Compensation for Involuntary Resettlement of Rural Populations

Alfredo Sfeir-Younis's 1980 working paper, Compensation for Involuntary Resettlement of Rural Populations, examines the critical economic and policy implications of displacement caused by development projects, prepared in April 1980 for the World Bank. The paper argues that equitable compensation mechanisms are necessary to mitigate the adverse effects of involuntary resettlement on affected communities. It advocates for integrating economic evaluation with sociocultural considerations in development planning to preserve livelihoods and ensure sustainable development in rural areas. Sfeir-Younis introduces frameworks for assessing the trade-offs between a project’s Net Present Value (NPV) and the need for compensation, establishing minimum criteria, and analyzing the stock versus flow effects of compensation. A key proposal is the use of an "equivalent hectare" criterion to ensure the social value of resources remains neutral post-resettlement, thereby addressing equity, initial wealth, and the timing of compensation.

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