Rehabilitation myths? How transaction costs reduce farmer welfare after land acquisition
Abstract
In this article, we show how transaction costs lead to farmer marginalization as
displaced farmers embark on the process of acquiring new land. Existing studies
have focused on the links between monetary compensation and landowners’
investment decisions, but before new land is acquired. However, the postdisplacement
scenario and the investment decisions of land owners to restore
income have not been carefully examined. We use a transaction cost framework
to suggest that local specificities related to land characteristics, uncertainties in
search for alternatives and information constraints may impose high non-monetary
costs on displaced farmers and force them to settle for inferior new land. The
article concludes with a preliminary assessment of whether the newly enacted land
acquisition framework, the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act 2013, promises to
minimize these ex-post transaction costs that farmers face.
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