
(FAO, 2019[67]).
PES-type schemes signed for period of over twenty years or in perpetuity or upon satisfaction of
specified conditions are usually referred to as Land Conservation Agreements (covenants or
easements). They can use fixed price offers or, more commonly, a market-based approach, such as
competitive tender (Smith et al., 2013[81]). Competitive tender type agri-environmental mechanisms based
on an environmental performance index have been used by governments to purchase ecosystem services.
The most studied example is the USDA Conservation Reserve Programme, a competitive tender 17 type
agri-environmental mechanism based on an environmental performance index (OECD, 2019[80]). Australia

14
An ecosystem is a dynamic complex of plant, animal, and microorganism communities and the non-living
environment, interacting as a functional unit. Ecosystem services are the benefits people obtain from ecosystems
(Millennium Ecosystem Assessment (Program), 2005[136]).
15
Including via the use of environmental cross-compliance mechanisms or agri-environmental schemes
16
considered “hybrid” because they embed regulatory-type requirements into a broader policy mechanism that a
farmer can choose to participate in (DeBoe, 2020[65]).
17
A tender is a sealed bid purchase auction.
 | 21

is another leader in auction type schemes and the best known in Australia is the BushTender scheme for
vegetation protection in Victoria (Rolfe, Whitten and Windle, 2017[85]). Conservation Covenants in
Tasmania are another case of successful implementation of combined fixed price offers and tenders (Smith
et al., 2013[81]).
PES schemes funded by the private sector are usually implemented at smaller scale than
government schemes. An example of private sector PES is that of South West Water and the
Westcountry Rivers Trust who combine use restrictive covenant to structure a payment to farmers for
implementing upstream watershed protection practices 18 in England (Smith et al., 2013[81]).
Overall, PES can be effective to incentivise sustainable land use if certain factors are taken into
account:
• The selection process should be designed carefully. Tender-type PES have been found to be
more cost-efficient than simpler PES approaches such as funding eligible proposals in the order in
which they are received (Smith et al., 2013[81]). The market-based approach to PES increased the
ecosystem benefits significantly (Smith et al., 2013[81]). Regarding tenders ranked based on an
environmental performance index, it should be noted that once all the most cost-effective tenders
have been signed in the earlier stages of the scheme, cost-efficiency of the overall scheme
diminishes with the participation of less cost-effective offers (Smith et al., 2013[81]).
• Practices encouraged by the scheme should be, once adopted, financially viable without
payment. Because one of the challenges of PES is that bad practices (e.g. deforestation) often
resume when payment (e.g. for conservation) stops (Etchart et al., 2020[86]), a key to success is to
pay for good and productive land-use practices (e.g. silvopastoral practices), as demonstrated in
Nicaragua (Pagiola, Honey-Rosés and Freire-González, 2017[84]) and Colombia (Pagiola, Honey-
Rosés and Freire-González, 2014[87]). Landowners who received the payment adopted
environmentally beneficial practices and continued after payments ceased.
• Leakages 19 should be controlled for. For instance, some evidence suggest that Viet Nam
national-scale reforestation programs led to the displacement of forest extraction to other countries
equivalent to 39% of the regrowth of Viet Nam’s forests from 1987 to 2006 (Meyfroidt and Lambin,
2009[88]) and approximately 50% of these wood imports were illegal (Lambin and Meyfroidt,
2011[89]).
• Long-term PES (e.g. Land Conservation Agreement) have duration specific challenges: (1)
Costs to monitor and enforce the agreements over time are often high (Smith et al., 2013[81]). (2)
In case the design of agreements is not adapted to the way societal needs and preferences evolve
over time, amendments may be needed are they are costly (Smith et al., 2013[81]).

18
limiting livestock numbers, planting cover crops after harvesting, refraining from planting maize in sensitive areas,
and maintaining specified uses of manure stores or other infrastructure (Smith et al, 2013)
19
Leakage happens when a degrading land-use practice relocates outside of the area of PES intervention.
22 |

Box 3.6. The government-driven China’s Conversion of Cropland to Forest Programme, also
known as the Sloping Land Conversion Program or “Grain for Green”
Launched in 1999 in response to widespread flooding in 1998, China’s government operates the largest
publicly funded watershed conservation project in the world: the Conversion of Cropland to Forest
Programme, also known as the Sloping Land Conversion Program or “Grain for Green”. Its goal is to
mitigate the effect of soil erosion and restore ecosystems by planting trees on former steep areas of
cropland or uncultivated barren land. China has invested billions of dollars for afforestation and to
provide compensation for participating farmers. Like in a PES scheme, 32 million farming families
receive annual subsidies to plant and manage trees on their (mostly low productivity) agricultural lands
totalling 28 million hectares (Zhang et al., 2017[90]). Uchida, Xu and Scott (2005[91]) pointed out that the
success of such programmes in the developing world depends on their ability to reduce erosion and
sustain income of participating farmers by means of a cost-effective and sustainable change. According
to FAO (2019[67]), the clear policy directive supporting it, the important allocation of resources, and
effective institutional arrangements at all scales to implement and monitor it made this programme
successful in addressing soil erosion on private land. However, the program has mixed results in terms
of biodiversity because it promotes monoculture tree plantation among others. Recommendations
based on empirical research are to (1) promote the conservation and expansion of native forest and (2)
mixed-plantation arrangements over monocultures (Wang et al., 2019[92]).
Sources: (Wang et al., 2019[92]; Zhang et al., 2017[90]; FAO, 2019[67]; Uchida, Xu and Scott, 2005[91])

