Empirical research conducted in many countries shows that the amount of compensation granted to affected landholders is often insufficient to reconstruct their livelihoods subsequent to expropriation [1
]. Banerjee and Van Eerd found that, in Cambodia, Indonesia, Nigeria, Sri Lanka, and the Philippines, the compensation and resettlement assistance provided to affected populations was not enough to cover their losses, allow them to purchase alternative land, and sustain an adequate standard of living after their land was expropriated [2
]. In China, a survey of 476 expropriation cases conducted by Keliang and others revealed that 65.5 percent of affected farmers were dissatisfied with the amount of compensation allotted [3
]. The World Bank’s Land Governance Assessment Framework (hereinafter “LGAF”) found that affected populations in Afghanistan, Brazil, Ethiopia, South Africa, South Sudan, Tanzania, and other countries were in many cases not granted sufficient compensation for expropriated land [4
]. In Nigeria, for example, the LGAF study found “a large number of acquisitions occurs without prompt and adequate compensation, thus leaving those losing land worse off, with no mechanism for independent appeal even though the land is often not utilized for a public purpose” [5
]. The recurring problem of insufficient compensation begs the question of what can be done to diminish the impoverishment risks associated with expropriation and forced displacement, and ensure that affected landholders are not worse off than before their land was compulsorily acquired.
1.1. Legal Reform as a Potential Solution to Insufficient Compensation
According to the “legality” principle, government actions should be limited by enacted laws that are clearly written with adequate precision and clarity; governments should not be allowed to make arbitrary decisions that violate the law [6
]. A basic assumption underlying the recommendations made in this article is that robust compensation procedures established by law, coupled with respect for the rule of law, can help ensure that expropriations promote sustainable development outcomes that balance property rights with the public interest. Moreover, if the governments and private actors respect and enforce laws that provide robust compensation entitlements to affected populations, then those populations will be more likely to obtain sufficient compensation when their land is expropriated. This article focuses exclusively on the written law in these 50 countries/regions; it does not assess whether laws are effectively implemented in practice. This article does not comprehensively examine the wide range of possible outcomes that may occur in countries where laws do not exist or the rule of law is not respected. An analysis of the actions of governments in countries with non-existent or weak rule of law is beyond the scope of the article. In such countries, if governments and private actors fail to respect the rule of law, land may be confiscated due to conflict or other reasons, even when such confiscation does not serve a genuine public purpose. Without enforceable legal rights, affected populations may be unable to seek redress in court in cases where governments and private actors fail to provide fair compensation.
Assuming rule of law is an essential “precondition” of good governance [7
] then clear and effective legal procedures may be necessary to ensure responsible land governance standards are met. As argued by Raz, the rule of law must provide people with effective guidance [8
]. If decisions on compensation valuation are made in an ad hoc manner, then the rule of law may be contravened. In theory, if compensation procedures require assessors to account for all of the losses borne by affected populations, and acquiring bodies obey the rule of law, affected populations may be less likely to endure impoverishment and other risks associated with expropriation and inadequate compensation. As stated by Cernea, “all forced displacements are prone to major socio-economic risks, but not fatally condemned to succumb to them” [11
If compensation procedures contain gaps or ambiguities, or if such procedures grant broad discretion to governments or acquiring bodies [12
] to determine what constitutes “fair compensation”, there may be an increased risk of insufficient compensation being paid to affected populations. Unless compensation procedures provide adequate redress mechanisms (e.g., a right to challenge compensation decisions in court or before a tribunal), affected populations may be unable to hold governments and acquiring bodies accountable for compensation decision-making. For this reason, it is important to consider whether national legal frameworks establish robust compensation procedures that ensure sufficient compensation is paid to affected populations.
This article examines national-level compensation procedures in 50 countries/regions across Asia, Africa, and Latin America against a set of legal indicators based on the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries, and Forests in the Context of National Food Security
(2012) (hereinafter “VGGTs”) [13
]. The indicators analyze whether laws require assessors to account for various types of land values when calculating compensation, and whether there are legal procedures in place to ensure that affected populations have the right to negotiate compensation amounts, receive prompt payments, and hold governments accountable by appealing compensation decisions in court or before a tribunal.
1.2. Road Map
This article is divided into six sections. Section 2
discusses internationally recognized standards on the valuation of compensation. Section 3
discusses the article’s background and methodology, Section 4
discusses the usefulness of this article, Section 5
presents the research findings and analysis, and Section 6
draws conclusions and recommends legal reforms that help ensure fair compensation for affected populations.
