Property Valuation Challenges for Properties Condemned for Environmental Public Upgrades

Abstract

No property may be taken for public use without just compensation. The issue is what is “just compensation” and how it is determined in a particular circumstance. Regardless of the type of valuation, the Greek Constitution (Article 17, paragraphs 2-5) clearly forbids estimation based on possible future projections. In this way, future externalities, positive or negative, deriving from the change of use are not incorporated. This contravenes the Pareto optimal resource distribution and even challenges the Caldor-Hicks compensation criterion, especially in cases of partial takings. We suggest valuation to include a best-case and a worst-case scenario for possible future values. A combination of them, e.g., the average, will be used to determine benefits and costs and the final level of compensation. The most important externality under consideration, especially in cases of land properties condemned for public large-scale constructions, such as environmental public utilities, should be the environmental effect. The internalisation of possible negative externalities should be internalised by the construction benefactor.