Biodiversity offsets 20 are measurable conservation outcomes that result from activities designed
to deliver additional biodiversity benefits in compensation for losses. They are based on the polluter
pays approach (OECD, 2016[93]). There are three types of offsets (one-off project based; payment in-lieu;
banking). There exists a considerable body of literature on biodiversity offsets. A market-based approach
to biodiversity offsetting means that, in order to offset their biodiversity impacts, project developers can
purchase conservation or offset ‘credits’ attached to wildlife sites registered by landowners. Biodiversity
offsets include habitat creation or restoration (Smith et al., 2013[81]). In 2016, there were at least 100
biodiversity offset programmes (some of them being close forms of compensatory conservation) in at least
56 countries among which Australia, Brazil, Canada, the People’s Republic of China, Colombia, France,
Germany, India, Mexico, New Zealand and South Africa (OECD, 2016[93]). Governments have introduced
biodiversity offsets in the European Union, Australia, Canada, South Africa) (OECD, 2016[93]).
Biodiversity offsets are usually mandatory when used by governments, and usually implemented
voluntarily by the private sector. Developers for instance may voluntarily purchase biodiversity offsets
to compensate for the impacts of their development projects. Voluntary biodiversity offsets are often used
by infrastructure construction or extractive industries that have visible and significant negative impacts on
biodiversity. Biodiversity offsets are sometimes required by financial institutions as a condition to fund a
project (OECD, 2016[93]).

20
Payments for Ecosystem Services can be distinguished by a particular focus on the ‘beneficiary pays principle’,
whereby the beneficiaries of ecosystem services provide payment to the providers of ecosystem services. Conversely,
Biodiversity Offsetting is based on the ‘polluter pays principle’, since developers pay for the provision of compensatory
habitat expansion or restoration elsewhere (Smith et al, 2013).
 | 23

Taxes

Taxes on property, agricultural inputs and natural resources use can efficiently incentivise
sustainable land use. The use of taxes for biodiversity has been increasing across the world. There are
currently 206 biodiversity-related taxes in force across 59 countries 21 and 96 taxes directed at land
management in force across 9 countries (OECD, 2020[74]). Based on the polluter pays principle,
biodiversity-related taxes embody the negative externality generated by the use of natural resource or the
emission of a pollutant. In doing so, they incentivise more sustainable and environmental-friendly
behaviours. Additionally, governments can redirect revenue from their land-use related taxes towards
conservation activities like forest protection, reforestation, agroforestry and sustainable forest
management. This is what Colombia and Costa Rica are already doing with their carbon tax revenue (WEF,
2020[94]).

Property taxes

Property taxes are a common economic instrument used in land-use policy. They are recurrent ad
valorem tax on real estate owned. It is commonly collected by the local authority often on both land and
land improvements. Lower tax rate in areas beyond the greenbelt induce the creation of lower density
urban areas further away from the first urban centre, beyond the greenbelt (OECD, 2018[49]). Such
development comes with longer commuting distances, and thus increased greenhouse gas emissions and
costs of transportation.

Taxes on agricultural inputs

Because of low elasticity in pesticide demand, studies have shown that high tax rates on specific pesticide
may lead to more significant behavioural changes than low taxes on a large range of pesticides (Sud,
2020[72]). However, targeting pesticides with higher environmental and health risks involves high
transaction costs (Sud, 2020[72]). A recent study from Sud (2020[72]) reviews many examples of pesticide
taxes in OECD countries. Revenue from taxes on pesticides and fertilisers is sometimes earmarked to
promote sustainable agriculture or to compensate for distributional effects on farmers (see section on
distributional impacts).

Fees and charges

Entrance fees to national parks, mining or quarrying charges could also incentivise sustainable
land use. There are currently 179 biodiversity-related fees and charges in force in 48 countries and only
58 directly directed at land management in force across 9 countries (OECD, 2020[74]). The idea behind in-
lieu fee schemes is close to an offset: entities pay a fee that will be used for conservation activities which
offset the activities undertaken by the fee-paying entities (DeBoe, 2020[65]).

