PPP Insights: Compulsory Acquisition of Land and Compensation in Infrastructure Projects

 

Introduction

 

Compulsory acquisition is the power of government to acquire private rights in land for a public purpose, without the willing consent of its owner or occupant (Keith, 2008). This power is known by a variety of names depending on a country’s legal traditions, including eminent domain, expropriation, takings and compulsory purchase. Regardless of the label, compulsory acquisition is a critical development tool for governments, and for ensuring that land is available when needed for essential infrastructure - a contingency that land markets are not always able to meet.

 

Yet despite being a core and necessary governmental power, compulsory acquisition has always attracted controversy, both in theory and practice. The reasons for this are unsurprising. Whenever people are displaced, the human costs in terms of disruption to community cohesion, livelihood patterns and way of life, may go beyond what can be fully mitigated through standard compensation packages, however generous those may be. Such inevitable costs are compounded, sometimes many times over, where the process is designed or implemented poorly - tenure insecurity is exacerbated, land markets are weakened, investment incentives are undermined, corruption is facilitated, and communities and livelihoods may be destroyed. Although the compulsory acquisition power is deeply rooted in virtually all legal systems, the establishment of efficient and fair legal and institutional frameworks for exercising this power remains unfinished business in many countries around the world. From Brazil and China to Ghana and the United States, the task of better defining the principles and processes that govern compulsory acquisition powers is one that is very much alive and at the heart of current land policy debates.

 

An important dimension of evolving law and practice relates to the deployment of government taking powers in respect of public-private partnerships (PPPs). The extent to which private end-users of property should be allowed to be beneficiaries of compulsory government land acquisition has long been an issue, and national laws vary in how they define and circumscribe the potential involvement of the private sector. The issue has become more acute as governments and their development partners increasingly emphasize the importance of leveraging private investment for activities that have traditionally fallen within the public domain.

 

This Note is intended to summarize for development professionals and policy makers some key considerations in the design of compulsory acquisition mechanisms, particularly in the context of infrastructure projects and PPPs and to highlight some areas of continuing controversy. Brief reference will be made to norms promoted at the international level, such as those embodied in the World Bank’s Policy on Involuntary Resettlement (OP 4.12); however, the main emphasis of this Note is on lessons that emerge from reviewing developments in national legislation and practice.
 

Last Updated : Sun,2017-06-11