Land Values and Compensation Payments from the Viewpoint of Owners and Users Affected By Projects: Analysis of Selected Land and Water Development Projects in Turkey

It is noteworthy that land valuation practices and compensation determination methods differ based on the purposes of land acquisition and especially owners have problems of perception regarding the concepts of “value” and “compensation” and that land value and compensation criteria deviate to a great extent. Methods used in valuation studies for land acquisition differ according to the types and kinds of real estates in many countries. Valuation criteria vary depending on the methods used in land acquisition and expropriation processes and it becomes necessary to classify the type of real estate in the first place as bare land and developed land in the valuation studies. In Turkey, under the Law on Expropriation No. 6830 dated 1956, it was firstly necessary to determine the expropriation values of land as per the methods of income and market value. Then, under the Expropriation Law dated 1983 and numbered 2942, it has been made legally obligatory to determine the value of parcels in the form of land lots based on “net income that the land can bring according to the position and conditions of the source and as it is used” and to conduct valuation procedures of parcels that have gained the quality of land lot based on the “non-special-purpose precedent transaction value before the expropriation date (comparative sales analysis method)”. Analysis and valuation methods and results of land acquisition and valuation studies for public and private projects are not generally understood, and valuation results that are appreciated according to the properties of land and the value expectations of the owners also deviate significantly. A comparative analysis of income value of lands, market values, values appraised by expert committees appointed by courts, if any, and the land values or compensation amounts which the owners would like to be paid (willingness-to-accept - WTA) using the results of 20 different projects analyzed in terms of parcel unit values was conducted by the real estate and asset valuation research group over last decade. According to the results of the field studies related to the selected case studies, it has been found that the land unit values that the owners want to be paid are generally higher than the land market and income values, and in these conditions, it is generally difficult to complete the land acquisition process in a short time by compromising with the land owners. Also, they preferred generally payment as cash compensation instead of in kind. According to the results of the selected sample project analyzes, the main reasons for the value expectation of the owners affected by the project to be higher than the estimated value of the land according to the income method include the expropriation values (or negative experiences) determined by courts in previous projects and some subjective factors. Factors such as the proximity of the parcels to village settlements, rivers, creeks and roads, land tenure and fertility of the land seem to be much more influential on the land value expectations of the owners. In many project areas, expropriation of parcels outside village settlements usually takes place and this can be interpreted as land prices should be relatively low. However, factors such as land availability and especially the lack of irrigated land in the project site and surrounding settlements, the presence of irrigated land generally in the expropriation area (except the irrigation facilities to be formed in the adjacent area after water retention) and the high population increase are among the reasons for the high value expectations of the owners. Nevertheless, it should be kept in mind that criteria such as “social elements” and “expectation and tendencies of the owners” are not included in the legislation and should not be taken into consideration in practice, in consideration of the expropriation values of the expropriated land. The fact that land values that the land owners want to be paid for are higher than the market values of the income value and parcels that have gained land lot qualities, which are clearly defined in the legislation, are considered as the reasons for the increase in dissatisfaction levels of the land acquisition process of the affected owners and affect the adoption of investments at the local level negatively. There are frequent instances where owners and users of land, and even the local community as a whole, tend to not want investment projects in general due to such reasons as making traditional benefit-cost analysis instead of social benefit-cost analysis during the decision making of investment projects; the weakness in implementation of international standards in project land acquisition phase; and not focusing on the assessment and implementation of tools for assessing impacts after land acquisition and mitigating adverse impacts. In these conditions, it seems necessary that public and private institutions should ensure transparency of the process of land acquisition and expropriation, and compensation calculation and payment systems are removed from the national scale to achieve compliance with international approaches and standards.