Costing a RAP: why resettlement budgets are wrong before they are approved

Resettlement budgets are typically wrong in one direction. They are built from an asset inventory, priced at statutory rates, and approved before anyone has tested whether those rates reach replacement cost or counted the people who will be added to the register later. The overrun that follows is then treated as a surprise, when it was a structural feature of how the number was produced.

This matters beyond accounting. An under-budgeted RAP does not fail quietly — it fails as delayed payments, which under both standards means displacement occurring before compensation.[1]

What the budget has to cover

Compensation for land and assets is the visible line and rarely the largest share of total cost. A complete resettlement budget covers:

• Compensation — land, structures, crops, trees, ancillary assets, at replacement cost rather than statutory rate.
• Resettlement assistance — moving costs, transitional allowances, tenure regularisation at the replacement site.
• Replacement site development — land purchase, servicing, access roads, water, sanitation, and any social infrastructure the plan commits to.
• Livelihood restoration programmes, which run for years after the last payment.
• Vulnerable household assistance above the standard entitlement.
• Implementation capacity — the resettlement unit, enumerators, valuers, community liaison officers, transport, systems.
• The grievance mechanism, staffed and running for the duration.
• Monitoring, evaluation and the completion audit, including the external auditor.
• Contingency, sized against identified risks rather than as a flat percentage.

The items that get omitted

Everyone added after the census

Registers grow. Grievances are upheld, people missed at enumeration are added, tenants and business employees surface once implementation begins and the mechanism starts working. A budget built on the census count with no allowance for register growth is budgeting for the population that was found, not the population that is eligible.[3]

The gap between statutory rates and replacement cost

Where gazetted rates sit below replacement cost, the project must top them up. If the budget was priced at the gazetted rate, that top-up is unfunded — and it is not a marginal figure. It is frequently the single largest variance in the whole budget, and it is entirely predictable at planning stage by testing the rates.

Time

Resettlement runs for years, in economies where construction materials and land prices move quickly. A valuation done in year one and paid in year three has not delivered replacement cost — it has delivered a three-year-old number. Budgets need an escalation mechanism and a rule for revaluation after a defined period, or they systematically under-deliver the longer implementation takes.

Livelihood restoration, properly costed

Livelihood programmes are frequently entered as a token line because their design is not finalised at budget stage. They are the longest-running commitment in the plan and the one most likely to require extension when monitoring shows incomplete recovery.[3] A placeholder here is a decision to underfund the requirement that determines whether the resettlement succeeded.

The cost of proving it happened

Systems, record-keeping, reconciliation and audit preparation are real costs and almost never separately budgeted. They are then absorbed by staff who were funded to do something else, which is the practical reason documentation degrades under schedule pressure.

A budget that funds paying compensation but not evidencing it has funded half the requirement, and it is the half that gets tested.

Contingency is not padding

A flat ten percent contingency is a convention, not an estimate. Useful contingency is sized against identified risks: rate revisions, register growth, schedule slip and revaluation, land price movement at the replacement site, and livelihood programme extension.

Naming each risk changes the conversation with the approving authority. A finance director can reject "contingency". Rejecting "the funds required if the gazetted crop rate is confirmed to be below replacement cost" requires them to take a position on a specific, documented exposure.

Who pays, and when

In donor-financed infrastructure the resettlement cost is typically borne by the government implementing agency, while the works are financed by the lender. That split has a practical consequence: resettlement funds move on a national budget cycle, and construction moves on a disbursement schedule. When those two calendars diverge, compensation is late and works are on time — which is precisely the failure mode both standards exist to prevent.[2]

The mitigation is unglamorous: front-load the resettlement budget so funds are available before the works programme needs the land, and treat compensation completion as a gating condition on mobilisation rather than a parallel activity. Every project that has had contractors waiting on unpaid households learned this the expensive way.