BAHIR DAR UNIVERSITY
INSTITUTE OF LAND ADMINISTRATION
Land Value Capture: Capture land value increment due to public infrastructural development in Debre Markos town
By: – Mulugeta Tenaw Assaye
Advisor: Belachew Yirsaw (PhD)
This MSc. thesis is submitted to Institute of Land Administration (ILA), as a partial fulfillment for the requirement to the Degree of Masters in Land Administration and Management
Bahir Dar, Ethiopia
Bahir Dar University
Institute of Land Administration (ILA)
MSc. Program in Land Administration and Management
I Mulugeta Tenaw Assaye, do here by declare that this Thesis is my original work and that it has not been submitted partially; or in full, by other person for an award of a degree in any other University/Institution.
Name of Participant Mulugeta Tenaw Assaye Signature __________ Date__________
BAHIR DAR UNIVERSITY
INSTITUTE OF LAND ADMINISTRATION (ILA)
MSc. PROGRAM IN LAND ADMINISTRATION AND MANAGEMENT
Land value capture: capturing the value increment due to pubic infrastructural development in Debre markos town
Thesis Submitted to Bahir Dar University, Institute of Land Administration, Department of Land Administration and Management in Partial Fulfillment of the Requirements for the Degree of Master of Science in Land Administration and Management
By: Mulugeta Tenaw
Approved by Board of Examiners
First and for most, praise be to Almighty GOD the beneficent, the merciful God who enabled me to complete my work.
I would like to express my earnest gratitude to my Advisor Dr. Belachew Yirsaw for his valuable comment, constant advice, and encouragement throughout the study.
I become short of words to express my sincere gratitude to my family, without their encouragement and ability to sustain every hardship during the course of this study and until the end of my work.
My special thanks also go to the household respondents, informants, participants of focus group discussion and data collectors who assisted me by providing all secondary data and professional advices
LIST OF ACRONYMSCSA Central Statistical Agency
AfDBAfrican Development Bank
LVC Land Value Capture
ILAInstitute of Land Administration
ICT Information Communication Technology
FGDFocus Group Desiccation
EELPAEthiopian Electric Light and Power Authority
0CDegree centigrade /Celsius
DIF Development Impact Fee
TIF Tax Increment Finance
List of Table
Table. 3.1. Population and area of the sample kebeles ———————————24
Table. 3.2. List of kebeles, total HHs sample size of respondents ——————-27
Table. 4.1. List of kebeles and number of selected respondents ———————–30
Table. 4.1. Category of the respondents————————————————–31
Table .4.3. Sex of the respondent———————————————————–32
Table. 4.4. Family size of the respondents————————————————33
Table. 4.5. Educational level of house hold———————————————–34
Table. 4.6. Density of settlement around road infrastructures—————————37
Table. 4.7. Regression result of rental price of house and road infrastructure———40
Table. 4.8. Willingness to pay share of the value uplift———————————–48
Table.4.9. Impact of proximity on willingness to pay land value uplift—————–48
List of Figure
Figure 3.1 Location Map of Amhara regional state and the Study Area————-19
Figure 4.1 Age of the respondents in the study area————————————32
Figure 4.2 Lengths (Duration) of Residence in the Area——————————-35
Figure 4.3 impacts of road on different land use rental price————————–40
Figure 4.4 Rightfulness of implementing land value capture————————–44
AbstractThe dramatic increment in the need and expansion of public infrastructure require sustainable fund source. the need to implement funding the infrastructure form the infrastructure itself by capturing the value uplift due to pubic action were become an important issue in developing countries like Ethiopia. The main issue of the research was, most research done was focused on financing public infrastructure using traditional funding mechanism, but this research focuses includes the possibility and rightfulness to implement land value capture to solve the problem in shortage of finance to expand infrastructure in the study area.
The study applied both qualitative and quantitative approaches .Data were gathered from 10 key informant interviews, 12 FGD selected purposively ,the data of land value capture and its rightfulness to implement assessed at field and respondent survey conducted on 163 respondents chosen by using systematic random sampling techniques. Primary data collected through questionnaire, interviews and focus group discussion while the secondary data gathered from different written and documented sources. The data analyzed using excel and Stata Statistics software. The finding of this study showed that there were higher need of sustainable fund source to respond increase in infrastructure expansion demand in the future and its rightfulness to implement appropriate land value capture mechanism fit for each particular situation in order to recover the value increment consumed by the landowner without his contribution in the study area. Therefore, applying land value capturing is legitimate to solve shortage of finance for future expansion of public infrastructure in Debre markos town.
