Debate on land valuation and fair compensation

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28 November 2016 to 23 December 2016
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Bjoern
Hoops
Nicholas Tagliarino's picture

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Nicholas
Tagliarino
Marcello Demaria's picture

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Marcello
De Maria

Land tenure changes are on the rise throughout the world as a result of increased migration from rural to urban areas, expansion of infrastructure, commercial pressures on agricultural land, extractive activities, and climate change. Shifts in land tenure arrangements are proceeding through compulsory acquisitions (i.e. expropriations) and voluntary market transactions, such large-scale land leases and concessions. With a rise in land tenure changes, forced evictions, and displaced populations comes a growing need to ensure that affected landholders are adequately compensated and not worse-off than before they lost possession of their land. The key question is how does one put a price tag on land and livelihoods? To brainstorm this question, the Rethinking Expropriation Law initiative is hosting a Conference in Cape Town, South Africa (December 7-9, 2016). The Conference aims at discussing land valuation, compensation for expropriation, and the creation of a new protocol on fair compensation. The final session of the Conference will be live streamed on YouTube; the session takes place on Friday, December 9 at 1:40PM South Africa time.

 

The protocol on fair compensation would provide objective guidance or “best practices” for valuing land and compensating landholders affected by land tenure change. This protocol will be designed to serve various actors operating in this field, such as affected people, governments, project developers, financiers, donors and civil society organisation in cases where fair compensation needs to be determined.  

 

To facilitate a participatory process for developing the protocol, True Price and Rethinking Expropriation Law launched a new input document in November 2016. The document establishes guidelines for creating a protocol on fair compensation. The input document highlights key problems associated with establishing guidelines on fair compensation, and raises a set of fascinating questions and discussion points.

 
  1. What should be the  prerequisites to fair compensation?

    1. Under what circumstances should the government be allowed to take land from citizens for “public purposes”? (i.e. To what extent should expropriation power be limited?)

    2. Should expropriation only be used as a last resort (i.e. should less invasive means be explored first)?

    3. What is a fair decision-making process for expropriating land?

  2. Once the decision to acquire land is made and the prerequisites to fair compensation are fulfilled:

    1. Who should be compensated?

      1. Which land tenure rights should be considered legitimate? (e.g. users, occupants, tenants?)

      2. How can valuers address the issue of unrecorded tenure rights? (e.g. land rights based on custom)

      3. What if the land rights and boundaries are in dispute?

      4. How can valuers address gender issues and account for the varying ways in which men and women use land?

      5. How can valuers accommodate poor and vulnerable groups, such as Indigenous Peoples and local communities?

    2. Which losses should be compensated?

      1. Should compensation reflect income losses? Crops and agricultural output? Non-tangible values such as spiritual and cultural values? Is this feasible?

      2. What about grazing, hunting, and other land use rights?

      3. What are appropriate alternatives to “fair market value” if land markets are weak or non-existent?

      4. How can valuers deal with the issue of imperfect information?

      5. Should affected landholders be put in the same position as before their land was taken, or should compensation ensure they are better off?

      6. Is “fair” compensation necessarily the same thing as “full” compensation?

    3. What forms of compensation are appropriate?

      1. Is payment in alternative land or payment “in kind” more appropriate than cash?

      2. Should valuers ensure that alternative land is productive, suitable, and not degraded?

      3. What form of compensation should be provided if suitable alternative land is not available?

      4. Should affected landholders be given a share of the benefits or profits deriving from development projects?

    4. What should be the rules of procedure?

      1. Who should determine the value of fair compensation?

      2. Should affected populations and the public be given an opportunity to negotiate? How can laws ensure a fair negotiation takes place?

      3. How can valuers and acquiring bodies be held accountable for decisions on compensation?

      4. What should be the timeframe for paying compensation and penalty for delay?

 

Land Portal invites you to respond to one or more of these questions by posting comments below. Your questions and comments will be made available to all of the participants at the Cape Town Conference. Conference participants will have an opportunity to respond to any questions you raise. A summary of their responses will be posted on this Land Debate page. We welcome you to create a Land Portal account and contribute to a fruitful discussion on fair compensation.

Comments

Throughout the world, an expropriation of property can only be justified if the goal of the expropriation is a public purpose. When asking which protection the public purpose requirement can offer, we typically think of the content of the term "public purpose". To give content to this term, however, often proves to be a futile exercise because it is so abstract and vague that courts struggle to give this requirement the teeth that are necessary for it to bite. Only where it is absolutely clear that the expropriation only serves the interests of a private party, do the courts generally interfere. This leaves a lot of scope for the state to point to public benefits that would satisfy the public purpose requirement. 

Also, to exclude certain categories of purposes from the realm of "purposes" may put a halt to desirable projects. Let's take the example of "economic development", which, for instance, may refer to jobs created by a new private factory for which the state seeks to expropriate property. If economic development were declared a private purpose instead of a public purpose, the public purpose requirement would not only prevent undesirable expropriations, but also expropriations for objectively desirable economic development projects.