2. International Standards on the Valuation of Compensation
Why should governments follow international standards on fair compensation? The principles of fairness and justice suggest that a person should not be forcibly removed from his or her land for a public purpose without payment of compensation that is commensurate of his or her losses. The U.S. Supreme Court, for example, ruled that the 5th Amendment Takings Clause is “designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole” [14
]. The principles of fairness and distributive justice dictate that governments should not impose disproportionate costs on the few in order to benefit the many. To ensure that the burdens on landholders are proportionate to the value of the public benefit generated by expropriation, the government must determine a level of “fair” compensation for expropriated land. However, the level of compensation provided by governments and private actors, following domestic legal frameworks that base compensation on market value, has often been insufficient to cover the losses borne by affected landholders [15
To address this concern, the VGGTs and international standards were formulated to protect affected landholders from impoverishment and other risks, including landlessness, joblessness, food insecurity, increased morbidity, and marginalization [16
]. These international standards aim at addressing the historic injustices suffered by affected landholders. For this reason, it may be in the best interest of governments to comply with these international standards if they wish to ensure that affected populations avoid the adverse socioeconomic impacts of expropriations commonly cited in empirical research.
This article assesses the laws of 50 countries/regions against a set of indicators that are based on the VGGTs and other international standards on the valuation of compensation [17
]. The indicators are primarily based on the VGGTs because they are the first comprehensive, internationally agreed-upon standards on land tenure governance. In 2012, the Committee on World Food Security of the United Nations, a body consisting of 193 member countries, officially endorsed the VGGTs. The VGGTs developed as a result of stakeholder consultations with governments, international NGOs, civil societies, and private companies [18
]. Although the VGGTs are not legally binding on state and non-state actors (e.g., private companies), they reflect widely accepted international human rights norms, such as the right to property, the right to housing, the right to an adequate standard of living, and other rights established in the Universal Declaration of Human Rights, International Covenant on Economic Social and Political Rights, ILO Convention 169, and the UN Declaration on the Rights of Indigenous Peoples [19
]. Private companies, governments, NGOs, and other stakeholders are increasingly accepting the VGGTs as the new international standard on land tenure [20
The VGGTs cover a range of issues pertaining to land tenure governance, such as administration of tenure, allocation and valuation of tenure rights, protection of customary and informal tenure systems, women’s land rights, and other topics. Overall, the standards established in the VGGTs aim at improving land governance and protecting the tenure rights of all persons, particularly marginalized and vulnerable groups. Section 16 of the VGGTs establishes a set of best practices for expropriating land and compensating and resettling affected populations.
Section 16.3 of the VGGTs provides that “States should ensure a fair valuation and prompt compensation in accordance with national law. Among other forms, the compensation may be, for example, in cash, rights to alternative areas, or a combination”. The VGGTs do not define the term “fair valuation,” which presumably means that states are permitted to develop their own definitions of “fair valuation” in national laws. Section 16.5 of the VGGTs provides that “all parties should endeavor to prevent corruption, particularly through use of objectively assessed values, transparent and decentralized processes and services, and a right to appeal”. Furthermore, section 18.2 of the VGGTS establishes additional standards on land valuation and states “policies and laws related to valuation should strive to ensure that valuation systems take into account non-market values, such as social, cultural, religious, spiritual and environmental values where applicable”.
While the VGGTs do not define the term “fair valuation”, there are several other international guidance documents that shed light on the meaning of “fair valuation”. For example, the Food and Agricultural Organization of the United Nations (FAO) publication, Land Tenure Studies 10: Compulsory acquisition of land and
compensation (hereinafter “FAO Handbook”), published in 2008, presents good practices for conducting compulsory acquisitions and compensating affected populations [21
]. Although the FAO Handbook is not officially endorsed by the international community, it reflects what FAO and its many international collaborators consider to be good practices for ensuring equitable access to land and increasing land tenure security. The FAO Handbook provides guidance on determining compensation and recommends that compensation should be based on the principles of equity and equivalence. These principles mean that affected persons should receive “no more or no less than the loss resulting from the compulsory acquisition of their land”. The FAO Handbook is discussed in more detail in subsequent sections of this article.
