For a new economics of resettlement: a sociological critique of the compensation principle

Abstract

Many development projects intended to alleviate poverty end up increasing poverty by displacing large numbers of people without reestablishing them viably, despite the use of compensation payments for assets lost. This paper appreciates the contribution of economic science to matters of compensation. However, it also subjects the theory of compensation to critical scrutiny and deconstructs the current practices of compensation to highlight their fallacies, distortions, and unsatisfactory outcomes. In particular, the paper critiques: (a) the economic theory that predicates the socio-economic recovery of those displaced only on the principle of compensation for asset losses; (b) the resettlement policies that tolerate an internal mismatch between policy objectives and policy means; and (c) the methodology that planners often employ in appraising projects with resettlement, which is inadequate to the task. The author argues that the magnitude of the combined material and non-material impoverishment risks and losses experienced by those displaced far exceeds the redeeming powers of narrow

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