NZIER report on compensation for transmission infrastructure
NZIER report on compensation for transmission infrastructure
NZIER report on compensation for transmission infrastructure
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The remainder of the literature review looks at the two equity related factors listed in<br />
the problem definiti<strong>on</strong>:<br />
Payment <strong>for</strong>mulas and timing<br />
Splitting an easement surplus.<br />
We finish the review with a brief summary of what the literature says about<br />
negotiating strengths.<br />
3.2 Land access and the basis of compensati<strong>on</strong><br />
3.2.1 Utilities’ rights to land<br />
Transmissi<strong>on</strong> companies tend to seek land access rights which reflect both the<br />
permanence of their <strong>infrastructure</strong> and their <strong>on</strong>ly occasi<strong>on</strong>al need to access it.<br />
Utilities in the countries we c<strong>on</strong>sidered usually purchase the land they need and<br />
create new rights (typically easements) so they can build and access <strong>infrastructure</strong><br />
and run lines and pipes. Many governments have deferred powers of eminent<br />
domain or compulsory purchase to utilities in recogniti<strong>on</strong> of the importance of such<br />
<strong>infrastructure</strong> (see, <strong>for</strong> example, Viitanen and Kakulu 2009, Nuuja and Viitanen 2007<br />
or Hutchis<strong>on</strong> and Rowan-Robins<strong>on</strong> 2000).<br />
Governments typically try to balance the need <strong>for</strong> transmissi<strong>on</strong> and similar<br />
<strong>infrastructure</strong> with the rights of individual landowners. Utilities are generally required<br />
to negotiate with landowners be<strong>for</strong>e exercising compulsory purchase powers, and<br />
are required to compensate the landowner when land is taken. Compensati<strong>on</strong> is<br />
usually based <strong>on</strong> the financial equivalence of the landowner‟s loss (see, <strong>for</strong> example,<br />
Hutchis<strong>on</strong> and Rowan-Robins<strong>on</strong> 2000).<br />
3.3 Efficiency<br />
3.3.1 Equivalence of loss<br />
Equivalence of loss compensati<strong>on</strong> is payment equal, in theory, to the cost imposed<br />
<strong>on</strong> the landowner from having <strong>infrastructure</strong> <strong>on</strong> their land. This includes the cost from<br />
loss of productive land, increased operati<strong>on</strong>al expenses and damages from<br />
c<strong>on</strong>structi<strong>on</strong>.<br />
The principle of equivalence of loss is embedded in legislati<strong>on</strong> in all of the countries<br />
we looked at. The New Zealand Public Works Act 1981 states that the landowner is<br />
entitled to full compensati<strong>on</strong> <strong>for</strong> acquisiti<strong>on</strong>, taking, injurious affecti<strong>on</strong>, or damage. 13<br />
The English Compulsory Purchase Act 1965 states that compensati<strong>on</strong> should be<br />
awarded <strong>for</strong> loss of land value and <strong>for</strong> injurious affecti<strong>on</strong> (in Hamer and O‟Brien<br />
2000). In Finland compensati<strong>on</strong> is based <strong>on</strong> assessing and compensating <strong>for</strong> all<br />
ec<strong>on</strong>omic losses suffered (Act <strong>on</strong> the Redempti<strong>on</strong> of Immovable Property and<br />
Special Rights 1977 in Nuuja and Viitanen 2007).<br />
13 Public Works Act 1981 http://www.legislati<strong>on</strong>.govt.nz/act/public/1981/0035/latest/DLM45427.html<br />
<str<strong>on</strong>g>NZIER</str<strong>on</strong>g> – Compensati<strong>on</strong> <strong>for</strong> transmissi<strong>on</strong> <strong>infrastructure</strong> 18