Farmer Displacement and Marginalization: A Transaction Cost Explanation from an Irrigation Project in India

In developing countries, the general principle followed in land acquisition for infrastructure projects is monetary compensation. The compensation is designed in a way that it enables farmers to buy comparable land assets. Despite this monetary compensation, a large proportion of farming population ends up not owning comparable assets, getting further marginalized in the process. We explain this using a transaction cost analysis of the dominant land acquisition framework in India (LAA, 1894). Based on the case of displaced farmers of Upper Krishna project in Karnataka, we show how specificities related to land characteristics, uncertainties in search for alternatives and information constrains impose high non-monetary transaction costs on farmers. We then assess whether or not the newly proposed land acquisition framework (RFCTLARR, 2015) promises to minimize transaction costs on farmers.

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JEL Codes:
Q15; D2; O13

 Record created 2017-04-01, last modified 2020-10-28

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