LAEI

7/29/2019 LAEI

http://slidepdf.com/reader/full/laei 1/14

By Group-2

7/29/2019 LAEI


IntroductionLand ownership confers :

Tangible benefits- Shelter and Livelihood

Intangible benefits- Security and Standing in society.

Typical issues with land acquisition:

In case of compulsory acquisition through “eminent domain”, often theacquisition process is neither consultative nor transparent.

Land titles are unclear and identifying parties eligible forcompensation is difficult.

Compensation and packages of rehabilitation& resettlement to thelandowners are often inadequate and based on low land values

Corruption limits the justified compensation to the affected parties.

7/29/2019 LAEI


3 AxesLand acquisition practice in various countries can be viewed along 3 axes:

Principle of land acquisition

Process of land acquisition

Land Valuation methods

7/29/2019 LAEI



The power and terms under which the land acquisition is to be exercised is either directly vested in the constitution example in -USA,Australia and China , or is specified inenacted legistlation example in- Hongkong, Malaysia and Singapore.

Public purpose:

Countries such as France, Japan, China, Mexico and India explicitly list situations under which land could be acquired by the state for public use.

In China, the public purpose can be setting up public undertakings such as nationaldefence, transport,water conservancy,government agencies etc.

In Mexico, public purpose includes infrastructure development, conservation of history or culture, national security or public development projects and projects to preserve the

ecological balance and natural resources Generic definition of public purpose in Malaysia,Brazil,US ,UK and Singapore that can

lead to misinterpretation and potential dispute.

In Singapore for” public benefit or public interest projects”

In Australia for” purposes that the parliament has the power to define by legislation”

In UK for “planning and public purposes if it is suitable for and required for

development”

7/29/2019 LAEI



Principles in 3 main categories : Value to the owner Just compensation Reasonable compensation

“Value to the owner” principle : It aims at compensating landowners to the tune of the land together with other losses suffered by the claimant . It covers compensation to be provided after the market value assessment of the land acquires and also the special values attributed to land, severancepayments, consequential financial losses, value loss to other retained land and Solatium . This isfollowed in most Commonwealth countries and regions such as Australia and Hong Kong. There issocio economic consideration and compensation may be monetary as well as non monetary.

“Just Compensation” principle :It aims at providing adequate financial compensation to the dispossessed groups such that they get

entitled for compensation and to be put in the same position if the land had not been taken. This may

also include enabling the property owners to be able to purchase similar lands of approximate areas asearly as possible. It is followed in USA, UK, Philippines, Brazil and Combodia. There is economicparity consideration and compensation is monetary.

“Reasonable compensation”: In this the landowners are fully indemnified only for their direct losses.Market value is the basic measure of deciding compensation and landowners are strictly paid to the value of land. Quite often, landowners possess huge losses . This principle is followed in China andBritish Columbia. Here, land acquisition is like financial transaction with intangible value ignored.

7/29/2019 LAEI


Process of Land Acquisition Land acquisition traverses from compulsory acquisition to consultative process

.

Consultative process is generally implemented when the land is not requiredfor public purpose. Here negotiation often leads to economically efficient and

socially optimal solution. Where land acquisition is critical and for public purpose , Japan recommends

the use o f negotiations to decide for the compensation to the stakeholders.

Singapore and Philippines recommends that government agencies &developers shall first negotiate with stakeholders to arrive at mutually

acceptable compensation package(monetary and non-monetary). If thisdoesn’t work then the state can move on to compulsory acquisition based onpredetermined formulae provided in land acquisition acts.

India, China, Australia and New Zealand follow compensation guidelines which are prescribed through set formulae and are enforced upon land owners.

7/29/2019 LAEI


Land Valuation methodsThere are 4 methods to value land and arrive at

appropriate compensation:

Evaluating market value of land

Evaluating net value of income from the land Determining original land value as set by state

Arriving at land values through negotiation

7/29/2019 LAEI


Techniques to measure the land value1) Comparable sales technique: It takes into account the sales of land of similar transaction in nearby areas over a recent time frame and an average sales price is calculated that represents the market valueof land. Countries namely Malaysia,China,USA and India follow this technique for valuedetermination. The advantage is that it represents true market conditions.

