The flow of new money into rural areas has the potential to bring transformational change and a range of socio-economic and environmental impacts. That new money can take many forms: from private individuals undertaking single projects in the countryside to institutional investors seeking sustained returns from farmland and farm products, establishing investment funds, and thereafter listing those funds on international stock markets. There are several possible ways to frame an analysis of the arrival of investment capital in rural areas: perhaps as a driver of rural development or a condition of late-capitalism, involving profit taking from assets including property, largely—but not exclusively—derived from appreciating land values (Edwards 2016). This framing has been applied to housing (Aalbers 2016), to urban development more generally (Weber 2015) and to the acquisition of rural land assets (Gunnoe 2014). The movement of new money into rural land assets is sometimes an outcome of ‘financialisation’, involving the repackaging of asset-backed debt as a financial (and income-generating) product. For housing, this may lead to the securitisation of mortgage debt and its sale to third parties: housing becomes the ‘asset’ in an ‘asset-backed security’. This is also a mechanism for bringing new investors into rural areas if, for instance, farms are mortgaged to banks and the loans then securitised. Some forms of investment generate new activity and cause new money to circulate in a local economy. Other forms—including the financialisation of assets—extract money and cause capital to circulate among investors but not locally. Because the investment routes into rural assets are varied—ranging from the very simple (e.g. cash buying) to the very complex (e.g. securitisation but also acquisitions incentivised by tax treatment, aided by grant support and facilitated by governmental agencies seeking foreign direct inward investment)—any single framing risks the exclusion of certain types of investment.
This book, and the research on which it draws, is concerned with the arrival of all new money in rural areas and attendant place-based impacts. Its particular concern is with Europe. Other research has focused on North America (Newell and Lincoln 2007), on Australia (Magnan 2015) and on the global south (Roberstson and Pinstrup-Andersen 2010; Cotula 2013). There has been widespread interest in, and concern for, the ‘land rush’ (Cotula 2012; Scoones et al. 2013; Arezki et al. 2013) affecting some of the world’s poorest nations and its effects on local populations and global food security, especially when arable land is turned to energy crops (White and Dasgupta 2010). A considerable amount of past research has been concerned either with the portfolio (inflation hedging) role of farmland, with food security, with financialisation processes or with dispossession and land rights. The principal focus of this book, however, is with the place-effects of different forms of investment, which may result in either apparent continuity of land-use (but underpinned and shaped by new ownership motives) or a shift from an existing pattern of use to a new one.
Europe provides the focus, both because of a relative paucity of research on the wider impacts of land investment (beyond financialisation processes) and because of the diversity of investments and transformations underway in this global region. Whilst European transition economies are experiencing some of the investment challenges hitherto seen in the global south, there is a vast range of European experiences in land investment, as illustrated in the case studies presented in later chapters.
Rural areas have not always been viewed as important investment destinations for foot-loose global capital. Likewise, rural economies have frequently been regarded as laggard and in need of modernisation (Gallent et al. 2015). The modernisation process in Europe began in the early twentieth century and often meant the mechanisation of farm production. This then resulted in a decline in rural labour demand and a transformation across the social and environmental dimensions: mechanisation of farming generated a very different rural society and has often threatened the rural landscape and environment, sometimes because of the use of chemical fertilisers or the elimination of landscape features that seemed to impede the use of heavy equipment. However, in the latter half of the twentieth century, new patterns of global trade led to a differentiation of rural areas around the world. Some became more intensively productive (exporting foodstuffs internationally), whilst the pace of farm production eased in other locations, providing a context for new economic diversity and for new land-uses. That diversity arose from a changing relationship between town and country. In some late-capitalist societies, the maturity of industrial production caused (some) dispersal of wealth to a growing middle class, which found itself with more leisure time and greater disposable income. Declining quality of life in cities triggered a wider search for new leisure and investment opportunities that extended to the nearby countryside and further afield. This sequencing of events and outcomes resulted in the countryside reconceptualised as a place of consumption rather than production, although in reality rural economies are far more nuanced and locally differentiated.
The upshot is that European rural areas now play host to a broad range of opportunities and activities. There is an enlarged international market for many forms of rural consumption: from conventional and new agricultural crops, through renewable (and non-renewable) energy, to the leisure value that is extractable from many rural places. Investors have displayed growing interest in the returns that can be realised from different activities and in the ‘valorisation’ of rural assets. Investment in farm production—particularly in transition economies that are opening up following decades of restricted access, and other places where land values remain low—has led to the consolidation of landholdings in the hands of investment banks and other financial service providers (Gunnoe 2014). Yet besides the consolidation and intensification of farm production, other investments reflect the ‘multi-functional’ nature of twenty-first-century rural economies.
The purpose of this book is to explore some of the place-based impacts brought by the flow of new money into rural areas. It asks whether money flows in and out again with few positive outcomes for a locality (because investors are simply extracting profit from held assets) or whether the practice of investment (perhaps with that practice being infused with corporate social responsibility or with the broader values of investors) brings discernible benefits to rural places and communities. All investments are of course different, but one important objective of the research on which this book draws has been to identify how the goals and practices of private or public investment (e.g. the setting of employment targets, the roll out of environmental sustainability measures or engagement with nearby communities) contribute to achieving broader local development goals.
New Money in Rural Areas has six chapters. The present chapter sets out the context of the research and its guiding questions. The second looks at investment interest in rural assets (including global trends) and the different forms that investment might take, with capital flowing either directly to an area from the investor (e.g. individual investor-cum-developers) or indirectly through investment vehicles that allow multiple individuals or corporate backers to put money into established ‘asset backed portfolios’. This chapter aims to detail the nature of investment in rural areas while distinguishing between those investments that are passive (motivated by land value appreciation or profit from pre-existing activity) or active (and concerned with projects that will either alter the use of land or enhance productivity and profit in some way). The aim here is to develop a perspective on, and cate...