NZIER report on compensation for transmission infrastructure

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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
5.1 Costs of periodic payments .......................................................................... 38 5.1.1 Development costs.......................................................................................................... 38 5.1.2 Management costs .......................................................................................................... 39 5.1.3 Dispute costs .................................................................................................................. 40 5.1.4 Uncertainty costs ............................................................................................................ 40 5.2 Results .......................................................................................................... 42 6. Transparency and collective bargaining ............................................................ 44 6.1 Costs of standardisation ............................................................................... 44 7. In summary - efficient compensation ................................................................. 45 Appendices Appendix A References .................................................................................................. 47 Figures Figure 1 Infrastructure surplus .......................................................................................... 12 Figure 2 The effect of compulsory purchase on negotiations ........................................... 15 Tables Table 1 Compensation summary ...................................................................................... 28 Table 2 Operational costs estimates ................................................................................. 35 Table 3 Cost of periodic payments .................................................................................... 42 <strong>NZIER</strong> – Compensation for transmission infrastructure vi
Page 1 and 2: Compensation for transmission infra
Page 3 and 4: Key points Easements create a surpl
Page 5: The costs of providing the option o
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 and 18: Landowners feel, however, that Tran
Page 19 and 20: The remainder of the literature rev
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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