Munich Personal RePEc Archive

Development and Land Acquisition in the View of Law and Economics

Dinda, Soumyananda (2015): Development and Land Acquisition in the View of Law and Economics.

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Abstract

The marginal productivity theory determines the value of a land under ceteris peribus. Land price depends on economic opportunity, time and technology. Recently, development policy focuses on creation of economic opportunity that increases the demand for transferring land from primary to secondary or tertiary activities. Market mechanism is sufficient argument of distributive justice for land acquisition for development activity, but some time it fails. Landowners are heterogeneous in terms of knowledge, skill, risk preferences, attitudes, perception of future development benefits, etc. Incorporating the mind set of landowners, how do we assign the value of land and compensate for land transfer for developmental activities? This paper focuses on it with possible alternative viable solutions. There is good reason to insist on compensation of displaced landowners at market prices for distributive justice with economic efficiency. Given the heterogeneity in land valuations, the required compensation rates can be set at the market rate. But the role of income security is ignored in market mechanism. The role of complementarities of land with farming skills those are non-transferable that incorporate their concern for financial security, time preference, and pattern of skills. These concerns exhibited considerable diversity with a corresponding diversity of preferences over alternative forms of non-cash compensation. Hence a menu of alternative compensation packages ought to be offered, to cater to this diversity.

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