Tradable permit systems

Tradable permits are market-based policy instruments that set a limit on the total amount of a
natural resource that can be exploited. Users can be granted individual permits which they can trade.
Permit allocation is conducted through auctions or can be grandfathered (i.e. allocated to existing users of
the resource free of charge, typically in perpetuity). There are four broad types of permit systems: 'quota'
system (also referred to as cap-and-trade programmes), a 'credits' system, with 'averaging' of limit values
for similar products manufactured and 'transferable usage rights' licensing the use of natural resources

21
Biodiversity-related taxes generate approximately a revenue of USD 7.5 billion a year (average 2016-2018)
24 |

(OECD, 2001[95]). For instance, tradable development rights allow a right to develop a parcel of land to
move from one parcel to another (OECD, 2001[95])(see Box 3.7).
Based on the OECD database (OECD, 2020[75]), most common environmental domains of the tradable
permit systems are : fishing, hunting, water, energy and greenhouse gas emissions. There are currently
42 active biodiversity-related tradable permit schemes in 26 countries (OECD, 2020[74]). At least 4 of these
schemes allow for the auctioning of part or all permits (OECD, 2020[74]). The largest system is the EU
Emission Trading Scheme (EU ETS) for CO2 and CO2/Carbon but similar schemes are in place also in
other countries or regions (like China, India or New South Whales). There are currently only 6 tradable
permits systems strictly directed at land management (e.g. for landscape preservation) in force in France,
New-Zealand and the United States (OECD, 2020[74]).
Key benefits of tradable permit system include certainty over total negative externalities and their
possible revenue raising potential. If they are auctioned, tradable permits can generate finance. In
Alberta, for instance, a minimum of 60% of funds generated by the hunting auction are to be invested in
projects for the long-term benefit of Rocky Mountain bighorn sheep (OECD, 2020[74]). The use of clearing
permit (rather than a clearing ban for instance) allows the government to control the total amount of land
clearing as well as to ensure the high agricultural value of the land cleared (Rolfe, Whitten and Windle,
2017[85]). Indeed, farmers with valuable agricultural land can buy permits from farmers with less valuable
agricultural land (Rolfe, Whitten and Windle, 2017[85]).
In some cases, high monitoring costs make the use of trading scheme particularly complex (OECD,
2001[95]). Initial allocation of tradable permits and subsequent behaviour (in terms of emissions and
abstractions) must be precisely monitored (OECD, 2001[95]). Some ecosystem services are particularly
difficult to quantify (and thus to monitor) with meaningful and robust indicators (Balvanera and al., 2017[96]).
Similarly, agricultural emissions have so far been excluded from the EU ETS (except NO2 emissions from
the production of chemical fertilisers) due to concerns surrounding the accuracy of monitoring, reporting
and verification (European Commission, 2018[97]).
 | 25

Box 3.7. Tradable development permits

Tradable development permits can be used for a range of policy objectives including land conservation,
prevention of urban sprawl, preservation of historic landmarks, densification of urban areas or promotion
of commercial growth in downtown areas. The United States is the country using tradable development
rights the most, before China, the Netherlands, Germany and France (Rama, 2011[98]). For instance,
the United States has permit systems related to land use: (1) the Montgomery County Land
management, (2) the Tradable development rights for pinelands management and (3) the Transferable
rights for wetlands conservation. In Victoria State in Australia, tradable development rights are used to
help planning officers weigh in the 73 objectives that they should take into account and balance trade-
offs between them (Rama, 2011[98]). Tradable development rights have distributional benefits. They
allow to use markets to compensate for and achieve more equitable land-use planning: for instance, a
landowner in an area constrained by conservation objectives can be compensated with tradable
development permits) (OECD, 2018[49]). The two most important factors in their success is (1)
developers’ need for bonus development, and (2) the attributes such as infrastructure to serve bonus
development and political and community acceptability in the receiving areas (OECD, 2018[49]; Rama,
2011[98]). Tradable development rights can fail when: (1) transaction costs are too high (for instance,
the costs (time and money) of incurred in search of information about prices of Tradable development
rights); (2) developers have to meet additional requirements ; and (3) there are other instruments exist
that can increase receiving area density (OECD, 2018[49]).
Source: (OECD, 2018[49]; Rama, 2011[98])