We should therefore rather look at who defines the public purpose of a specific expropriation. To give the public purpose requirement the necessary teeth the legislature should specify the public purposes in the Expropriation Act. More specific purposes limit the freedom of state authorities, thereby reducing the likelihood of corruption, and make it easier for the courts to assess whether the proposed project actually serves a public purpose. When it comes to urban redevelopment and economic development projects, the legislature should circumscribe the purposes very narrowly to make corruption less likely to occur.  

Sam Szoke-Burke's picture

[Author's note: I am copying an excerpt from my full comment, given its relevance to the discussion of the public purpose requirement. Apologies for the duplication.]

The legality of expropriating community lands for the purposes of an investment will vary depending on domestic laws in force; in addition, whether expropriation for the purposes of facilitating a land-based investment is consistent with international human rights law is debatable. For instance, the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security exhort governments to “clearly define the concept of public purpose in law, in order to allow for judicial review” while also ensuring that “all actions are consistent with their national law as well as their existing obligations under national and international law, and with due regard to voluntary commitments under applicable regional and international instruments” (para. 16.1).

While projects requiring land for the construction of public amenities and services may well fall within the public interest, it may be more difficult to invoke the public interest where land is taken to enable an investor to carry out a land-based investment. The benefits of such investments are said to lie primarily in their potential for employment creation, leveraged infrastructure, and increased public revenue; however, such potential is often difficult to realize, which may reduce the chances an investment will constitute a public purpose.

Courts in different jurisdictions have expressed divergent opinions on whether the taking of land for a private investment can constitute a public purpose. The Supreme Court of Canada noted in Tsilhqot’in Nation v. British Columbia that a logging concession could be considered to be a public interest objective that could override Aboriginal title, while also noting that logging is a “serious infringement [of Aboriginal title] that will not lightly be justified” (para. 127). In that case, the Court ultimately held that logging in the area in question was not in the public interest, as it was not economically viable, and had an impact on the plaintiff’s Aboriginal title that was disproportionate to the economic benefits that would accrue to the State, or Canadian society generally (para. 1107). However, in the Sawhoyamaxa Indigenous Community v. Paraguay case, the Inter-American Court of Human Rights rejected an argument that the allocation of indigenous land for the purposes of investment constituted a public purpose (para. 137). It held that such an argument approached indigenous claims to land title “from the standpoint of land productivity and agrarian law,” which was “insufficient” because it failed to address “the distinctive characteristics of such peoples” (para. 139).

Nicholas Tagliarino's picture

Fair compensation should be provided to legitimate tenure rights holders who hold land under customary tenure, including Indigenous Peoples and local communities. Section 3.1 of the Voluntary Guidelines on the Responsibile Governance of Tenure (VGGTs) provides that states “should . . . respect legitimate tenure rights holders and their rights, whether formally recorded or not”. Where formal recognition is required to receive compensation, customary landholders without statutorily recognized rights, including Indigenous and local communities, may be vulnerable to expropriation without compensation. According to a recent study by World Resources Institute/University of Groningen, only six of 30 countries assessed (Philippines, South Africa, South Sudan, Tanzania, Uganda, and Zambia) have national laws that adequately ensure that customary tenure rights and users of undeveloped common properties are eligible for compensation. Legal reforms should aim to ensure that tenure rights are respected and that governments are required to compensate all legitimate tenure rights holders – including unregistered customary tenure rights holders and users of pastures and other undeveloped areas. In countries where registration is a prerequisite to receiving compensation, governments could additionally consider streamlining registration processes that are time-consuming, inaccessible, and expensive to ensure lands held by Indigenous Peoples and local communities are not expropriated without proper payment of compensation.

Valuation of compensation: Section 16.3 VGGTs call for states to adopt a “fair valuation” of compensation, but does not provide a definition of “fair valuation." Additionally, the VGGTs call for state and non-state actors to adopt gender-sensitive approaches to tenure governance. Drawing on the 2008 FAO publication entitled "Compulsory Acquisition of Land and Compensation" for insight on defining these terms, the WRI/Groningen working paper recommends that states provide ‘comprehensive’ compensation, defined as compensation that accounts for the following land value attributes: economic activities, improvements, and intangible land values (e.g. historical/cultural values) associated with the land. Additionally, ‘comprehensive’ refers to procedures that provide alternative land as a compensation option. ‘Gender-sensitive’ compensation refers to special legal protections ensuring women landholders, especially women who are at risk of being disproportionately burdened by expropriations, are adequately compensated. Compensation that is directly paid to the male head of household, “could be detrimental to the family’s health and welfare.” in societies where women are considered dependents of their husbands, and have no direct rights to land. None of the 30 countries have laws that adequately ensure the government will conduct a comprehensive and gender-sensitive valuation of compensation consistent with the VGGT principles. Of the 30 countries, only the Philippines has a law which adequately ensures that compensation reflects the historical and cultural values associated with Indigenous community land. In the other countries, compensation procedures do not capture these land values, and thus compensation may be insufficient to cover the livelihood losses borne by Indigenous and local communities.Furthermore, while India’s expropriation law partially addresses gender issues, compensation procedures in the other 29 countries are gender-neutral, meaning they are silent on whether compensation must reflect the differing ways in which women and men hold and use their land and resources. To ensure compensation is comprehensive and gender-sensitive, states and acquiring bodies should consult male and female landholders regarding the ways in which they use their land, and their land’s historical/cultural value. Consulting affected landholders and allowing compensation negotiations to take place may be a particularly important in rural areas, such as community-held pastures and burial grounds, where land markets are weak or non-existent, and thus “fair market value” is difficult to ascertain. 

