IDEAS home Printed from https://ideas.repec.org/a/gam/jlands/v11y2022i5p664-d805665.html
   My bibliography  Save this article

Measuring Inadequacy in Compensation for the Compulsory Acquisition of Land: Evidence from Bengaluru, India

Author

Listed:
  • Jyoti Shukla

    (Faculty of Architecture, Building and Planning, University of Melbourne, Melbourne 3010, Australia)

  • Piyush Tiwari

    (Faculty of Architecture, Building and Planning, University of Melbourne, Melbourne 3010, Australia)

Abstract

Taking inspiration from the longstanding problem of inadequate compensation for the compulsory acquisition of private land for a public purpose, this research estimates the economic value of (i) future development potential of land or ‘hope value’; and (ii) depreciation in property value due to acquisition notification or ‘blight’. Using empirical data on property transactions conducted in the Bengaluru Mysore Infrastructure Corridor (BMIC) project area and registered with sub-registrar offices in Bengaluru India during 2007–14, this research innovatively combines the duration model and hedonic price model to estimate the above. Results indicate that the current mechanisms for compensation are inadequately compensating for the land. The loss of the hope value ranges between 2.39 to 8.35 times the market value of agricultural land in 2006 and loss due to blight is approximately 31 percent. Compensating for these losses ex-ante should induce fairness in the compulsory acquisition process and reduce arbitrariness in the valuation of essential components of a compensation package, thus unburdening the valuation responsibilities of the legal institutions. These findings empirically support the argument of payment of additional monetary compensation to the market value of land and provide a rational measure of the same.

