By Group-2

Introduction
Land 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 the acquisition process is neither consultative nor transparent. Land titles are unclear and identifying parties eligible for compensation is difficult. Compensation and packages of rehabilitation& resettlement to the landowners are often inadequate and based on low land values Corruption limits the justified compensation to the affected parties.

3 Axes
Land acquisition practice in various countries can be viewed along 3 axes: Principle of land acquisition Process of land acquisition Land Valuation methods

Principle of land acquisition

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 in enacted 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 national defence, 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

Principle of land acquisition

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, severance payments, consequential financial losses, value loss to other retained land and Solatium . This is followed in most Commonwealth countries and regions such as Australia and Hong Kong. There is socio 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 as early as possible. It is followed in USA, UK, Philippines, Brazil and Combodia. There is economic parity 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 and British Columbia. Here, land acquisition is like financial transaction with intangible value ignored.

Process of Land Acquisition

Land acquisition traverses from compulsory acquisition to consultative process .
Consultative process is generally implemented when the land is not required for 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 this

doesnt work then the state can move on to compulsory acquisition based on predetermined 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.

Land Valuation methods

There 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

Techniques to measure the land value

1) 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 value of land. Countries namely Malaysia,China,USA and India follow this technique for value determination. 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 kept artificially low for tax purposes. 2) Replacement value technique: Replacement value includes not only the cost of acquiring or replicating the property, but also the relevant costs associated with the replacement .It is applicable in countries where legal systems are not robust, where either the land market is not well developed or does 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 value of property is taken to be the value of expected income that could be earned from the land which is basically 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 which the 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 .

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 from agricultural to commercial before acquisition. b) Original use compensation assumes that agriculture is the highest and best use of rural land.
4) Discussions with stakeholders: This policy considers compensation based strictly on negotiation with the affected parties. It is followed in Peru, Singapore and Japan.

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 but by the provision of a comparable plot of land elsewhere. Sometimes China did this.
Solatium for Householders surplus which reflects the value of ties with the

area , friendships made and social relations. Solatium for lost economic power of the affected parties where individuals can not 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 farmers operations. In Germany ,government pays additional compensation when an expropriation divides or transverses agricultural land.

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 sectors pecific Acts such as the National Highways Act ,the Indian Railways Act and Forest Land Acquisition act. Some states have their own land acquisition Acts that are variants of the National Act.

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 a chance to voice their views must be followed. Finally, an acceptable compensation package must be arrived upon and distributed. Very often, only the minimum subsets of landowners who are affected are identified. Encroachers, sharecroppers, landless labourers and so on, 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 value derived from all possible compensation approaches and as a result the final compensation arrived at is often an order of magnitude lower than that expected by landowners. The real value of this compensation is further reduced due to the time lag between determining the compensation and awarding it to project-affected parties

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 to restore them, in real terms, to pre-displacement levels or to levels prevailing prior to the beginning of project implementation, whichever is higher. Compensation: The guidelines require the compensation to be promptly and effectively, at full replacement cost for losses suffered, distributed to affected parties. the sponsoring agency is also expected to play an active role in the rehabilitation process, beyond merely providing a financial package to affected parties. Consultative Approach for negotiation: The World Bank guidelines prescribe a consultative approach. Stakeholders are to be informed about their rights and allowed to select between economically feasible compensation alternatives. The approach set out in guidelines may result in the entire process being played out over an extended over of the time.