PeterVeit's picture

When the government acquires private property (including indigenous and community land) in a compulsory manner or renders land essentially useless or valueless by land use restrictions, it should compensate the landholder for his losses. While fair compensation mandates addressing a range of issues, three stand out.

Protect Welfare. Development professionals and human rights advocates argue that compensation should improve or at least restore in real terms the living conditions of displaced people to pre-resettlement levels. Fair compensation will ensure that all affected people and populations are not worse off - and preferably are better off - than before their land is taken. This measure is consistent with the principles of equity and equivalence encouraged by the FAO in which “(a)ppropriate measures should ensure that those affected, and particularly the vulnerable, are not disadvantaged.” As such, it is simply not sufficient or appropriate to focus narrowly on the land, but rather, in many cases, it will require a deep understanding and full recognition by the government of the wellbeing and welfare of those who are adversely affected by the taking.

Full Value. To protect the wellbeing and welfare of affected people, compensation must reflect not just the land and the tangible assets and economic activities associated with the land, but also the intangible land values (e.g. cultural and spiritual values of sacred lands held by communities). Unfortunately, this is not common. A 2016 World Resources Institute Working Paper found that 23 of 30 countries examined, the laws fail to ensure that the historical and cultural values of expropriated lands will be reflected in the assessment of compensation. For many Indigenous Peoples, rural communities and other landholders, the value of land far exceeds the market price. In a 2008 WRI report, “(c)alculating compensation solely on the basis of fixed or unexhausted improvements on the land, and ignoring the real value that informs the acquisition is unjust.” Governments must work with landholders to value the cultural and other intangible values of land that contribute to local wellbeing, and perhaps consider paying a premium to offset the hardships from involuntary resettlement.

Prompt Payment. Fair compensation means that full compensation should be awarded to all claimants before the government takes possession of the land. In too many cases, affected people do not receive their compensation ten or more years after the government takes their land. The same 2016 WRI Working Paper found that, in only 16 of 30 countries assessed, governments are legally required to pay compensation prior taking of possession. In the other 14 countries, the laws do not impose obligations on governments to pay compensation within a specified period of time. Even with legally imposed deadlines for payment, compensation payments are often significantly delayed, such as in Rwanda, Ghana, and China. Poor and vulnerable groups may endure poverty, hunger, poor health, and other risks associated with displacement if they are not fairly compensated before their land is taken. 

Sam Szoke-Burke's picture

This comment considers the issue of public expropriation of community lands and the compensation thereof in the context of land-based investments, such as agricultural or forestry concessions. It does so through the lens of human rights law, as well as considering practical implications for different stakeholders, and draws in particular on the Columbia Center on Sustainable Investment’s research and 2016 report entitled “Land Deal Dilemmas: Grievances, Human Rights and Investor Protections,” which I co-authored with Kaitlin Cordes and Lise Johnson.

Government expropriation of community lands for the purposes of large land-based investment is an extremely sensitive issue, and for good reason. While there may be cases where a government considers that a community’s lands can generate greater public benefits if used as the site of a large-scale project, such as an agricultural or forestry concession, such considerations need to be balanced with the high likelihood that community members who have historically resided on, or otherwise accessed resources from, the land in question stand to extensively suffer adverse impacts and human rights violations if their access to the land is taken away.

Risks associated with expropriation of land

An “expropriate and compensate” approach can create different types of risks for stakeholders and lead to an array of negative outcomes, and as such should be considered with great caution. Specifically, such an approach:

  • Will risk violating a government’s obligations under international human rights law, including obligations to respect, protect, and fulfill rights to food, water and health; for indigenous peoples and other minority groups, community rights to free, prior, and informed consent, self-determination, and enjoyment of culture. (Whether such an approach also falls foul of domestic law will depend on the laws in place in the specific country in which the expropriation occurs.)
  • May lead to greater demands on public resources. As Cernea notes (at p. 16), compensation is generally incapable of fully replenishing what a community loses when it is resettled, and is instead likely to entrench the impoverishment of the community. Increased poverty can lead to lower socioeconomic indicators and greater demand for public services and development programs, requiring significant financial resources to address.
  • Can inflame community discontent, leading to demonstrations or conflict. This can increase the risk of property damage and the disruption of investment projects taking place on the land in question. The rights of protestors may also be further undermined by security personnel charged with protecting the investment.
  • Can create reputational risks for governments, as resulting conflicts can create the impression of an unstable business environment, and of a government that does not prioritize the protection of human rights within its borders.

When is expropriation acceptable?

The legality of expropriating community lands for the purposes of an investment will vary depending on domestic laws in force; in addition, whether expropriation for the purposes of facilitating a land-based investment is consistent with international human rights law is debatable. For instance, the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security exhort governments to “clearly define the concept of public purpose in law, in order to allow for judicial review” while also ensuring that “all actions are consistent with their national law as well as their existing obligations under national and international law, and with due regard to voluntary commitments under applicable regional and international instruments” (para. 16.1).

While projects requiring land for the construction of public amenities and services may well fall within the public interest, it may be more difficult to invoke the public interest where land is taken to enable an investor to carry out a land-based investment. The benefits of such investments are said to lie primarily in their potential for employment creation, leveraged infrastructure, and increased public revenue; however, such potential is often difficult to realize, which may reduce the chances an investment will constitute a public purpose.

Courts in different jurisdictions have expressed divergent opinions on whether the taking of land for a private investment can constitute a public purpose. The Supreme Court of Canada noted in Tsilhqot’in Nation v. British Columbia that a logging concession could be considered to be a public interest objective that could override Aboriginal title, while also noting that logging is a “serious infringement [of Aboriginal title] that will not lightly be justified” (para. 127). In that case, the Court ultimately held that logging in the area in question was not in the public interest, as it was not economically viable, and had an impact on the plaintiff’s Aboriginal title that was disproportionate to the economic benefits that would accrue to the State, or Canadian society generally (para. 1107). However, in the Sawhoyamaxa Indigenous Community v. Paraguay case, the Inter-American Court of Human Rights rejected an argument that the allocation of indigenous land for the purposes of investment constituted a public purpose (para. 137). It held that such an argument approached indigenous claims to land title “from the standpoint of land productivity and agrarian law,” which was “insufficient” because it failed to address “the distinctive characteristics of such peoples” (para. 139).

Consultation and consent

Where a government contemplates expropriation of community lands for the purpose of facilitating a land-based investment, it should immediately take steps to engage the affected community regarding the project. Where indigenous and tribal communities are involved, the government must establish a process for obtaining the community’s free, prior, and informed consent (“FPIC”), as required by international law. For other communities, it is also preferable to obtain FPIC prior to any expropriation (and indeed, some companies and commodity groups now have requirements that FPIC be obtained from all local communities, and not just indigenous ones). Failing that, any consultation process should be implemented consistently with the principles that underlie FPIC: pressure and undue influence should not be exerted on the community; the consultation should take place sufficiently prior to any decision regarding the expropriation to allow for the community’s perspective to be incorporated into decision-making; and sufficient and accessible information about the proposed expropriation and investment project should be provided to the community, along with adequate time and resources for the community to build its capacity, and properly understand and deliberate on the proposal. Such consultation or consent processes should also form a key basis for determining the contours of any expropriation, resettlement and compensation that may follow. Specifically, to ensure meaningful community participation and consultation, the government must provide opportunities for the community to contribute to the design of the project, the resettlement plan, and any related compensation packages.

Determining the amount of compensation

The United Nations Basic Principles and Guidelines on Development-Based Evictions and Displacement (the “Basic Principles”) provide vital guidance on determining the amount of compensation that should accompany expropriation of land. Communities and individuals who are resettled should be compensated with land commensurate in quality, size, and value, or better (Basic Principles, para. 60). Such land should be accompanied by security of tenure, as well as adequate housing and access to necessary services (Basic Principles, para. 55). The Basic Principles also set out (at para. 52) that, at a minimum, a government must provide those displaced with “safe and secure access to:

(a) essential food, potable water and sanitation;
(b) basic shelter and housing;
(c) appropriate clothing;
(d) essential medical services;
(e) livelihood sources;
(f) fodder for livestock and access to common property resources previously depended upon; and
(g) education for children and childcare facilities.”

A government providing cash compensation should ensure the amount awarded is appropriate. Leading practices seek to place those affected in a position that is as favorable as, or better than, the position they were in before the land was taken. In addition to incorporating objective valuations of the market value of the land, improvements, and any lost personal property, this may require economic analyses of land-derived income, and articulation of the cultural, economic, and other benefits provided by the land (see German et. al.). Unfortunately, many domestic laws regarding compensation for resettlement fall short of this standard, and compensate only for the market value of lost assets.