The drawbacks are:

a) sales data on comparable tracts of land may not be available.

b) there are several cases in the developing countries where the registered value of the new sale is keptartificially low for tax purposes.

2) Replacement value technique: Replacement value includes not only the cost of acquiring orreplicating the property, but also the relevant costs associated with the replacement .It is applicable incountries where legal systems are not robust, where either the land market is not well developed ordoes not provide active reliable information. An example to this is Philippines.

Where land market data is not reliable, the “net value of income from land may be used to calculate

value of the land .This is mostly applicable in the appraisal of farmland. Using this method the valueof property is taken to be the value of expected income that could be earned from the land which isbasically the present value of future income from the land including its sale .It is used in Tanzania.

The drawbacks are :

a) it requires accurate estimates of the total cost of incurred by the landowner, the price at whichthe crops from the land are sold and the cost of inputs to land.

b) the use of discount rate leads to uncertainity.

c) it does not account for non income benefits of land such as - livelihood, and social security .

7/29/2019 LAEI


Techniques to measure the land value 3) Original land use : It is used in China and the Land Act of China does not

permit free transfer or rural land because there is not active land market . So,the original use of land is used for compensation purposes.

The drawbacks are :

a) Lack of clarification to decide the original use of land converted fromagricultural to commercial before acquisition.

b) Original use compensation assumes that agriculture is the highest and bestuse of rural land.

4) Discussions with stakeholders: This policy considers compensation basedstrictly on negotiation with the affected parties. It is followed in Peru,Singapore and Japan.

7/29/2019 LAEI


Special compensation Non-monetary means of compensation is an attempt to address the indirect

cost of land. Land for land transfer in which compensation is not by cash butby the provision of a comparable plot of land elsewhere. Sometimes China didthis.

Solatium for “Householder’s surplus” which reflects the value of ties with thearea , friendships made and social relations.

Solatium for lost economic power of the affected parties where individuals cannot use their acquired skills at the new location to earn for living.

In Brazil , in addition to direct compensation, there is “Social subsidy” to allow

the displaced party to buy replacement real estate. Great Britain provides special compensation when expropriation of agricultural

land disturbs a farmer’s operations.

In Germany ,government pays additional compensation when an expropriationdivides or transverses agricultural land.

7/29/2019 LAEI


The Indian Land Acquisition Experience Land Acquisition Act of 1984, which was partially

amended in 2007. This Act is invoked in the majority of land acquisition cases. Besides this, there are sectorspecific Acts such as the National Highways Act ,theIndian Railways Act and Forest Land Acquisition act.

Some states have their own land acquisition Acts thatare variants of the National Act.

7/29/2019 LAEI


Land acquisition act of 1984 Three macro-processed involved in the acquisition process. First, affected parties are to be identified. Second, a fair process by

which stakeholders are notified of the acquisition and are given achance to voice their views must be followed. Finally, an

acceptable compensation package must be arrived upon anddistributed. Very often, only the minimum subsets of landowners who are affected

are identified. Encroachers, sharecroppers, landless labourers and soon, who have an interest in the land are not compensated.

. Finally, no clear formula is given as to how compensation must

be calculated. Government officials often consider the least valuederived from all possible compensation approaches and as a result thefinal compensation arrived at is often an order of magnitude lower thanthat expected by landowners. The real value of this compensation isfurther reduced due to the time lag between determining thecompensation and awarding it to project-affected parties

7/29/2019 LAEI


7/29/2019 LAEI


Take of World Bank on Acquisition

Process Framework Value to the owner :Displaced persons should be assisted in their

efforts to improve their livelihoods and standards of living or at least torestore them, in real terms, to pre-displacement levels or to levelsprevailing prior to the beginning of project implementation, whicheveris higher.

Compensation: The guidelines require the compensation to bepromptly and effectively, at full replacement cost for losses suffered,distributed to affected parties. the sponsoring agency is also expectedto play an active role in the rehabilitation process, beyond merely providing a financial package to affected parties.

Consultative Approach for negotiation: The World Bank guidelinesprescribe a consultative approach. Stakeholders are to be informedabout their rights and allowed to select between economically feasiblecompensation alternatives. The approach set out in guidelines may result in the entire process being played out over an extended over of the time.

LAEI

Documents

Transcript of LAEI