The IISD Guide to Negotiating Investment Contracts for Farmland and Water

The IISD Guide to Negotiating Investment Contracts for Farmland and Water is a comprehensive tool designed for governments and communities to manage foreign investments in agricultural land. It emphasizes the primacy of domestic law over investment contracts and international treaties, while providing a model contract to fill gaps where domestic laws are weak. The guide outlines a preparatory phase involving investor screening, community engagement, and impact assessments, and proposes specific contractual provisions covering tenure, financial obligations, social development, and environmental protections. It strongly advocates for transparency, the avoidance of stabilization clauses, and the use of domestic courts for dispute resolution to protect the national interest and ensure long-term project viability.

• Investment contracts operate within a legal hierarchy where domestic law should be the primary foundation, followed by specific investment contracts, with international investment treaties playing the smallest role, ideally limited to addressing egregious violations like uncompensated expropriation.
• Stabilization clauses, which freeze domestic laws at the time of signing, are discouraged because they can prevent governments from enacting new environmental, labour, or health and safety legislation and may lead to costly international arbitration.
• Agricultural investments have a high failure rate, with a World Bank study of 179 projects finding that 50% were financial failures or moderate failures, often due to fatally flawed concepts such as wrong location or crop choice.
• The guide proposes that investors be legally bound to economic and social development obligations, including the creation of outgrower schemes, which can generate significantly more employment (one job per three hectares) compared to plantations (one job per 19 hectares).
• Environmental and Social Impact Assessments (ESIAs) are frequently neglected or treated as "box-ticking" exercises in agricultural investments; the guide argues they should be conducted before contracts are signed and their results made legally binding.
• Transparency is critical to reducing corruption and increasing community support; the guide recommends that all investment contracts, impact assessments, and business plans be made public, subject to limited redactions of confidential business information.
• Water resource management in these contracts often lacks regulation; the guide recommends a system of water permits with regular reviews and an "increasing block tariff" to encourage water efficiency.
• To protect national resources, contracts should explicitly exclude mineral rights, as some reviewed contracts inadvertently gave investors rights to all subsoil resources discovered during the lease period.
• The guide suggests that host states should prioritize domestic courts as the forum for dispute resolution to avoid the unpredictability and potential policy-space limitations associated with international arbitration.

APA

Smaller, C., Mann, H., Bernasconi-Osterwalder, N., Pinter, L., McCandless, M., & Parry, J.-E. (2014). The IISD Guide to Negotiating Investment Contracts for Farmland and Water. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/iisd-guide-negotiating-investment-contracts-farmland-water_1.pdf

Chicago

Smaller, Carin, Howard Mann, Nathalie Bernasconi-Osterwalder, Laszlo Pinter, Matthew McCandless, and Jo-Ellen Parry. The IISD Guide to Negotiating Investment Contracts for Farmland and Water. International Institute for Sustainable Development, 2014. https://www.iisd.org/system/files/publications/iisd-guide-negotiating-investment-contracts-farmland-water_1.pdf.

Wikipedia

{{cite report |last1=Smaller |first1=Carin |last2=Mann |first2=Howard |last3=Bernasconi-Osterwalder |first3=Nathalie |last4=Pinter |first4=Laszlo |last5=McCandless |first5=Matthew |last6=Parry |first6=Jo-Ellen |title=The IISD Guide to Negotiating Investment Contracts for Farmland and Water |publisher=International Institute for Sustainable Development |date=November 2014 |url=https://www.iisd.org/system/files/publications/iisd-guide-negotiating-investment-contracts-farmland-water_1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{smaller2014iisd, author = {Smaller, Carin and Mann, Howard and Bernasconi-Osterwalder, Nathalie and Pinter, Laszlo and McCandless, Matthew and Parry, Jo-Ellen}, title = {{The IISD Guide to Negotiating Investment Contracts for Farmland and Water}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = nov, url = {https://www.iisd.org/system/files/publications/iisd-guide-negotiating-investment-contracts-farmland-water_1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }