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In this study the involvement of the community during expropriation and the utilization of the compensation money of the expropriated farmers are investigated taking Bahir Dar and Debre Markos peri-urban areas as case studies. Survey research methods were applied for data collection. The data were analyzed by means of descriptive statistics. According to the results, there is high land tenure transformation in both study areas. Even though the majority of the expropriated farmers got compensation payments, most farmers did not use their compensation money to found alternative income generating businesses. Just payment of compensation shall not be an end by itself. Technical and administrative supports for farmers are essential for the proper utilization of the compensation money. Communities affected by expropriation should participate effectively in the processes of expropriation and compensation in order to reduce the externalities of the process. For this to happen, the public authorities should prepare open public consultation meetings prior to expropriation and must exercise smart democracy during the whole period of the process.
