The international financing institutions (IFIs) typically require that those who have a claim to land recognized or recognizable under national law are eligible for compensation at replacement value if their land is involuntarily acquired under the development projects the IFIs finance, even when they do not have formal legal rights to the land in question. The challenges to fully implement this requirement are numerous. Identification and confirmation of unregistered tenure rights are time consuming and complex. Formally recognizing ‘legalizable’ land and tenure rights is not a straightforward process and neither is the proper compensation of such lands and tenure rights. The problem is further compounded if the land is customarily occupied with unclear boundaries, overlapping claims, and political economy issues. Market valuation is the cornerstone of the current valuation practice, but this alone may not achieve adequate compensation for expropriation. The ‘market value’ is a value where properties exchange hands based on a willing-seller willing-buyer transaction, unlike involuntary land acquisition where the buyer, the state, has the power of eminent domain. Other concerns, such as disturbance, special value to owner, injurious affection, severance, and solatium allowances, may be needed to achieve the core principle of compensation, to leave the persons affected no worse off than they were before the expropriation. Recent efforts to develop methodological guidelines on the valuation of unregistered lands illustrate the complexity (for example, UN Habitat, 2021). The study comprises cases studies compiled from Indonesia (3), Sri Lanka (2), Uganda (3), Nepal (1), and Afghanistan (1). The case studies (summaries annexed) reflect public investment projects where land-for-land or cash compensation was paid or monetary support provided for compulsory acquisition of unregistered and customary land and tenure. The definition of eligibility and valuation methodology used by valuators in response to specific project contexts is presented, along with the solutions to provide fair and adequate compensation and livelihood restoration outcomes for the affected peoples. This study aims to contribute to global knowledge on the valuation and compensation of unregistered land and tenure rights under compulsory acquisition to assess the valuation methodologies used; the legal, historical, and cultural contexts that informed them; and the outcomes achieved.

Valuation and Compensation of Unregistered and Customary Lands

Resource Key: GZUWQDPT

Document Type: Report

Creator:

Author:

  • World Bank

Creators Name: {mb_resource_zotero_creatorsname}

Place: Washington D.C.

Institution: World Bank

Date: February 2024

Language: en

The international financing institutions (IFIs) typically require that those who have a claim to land recognized or recognizable under national law are eligible for compensation at replacement value if their land is involuntarily acquired under the development projects the IFIs finance, even when they do not have formal legal rights to the land in question. The challenges to fully implement this requirement are numerous. Identification and confirmation of unregistered tenure rights are time consuming and complex. Formally recognizing ‘legalizable’ land and tenure rights is not a straightforward process and neither is the proper compensation of such lands and tenure rights. The problem is further compounded if the land is customarily occupied with unclear boundaries, overlapping claims, and political economy issues. Market valuation is the cornerstone of the current valuation practice, but this alone may not achieve adequate compensation for expropriation. The ‘market value’ is a value where properties exchange hands based on a willing-seller willing-buyer transaction, unlike involuntary land acquisition where the buyer, the state, has the power of eminent domain. Other concerns, such as disturbance, special value to owner, injurious affection, severance, and solatium allowances, may be needed to achieve the core principle of compensation, to leave the persons affected no worse off than they were before the expropriation. Recent efforts to develop methodological guidelines on the valuation of unregistered lands illustrate the complexity (for example, UN Habitat, 2021). The study comprises cases studies compiled from Indonesia (3), Sri Lanka (2), Uganda (3), Nepal (1), and Afghanistan (1). The case studies (summaries annexed) reflect public investment projects where land-for-land or cash compensation was paid or monetary support provided for compulsory acquisition of unregistered and customary land and tenure. The definition of eligibility and valuation methodology used by valuators in response to specific project contexts is presented, along with the solutions to provide fair and adequate compensation and livelihood restoration outcomes for the affected peoples. This study aims to contribute to global knowledge on the valuation and compensation of unregistered land and tenure rights under compulsory acquisition to assess the valuation methodologies used; the legal, historical, and cultural contexts that informed them; and the outcomes achieved.

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