Suggested Citation

  • Jyoti Shukla & Piyush Tiwari, 2022. "Measuring Inadequacy in Compensation for the Compulsory Acquisition of Land: Evidence from Bengaluru, India," Land, MDPI, vol. 11(5), pages 1-16, April.
    • Handle: RePEc:gam:jlands:v:11:y:2022:i:5:p:664-:d:805665
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-445X/11/5/664/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2073-445X/11/5/664/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gary Sams, 2017. "Compulsory purchase and compensation update 2017," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 35(5), pages 528-534, August.
    2. Sudip Chattopadhyay, 1999. "Estimating the Demand for Air Quality: New Evidence Based on the Chicago Housing Market," Land Economics, University of Wisconsin Press, vol. 75(1), pages 22-38.
    3. Ram Singh, 2012. "Inefficiency And Abuse Of Compulsory Land Acquisition--An Enquiry Into The Way Forward," Working papers 209, Centre for Development Economics, Delhi School of Economics.
    4. Poirier, Dale J & Melino, Angelo, 1978. "A Note on the Interpretation of Regression Coefficients within a Class of Truncated Distributions," Econometrica, Econometric Society, vol. 46(5), pages 1207-1209, September.
    5. Jyoti Rao, 2018. "Functionings of Land," Springer Books, Springer, number 978-981-13-1441-4, December.
    6. Rao, Jyoti, 2019. "A ‘capability approach’ to understanding loses arising out of the compulsory acquisition of land in India," Land Use Policy, Elsevier, vol. 82(C), pages 70-84.
    7. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    8. Graeme Newell & Nelson Chan & Evan Goodridge, 2011. "Risk assessment and compensation analysis of court decisions in compulsory land acquisition compensation cases in Australia," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 29(2), pages 210-219, March.
    9. Gary Sams, 2016. "Compulsory purchase and compensation update – 2016," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 34(4), pages 421-427, July.
    10. Rao, Jyoti, 2018. "Fundamental Functionings of Landowners: Understanding the relationship between land ownership and wellbeing through the lens of ‘capability’," Land Use Policy, Elsevier, vol. 72(C), pages 74-84.
    11. Ghatak, Maitreesh & Mitra, Sandip & Mookherjee, Dilip & Nath, Anusha, 2013. "Land Acquisition and Compensation in Singur: What Really Happened?," CAGE Online Working Paper Series 121, Competitive Advantage in the Global Economy (CAGE).
    12. Drapikovskyi, Oleksandr & Ivanova, Iryna & Renigier-Biłozor, Małgorzata & Źróbek, Sabina, 2020. "How to assess the impact of hope on a change in the use of land on market value?," Land Use Policy, Elsevier, vol. 97(C).
    13. Piyush Tiwari & Hiroshi Hasegawa†, 2004. "Demand for Housing in Tokyo: A Discrete Choice Analysis," Regional Studies, Taylor & Francis Journals, vol. 38(1), pages 27-42.
    14. Halvorsen, Robert & Pollakowski, Henry O., 1981. "Choice of functional form for hedonic price equations," Journal of Urban Economics, Elsevier, vol. 10(1), pages 37-49, July.
    15. Jyoti Rao & Norman Hutchison & Piyush Tiwari, 2020. "Analysing the process of compulsory acquisition of land through the lens of procedural fairness: evidence from Scotland," Journal of Property Research, Taylor & Francis Journals, vol. 37(1), pages 62-84, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wilhelmsson, Mats, 2002. "Household Expenditure Patterns for Housing Attributes: A Linear Expenditure System with Hedonic Prices," Journal of Housing Economics, Elsevier, vol. 11(1), pages 75-93, March.
    2. Shr, Yau-Huo & Zipp, Katherine, 2016. "Valuing complementarity between environmental goods and housing attributes with the benefit function: An application to flood hazards," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235961, Agricultural and Applied Economics Association.
    3. Palmquist, Raymond B., 2006. "Property Value Models," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 16, pages 763-819, Elsevier.
    4. Chattopadhyay, Sudip, 2000. "The effectiveness of McFaddens's nested logit model in valuing amenity improvement," Regional Science and Urban Economics, Elsevier, vol. 30(1), pages 23-43, January.
    5. Sudip Chattopadhyay, 2002. "Divergence in alternative Hicksian welfare measures: the case of revealed preference for public amenities," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(6), pages 641-666.
    6. Patil, Vikram & Ghosh, Ranjan & Kathuria, Vinish & Farrell, Katharine N., 2020. "Money, Land or self-employment? Understanding preference heterogeneity in landowners’ choices for compensation under land acquisition in India," Land Use Policy, Elsevier, vol. 97(C).
    7. David M. Brasington & Diane Hite, 2005. "Demand for Environmental Quality: A Spatial Hedonic Approach," Departmental Working Papers 2005-08, Department of Economics, Louisiana State University.
    8. DESBOIS, Dominique, 2015. "La qualité du lait a-t-elle un prix ? Une estimation hédonique de la valeur des attributs spécifiques du lait de vache," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 96(3), September.
    9. Joaquín Delgado & Giovanni Wences, 2020. "A hedonic approach to the valuation of the effect of criminal violence on housing prices in Acapulco City," Empirical Economics, Springer, vol. 59(6), pages 2999-3018, December.
    10. Badi H. Baltagi & Georges Bresson & Jean‐Michel Etienne, 2015. "Hedonic Housing Prices in Paris: An Unbalanced Spatial Lag Pseudo‐Panel Model with Nested Random Effects," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 30(3), pages 509-528, April.
    11. Mai, Nhat Chi, 2018. "도이모이 이후 베트남의 주거 이동, 선택, 가격 결정요인 연구: 호치민시 사례 중심으로," OSF Preprints 6kdfy, Center for Open Science.
    12. Sanglim Yoo & John E. Wagner, 2016. "A review of the hedonic literatures in environmental amenities from open space: a traditional econometric vs. spatial econometric model," International Journal of Urban Sciences, Taylor & Francis Journals, vol. 20(1), pages 141-166, March.
    13. Theodore M. Crone, 2006. "Capitalization of the quality of local public schools: what do home buyers value?," Working Papers 06-15, Federal Reserve Bank of Philadelphia.
    14. Fluvià, Modest & Rigall-I-Torrent, Ricard & Espinet, Josep Maria & Garriga, Anna & Saló, Albert, 2011. "Precios implícitos de los atributos de los productos turísticos: ¿Qué esconde el efecto de la localización?/Implicit Prices of the Attributes of Tourism Products: What is Hidden Behind Location?," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 29, pages 781-802, Diciembre.
    15. Zhang, Congwen & Boyle, Kevin J. & Kuminoff, Nicolai V., 2015. "Partial identification of amenity demand functions," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 180-197.
    16. Muriel Travers & Abdelhak Nassiri & Gildas Appéré & Francois Bonnieux, 2006. "Evaluation des bénéfices environnementaux par la méthode des prix hédonistes : une application au cas du littoral," Post-Print hal-04488838, HAL.
    17. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    18. Josep Mª Espinet Rius, 2018. "Global and local pricing strategies in the cruise industry," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(5), pages 329-340, October.
    19. Uchenna N. Akpom, 1996. "Housing Attributes And The Cost Of Private Rental Buildings In Lagos Nigeria: A Hedonic Price Analysis," The Review of Regional Studies, Southern Regional Science Association, vol. 26(3), pages 351-365, Winter.
    20. Wisdom Akpalu & Ametefee K. Normanyo, 2016. "Gold mining pollution and the cost of private healthcare: The case of Ghana," WIDER Working Paper Series 121, World Institute for Development Economic Research (UNU-WIDER).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jlands:v:11:y:2022:i:5:p:664-:d:805665. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.