Large-Scale Land Acquisitions

An increasing number of Large-Scale Land Acquisitions (LSLAs) is impacting land use governance
and practices in recipient countries. LSLAs most typically happens when “large agribusiness companies
from countries rich in financial capital but poor in suitable land for agriculture are acquiring large tracts of
land in countries with land reserves” (Lambin and Meyfroidt, 2011[89]). As Zoomers (2010[99]) points out,
LSLAs also mean displacement of land use and are sometimes initiated by foreign governments.
LSLAs rarely incentivize sustainable land use albeit their potential to leverage new governance and
management arrangements. A World Bank study finds that surveyed LSLAs are mostly interested in
generating positive environmental and socioeconomic impacts but are mostly achieving the opposite
(Verburg et al., 2019[50]). Key conclusions can be drawn from a recent joint empirical research by FAO,
IFAD, UNCTD and the World Bank (2010[100]): LSLAs often create positive socioeconomic impacts on
surrounding communities (for instance, contract farming opportunities) but some LSLAs have been found
to overexploit soils and water sources, and overuse pesticides. In addition, their finding that the most
profitable LSLAs were also the ones with the most positive impacts calls for a careful selection of potential
investors (World Bank, 2014[101]). LSLAs negotiations must include environmental impact assessments
prior to the investment and LSLAs agreements must include binding agreements on land stewardship in
general and sustainable land use in particular (Verburg et al., 2019[50]). LSLAs have been criticised for not
having a robust environmental impact assessment and environmental management system available to
the public (FAO, 2010[100]). A number of studies have identified negative outcomes from LSLAs, including
high deforestation rates in Brazil (Gibbs and al, 2015[102]) and Cambodia (Davis and al., 2015[103]); rapid
and massive land conversion to grow crops that are not used for local subsistence (Boudreaux, 2016[104]).
26 |

Positive change was identified in Cambodia where some LSLAs for sugar production had been exposed
as high-profile “land grabs” whith land acquisition not being compensated for (Beban, So and Un, 2017[105]).
The use of outright force and repressive regulation and legitimation completely shifted the situation towards
land titling campaigns in LSLAs areas and responsible investment certification (Beban, So and Un,
2017[105]). Based on quantitative analysis of empirical data from Indonesia, Chen, Kennedy and Xu
(2019[106]) found that policy-driven moratoria on existing LSLAs were effective to reduce tropical
deforestation.

Due diligence for Responsible Investment in Agriculture

Due diligence of land-based investments is becoming increasingly organised. The Committee on

World Food Security (CFS) has developed two key products for due diligence: the 2012 Voluntary
Guidelines on the Responsible Governance of Tenure of Land, Fisheries, and Forestry (the CFS “VGGT”),
and the 2014 Principles of Responsible Agricultural Investments (the “CFS-RAI”). The sustainable
management of natural resources is one of the ten core principles for Responsible Investment in
Agriculture and Food Systems (CFS-RAI Principles). Based on these principles, USAID (2015[107]) has
developed a guide with recommendations for best practices related to the due diligence and structuring of
land-based investments, with the goal of reducing risks and facilitating responsible projects that benefit
both the private sector and local communities. This guide is also designed to help companies identify
practical steps to align their policies and actions with provisions of other relevant instruments (USAID,
2015[107]). Following a two-year multi-stakeholder process, OECD and FAO (2016[108]) jointly developed
Guidance for Responsible Agricultural Supply Chains. Their environmental risk mitigation measures
include “Seek to avoid negative impacts on, and support the conservation of biodiversity, genetic resources
and ecosystem services, and when avoidance of such impacts is not possible, implement measures to
minimise impacts and restore biodiversity and ecosystem services through an adaptive management
approach.” (OECD/FAO, 2016[108]). IFC Performance Standard 6, para 26, also states that ‘Where feasible,
the client will locate land-based agribusiness and forestry projects on unforested land or land already
converted’.

Voluntary certification schemes

Voluntary certification schemes can be broadly defined as eco-labelling schemes. They were
initiated in the 1970s to provide seals on products with the best environmental characteristics on a single
environmental issue, often in a specific sector (OECD, 2013[6]). In the 1980s and 1990s, several private
standards were developed and there is nowadays a multiplication of certification schemes of varying scope
and nature (OECD, 2013[6]). Examples include quantitative “footprint” schemes for GHG and broader
environmental impact (OECD, 2013[6]). Voluntary certification schemes can be initiated by NGOs, private
companies and multi-stakeholder roundtables. Some voluntary certification schemes include mandatory
requirements to be fulfilled by any party choosing to use the label (OECD, 2013[6]).
A number of certification schemes are developed by NGOs to ensure sustainable and responsible
production. Adherence is voluntary and subject to regular audits by the NGO. NGO-led certification
typically targets food, agriculture or forest products and are called Voluntary Sustainability Standards
(Prag, Lyon and Russillo, 2016[109]). Examples include Fair Trade, Rainforest Alliance, Forest Stewardship
Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC). Rainforest Alliance
began certification 30 years ago and now 2.2 million certified farmers or 4.7 million hectares of coffee,
cocoa, tea and banana plantations in 70 countries. In the forest sector, there is a global duopoly shared
by the FSC and the PEFC, both privately developed with strong government recognition and a push to
ensuring standards are locally compatible. FSC and PEFC certified forests account for most of the
 | 27

