Wednesday, September 25, 2013

Global Capital, Local Concessions: A Data-Driven Examination of Land Tenure Risk and Industrial Concessions in Emerging Market Economies

Using geospatial data from 12 emerging market economies (EMEs), this analysis by The Munden Project attempts to guide investors in emerging markets by shedding light on a difficult problem: overlapping land claims that diminish the value and viability of industrial concessions. The report refers to this as "land tenure risk."

From these datasets and an examination of research and financial information, the report concludes that land tenure risk is a statistically significant source of risk in EME concession investments. This risk extends across all land-dependent sectors, regardless of concession type and, to the extent they are even used, normal proxies for judging this risk are not likely to help. Furthermore, it is difficult to make a case for insurability against this risk.

Consequently, a different approach for addressing the risk needs to be developed. The analysis concludes with specific thoughts on this topic, emphasizing the importance of field-level data collection and contextualization within macro-level assessments, all of which can be done economically and in a way that matches standard due diligence procedures.

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