Keywords: pubic infrastructure, land value capture, sustainable fund source, value increment
Table of Contents
TOC o “1-7” h z u Acknowledgement PAGEREF _Toc515176389 h ivLIST OF ACRONYMS PAGEREF _Toc515176390 h vList of Table PAGEREF _Toc515176391 h viList of Figure PAGEREF _Toc515176392 h viiAbstract PAGEREF _Toc515176393 h viiiChapter one PAGEREF _Toc515176394 h 11.Introduction PAGEREF _Toc515176395 h 11.1.Background of the Study PAGEREF _Toc515176396 h 11.2.Statement of the Problem PAGEREF _Toc515176397 h 31.3.Objectives of the research Paper PAGEREF _Toc515176398 h 41.3.1.General Objective PAGEREF _Toc515176399 h 41.3.2.Specific Objectives PAGEREF _Toc515176400 h 41.4.Research Questions PAGEREF _Toc515176401 h 41.5.Significance of the study PAGEREF _Toc515176403 h 51.6.Delimitation of the Study PAGEREF _Toc515176404 h 51.7.Limitation of the Study PAGEREF _Toc515176405 h 51.8.Definition of Terms and Concepts PAGEREF _Toc515176406 h 61.9.Organization of the Study PAGEREF _Toc515176407 h 6Chapter Two PAGEREF _Toc515176408 h 72.Literature Review PAGEREF _Toc515176409 h 72.1.Land value PAGEREF _Toc515176410 h 72.2.Land value increment PAGEREF _Toc515176411 h 72.3.Public Infrastructure PAGEREF _Toc515176412 h 82.4.Capturing land value increment PAGEREF _Toc515176413 h 92.5.The role of public infrastructure for land value increment PAGEREF _Toc515176414 h 102.6.Funding infrastructure PAGEREF _Toc515176415 h 102.7.Responsible Body for Land Value Capture PAGEREF _Toc515176416 h 122.8.Mechanisms to Capture Land Value PAGEREF _Toc515176417 h 122.9.Willingness of the community to return share of value increment PAGEREF _Toc515176418 h 132.9.1.Purpose of Public Involvement PAGEREF _Toc515176419 h 132.10.Importance of Land Value Capture PAGEREF _Toc515176420 h 142.10.1.The Success Factors to Capture Value PAGEREF _Toc515176421 h 152.12.Legal grounds for land value capture in Ethiopia PAGEREF _Toc515176422 h 20Chapter Three PAGEREF _Toc515176423 h 223.Research Method PAGEREF _Toc515176424 h 223.1.Description of the study area PAGEREF _Toc515176425 h 223.1.1.Location and area coverage PAGEREF _Toc515176426 h 223.1.2.Historical Background of Debre Markos Town PAGEREF _Toc515176427 h 223.1.3.Climate (Temperature and Rain tall) PAGEREF _Toc515176428 h 233.1.4.Topography PAGEREF _Toc515176429 h 233.1.5.Population characteristics PAGEREF _Toc515176430 h 243.1.6.Characteristics of sample kebeles PAGEREF _Toc515176431 h 243.2.Research methodology PAGEREF _Toc515176432 h 243.2.1.Site Selection PAGEREF _Toc515176433 h 253.2.2.Target Population PAGEREF _Toc515176434 h 253.2.3.Research design PAGEREF _Toc515176435 h 253.2.4.Sampling Design PAGEREF _Toc515176436 h 263.2.5.Sampling Frame PAGEREF _Toc515176437 h 263.2.6.Sampling Techniques and its sample size PAGEREF _Toc515176438 h 263.2.7.Data Source and Data Collection PAGEREF _Toc515176439 h 2184.108.40.206.Primary data collection methods PAGEREF _Toc515176440 h 2220.127.116.11.1.Questionnaires Survey PAGEREF _Toc515176441 h 218.104.22.168.2.Key Informant Interview PAGEREF _Toc515176442 h 222.214.171.124.3.Focus Group Discussion PAGEREF _Toc515176443 h 2126.96.36.199.4.Checklists PAGEREF _Toc515176444 h 2188.8.131.52.Secondary data collection methods PAGEREF _Toc515176445 h 293.2.8.Data Analysis and Triangulation PAGEREF _Toc515176446 h 29Chapter Four PAGEREF _Toc515176447 h 304.Introduction PAGEREF _Toc515176448 h 304.1.Socio – Demographic Characteristics of Sample Respondents PAGEREF _Toc515176449 h 304.1.1.Respondents by Sample Area (Study Area) PAGEREF _Toc515176450 h 304.1.2.Category of the Respondents PAGEREF _Toc515176451 h 314.1.3.Gender (Sex) of the Respondent PAGEREF _Toc515176452 h 314.1.4.Age of Respondents PAGEREF _Toc515176453 h 324.1.5.Family size of respondents PAGEREF _Toc515176454 h 334.1.6.Educational Background PAGEREF _Toc515176455 h 334.1.7.Length (Duration) of Residence in the Area PAGEREF _Toc515176456 h 344.2.Infrastructural expansion in Debre Markos city PAGEREF _Toc515176457 h 354.2.1.Transport infrastructure PAGEREF _Toc515176458 h 354.2.2.Utility PAGEREF _Toc515176459 h 374.2.3.Social and service infrastructures PAGEREF _Toc515176460 h 384.3.Challenge and opportunity for expanding infrastructure in the town PAGEREF _Toc515176461 h 384.3.1.Opportunities for expansion infrastructure in Debre Markos PAGEREF _Toc515176462 h 384.3.2.Challenges for expanding pubic infrastructure PAGEREF _Toc515176463 h 394.4.Land value increment and public infrastructure PAGEREF _Toc515176464 h 394.5.Impacts of public infrastructure on land value PAGEREF _Toc515176465 h 414.5.1.Spatial extent PAGEREF _Toc515176466 h 424.5.2.Change in land value price PAGEREF _Toc515176467 h 424.6.Rightfulness of land value capturing in the city PAGEREF _Toc515176468 h 434.7.Land value capture tools/ methods implemented in the city