The loss of land is not the only loss caused by an expropriation. Compensation must also be paid for any other economically assessable damage, which, as noted by the Basic Principles, may include “loss of life or limb; physical or mental harm; lost opportunities, including employment, education and social benefits; material damages and loss of earnings, including loss of earning potential; moral damage; and costs required for legal or expert assistance, medicine and medical services, and psychological and social services” (para. 60). Calculation of fair compensation for these losses should include a gender-specific analysis.

After compensation is paid

Any compensation paid must then be monitored and evaluated to track its impact (Basic Principles, paras. 69 and 70), as well as to ensure it is granted in its entirety in a timely manner (Basic Principles, para. 59). This can be done by independent state institutions, such as human rights commissions or land boards. As Cotula notes (at p. 100), government decisions regarding compensation should also be subject to judicial review, ensuring that decisions are reasonable and accountable. For communities and individuals lacking easy access to judicial institutions, other government- or investor-operated grievance mechanisms whose procedures are tailored to community contexts may also be needed. Such procedures are especially important where the entity (the government or the investor) determining the amount of compensation is also the entity paying that compensation, as it otherwise may be incentivized to reduce the amount of compensation payable.

manohar.velpuri@gmail.com's picture

Valuation and compensation best practices :

The Land Pooling scheme adopted by Amaravati is the largest and the most successful of its kind in India, and is a manifestation of the people's desire for a world-class capital. 300 kilometers from the earlier capital - Hyderabad and in the middle of the most fertile rice bowls, was the proposal to build the city of Amaravathi. It will also be home to 3 million people.

Amaravati city is expected to cost in excess of $2 bn and has seen the following activities as acquiring the land would mean an additional expense of $ 1bn and would also has rehabilitation and re­settlement requirements to be fulfilled under the Land Act, 2013.

- The state government has enacted AP Capital Region Development Authority Act to define the land pooling schemes (LPS) in the capital region. The required land bank of 300000 acres for Amaravati city is to be supplemented by industrial land bank of about 700000 acres. 

LPS was issued in 24 revenue mandals to pool 33,733 acres which includes patta lands, 1034 acres is endowment lands, 50,000 acres of reserve forest land which will be eventually denotified and rest include from land ceiling and unauthorised layouts. The government has promised compensation in return with commercial land post the completion of capital, besides an annual compensation, loan waiver and government jobs to the local youth.It has been observed that the tenant farmers are most affected in the process. So an annuity to landless or tenant farmers has been looked in amended orders. The Government shall provide pension of two thousand five hundred rupees per month per family for a period of ten years to all landless families through a capital region social security fund.



As part of the land pooling scheme, the government will reconstitute land, develop infrastructure and hand over possession of the developed plots to the land owners within two-and- half years. The benefit of yearly payment is approximately $ 400/- for Dry Land and $ 700 /- for Jareebu land shall be extended only to landowners who surrender lands and continue to hold returnable developed plots. Proportionate payment shall be made if part of developed plots are alienated.

Capital city master plan was notified following statutory process and environmental clearances and the state government has improved the rules, regulations and laws with an aim of Amaravati Capital Development Project to be seen as an example for sustainable development. The details of the procedures for raising $2bn for capital development has been worked out and The World Bank has been involved in the development of this futuristic sustainable capital city development project.

There were also a claim for 19,256 hectares of reserve forest area in Krishna and Guntur districts being diverted for the new capital, Amaravati with questions being raised on the concept of compensatory afforestation. The total sown area in Amaravati that will be lost is only 0.027% of the total sown area of the state. The basis for compensation of all these greenfield lands that were pooled has followed a consensus approach rather than an international guideline. The methods for fair distribution of the developed lands in these informal markets also has some drawbacks. The consensus has been reached as the citizens also felt the need to build the capital city for the state. While it seems to be reasonable to foresee an improved valuation of the lands, the distribution of the developed lands back to lenders at an increase in compensation based on valuation may be required.

Compensation method :

The state government applied land pooling method instead of land acquisition law, as it is easy for governments to extract land from willing owners. The owners of the land were therefore asked to sell in return for combination of upfront cash and or return of developed land. The timeline for the compensation is unclear and it is also unsure about an accurate assessment of the dependents on land in the absence of a social impact assessment.

The unregistered land chosen for Amaravati is also a source of agro-economy that yields Rs 1000 crore per year ($ 160k/ yr) , with multiple linkages from farm to market and women entrepreneurship. Many owners of these lands in the 29 villages grow three or more crops annually and more than 120 varieties per year earning more than $ 500 per month. The compensations to these owners however has not taken into account destruction of the Krishna floodplain for the construction of Amaravati. This would mean the destruction of this rich local economy and these livelihoods at a trade-off for urbanisation.

Benefits :

● Land pooling does avoid the unpleasant step of forcing an unwilling owner to part with land.

● It reduces the upfront cost for the government

● For the sellers, there is the possibility of locking into future appreciation in land value on account of the change in its use.

