Can Compensation Prevent Impoverishment?
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1 Can Compensation Prevent Impoverishment?
2 List of Tables, Figures, and Boxes xv Acknowledgements xvii List of Abbreviations t xix Editors' Preface and Overview xxiii Michael M. Cernea and Hari Mohan Mathur 1. REFORMING THE FOUNDATIONS OF INVOLUNTARY 1 RESETTLEMENT: INTRODUCTION MichaelM. Cernea 1 From Anomie to Policy: Between Achievements 2 and Unevenness 2 The Paradox of Impoverishment 4 3 Compensation: How Could So Much Rest on 5 So Little? 4 Methodological Bottlenecks to Reforming 6 Resettlement 5 Resource Scarcity and Sources for Financing 8 PARTJ THEORETICAL ISSUES IN DEFINING COMPENSATION 11 FOR DISPLACEMENT Editors' Note 2. COMPENSATION AND INVESTMENT DM RESETTLEMENT: 15 THEORY, PRACTICE, PITFALLS, AND NEEDED POLICY REFORM MichaelM. Cernea 1 An Underlying Fallacy of Present Policies 16
3 2 A Global Problem and a Shift to Economics 18 3 An Anomaly: The 'Project within a Project Defective Economic Evaluation and Budgeting 31 5 The Limits of Cost-Benefit Analysis 38 6 Compensation in Principle and Compensation 43 in Practice 7 The Case for Investment: Pursuing Resettlement 58 with Development 8 Economic Rent as Resource for Investing in 65 Resettlement 9 Regular Project Benefits as Investment Resource Political Will: Financing is not Just a Resource 71 Matter 11 Types of Mechanisms for Benefit Sharing Novel Compensation Modalities A False Objection to Targeted Benefit Sharing China's Major Reforms in the Economics of 82 Resettlement THE ECONOMIC EVALUATION OF PROJECTS INVOLVING 99 FORCED POPULATION DISPLACEMENTS ] and Timothy Swanson 1 The Economic Theory of Project Evaluation: 100 The Compensation Principle 2 Problems with the Compensation Principle: 101 Actual versus Hypothetical Compensation and Efficiency Considerations 3 The Law of Compensated Takings: Developing 102 States 4 Towards a New Economics of Project Appraisal 105 for Forced Displacement 5 Measuring Displacement Losses The Rights Lost in the Forced Displacement of 111 Individuals and Households 7 The Role for Benefit Sharing in Compensation The Empirical Literature on Displacement 113 Economics 9 Conclusion 116
4 IX 4. FORCED DISPLACEMENT: ALLOCATTVE EXTERNALITY OR 121 UNJUST REDISTRIBUTION? Herman E.Daly 1 Viewing Displacement through the Lens of 121 Opportunity Cost 2 Growth and the Understatement of 123 Opportunity Costs 3 Eminent Domain and Property Rights From Allocatdve Efficiency to Distributive 126 Justice 5. DEVELOPMENT ECONOMICS AND THE COMPENSATION 129 PRINCIPLE RaviKtmbur 1 Economics has Struggled within Itself Economics and 'Pareto Improvements' Steps to the Compensation Principle A Love-Hate Relationship Dams, Displacement, and Development Safety Nets to the Fore 'An Inescapable Dilemma? Conclusion 140 PART II THE POLICY AND LEGAL FRAMEWORK FOR 145 COMPENSATION Editors'hiote 6. COMPENSATION, RESTORATION, AND DEVELOPMENT 147 OPPORTUNITIES: NATIONAL STANDARDS ON INVOLUNTARY RESETTLEMENT Susanna Price 1 Why Address National Standards? Some 148 Conceptual Issues
5 X CONTENTS 2 Land Acquisition Laws versus Involuntary 153 Resettlement Policies 3 Rationale for.adb Involvement ADB's Regional Initiative What are the Next Steps? INDIA'S FORCED DISPLACEMENT POLICY AND 180 PRACTICE: IS COMPENSATION UP TO ITS FUNCTIONS? Walter Fernandes 1 The Policy, Displaced'Persons, and 181 Project-Affected Persons 2 Status of R&R Policies in India The People's Alternative NPRR 2003 and the Principles Replacement Value Benefits to the Victims Rethinking Cost-Benefit Analysis The Changes Suggested EMINENT DOMAIN, PROTEST, AND THE DISCOURSE 208 ON REHABILITATION Usha Ramanathan 1 Eminent Domain and Zamindari Abolition Project Displacement and Land Acquisition Mass Displacement Land Acquisition Act 1894 and Reducing 217 Transaction Costs 5 Protest, Resistance, and Transaction Costs Two Responses to Protest Disenchantment with Rehabilitation Does Motive Matter? State, Sovereign, and Subject 226
