Valuation practices in urban land readjustment cases in Norway

Valuation of real property is an essential part of land readjustment, with the purpose to establish the right exchange value of parcels shifting owners. Applied methods should be expedient for the exchange purpose. Based on empirical findings from land readjustment cases in Norway, this article assesses whether and to what extent valuation methods in land readjustment are appropriate. The article is based on document analysis of court records on land readjustment from all the Land Consolidation Courts in Norway, analyzed through institutional theory emphasizing (the lack of) institutional adaptability. The essence of land readjustment is to facilitate implementation of urban transformation. As a peculiarity, Norwegian land readjustment is governed by a special court – the Land Consolidation Court – which historically and still largely is dealing with traditional rural land consolidation. Legal rules on Norwegian land readjustment valuation equate rules for land consolidation. Areas to be exchanged should be valued based on ‘foreseeable use’, usually understood as investment value. However, for buildable plots, market value might be used. The legal rules can be described as institutional norms or strategies, formulated as approximate procedural descriptions. Legal rules on what to value involves a significant element of discretion and should be understood as a norm. The choice of valuation method is more to be considered as a strategy. The study show that courts lack own expertise on urban valuation and, thus, often take the parties' prior valuation for granted. Furthermore, documentation on valuation methods used is sparse, in several cases such information is absent. Few court records reflect on the complexity of valuation in land readjustment. The lack of own expertise and few cases for processing by the courts contribute to land readjustment appearing unpredictable and risky for the parties. It emphasizes the slow acquisition of competence by these courts in land readjustment due to limited institutional adaptive capacity. The findings from this study contribute to the understanding of how path dependence linked to rule design, history and culturally conditioned norms and strategies lead to inertia in institutional adaptability.