NZIER report on compensation for transmission infrastructure

6. Transparency and collective bargaining
We found several examples of farmers‟ groups negotiating on behalf of landowners.
The Union des producteurs agricoles, negotiated easements with Hydro-Québec on
behalf of landowners in Québec (Hydro-Québec 2000). Compensation in the United
Kingdom is based on a national agreement in part negotiated between landowner
groups and the electricity industry (Hutchison and Rowan-Robinson 2000).
Negotiations in these examples have led to the development and dissemination of
frameworks for considering easement compensation. Greater landowner awareness
of the compensation process appears to counter, to some extent, utility bargaining
strength.
Standardising some key aspects of the compensation process and making it more
transparent would provide efficiency by reducing the time and money required for
negotiations in the medium to long term. A comprehensive framework, with
examples, applicable to a range of common situations could be established and
made widely available. Once a formula had been developed Transpower and
individual landowners would have a base for contracts rather than having to start
negotiations from scratch each time an easement was needed. If landowners
perceive that the initial negotiations were fair and balanced, and acceptable to other
landowners, they would be much more likely to accept the outcomes.
The goodwill generated with a transparent and standard process could be of
significant benefit for Transpower. Our impression has been that landowners are not
opposed to infrastructure on their land per se. Contention is created as many
landowners feel they are being forced to give up their land so that Transpower can
generate revenue. Improving perceptions of fairness would go some way towards
encouraging landowner buy-in and improving the efficiency of negotiations.
6.1 Costs of standardisation
A standardised process will reduce the time and money spent on later negotiations,
but is unlikely to remove the need for negotiations entirely. On top of this, such an
approach may create problems by encouraging rent seeking behaviour by
landowners. If landowners are aware, for example, that growing crops rather than
pasture provides greater compensation then this may cause them to shift towards
growing crops. A sheep farmer may be encouraged to switch to growing crops in
those areas of their land where the easement corridor is planned.
We believe there would be efficiency gains from introducing a standardised process
with open negotiations and wide dissemination of both the process and results. Care
would need to be taken, however, to manage landowners‟ expectations and minimise
rent seeking behaviour.
<strong>NZIER</strong> – Compensation for transmission infrastructure 44