6 XI PART III EMPIRICAL EVIDENCE ON THE LIMITS OF 231 COMPENSATION Editors' Note 9. CAN DISPLACEMENT BE TURNED INTO DEVELOPMENT 233 BY COMPENSATION ALONE? THE SOUTH ASIAN EXPERIENCE RuwaniA.Jayewardene 1 Laws, Policies, and Procedures Who is a Resettler? Compensation and its Practice Replacement Value What is the Objective? Distributive Justice and 251 Adequate Legal Instruments for Re-establishing Livelihoods 6 Conclusion MINING COAL, UNDERMINING PEOPLE: 260 COMPENSATION POLICIES AND PRACTICES OF COAL INDIA Hari Mohan Mathur 1 Coal India Limited Approaches to Compensation Limitations of Job-Centred Compensation Coal Sector Environmental and Social 266 Mitigation Project 5 The New CIL Resettlement Policy Implementing New Policy Focused on 269 Self-employment 7 Self-Employment as Compensation and its 271 Failure 8 What Went Wrong? 272
7 Xll CONTENTS 9 Complaint to the Inspection Panel Conclusion CONSERVATION, DISPLACEMENT, AND COMPENSATION 286 FrancesJ. Seymour 1 Costs Imposed on Displaced Communities Assumptions Underlying Decisions to Displace Who is Targeted for Displacement? Who is 292 Eligible for Compensation? 4 A Range of Approaches to Displacement Reasons Advanced for Denying Compensation Estimating the Cost of Compensation Obstacles to Providing Compensation Conservation Impacts of Displacement Implications for the International Conservation 306 Community PART IV CONSTRUCTIVE SOLUTIONS: SUPPLEMENTING 315 COMPENSATION WITH INVESTMENT AND BENEFIT SHARING Editors'Note 12. BENEFIT SHARING TO SUPPLEMENT COMPENSATION 317 IN RESOURCE EXTRACTIVE ACTIVITIES: THE CASE OF DAMS Dominique Egre, Vincent Roquet, and Carine Durocher 1 Definition and Objectives of Benefit 318 Sharing 2 The Rationale for Benefit Sharing in 321 Dam Projects 3 Types of Benefit-Sharing Mechanisms Criteria to Evaluate Types of Benefit-Sharing 337 Mechanisms 5 Preliminary Evaluation of Benefit Sharing 340
8 Xlll 6 Practicalities and Processes in Implementing 343 Benefit Sharing 7 Assessing the Likelihood of an Agreement Conclusion 348 Appendix Examples of Economic 350 Rent Measurement A.1 The Columbia River Basin Development 350 in Canada A.2 The Lesotho Highlands Water Project FROM EXPROPRIATION TO LAND RENTING: 357 JAPAN'S INNOVATIONS IN COMPENSATING RESETTLERS Mikiyasu Nakayama and Kumi Furuyashiki 1 Searching for Innovative Approaches Innovative Resettlement Schemes Proposed Sharing of Existing Farmland with Present 362 Owners by Increasing Productivity 4 Creating Capacity: The Tone River 364 Development Agency 5 Previous Case of Compensation through a 366 'Rent 3 Scheme 6 Rent Scheme Adopted for Jintsu-Gawa Dams Merits of the Rent Scheme Issues to be Considered for Large Dam Projects Conclusion BEYOND COMPENSATION: SHARING OF RENTS ARISING 375 FROM HYDROPOWER PROJECTS Barry P. Trembath < 1 Resettlement as a Development Opportunity Benefit Sharing and its Theoretical Basis Magnitude of Economic Rents Types and Experiences of Rent Sharing with 383 Affected Communities 5 Conclusion. 390
9 XIV CONTENTS 15. CAN IMPROVED RESETTLEMENT REDUCE POVERTY? 394 Susan D. Tamondong 1 Are All Displacements Bad? Case Studies of Success Using Compensation to Provide Shareholding 401 in Project-Created Assets 4 Risks of Impoverishment and Development 403 Potential in Resettlement 5 ADB's Poverty Reduction Initiative vis-a-vis 406 Resettlement 6 Conclusion Notes on Contributors 418 Index 423
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