While the VGGTs and the FAO Handbook together form the basis of the indicators analyzed in this article, it is important to acknowledge other international instruments that establish standards on land valuation and compensation for expropriation. For example, the 2016 World Bank Environmental and Social Standard 5 on Land Acquisition, Restrictions on Land Use and Involuntary Resettlement (ESS5) establishes that compensation should reflect the “replacement cost”. “Replacement cost” is defined as a method of valuation yielding compensation sufficient to replace assets, plus necessary transaction costs associated with asset replacement [22
]. Standards on the valuation of compensation are also established in the United Nations Basic Principles and Guidelines on Development-Based Evictions and Displacement, IFC Performance Standards 5 and 7, the Asian Development Bank Handbook on Resettlement, the Centre on Housing Rights and Evictions Pinheiro Principles, and the UN Human Rights Commission Principles and Guidelines on Development-based Evictions and Displacement establish best practices. Several of the standards established in these instruments are similar to those established in the VGGTs. While the international instruments discussed in this section are noteworthy, the focus of the legal indicator assessment is on the VGGT standards since they were the first standards on land tenure governance that are backed by international consensus of governments, international NGOs, civil society, and the private sector.
3. Background and Methodology
This article examines whether national laws in 50 countries/regions across Asia, Africa, and Latin America provide compensation procedures that comply with international standards on the valuation of compensation. This article is part of a series of articles that are being developed as part of the author’s PhD research project at the University of Groningen Faculty of Law. The overall objective of this PhD research project is to assess whether national laws in 50 countries across Asia, Africa, and Latin America comply with international standards on expropriation, compensation, and resettlement. The 50 countries/regions assessed in this article (and this PhD research project) are listed in Table 1
There are several reasons why these 50 countries/regions were chosen. The author began this project in 2014 at the World Resources Institute’s (WRI) Land and Resource Rights Initiative (LRR) with initial research support from the Harvard Law and International Development Society [23
]. In 2014, 30 countries/regions in Asia and Africa were chosen randomly for the initial stage of this legal indicator study. This initial list of countries/regions was altered slightly so that the study would cover a broad geographical area in Africa, Asia, and Latin America. WRI’s LRR focuses on securing land rights for the rural poor, including indigenous and local communities with customary tenure, and thus the primary focus of the initial study was on the expropriation of land held by informal and customary landholders. For this reason, the list of 30 countries/regions was altered slightly to include countries with large populations of informal and customary landholders. The list of countries/regions was also altered slightly to ensure that the study covers mostly low- and middle-income countries because contestation over land and resources tends to be more active in countries with such income levels. These 30 countries’ or regions’ laws were analyzed, and the findings from the analysis were published in a World Resources Institute Working Paper entitled Encroaching on Land and Livelihoods
in June 2016. In 2016, in order to expand the study to fulfill requirements for the author’s PhD dissertation, the author randomly chose an additional 20 countries (nine Latin American countries, five additional African countries, and six additional Asian countries) in order to increase the number of countries or regions assessed to 50 and to ensure the study covers some Latin American countries. In a few cases, countries/regions without laws or regulations available online were removed from the list of additional countries, and replaced with countries for which laws, regulations, and information were available online.
Since the VGGTs do not define the term “fair valuation” of compensation, the author drew on the FAO Handbook for guidance on interpreting this term. The author chose 10 indicators based on the various guiding principles established in Chapter 4 of the FAO Handbook on Valuation, Compensation, and Taking possession (see Table 2
). As discussed in Section 2
of this article, the FAO Handbook reflects what FAO and its many international collaborators consider to be good practices for ensuring equitable access to land and increasing land tenure security. While these 10 indicators cover many of the issues associated with the valuation of compensation, they do not cover all aspects of land expropriation. For instance, the indicators above do not address the many issues associated with resettlement and reconstruction of the livelihoods of landholders displaced by expropriation. As part of the author’s PhD dissertation, these additional issues regarding resettlement and reconstruction will be analyzed in the author’s forthcoming article [24
]. Answering the questions posed by these indicators entailed analyzing a broad range of national-level laws, including national constitutions, land acquisition acts, land acts, community land acts, agricultural land acts, land use regulations, and some court decisions.
The indicators examine whether laws establish explicit or implicit requirements for valuing compensation for land. The indicators ask yes or no questions about the legal provisions established in expropriation and other national land laws. Where laws only partially satisfy the question asked by the indicator, “partial” is an answer option. In some cases, a “partial” score was granted where laws partially address the issue raised by the indicator, but the legal provisions are not clear or widely applicable enough to elevate the score to a “yes”. For instance, when assessing the indicator which asks whether laws require assessors to account for improvements made on the land, a “partial” score was given where the law only requires the assessor to account for some (but not all) improvements made on the land. Regarding the procedural requirements (e.g., a right to negotiation and appeal), if a legal provision only grants the right to negotiate or appeal compensation decisions under certain circumstances, then a score of “partial” is given. Additionally, if a law only applies to certain land areas (e.g., urban areas) or to certain types of landholders (e.g., Indigenous Peoples), then a score of “partial” is given. In the absence of explicit or implicit indication from the law that questions asked by the indicators can be answered with a “yes” or “partial”, the indicator scores received a “no” score, meaning the question posed by the indicators above were answered in the negative.
