An analysis of land acquisition processes and compensation methods for ‘public projects’: Comparative study of Australia, India, and the UK

By Jyoti Rao

‘Compulsory purchase’ is the power of the government to acquire private land for public use (Mills, 1982). The concept of compulsory purchase is “forceful” by its definition and execution.

Compulsory acquisition of private land (and property rights) is usually resisted by the affected parties. Despite the disapproval of the landowners, this power is considered an important tool for the procurement of contiguous parcels of land for public infrastructure projects. Kaufman (2010) states that “taking the power away from government is no more possible than doing away with government itself” (p. 77).

This research looks very closely into the mechanism of compulsory acquisition of land for public, with the aim of deriving a fairer mechanism of compensation for the loss of private land and property. While the bigger argument for the exercise of the powers of compulsory purchase is the maximization of social welfare, this research shall base its argument on Amartya Sen’s (1979) capability approach; namely, that welfare should be equated with the ‘capability’ of the individual. The freedom of access to valuable functionings shall be the measure of individual’s welfare. This research argues that the ‘functionings’ of the landowner that are lost due to compulsory acquisition of land shall be appropriately compensated so as to maximize the social welfare more holistically.

Fairer approach to the coercive process of ‘compulsory purchase'

This research operationalizes the capability approach through the use of a hedonic price model. This model hypothesises that “goods are valued for their utility-bearing attributes or characteristics” (Rosen, 1974, p. 34). In the context of land (as a good), the utility bearing attributes are the ‘functionings’ of the land. Like other differentiated goods, land commands different prices for different ‘functionings’, through which market forces determine the price of each parcel. The hedonic model of pricing is responsive to these relations, which arise out of heterogeneity (Malpezzi, 2002).

Findings from this research shall apprehend the socio-economic aspects of land and private property rights and shall help in policy intervention.