● Landowners are may be receiving the benefits as compared to the tenant farmers Problems :

● Land owners were persuaded to part with their land on the name of the development process and may lose out the land completely if state could not deliver its promises.

● Land that is returned is less than the land originally sold under the pooling method. risk their next generations may take hoping for the urban setting with new economic opportunities will materialize.

● No clear mandate for people who do not own agricultural land and are dependent like tenant farmers and labourers. A very high probability for lack of food security in the long run. The International Water Management Institute has categorised India and China are the world’s largest countries with water stress, 33% of India’s rivers are severely or moderately polluted across their entirety and construction of a capital city on this unregistered land claimed from floodplains could only create more water scarcity.

● planned location on the southern floodplains of the river Krishna may violate laws, making the city environmentally unsustainable and potentially dangerous for human life. It is concerning that high fertile flood plains may be destroyed due to the construction and may lead to informal settlements.

● Several recent disasters have been the result of encroachment – buildings, roads, dams and embankments – on floodplains: the flooding of the Adyar and Coovam rivers in Chennai, of the Mithi river channel in Mumbai, in Srinagar and in Uttarakhand. Of course the worry is that improper or internal non market based valuations can and are sometimes done to benefit certain specific insiders who take advantage of the system and thus may or may not actually be focused on the betterment of the people but instead are focused on their own betterment.

 

References :

1. Avenue Realty (2016) - "AP Capital City Amaravati land pooling scheme compensation for assigned lands" 

http://avenue.in/2016/02/18/ap-capital- city-amaravati- land-pooling- scheme-for-assigned- lands-crda/

2. Avenue Realty (2016) - “CRDA deny cut to World Bank loan to Amaravati City Development Project.”

http://helloap.com/wp-content/uploads/2015/01/AP- Capital-Land- Pooling-GOs.pdf

4. BV Mahalakshmi (2015), “Andhra Pradesh’ new capital Amaravati: How the 10 lakh acre land pool problem was cracked”

http://www.financialexpress.com/economy/andhra-pradesh- new-capital- amaravati-how- the-10-lakh-acre- land-pool- problem-was- cracked/155502/

5. Kesavan, Raghu (2016), “Amaravati Sustainable capital city development project (P159808)” ,The World Bank.

http://documents.worldbank.org/curated/en/601991470663401388/Concept-Int... Sheet-Integrated- Safeguards-Document- Amaravati-Sustainable- Capital-City-Development-Project- P159808

6. Majumdar, Nandini (2016), “Amaravati, an Example of Flawed Urban Policy”

 https://amaravati.gov.in/EBricks/Index.aspx

Nicholas Tagliarino's picture

A student from the University of Cape Town comments:

What should be the prerequisites to fair compensation?

1.     Under what circumstances should the government be allowed to take land from citizens for “public purposes”? (i.e. To what extent should expropriation power be limited?)

Section 25(2) of the South African Constitution provides that an expropriation must serve a ‘public purpose’ or a public interest The circumstances in which the government is allowed to take land from citizens appears to be very open ended as what constitutes ‘public purpose’ is extremely vague. As the public purpose or public interest requirement is a protection measure to balance the competing interests of the property owner and the expropriating authority/government, this requirement should be heavily scrutinised and should be limited to cases where the public purpose requirement has been met beyond reasonable doubt. In cases of uncertainty the government should not be allowed to expropriate the property where in their view it is a ‘public purpose’ but objectively speaking the requirement has not been met.  The public purpose should thus be very clear.

v   This especially becomes more controversial where the lines are blurred, especially in the context of where the public purpose has changed or has not been realized. In such cases I would argue that the expropriation power should be limited and should be subjected to severe scrutiny so that the government does not abuse its expropriation power. The public purpose requirement is supposed to ensure that the expropriating authority’s extensive powers are limited. The scrutinizing of the public purpose requirement however tends to favour the larger society over landowners and thus this is in need of address.

2.     Should expropriation only be used as a last resort (i.e. should less invasive means be explored first)?

v  Expropriation should only be used as a last resort where negotiations fail with the respective parties involved.  Allowing expropriation to be a first rather than a last resort would lead to an overly burdensome amount of people being displaced from their homes and could in effect worsen poverty.

3.     What is a fair decision-making process for expropriating land?

v  A fair decision-making process for expropriating land would be first to explore all alternatives short of expropriation and only where there is no reasonable alternative and suitable land available for the purpose should the government be permitted to expropriate the land. Furthermore, this should only be in the circumstances where the owner of the land refuses to sell his land or refuses to negotiate on a fair price for compensation.

Once the decision to acquire land is made and the prerequisites to fair compensation are fulfilled: Who should be compensated?

1.     Which land tenure rights should be considered legitimate? (e.g. users, occupants, tenants?)

v  Landlords and tenants should both have an interest in the expropriated land as they will be impacted if the land is expropriated prior to the expiry of the lease. The landlord will be impacted as he would then no longer be receiving rental income since the expropriation of his land. The tenant however shouldn’t automatically have a right to compensation but rather only where his or her interest is adversely affected by the expropriation at hand.

