Foreign direct investment in biofuels and sustainable development: the case of jatropha in the Boeny region, Madagascar

2017-03-01T00:59:47Z (GMT) by Nicotra, Alberto
The past decade has seen the rapid spread of market-based approaches to address climate change mitigation, adaptation and poverty alleviation. In the first decade of the 21st century, the enthusiasm for pursuing mitigation through green alternatives to fossil fuels contributed to a spike in global investments in biofuel crops. The tropical plant jatropha (Jatropha curcas Linn.) was promoted as the ideal ‘green’ biofuel because of its multiple qualities. It was a non-food crop that was seen to grow easily in poor soils without requiring fertiliser or heavy demand for water and, most importantly, it could not be diverted from food consumption to biofuel production. Foreign direct investment (FDI) in jatropha cultivation was thus considered a potentially winning strategy for sustainable development and poverty alleviation in poor countries. This thesis investigates how FDI in jatropha has contributed to sustainable regional development in northwest Madagascar. Madagascar was one of the major destinations for FDI in jatropha cultivation in the 2000s and, in particular, the northwest region of Boeny was targeted for large-scale production of the crop and as a node for biofuel-based industrial development. Using the framework of political ecology and global value chain analysis, the thesis examines three critical dimensions of jatropha investments in Boeny: first, the broader political-economic conditions that led Madagascar to become a favoured global destination for jatropha investment; second, the processes by which foreign companies launched into jatropha production in Boeny; and third, the experiences and outcomes of jatropha production and their impact on sustainable regional development in northwest Madagascar. The study uses a combination of field interviews, observations, and secondary data on jatropha investment and government policies to explore these dimensions. The thesis shows that jatropha investment in Madagascar resulted from a convergence of interests of the Madagascar presidency, bilateral aid agencies, global environmental organisations, and investors seeking to profit from an emerging global carbon economy. The expectations were similar to a gold rush, where everyone hoped to reap windfall profits as early-movers in the alternative fuel industry. The reality of jatropha cultivation proved the opposite and companies struggled to meet the targets outlined in their business plans. Poor knowledge of the crop’s agronomy and the regional economy undermined the profit expectations of companies, and a subsequent fall in petroleum prices and financial crisis led many to withdraw from jatropha cultivation altogether. These outcomes provided negligible benefits for sustainable regional development in the Boeny region. This study offers significant insights on the risks associated with market-driven initiatives aimed at climate change mitigation and sustainable development. Its findings indicate that despite vigorous promotion of sustainable development through the emerging global carbon economy, ‘green’ foreign investments in innovative biofuel crops such as jatropha provide negligible economic or ecological benefits to regions in poor countries.