This PhD study marks the first instance in which indicators are used to measure expropriation, compensation, and resettlement procedures in 50 developing countries/regions; however, indicators have often been used to measure national laws in other studies [25
]. By measuring country legal frameworks on a scale of no, partial, and yes, this method allows for one to see how the laws in various countries/regions measure up against each other and against international standards. Through this methodological approach, the indicator scores can be shown graphically in color-coded charts (see Section 5
While every attempt was made to ensure that only accurate, reliable, and current information was used to answer the compensation valuation indicators, there are several important caveats regarding this article. First, it focuses on legally binding national-level statutory and regulatory laws relating to compensation; it does not assess non-binding policies. Second, the analysis focuses on compensation procedures as they are written into laws, and does not comprehensively assess whether compensation procedures are implemented or enforced in practice. In some of the countries/regions assessed, the government and private actors may not respect the rule of law or otherwise enforce legal procedures. Some of the countries/regions assessed have long histories of land conflict, which may affect the degree to which the rule of law and property rights are respected by governments and private actors. While an in-depth, multi-disciplinary study of whether the law is respected and enforced on the ground is necessary to obtain a comprehensive analysis of expropriation and compensation practices, the author did not have the financial and other resources needed to assess whether laws are well implemented or enforced in these 50 countries/regions. Instead, the analysis is based on a desk review of national-level expropriation laws, land laws, and secondary sources available online, including the World Bank’s LGAF assessments. Third, the analysis examines whether compensation is provided when land is expropriated; this article does not address compensation for other types of land transfers (e.g., voluntary land transfers) [26
]. Fourth, the analysis focuses on compensation for land, and does not assess whether compensation is provided for water or subsoil rights (e.g., mineral rights). Fifth, the analysis focuses on national-level laws and does not include an assessment of sub-national laws (e.g., state and district level laws). In some countries or regions, government officials and private actors deliberately use subnational laws and policies in order to avoid following more progressive laws enacted that national level [27
]. In India, for example, state-level laws are currently undermining some of the requirements established in the progress LARR Act, 2013 that are designed to protect local landholders [28
]. However, given the broad range of subnational laws in the 50 countries/regions, it was not feasible to conduct a comparative assessment of subnational laws using the methodology adopted for this paper. Sixth, while the analysis covers a broad range of legal instruments (see Land Portal’s Land Book country pages), there may be additional laws that are not available online and therefore not accounted for in the analysis. Seventh, some of the laws assessed, particularly the laws of the Latin American countries, were unofficial English-translated versions of laws originally written in non-English languages. Seventh, the findings are based on the author’s legal interpretations of the laws assessed. For some of the countries, country-level experts reviewed the findings. Eighth, the research was conducted up until December 31, 2016, and so any laws passed after this date are not accounted for in the analysis.
4. The Usefulness of this Research
This article has academic value because it presents an innovative methodology for conducting broad comparative legal research. By reviewing legal provisions against a set of indicators (i.e., questions pertaining to the law), and categorizing the answers to these indicators into color-coded charts, this analysis allows the reader to see how the laws in various countries/regions measure up against each other and against international standards [29
]. Scholars can adopt this approach and develop legal indicator analyses of other research areas.
By highlighting gaps in the law and pinpointing which legal provisions must be amended to adopt international standards on compensation valuation, this study can help inform debates on “fair compensation” among scholars, practitioners, policymakers, affected populations and other actors. The findings from the research establish a benchmark for progress, which can assist civil society organizations and activists in measuring government progress towards adopting the VGGT standards on compensation in domestic laws.
This article can also support the creation of new international compensation standards and guidance documents, such as the new Protocol on Fair Compensation, an ongoing project funded by the Dutch Land Governance Multi-stakeholder Dialogue [30
]. By serving as a reference point for law and policy makers, this article can support and influence legal reforms to compensation procedures [31
]. Affected populations can use the research findings to better understand their compensation rights, advocate for legal reforms, and hold governments and acquiring bodies accountable for compensation decision-making. This analysis can also support companies engaging in activities that involve expropriation, compensation, and resettlement. Companies can use this article to understand international standards and best practices, and also the domestic legal frameworks of the countries in which they make land investments and implement activities that require expropriation of land.