2.     How can valuers address the issue of unrecorded tenure rights? (e.g. land rights based on custom)

The government should not ignore unrecorded tenure rights solely on the basis that it isn’t recorded. Especially in a context such as South Africa and African customary law, all tenure rights should be taken into consideration especially the rights of the vulnerable members of the community. Valuers should address the issue of unrecorded tenure rights by recognizing all legitimate unrecorded tenure rights. Perhaps in this regard, there needs to be a framework which ensures equal rights to these vulnerable community members. This could also be done through greater awareness and training the judges in these areas.

3.     What if the land rights and boundaries are in dispute?

 

4.     How can valuers address gender issues and account for the varying ways in which men and women use land?

This is in the context of customary law for instance which still prohibit females from being able to hold land rights. There are still patriarchal systems that govern certain communities and thus women are often subjected to inequalities associated with land. There needs to be policy frameworks that address gender issues otherwise certain groups will be excluded. Valuers can address gender issues by ensuring that such policy frameworks address potential inequality between men and women regarding land issues, such as ensuring that women are able to hold these land rights independently from men.

5.     How can valuers accommodate poor and vulnerable groups, such as Indigenous Peoples and local communities?

There needs to be a policy framework which addresses such issues. This is especially in the context where poor and vulnerable groups such as indigenous people and local communities depend solely on the land for their basic needs and which such expropriation would heavily impact their community. Valuers need to have due regard for such groups in assessing the amount of compensation as some groups could end up in a worse position prior to when the land was expropriated. Perhaps in such cases an alternative suitable land should be given in the form of compensation in lieu of monetary compensation. The government should be sensitive to such land that is held by vulnerable and disadvantaged communities.

Which losses should be compensated?

1.     Should compensation reflect income losses? Crops and agricultural output? Non-tangible values such as spiritual and cultural values? Is this feasible?

Perhaps compensation should reflect cultural values as their history is a large part of their livelihood and culture. However such compensation would undoubtedly be very difficult to quantify in terms of monetary value and thus may be considered impractical and unrealistic and hence not feasible.

2.     What about grazing, hunting, and other land use rights?

Especially vulnerable grounds such as indigenous people and local communities who depend on the land for their basic needs should have grazing, hunting and other land use rights. These rights have been a part of their livelihood, history and culture for centuries and therefore valuers should take this into consideration during the expropriation process.

3.     What are appropriate alternatives to “fair market value” if land markets are weak or non-existent?

Alternative approaches of calculating the amount of compensation payable could be assessing the profits made instead of the value of the land. 

4.     How can valuers deal with the issue of imperfect information?

Where land markets are weak or non-existent, fair market value should perhaps be assessed based on the average value of the land over a substantial period of time. There are however concerns with such an approach as to what determines or reflects a fair market value where land markets are weak or non-existent.

5.     Should affected landholders be put in the same position as before their land was taken, or should compensation ensure they are better off?

Ideally, compensation should ensure that affected landholders are in a better off position however this may not always be feasible. Thus more realistically speaking the monetary award should merely restore the status quo ante and should not place the landholders in a worse off position.

6.     Is “fair” compensation necessarily the same thing as “full” compensation?

 ‘Fair’ compensation should not be seen as a synonym for ‘full’ compensation but rather ‘fair’ compensation should be the measure that must be considered in respect of ‘full compensation’. For instance full compensation in each case may not be possible, however so long as the compensation is ‘fair’ and equitable, ie appropriate in the circumstances, the requirement has been fulfilled.

What forms of compensation are appropriate?

7.     Is payment in alternative land or payment “in kind” more appropriate than cash?

 In some cases compensation in the form of land may be more appropriate. This is especially the case where vulnerable and disadvantaged communities have had their land expropriated and thus seek immediate compensation in the form of land. Furthermore, due regard should be given to such people to ensure that the compensation in the form of alternative land is for instance, suitable and productive for agricultural purposes or that communities basic needs.

8.     Should valuers ensure that alternative land is productive, suitable, and not degraded?

Valuers should ensure that alternative land is productive and suitable as otherwise the landowner is being put in a worse off position. The problem however occurs where the land during this process later becomes ill suited for the purpose and thus perhaps it could be argued that there should not be a high burden or duty on valuers to ensure that alternative land is productive and suitable. Perhaps a phrase could be adopted such as that the land be “reasonably” suited or “reasonably” productive.

9.     What form of compensation should be provided if suitable alternative land is not available?

Where suitable alternative land is not available in the form of compensation, then perhaps alternative land which is not suitable should be offered in addition to monetary compensation. Where the landowner rejects such an offer then fair and equitable monetary compensation should be given.