agriculture and forestry land under sustainable certification. The area of forest under FSC and PEFC is
commonly used as an indicator of sustainably managed forests.
In some countries, certification standards have been successfully adopted into national laws. In
Guatemala, FSC certification is required for all forest concessions. In the EU, producers of imported
biofuels have to be certified (Verburg et al., 2019[50]; Fortin and Richardson, 2013[110]).
Multi-stakeholder commodity roundtables are like NGO-led certification except the fact that the different
actors involved in the production of a commodity are the ones leading the process. Together, these actors
have developed for instance:
• the Principles and criteria for sustainable palm oil production which certifies palm oil producers,
processors, or traders, as well as manufacturers, retailers, banks and investors involved in palm
oil supply chains,
• the standards of the roundtable on sustainable biofuels which certifies biofuel operators,
• Principles and criteria for responsible soy production certifying soy growers and soy growers’
groups,
• the Better Sugar Cane Initiative (Bonsucro) Standards for sugarcane producers.
Supermarkets and other food retailers have also developed their own production criteria that must be met
for them to distribute the product. Currently, the most used private certification board is the Global Good
Agricultural Practice (G.A.P.) standards.
This chapter has provided an overview of the key elements common to all successful land-use policies,
has delved into the range of policy instruments that could overcome today’s challenges towards more
sustainable land use. The next chapter will focus on the political economy issues connected with the
introduction or reform of these policy instruments.
28 |

4 Political economy of land-use

policies

Some of the salient issues that arise in the political economy of land-use policy are similar to those
characterising environmental or biodiversity policy reforms: (1) competitiveness issues, (2) distributional
implications on households, (3) vested interests, and (4) political acceptability (OECD, 2017[73]). Empirical
research has shown that the distribution of real or perceived costs and benefits influences policy choice
and design in general and the ambition and pace of reforms in particular (OECD, 2017[73]; Zachmann,
Fredriksson and Claeys, 2018[111]). In this context, analysing distributional impacts of reforms and possible
mitigation or compensatory measures could speed-up the introduction of new policies or policy reforms
(OECD, 2015[112]; Zachmann, Fredriksson and Claeys, 2018[111]; OECD, 2014[113]). This chapter details key
distributional impacts of biodiversity reforms and of green urban policies, and solutions to adjust or avoid
them. It then delves into land governance issues towards more sustainable land use.

Distributional impacts on firms and households

Distributional impacts of biodiversity reforms

The risk that reforms can have a negative impact on firm competitiveness is a common concern in
environmental policy reforms. A country or region applying more stringent policies may affect the
competitiveness of domestic firms and create an incentive to relocate in other countries or regions with
less stringent regulations (the so called “pollution haven” hypothesis ) (OECD, 2017[73]). Such
‘competitiveness concerns’ may also generate a “race to the bottom”, where policy makers ease
regulations in order to retain or attract firms (OECD, 2017[73]).
The literature on the impact of biodiversity policy reforms on firm competitiveness is particularly
limited. Most of studies on the competitiveness impact of environmental policy reforms focused on the
impact of carbon pricing and find limited evidence of negative impact of more stringent emission policies
on firms (OECD, 2020[30]). The OECD (2017[73]) reviewed examples of studies on competitiveness impacts
of environmental policy reforms in sectors or areas related to biodiversity and found limited evidence of
negative impacts. ECOTEC (2001[114]) focused on the introduction of a pesticide tax reforms in Sweden
and Denmark and found no evidence of negative impacts on firms (OECD, 2017[73]). No negative
competitiveness impacts were found in a study on the introduction of an Environmental User Fee System
(EUFS) to address oxygen pollution in the Philippines (ECOTEC, 2001[114]; Catelo and al., 2007[115]; CBD,
2011[116]; DELTARES, n.d.[117]; GWP, n.d.[118]); as in (OECD, 2017[73])].
Similarly, studies on the impact of PES and the creation of protected areas on income have mixed
results. Hegde and Bull (2011[119]) found some evidence of regressive impacts since male-headed and
high-income households were being favoured as project benefit recipients of a small scale agroforestry
based carbon sequestration PES project in rural Mozambique (Hegde and Bull, 2011[119]). The Mexico’s
Payments for Hydrological Services Program has been found to generate small but positive poverty
alleviation effects (Alix-Garcia, Sims and Yañez-Pagans, 2015[120]; Sims and Alix-Garcia, 2017[121]). Alix-
 | 29

Garcia, Sims and Yañez-Pagans (2015[120]) found that targeting forests at greater risk could increase
additionality in terms of forest protection but would decrease the potential for poverty alleviation by reducing
participation of poor households (because they usually live close to forests at lower risk). The creation of
national parks in Costa Rica has led to increase in the wages but only in areas with tourism (Robalino and
Villalobos, 2015[122]) while Sims and Alix-Garcia (2017[121]) find that protected areas in Mexico had overall
neutral impacts on livelihoods.
Policies to green the agricultural sector may also have indirect consequences on households’ budget
through variation in food prices. For instance, policies to decrease global GHG emissions in food
production may affect crop prices. In principle, such changes could have regressive implications as lower
income households are likely to spend a higher share of their income on food. However, food consumption
preferences vary remarkably across a number of socio-economic dimensions (e.g. geography, religion,
income) and it is challenging to make broad conclusions (Zachmann, Fredriksson and Claeys, 2018[111]).

