Valuing land tenure rights - Food and Agriculture …

1 Valuing land tenure rightsA technical guide on Valuing land tenure rights in line with the Voluntary Guidelines on the Responsible Governance of tenure of land , Fisheries and Forests in the Context of National Food SecurityGOVERNANCE OF tenure TECHNICAL guide 11 The FAO Governance of tenure Technical Guides are part of FAO s initiative to help develop capacities to improve tenure governance and thereby assist countries in applying the Voluntary Guidelines on the Responsible Governance of tenure of land , Fisheries and Forests in the Context of National Food Security. The FAO Governance of tenure Technical Guides are prepared by technical specialists and can be used by a range of actors.

2 They: translate principles of the Guidelines into practicalmechanisms, processes and actions; give examples of good practice what has worked, where,why and how; provide useful tools for activities such as the design ofpolicy and reform processes, for the design of investmentprojects and for guiding interventions. For more information on the Guidelines and FAO s activities on governance of tenure visit: O O D A N D A G R I C U L T U R E O R G A N I Z A T I O N O F T H E U N I T E D N A T I O N SRome, 2017 Valuing land tenure rights GOVERNANCE OF tenure TECHNICAL guide No. 11 A technical guide on Valuing land tenure rights in line with the Voluntary Guidelines on the Responsible Governance of tenure of land , Fisheries and Forests in the Context of National Food SecurityThe designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.

3 The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not views expressed in this information product are those of the author(s) and do not necessarily reflect the views or policies of 978-92-5-130069-5 FAO, 2017 FAO encourages the use, reproduction and dissemination of material in this information product. Except where otherwise indicated, material may be copied, downloaded and printed for private study, research and teaching purposes, or for use in non-commercial products or services, provided that appropriate acknowledgement of FAO as the source and copyright holder is given and that FAO s endorsement of users views, products or services is not implied in any requests for translation and adaptation rights , and for resale and other commercial use rights should be made via or addressed to information products are available on the FAO website ( )

4 And can be purchased through publication has been printed using selected products and processes so as to ensure minimal environmental impact and to promote sustainable forest publication is intended to support the use of the Voluntary Guidelines on the Responsible Governance of tenure of land , Fisheries and Forests in the Context of National Food Security. It is not intended to contradict the language of the Guidelines as endorsed by the Committee on World Food Security on 11 May 2012 nor the role of States in their publication has been developed with the financial assistance of the Food and Agriculture Organization of the United Nations (FAO), and the United Kingdom of Great Britain and Northern Ireland.

5 The views expressed herein are those of the authors and do not necessarily reflect the official policies or views of .. VAbbreviations .. VIForeword .. VII1. Key points .. Background .. Why value tenure rights ? .. The Voluntary Guidelines and this Technical guide .. Summary .. 72. What gives tenure rights value ? Key points .. Background .. tenure rights .. Physical characteristics .. Summary .. 213. Why value tenure rights ? Key points .. Background .. Transactions in legitimate tenure rights .. Regulated spatial planning .. Expropriation .. Taxation of land and property.

6 Accounting, lending and insurance .. Summary .. 47 IVVALUING land tenure RIGHTS4. What does a valuation involve? Key points .. Background .. Understanding and agreeing the valuation task .. 5 Information gathering .. 5 Undertaking the valuation .. Valuation reporting .. Summary .. 735. What makes an effective valuation system? Key points .. land and property information .. Valuation capacity .. 8 Governance .. Summary .. 90 Conclusion .. 91 References .. 92 Glossary .. 94 VAcknowledgements This technical guide was prepared by a team led by Peter Wyatt from the University of Reading in the United Kingdom and a team of fourteen valuation experts comprising Adarkwah Antwi, land tenure Expert/Real Estate Market Analyst from Ghana, Ben Elder from the Royal Institution of Chartered Surveyors in the United Kingdom, Christopher de Gruben from Investment Solutions in Mongolia, Eric Allen from the National land Agency in Jamaica, Jan Brzeski from the International Property Tax Institute in Canada, Maxwell Mutema from the Zimbabwe Institution of Engineers (FZweIE)

7 , Mike McDermott from the Global Property Advisory in Australia, N stor Garza and Dann Payares from the Universidad del Norte in Colombia, Nivedita Haran from the Government of Kerala in India, Phan Trung Hien from the Faculty of Law at Can Tho University in Viet Nam and William McCluskey from the School of the Built Environment at Ulster University in the United Kingdom and Andrew Hilton, Paul Munro-Faure and Mackay Rigava from the Food and Agriculture Organization of the United Nations (FAO). The guide was prepared under the direction of Paul Munro-Faure, Andrew Hilton, and David Palmer. It was edited by Christabel Clark and Luca Feliziani designed the workshop, co-hosted by FAO and the University of Reading, provided an opportunity to conduct a detailed review of an earlier draft of this guide .

8 FAO wishes to express its appreciation to the University of Reading for the collaboration on this technical guide , to the United Kingdom s Department for International Development (DFID) for the financial contribution that made this publication possible and to all the individuals named here for their valuable time and land tenure RIGHTSA bbreviations DCF Discounted Cash FlowDIP Deliberative and Inclusionary ProcessDRC Depreciated Replacement CostECA Europe and Central AsiaFAO Food and Agriculture Organization of the United NationsHABU Highest and Best UseIAAO International Association of Assessing OfficersIFC International Finance CorporationIFRS International Financial Reporting StandardsIPMS International Property Measurement StandardsIRPF International Real Property FoundationIVS International Valuation StandardsIVSC International Valuation Standards

9 CouncilJFM Joint Forest ManagementLADM land Administration Domain ModelLUC land Use CertificateLUR land Use RightMRA Multiple Regression AnalysisNPV Net Present ValueRICS Royal Institution of Chartered SurveyorsSDR Social Discount RateUN United NationsUSAID United States Agency for International DevelopmentVGGT Voluntary Guidelines on the Responsible Governance of tenure of land , Fisheries and Forests in the Context of National Food Security VIIF oreword Value, whether defined in purely economic terms or more widely to encompass social and environmental value, is an important basis for making decisions about legitimate tenure rights . Valuation, the process of estimating value, forms part of the evolution and improvement of land , fisheries and forests, which can have an overarching influence on the general economic development and growth, wealth and prosperity of a community, society or of tenure rights are required by the State and by the private sector for a wide variety of reasons, often forming and informing the basis of transactions, taxation, compensation and accounting.

10 Value and the valuation process form a part of our everyday lives, and yet these are often shrouded in mystery and are not clearly understood. Valuation is not merely hypothetical a significant proportion of complaints and legal challenges in many countries are grounded on valuation, be it claims of inadequate levels of compensation for land taken by the State, or resistance to high land and property taxes, all of which have legal and financial Voluntary Guidelines on the Responsible Governance of tenure of land , Fisheries and Forests in the Context of National Food Security (hereafter the Guidelines) endorsed in 2012, are the first international consensus on the centrality of tenure rights .