10.  Should affected landholders be given a share of the benefits or profits deriving from development projects?

In light of the obvious displacement and impact that expropriation has on affected landholders, one would think that justice should demand that affected landholders be given a share of the benefits or profits derived from development projects. The extent to which landowners should get a share of such profits and for how long however is very debatable.

What should be the rules of procedure?

11.  Who should determine the value of fair compensation?

 The expropriating authority should not be the only body to determine the value of fair compensation but also the local government. The Act needs to provide clear certainty and guidelines to the range of expropriating authorities.

12.  Should affected populations and the public be given an opportunity to negotiate? How can laws ensure a fair negotiation takes place?

Affected populations and the public should be given an opportunity to negotiate, this is crucial to our constitutional dispensation and in terms of the maxim audi alterum partem (hear the other side). All parties that have an interest in the matter should be afforded a right to be heard, especially where their rights are being affected. Affected populations and the public a chance should be given an opportunity to express their views and an opportunity to negotiate in the expropriation matter at hand.

Laws can ensure a fair negotiation takes place by providing a clear procedure in which would have to be followed. This could be firstly given notice and consulting with interested parties by giving them notice of the day in which negotiation will take place.

13.  How can valuers and acquiring bodies be held accountable for decisions on compensation?

 There needs to be uniformity of procedure which valuers in assessing the amount of compensation have to follow. Where values and acquiring bodies have abused such positions or deliberately placed landowners in a worse off position, valuers should be held accountable for their actions.

14.  What should be the timeframe for paying compensation and penalty for delay?

It is difficult to stipulate a precise timeframe for paying compensation and a penalty for delay. The most obvious answer would be to stipulate that the compensation must be paid “within a reasonable time”, however it is difficult to assess what is meant by a reasonable time. Perhaps it is reasonable to state that compensation must be payable within one year and thereafter the expropriating authority will receive a penalty for the delay. Where the expropriating authority knows in advance that they will not meet this deadline then perhaps they can apply for an extension in order to avoid such a penalty, however the extended period must be reasonable in the circumstances.

Marcello Demaria's picture

 

A new blog on fair compensation in transational land deals has been just released on the LandPortal.

The blog argues that a mandatory fair compensation for local populations affected by Large-Scale Land Acquisitions (LSLAs), with clearly established rules can act as a catalyser for those investments that truly constitutes a development opportunity.

This blog offer good for thought in the context of this debate.

The blog post can be accessed here: Blog on Fair Compensation in Large-Scale Land Acquisitions.

Intentional engagement with the impact of expropriation on women is necessary to prevent the process from furthering gender inequality. States have a legal obligation under the Convention on the Elimination of Discrimination against Women to not only avoid de jure discrimination against women, but to ensure their development and advancement towards de facto equality. Accordingly, expropriation processes must be facially non-discriminatory, but they should also facilitate the realization of women’s equality, specifically in regards to land and resource use and access. This is recognized in standards such as the Voluntary Guidelines on the Responsible Governance of Tenure, which recommend “taking specific measures aimed at accelerating de facto equality when necessary.” Such specific measures are necessary because land transitions that adopt a “gender-blind” approach often, in practice, perpetuate de facto inequality.

First, this means explicitly including women in consultations and negotiations over compensation. The World Bank’s 2016 Environmental and Social Standards specifically note that the consultation process should incorporate women’s perspectives, including their preferences regarding compensation mechanisms and resettlement planning. One good practice is separate consultations with women and women’s groups. The timing and location of consultative meetings should be considered in light of women’s domestic and other duties, and information dissemination should target women as well as men.

Second, recognizing and compensating informal land use rights is key to ensuring gender equitable compensation practices. Women are less likely to have formal ownership rights to land. Instead, they may have secondary use rights to land of a family member, or access and use rights to community land (such as gathering rights). Access to resources is also important, since women often have primary responsibility for fuel and water collection for domestic use. Women should be consulted where expropriation will affect these rights, and such rights need to be carefully addressed in compensation packages in a manner that will benefit women.

Compensating use rights and other non-ownership interests in land does not benefit women if women are not included in compensation schemes. Accordingly, gender equity must be considering in implementing compensation schemes. Recommendations in favor of joint titling of land, as well as making men and women joint beneficiaries of compensation schemes, are embraced by a number of development bank standards and policies (such as the Asian Development Bank and the African Development Bank). In both cases, procedural and practical barriers to women’s access to the benefits should be considered, such as women’s access to bank accounts or ability to purchase replacement land.

Finally, special measures may need to be taken for particular groups of women, such as female-headed households, widows, and unmarried women. Where polygamous marriages are practiced, compensation and resettlement plans should address the needs of each wife and her children. In some societies, female in-laws may negatively interfere with a woman’s ability to claim compensation or land tenure rights. Women members of minority groups (such as pastoralist or indigenous communities) may face multiple forms of discrimination. Navigating these dynamics will be easier if there is close and regular consultations with women affected by the expropriation, but may also benefit from external expert advice on social and cultural matters.