The super-rich and cropland expansion via direct investments in agriculture

Abstract

Cropland expansion represents an important cause of tropical deforestation, contributing to the loss of ecosystems’ functions. Flex-crops (for example, oil palm, soy and sugar cane) account for an increasing share of cropland and contribute considerably to carbon emissions and biodiversity loss. Various forms of inequality have been shown to affect agricultural expansion, yet the effect of wealth concentration among the super-rich is understudied. Here I show how, over the period 1991–2014, the large amount of wealth in the hands of high-net-worth individuals (HNWI) stimulated foreign direct investments in agriculture in Latin America and Southeast Asia. This, in turn, drove the expansion of flex-crops areas. The combination of these two effects implies that a 1% increase in the wealth of HNWI generated an expansion of the flex-crops area share of up to 2.4–10%. The results point to the urgency of addressing wealth inequality to protect the remaining forests. Inequality—wealth concentration among few people—stimulates direct foreign investment in agriculture, leading to flex-crop expansion and associated deforestation in Latin America and Southeast Asia, as found in this econometric study.