NZIER report on compensation for transmission infrastructure

Contents
1. Background ............................................................................................................. 7
1.1 Compensation ................................................................................................. 7
1.2 Report structure .............................................................................................. 8
1.3 Problem definition ........................................................................................... 9
2. Easements ............................................................................................................. 10
2.1 Efficient compensation .................................................................................. 10
2.2 Equity – splitting the surplus ......................................................................... 11
2.3 An economic framework ............................................................................... 11
2.3.1 Estimated easement costs and efficiency ........................................................................ 13
2.3.2 Splitting the surplus efficiently ......................................................................................... 13
2.3.3 How compulsory purchase changes negotiations ............................................................ 14
3. Literature review ................................................................................................... 17
3.1 Structure of review ........................................................................................ 17
3.2 Land access and the basis of compensation................................................ 18
3.2.1 Utilities‟ rights to land ...................................................................................................... 18
3.3 Efficiency....................................................................................................... 18
3.3.1 Equivalence of loss ......................................................................................................... 18
3.4 Standard features of compensation .............................................................. 19
3.4.1 Easement area ................................................................................................................ 19
3.4.2 Land market value........................................................................................................... 20
3.4.3 Injurious affection ............................................................................................................ 21
3.4.4 Operational costs ............................................................................................................ 21
3.4.5 Externalities .................................................................................................................... 22
3.5 Damages....................................................................................................... 23
3.6 Payment methods ......................................................................................... 23
3.6.1 Payment per structure ..................................................................................................... 25
3.6.2 Splitting the surplus ......................................................................................................... 25
3.7 Negotiations .................................................................................................. 26
3.8 Summary of literature key points .................................................................. 27
4. Efficiency: Valuing easements ............................................................................ 29
4.1 Calculating the cost of easements ................................................................ 29
4.1.1 Market value of land ........................................................................................................ 30
4.1.2 Easement area ................................................................................................................ 30
4.2 Operational costs .......................................................................................... 31
4.2.1 Key operational costs ...................................................................................................... 32
4.2.2 Quantifying operational costs .......................................................................................... 35
4.3 Disturbance ................................................................................................... 35
4.4 Externalities .................................................................................................. 35
5. Periodic payments ................................................................................................ 37
<strong>NZIER</strong> – Compensation for transmission infrastructure v