NZIER report on compensation for transmission infrastructure

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3. Literature review In this section we summarise the most relevant points in the international literature on easements. The literature review has two main functions: To summarise how compensation is calculated and awarded in countries similar to New Zealand to identify, based on international practices, an efficient and equitable approach to calculating and awarding compensation in New Zealand. Easements are heavily influenced by national or state statutes, enactments and laws, and we have therefore, focused largely on countries with similar property rights and basic legal structure as in New Zealand. Due to the availability of <strong>report</strong>s and information we have included literature from Australia, Canada, the United Kingdom 12 , parts of Europe and the United States. As well as <strong>report</strong>s and articles the following is based on information from utility and landowner representative websites, and emails from utilities and landowner groups. Among the countries we looked at there is, to some extent, a standard set of base factors used to calculate compensation. How things are done in practice, however, appears to vary somewhat between countries and, at times, by utility. Often compensation details are based on legislation and finalised in negotiations. The often private nature of negotiations has limited our ability to include details on exactly how or why outcomes were reached. 3.1 Structure of review The literature review starts by providing some context on land access rights and the basis of compensation and then discusses in turn each of the three issues listed above in the problem definition (section 1.3). Most of the literature focuses on how the costs of easements (or wayleaves) are determined and calculated for compensation purposes. As discussed above it is essential for the sake of efficiency to accurately calculate easement costs. Under efficiency we therefore cover: Equivalence of loss compensation Standard features of compensation area of the easement and land market value injurious affection disturbances 12 Utility access to infrastructure is often in the form of wayleaves in the United Kingdom, as opposed to easements in New Zealand and the other countries. The wayleaves literature from the UK is still relevant, however, for much of our discussion on compensation for transmission infrastructure. <strong>NZIER</strong> – Compensation for transmission infrastructure 17
The remainder of the literature review looks at the two equity related factors listed in the problem definition: Payment formulas and timing Splitting an easement surplus. We finish the review with a brief summary of what the literature says about negotiating strengths. 3.2 Land access and the basis of compensation 3.2.1 Utilities’ rights to land Transmission companies tend to seek land access rights which reflect both the permanence of their infrastructure and their only occasional need to access it. Utilities in the countries we considered usually purchase the land they need and create new rights (typically easements) so they can build and access infrastructure and run lines and pipes. Many governments have deferred powers of eminent domain or compulsory purchase to utilities in recognition of the importance of such infrastructure (see, for example, Viitanen and Kakulu 2009, Nuuja and Viitanen 2007 or Hutchison and Rowan-Robinson 2000). Governments typically try to balance the need for transmission and similar infrastructure with the rights of individual landowners. Utilities are generally required to negotiate with landowners before exercising compulsory purchase powers, and are required to compensate the landowner when land is taken. Compensation is usually based on the financial equivalence of the landowner‟s loss (see, for example, Hutchison and Rowan-Robinson 2000). 3.3 Efficiency 3.3.1 Equivalence of loss Equivalence of loss compensation is payment equal, in theory, to the cost imposed on the landowner from having infrastructure on their land. This includes the cost from loss of productive land, increased operational expenses and damages from construction. The principle of equivalence of loss is embedded in legislation in all of the countries we looked at. The New Zealand Public Works Act 1981 states that the landowner is entitled to full compensation for acquisition, taking, injurious affection, or damage. 13 The English Compulsory Purchase Act 1965 states that compensation should be awarded for loss of land value and for injurious affection (in Hamer and O‟Brien 2000). In Finland compensation is based on assessing and compensating for all economic losses suffered (Act on the Redemption of Immovable Property and Special Rights 1977 in Nuuja and Viitanen 2007). 13 Public Works Act 1981 http://www.legislation.govt.nz/act/public/1981/0035/latest/DLM45427.html <strong>NZIER</strong> – Compensation for transmission infrastructure 18
Page 1 and 2: Compensation for transmission infra
Page 3 and 4: Key points Easements create a surpl
Page 5 and 6: The costs of providing the option o
Page 7 and 8: 5.1 Costs of periodic payments ....
Page 9 and 10: Some authors suggest that that the
Page 11 and 12: 2. Easements An easement is a right
Page 13 and 14: Figure 1 Infrastructure surplus $ S
Page 15 and 16: information and the method by which
Page 17: Landowners feel, however, that Tran
Page 21 and 22: the degree of sterilisation (Hydro-
Page 23 and 24: the cost of driving around support
Page 25 and 26: lump-sum and annual payments (PSC 2
Page 27 and 28: thought approximately 90 percent of
Page 29 and 30: Table 1 Compensation summary Countr
Page 31 and 32: 4.1.1 Market value of land Estimati
Page 33 and 34: landowners is to do with the requir
Page 35 and 36: cross already worked ground. As an
Page 37 and 38: In a number of countries the effect
Page 39 and 40: 5.1 Costs of periodic payments We s
Page 41 and 42: for four different land uses (fores
Page 43 and 44: 5.2 Results For modelling purposes
Page 45 and 46: 6. Transparency and collective barg
Page 47 and 48: In conclusion we think that easemen
Page 49: Munneke, H and J Trefzger 1998. Non

NZIER report on compensation for transmission infrastructure

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