The Scheme, and Effects on Value

Abstract

In compulsory acquisition (eminent domain) the compensable value of land is often measured not against the world as it is but against a world in which the project was never undertaken. That reference world is the no-scheme world, and a difference between the two is a value effect. Neither is the appraiser's to choose: the governing law fixes the form of the counterfactual, its extent is a question of fact that a tribunal decides when it is disputed, and the arrangements differ by jurisdiction. This entry distinguishes four kinds of value effect -- enhancement, depreciation, effects on the remainder of a partial taking, and movements caused by something other than the scheme -- and shows why confusing them is a frequent source of error. It sets out five instruments that treat them differently, from Ontario and Czechia, which exclude gains and losses alike, through Argentina, which excludes only the uplift, to Poland, which by statute gives the owner the uplift from valuing the land for the use the expropriation is for. The entry's central claim is that the boundary of the scheme is not preliminary to the valuation but constitutive of it. Goldmate, in New South Wales, is worked through to show a rezoning uplift falling inside or outside the compensable measure according to whether the scheme was taken to be one motorway or a regional program, and to what, within that frame, was found to have caused the rezoning -- a difference of A$28.6 million, on land that did not change.