Distributional impacts of green urban policies

Policies to promote infill development can have important distributional implications as they can
affect house values directly. Urban containment policies may strongly affect the value of land as they
can change its commercial value. Investment in public transportation, often used to support densification
of inner suburbs, often increases the values of areas served by the newly built infrastructure. Reform to
building height, which may be used to increase densification, can also affect the prices of existing dwelling
stock (Ihlanfeldt, 2007[123]). In this context, it should be noted that poorer households are less likely to be
directly affected by such policies since they are less likely to own housing. However, they may suffer from
second round consequences as rent prices may vary due to increase in the property values due to policy
intervention (OECD, 2018[49]). Urban containment policies were found to have regressive impacts in
Germany (Jehlinga, Hecht and Herold, 2018[124]). The topic of infill development needs to be further
researched (Jehlinga, Hecht and Herold, 2018[124]).
Reforms to urban parking policies may have progressive impacts. Incorporation of parking costs in
local taxes is likely to be regressive as low-income households are less likely to own cars. In this context,
reforms to increase the prices of parking permits prices may lead to progressive outcomes (Russo, van
Ommeren and Dimitropoulos, 2019[125]). In addition, large amounts of land is allocated to car parking, which
encourages car ownership and use, thus further promoting urban expansion. At the same time, the
saturation of on-street parking in busy downtown areas suggests that parking prices are too low. However,
local communities are likely to oppose increase in tariffs for curb-side parking. Earmarking some of the
revenues from parking revenues for local project can help to increase support for policy reforms. For
example, 30% of on-street parking fees in central Mexico city are earmarked for local projects that are
selected through a public consultation process (Russo, van Ommeren and Dimitropoulos, 2019[125]) (see
Box 4.1).
30 |

Box 4.1. The ecoParq program, a successful paid on-street parking in Mexico city
In 2017, Mexico City also replaced its minimum with maximum parking requirements, which amount to
a maximum of three parking spaces per housing unit for residential parking (Government of Mexico
City, 2017[126]; Institute for Transportation and Development Policy, 2017[127]). Thirty per cent of on-
street parking revenues are recycled into projects for the revitalisation of local neighbourhoods such as
accessible quality sidewalks, improved parks and lighting. Funds are allocated to selected projects
decided upon via a community consultation process. The community is actively engaged in selecting
the recipient projects (OECD, 2015[128]; Ríos Flores, Vicentini and Acevedo-Daunas, 2015[129]).
Source: (Russo, van Ommeren and Dimitropoulos, 2019[130])

Best practices to advance reforms

Recycling the revenue from environmentally related taxes or putting into place transitional
measures can help to reduce resistance in the most affected sectors. The cost of policy reforms to
address unstainable land-use tend to be concentrated on selected social groups while benefits often are
more widespread, as often happens with environmental reforms (e.g. the impact of climate change policies
for coal miners). In this context, countries could consider earmarking part of the revenues of newly
introduced environmental taxes to support affected social groups or also introduce transitional payments
(see Box 4.2).
 | 31

Box 4.2. Examples of earmarking and transitional measures to address political economy
concerns
Example 1: Creation of a new tax on pesticide to address agricultural pollution in France and
recycling tax revenue into technical assistance
In France, a first step in advancing the creation of a new pesticide tax, called the diffuse pollution tax,
has been to find ways to minimise the potential costs to farmers (OECD, 2017[73]). The economic
instrument chosen to do this has been the recycling of the revenue from this tax to fund the Ecophyto I
plan (that started in 2008), Ecophyto II plan (in 2016), and the Water Agencies (OECD, 2017[73]). With
the Ecophyto plans, farmers do not receive any monetary compensation but opportunities for peer
interaction and free technical assistance (Lapierre, Sauquet and Subervie, 2019[131]). The idea is to
demonstrate that it is possible to decrease pesticide use and maintain yields. Up to 3000 farms
benefited from this assistance so far. A recent empirical study found that the Ecophyto plans are
successful in reducing pesticide use for a similar cost per hectare than that of the average European
agri-environmental scheme (Lapierre, Sauquet and Subervie, 2019[131]).
Example 2: Use of transition payments to lessen/soften the negative impact of removing
payments per head of cattle in Switzerland
In Switzerland, farmers with intensive cattle operations in the lowland region of the country were
negatively affected by the agricultural reform because payments per head of cattle were removed
(OECD, 2017[73]). To minimize these negative impacts, transition payments were included in the reform
package to help offset expected income losses for these farmers (OECD, 2017[73]). Moreover, the
revenue from removing these payments per head of cattle was reallocated to food security payments
(OECD, 2017[73]).
Sources example 1: (OECD, 2017[73]; Lapierre, Sauquet and Subervie, 2019[131])
Sources example 2: (OECD, 2017[73])

