How is compensation for land calculated?

Compensation is not one figure. It is a sum of separately assessed items: the land itself, each structure on it, standing crops, trees by species and age, and then allowances for disturbance and moving. Under lender standards each item is assessed at what it costs to replace, not at what it would fetch if sold.

The items and their bases

• Land — the cost of acquiring an equivalent parcel nearby, including the fees and transfer costs of buying it. Not the district average, and not a historic rate.
• Structures — the cost of building the same structure today, with no deduction for age or condition.[1] Depreciation is the most common error in compensation assessment.
• Annual crops — the value of the harvest you will not take.
• Trees and perennials — the cost of establishing a replacement plus the income lost until it bears. For a mature stand this is years of yield, not one season's fruit.[2]
• Businesses — lost net income for a realistic re-establishment period, plus moving and re-fitting costs.
• Allowances — disturbance, transport, transitional support, and additional assistance for vulnerable households.

Items commonly left out

Ask about these specifically, because they are frequently absent from the schedule rather than deliberately refused:

• The land you keep. If the take splits your holding or cuts you off from water or a road, the loss in value to the remainder is compensable.[3]
• Fences, wells, latrines, kitchens, stores and paving — real cost, routinely unrecorded because the enumerator was looking at the house.
• Access to common resources — grazing, firewood, water points — which supports household income and belongs to nobody individually.
• Improvements made by a tenant rather than the owner.

How to check the figure

1. Ask for the breakdown, not the total. You are entitled to see how each item was assessed.[4]
2. Check the counts first. Most errors are in quantities — area, tree numbers, structure dimensions — rather than in rates, and they are the easiest to correct.
3. Test the rate against the market. Ask what a similar parcel nearby actually sells for, and what a builder would charge for the same house today. If the compensation will not buy the replacement, it is not replacement cost.
4. Check the date. A valuation done two years ago and paid today has lost value in between.

Where rate schedules come in

Many jurisdictions publish official rates for crops and structures by district. They make thousands of assessments consistent, and they are often revised infrequently, which means they can fall below current replacement cost. A project working to lender standards is expected to benchmark them and make up the difference — so it is a fair question to ask whether that check was done, and what it found.