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Protection against Government Takings: Compensation for Regulation?

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Abstract

The paper responds to recent debate in New Zealand on the power of the government to take private property, directly or through regulatory constraints. This aspect of regulation has received less attention in New Zealand than it warrants. This paper addresses the issue of which protections against takings are appropriate, and the role of compensation as a protective device. A taking can be broadly defined an act by which a government assumes or assigns control over all or part of a property right held by a private party. Government regulation is typically not treated as a taking. In practice, compensation is normally required only for physical takings, such as the acquisition of land, and is not available for takings through regulation, such as restricting the right to use land in a particular way. New Zealand has three options for improved protection against takings: a tighter regime for scrutinising the quality of regulation, more restricted takings powers, and extended compensation provisions. The desirability and practicality of a greater role for compensation requires, however, more detailed consideration. The paper aims to stimulate further debate in this area as an aspect of the wider debate on regulatory quality.

Suggested Citation

  • Kevin Guerin, 2002. "Protection against Government Takings: Compensation for Regulation?," Treasury Working Paper Series 02/18, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:02/18
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    File URL: https://treasury.govt.nz/sites/default/files/2007-09/twp02-18.pdf
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    References listed on IDEAS

    as
    1. Hermalin, Benjamin E, 1995. "An Economic Analysis of Takings," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(1), pages 64-86, April.
    2. Miceli, Thomas J & Segerson, Kathleen, 1994. "Regulatory Takings: When Should Compensation Be Paid?," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 749-776, June.
    3. Kevin Guerin, 2001. "Regulatory Harmonisation - Issues for New Zealand," Treasury Working Paper Series 01/01, New Zealand Treasury.
    4. Kevin Guerin, 2002. "Subsidiarity: Implications for New Zealand," Treasury Working Paper Series 02/03, New Zealand Treasury.
    5. Fischel, William A. & Shapiro, Perry, 1989. "A constitutional choice model of compensation for takings," International Review of Law and Economics, Elsevier, vol. 9(2), pages 115-128, December.
    6. Fischel, William A & Shapiro, Perry, 1988. "Takings, Insurance, and Michelman: Comments on Economic Interpretations of "Just Compensation" Law," The Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 269-293, June.
    7. Esposto, Fred G, 1996. "The Political Economy of Taking and Just Compensation," Public Choice, Springer, vol. 89(3-4), pages 267-282, December.
    8. Lawrence Blume & Daniel L. Rubinfeld & Perry Shapiro, 1984. "The Taking of Land: When Should Compensation Be Paid?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(1), pages 71-92.
    9. Munch, Patricia, 1976. "An Economic Analysis of Eminent Domain," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 473-497, June.
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    More about this item

    Keywords

    Eminent Domain; Compensation; Regulatory Takings; Police Power; Public Works; Land Use;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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