Introducing reforms through a multi-stakeholder and participative process can help to build
consensus for the reform. Broad comprehensive stakeholder engagement is recommended in general
at an early stage of decision-making to help build support for new policies or policy reforms (OECD,
2018[49]). Participation can take place at a different level, including the discussion on strategic objectives
and of how to use earmarked funds (see Box 4.2). Other examples of implemented deliberative processes
include the process of “Grenelle de l’environnement” 22 in France and The Irish Citizens’ Assembly 23 in
Ireland. In the context of climate change, several countries have started to seek inputs from the civil society
(e.g. the Citizens' Convention on Climate (Convention Citoyenne pour le Climat or the German initiative to
randomly recruited citizens to participate in the creation of the Germany’s LT-LEDS). OECD conducts
research on ways to engage stakeholders in deliberative, collaborative, and participatory decision making
using new technologies (OECD, 2020[132]). Participation of local communities is especially important in
regions of the world where the main type of land governance (in terms of land area) is customary (Verburg

22
In 2007, France organised roundtables as part of the “Grenelle Environment Forum” to identify the issues that should
be at the center of environmental policies in the following years (Whiteside and Boy, 2010[134]).
23
The Irish Citizens’ Assembly (2016-2018) involved 100 randomly selected citizen members who considered five
important legal & policy issues. It was selected by the OECD as a winning case of the first call for innovative Open
Government cases (OECD, 2020[135]).
32 |

et al., 2019[50]). Although, customary land governance is threatened by globalisation and outside interests,
it is also more and more protected by national laws (Verburg et al., 2019[50]).
Showcasing economically successful models can help to build support for the reforms. Modelling
or prospective work can contribute convincing stakeholders that the overall effect of the reform scenario is
better than the business as usual scenario (OECD, 2017[133]; OECD, 2017[73]). Such work also helps to
withstand pressure from vested interest (OECD, 2017[133]). In Switzerland, the government used robust
scientific and economic robust evidence to build support for reform of agricultural subsidies (OECD,
2017[133]). In France, the government should showcase pre-existing profitable organic farming (see Box
4.3).

Box 4.3. Demonstrating the profitability of organic farming in France

In France, opposition to a further decrease in agricultural pesticide use (modulating the existing tax) is
fierce and sometimes driven by fear of loss of competitiveness (OECD, 2017[73]). Demonstrating that a
reduced use of pesticide is compatible with competitiveness may be a solution (OECD, 2017[73]). This
can be done showcasing the experience of farmers already engaged in reducing pesticide (OECD,
2017[73]).
Source: (OECD, 2017[73]).

This chapter has provided and overview of the political economy (distributional implications and best
practices) of the introduction of policies or reforms that could address the current impacts of unsustainable
land use. In the next chapter, some selected lessons learned from Chapter 2, 3 and 4 will be summarised.
 | 33

5 Lessons learned and research gaps

The previous chapters have provided an overview of the challenges towards more sustainable land use,
the policies that could overcome these challenges and the political economy of the introduction of such
policies or reforms. This chapter summarises some key lessons learned from the previous chapters
(Chapters 2, 3 and 4).
Some key challenges towards more sustainable land use were reviewed in Chapter 2, include: loss of
biodiversity, climate change, zoonotic diseases and alien species invasion, impacts on water resources
and loss of livelihoods and lands of indigenous populations. These impacts of unsustainable land use can
be, if not reversed, addressed through the introduction of new land-use policies or reforms.
Chapter 3 highlighted the need for a coherent long-term vision and vertical and horizontal coordination for
successful land-use policies and business practices. Policy coherence should rely on an integrated
landscape approach to understanding the issues at stake and developing solutions to address them.
Governments could (1) improve land-use planning governance, (2) mainstream land-use nexus issues into
sub-national strategies, plans and programmes, (3) use land use or spatial planning tools, and (4) conduct
land-use planning in a collaborative fashion (OECD, 2017[63]; OECD, 2020[45]). Acknowledging that
developing policies for sustainable land use is challenging and highly context-specific, Chapter 3 discussed
a number of land-use policy reforms that can be relevant in certain settings. In any case, policy
development should be based on a mix of instruments which would provide both immediate remedies to
the consequences of harmful land-use patterns and long-term solutions to unsustainable land use.
Chapter 4 provided and overview of the political economy (distributional implications) of the introduction of
policies or reforms that could address the current impacts of unsustainable land use. It focused on the
distributional impacts of (1) biodiversity reforms and of (2) green urban policies. (1) The risk that biodiversity
reforms can have a negative impact on firms’ competitiveness is a common concern in environmental
policy reforms. The literature on the impact of biodiversity policy reforms on firm competitiveness is
particularly limited. Similarly, studies on the impact of PES and the creation of protected areas on income
have mixed results. Policies to green the agricultural sector may also have indirect consequences on
households’ budget through variation in food prices. (2) Policies to promote infill development can have
important distributional implications as they can affect house values directly. Reforms to urban parking
policies may have progressive impacts. Recycling the revenue from environmentally related taxes or
putting into place transitional measures can help to reduce resistance in the most affected sectors.
Introducing reforms through a multi-stakeholder and participative process, and showcasing economically
successful models, are two ways to help build support for the reforms. Key additional lessons, not covered
in the previous chapters, include the followings:
• The interaction among different policy instruments should be considered (in the development of
land-use policy for instance) (OECD, 2018[49]).
• A mix of regulatory and market-driven policy initiatives is needed (FAO, 2019[67]). Although in
economic theory, the general rule is one policy instrument for one market failure (e.g. carbon
pricing for under-pricing of carbon externalities), in reality, this rule is almost never followed.
Realisation of the limitations of regulatory approaches is encouraging the pursuit of market-driven
approaches and of a mix of regulatory and market-driven policy initiatives (FAO, 2019[67]). It should
34 |