This article establishes a benchmark for progress to assist civil society organizations, NGOs, policymakers, advocates, affected populations, investors, and other stakeholders in measuring government progress towards adopting VGGT standards on compensation in domestic laws. Some countries, such as Laos, Philippines, Tanzania, Indonesia, and Cambodia, have enacted laws with relatively robust compensation procedures that largely adopt the VGGT standards on compensation. However, there is ample room for progress. In most of the 50 countries or regions assessed, there are a number of gaps in national laws that put affected populations at risk of being insufficiently compensated upon expropriation. These legal gaps must be filled if national laws are to adopt the VGGT standards on compensation. Robust compensation procedures are necessary but insufficient to ensure communities are sufficiently compensated. Governments must also respect and enforce robust compensation procedures.
Based on the findings from the research, the author proposes four recommendations for ensuring international standards on compensation valuation are adopted and sufficient compensation for legitimate tenure rights is provided:
(1). Law should ensure that compensation procedures respect and protect the tenure rights of poor and marginalized groups.
In cases where land markets are weak or non-existent, laws should be flexible and provide alternatives to the “fair market value” approach to calculating compensation. As discussed in Section 5
, the “replacement cost” approach may be a suitable alternative to fair market value since it requires an assessment of what it would really take in a given market to replace lost assets. Section 10 of Tanzania’s Village Land Regulation, 2001, is a good provision for countries or regions without robust land markets to adopt because it grants assessors flexibility to follow a variety of approaches when calculating compensation [123
]. The law should provide clear and specific guidelines for valuing compensation that are flexible enough to allow for the determination of full compensation in special cases where land markets are weak or non-existent.
To conform to the VGGTs, governments must protect and respect the legitimate tenure rights of communities with customary tenure rights. Although the term “legitimate” is left undefined in the VGGTs, this term is defined in other international instruments as including both legal legitimacy (rights recognized by law) and social legitimacy (rights that have a broad acceptance among society) [124
]. For this reason, states should initiate flexible systems that look beyond registered property rights when determining who is entitled to compensation. In order for governments to adequately and effectively assess the “social legitimacy” of tenure rights held by IPLCs, they should survey the affected land and conduct in-person consultations and negotiations with affected landholders. Governments should consider adopting the legal provisions established in the laws of the Philippines, South Sudan, Tanzania, Uganda, and Zambia, which formally recognize community land rights regardless of whether those rights are registered. In these countries, customary tenure rights are formally recognized automatically once the community proves it has customarily occupied and used the land. As an alternative to registration, states could also adopt Rwanda’s compensation provision, which allows for affected persons to claim compensation by submitting written testimony from their neighbors stating that they own the expropriated land [125
The finding that only two countries (India and Laos) have enacted laws which establish special protections for women relating to compensation is particularly problematic given the risk that expropriations may disproportionately burden women landholders. More countries need to establish compensation procedures that require governments to respect women’s land rights and follow a gender-sensitive approach to providing compensation, which accounts for the varying ways in which women and men use land. As discussed in the FAO Handbook, compensation that is directly paid to the male head of household could be detrimental to the family’s health and welfare “since the needs of women and children may be ignored as the money vanishes”.
(2). Laws should establish procedures that ensure a comprehensive valuation of compensation, accounting for all of the losses borne by affected populations
. For compensation to comprehensively reflect all of the losses borne by affected populations, compensation payments should reflect the land’s historical and cultural value, in addition to economic activities and improvements associated with the land. Consultations with male and female landholders about the ways in which they use their land, and their land’s historical/cultural value, can be an effective measure to ensure that compensation is sufficient. In order to ensure adequate compensation for farmers, herders, gatherers and other landholders who use land as a primary source of income and livelihood needs, laws should provide affected populations the right to opt for alternative land instead of cash as a compensation payment. Such land must suitable for affected populations to maintain an adequate standard of living (e.g., through cultivating or grazing purposes). Moreover, laws should require valuers to research relevant customary laws and practices to ensure that its approach to assessing compensation is acceptable to members of the community [126
]. The FAO Handbook further recommends “when there is a shared use of a resource such as forest land or pastures, the total value should take into account the value of each affected community member.”
(3). Laws should establish measures that ensure compensation is promptly paid and objectively assessed.
Governments and acquiring bodies should be legally obligated to pay compensation to affected populations prior to taking possession of the expropriated property. Laws should ensure that affected landholders can negotiate compensation amounts and appeal compensation decisions to courts or tribunals. In addition to protecting the interests of affected populations, negotiating with affected landholders can benefit acquiring bodies by reducing costs from project delays that occur when landholders or appeal acquisition projects [127
]. Laws should grant affected populations the right to challenge compensation decisions in court or before a tribunal. Legal avenues of redress enable affected population to hold governments and acquiring bodies accountable for poor compensation decisions; for instance, if assessors use incorrect methods of valuation resulting in partial compensation to the affected landholder.