be taken into account that the higher the number of policy instruments, the more difficult are the
coordination and coherence.
• The benefits of sharing (good and bad) experiences and adapting principles and solutions to local
circumstances are commonly highlighted in the literature. Previous studies have shown this in the
case of urban policies and of agricultural policies (OECD, 2018[49]).Land tenure is one of the key
local variables to be considered for sustainable land-use policy (Verburg et al., 2019[50]).
Finally, policy design would benefit from monitoring and evaluating the effectiveness of policy
instruments for sustainable land use (OECD, 2020[30]; Verburg et al., 2019[50]). In order to evaluate and
draw lessons from the use of a variety of policy instruments in a range of contexts, it is needed to establish
and monitor progress towards targets that are specific, measurable, actionable, realistic and timebound
(SMART) (OECD, 2020[45]). These indicators should include the distributional consequences of using these
instruments (OECD, 2020[30]). Countries would benefit from an indicators framework to measure, monitor
and evaluate progress towards the green recovery (OECD, 2020[30]). More generally, indicators of policies
implications on local livelihoods and well-being in the country itself and globally should be tracked. In
addition, transparency and accountability would both gain from the development of indicators and SMART
targets (OECD, 2020[45]).
Based on this literature review, it seems that most sustainable land-use measures used have been
relatively permissive. In the context of COVID-19, one could expect for such measures to become more
stringent. However, it has been the opposite in some countries as, for instance, stringency of land-use
policies has been weakened temporarily (OECD, 2020[58]). Although some economic stimulus packages
and recovery plans for economies hit by the COVID-19 crisis are already incentivising sustainable land
use, such measures could be further included in stimulus packages.
This literature review has shown that existing literature suffers from certain weaknesses that offer
suggestions for new research on the followings.
• The section on food security and trade-offs between goals (in Chapter 2) has revealed that more
data on food loss and waste and on impacts of food loss and waste policies is needed to inform
policies that could better balance trade-offs between environmental and economic impacts (OECD,
2019[47]). Policy design would benefit from additional research on the impacts of land conversion
on disease outcomes.
• The section on policy coherence (in Chapter 3) mentioned that a certain land-use policy aimed at
reducing environmental pressure can generate leakage (unintended impacts (like leakage) (OECD,
2020[45]). Research on the quantification of the links between international trade and land use is
needed to shed light on such unintended impacts. In addition, although the use of integrated
landscape approaches is recommended, there is still little empirical research on these approaches
(Reed et al., 2020[52]).
• The section on land-use planning (in Chapter 3) recommended including the valuation of
ecosystem services into land-use planning (OECD, 2020[49]). In order to do this successfully, the
changes in ecosystem services resulting from different policy options, and the value of these
changes to society need to be quantified (OECD, 2020[49]). Countries should consistently integrate
ecosystem services mapping and valuation, into land-use planning systems (OECD, 2020[49]).
• In addition, while stakeholder engagement is desirable (section on land-use planning in Chapter
3), ways for sectorial institutions and stakeholders to work together are sometimes still unclear.
Sectorial institutions and stakeholders should move towards a more coherent/integrated landscape
approach. Who should lead such a process, and what would be the incentive for them to
participate? (OECD, 2018[49]; Reed et al., 2020[52]).
• Chapter 4 has shed light on the distributional impacts of land-use policies. Gathering of data and
research on the distributional effects of individual policies is needed to help the design of policies
 | 35

that minimise trade-offs (Zachmann, Fredriksson and Claeys, 2018[111]). More research is needed
on infill development in particular (Jehlinga, Hecht and Herold, 2018[124]).
36 |

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