PAGEREF _Toc515176469 h 444.7.1.Efficiency of the methods implemented to capture land value PAGEREF _Toc515176470 h 454.7.2.Alternative tools PAGEREF _Toc515176471 h 464.8.Willingness to pay share of value uplift PAGEREF _Toc515176472 h 474.9.Organizational Structure involved in land value capturing PAGEREF _Toc515176473 h 494.10.Prerequisite for land value capture PAGEREF _Toc515176474 h 494.11.Constraints to capture land value PAGEREF _Toc515176475 h 49CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS. PAGEREF _Toc515176476 h 525.1. CONCLUSION PAGEREF _Toc515176477 h 525.2. RECOMMENDATION PAGEREF _Toc515176478 h 54Reference PAGEREF _Toc515176479 h 55Appendixes PAGEREF _Toc515176480 h 58Appendix one PAGEREF _Toc515176481 h 58Appendix Two PAGEREF _Toc515176482 h 60
Background of the Study Successful public infrastructural development generates substantial economic value for cities; because of improve accessibility, productivity, connectivity, livability, quality of life, etc. in the immediate area around the infrastructure. According to (George Hazel consultancy, 2013) peoples will often pay more money to buy property that has attractive design and view. In the same, way if the property has good access to public infrastructure then that will attract a premium. Land parcels that is located nearby public infrastructural facilities will be more demanded by the peoples and create additional profit for the owner without his or her contribution on the property.
Public infrastructural accessibility makes the land more productive and more valuable. As stated on (shishir and Adam, 2012) provision of or enhancement to public infrastructure mount up accessibility-related benefits to the neighboring properties. This benefit positively capitalizes into higher land value even if the value increment varies according to the type and numbers of public infrastructure exist in the area.
Almost in all counties, local and state government as indicated in (shishir and Adam, 2012) provides 75% of infrastructural developments funding. However, as (George Hazel consultancy, 2013) discussion paper conclude in most case the additional value of the property derived from the public funding is captured by landowner who has no contribution for the uplift of the value. Rather the extra profit generated by the property due to the infrastructure should be shared between the infrastructure provider i.e. the public and the property owner. This needs smooth collaboration of both the public sector and the private one’s as well as efficient mechanism to capture only the value increment resulted from the public contribution.
According to (United nations, 1997) the unearned increment resulting from the rise in land values resulting from change in use of land, from public investment or decision, or due to the general growth of the community must be subject to appropriate recapture by public bodies. (Huxley, 2010) defined land value capture as an arrangement by the public sector for the acquisition of a proportion of private sector returns for local reinvestment. This can take the form of monetary or in-kind contributions from the private to public actors. Therefore, land value capturing is a way to capture the increase in the value of land and development generated by the improved accessibility of public infrastructure; since better access to infrastructure has value that is reflected in land and property value.
The four broader requirement that needs to happen in order to capture land value are, first, land value must uplift due to public infrastructural investment. Second, a valuation process must be implemented that identifies the change in land value and incorporate the change into taxable value of the land. Third, special or broader tax rate applied to land must be maintained at a sufficient high level to capture the desired share of the increased value and lastly, the collection efforts must be sufficient to realize the increased revenue.
According to (Ethiopian news agency, 2016) Ethiopia has become one of the top countries in the world in investing on infrastructure over the past three years. Surprisingly in Ethiopia, the government provides almost all public infrastructures and these infrastructures increase the value of the land and the property permanently attached to it. Nevertheless, the government did not still start to capture the share of additional income consumed by the landowner that is generated because of government action due to several factors, ranging from lack of legal framework up to unwillingness of the society to pay the share of the value increment. This adversely affect the capital or financial strength of the government.
In Amhara region, especially in Debre markos town, infrastructural development is starting to boom at an alarming rate. Roads, public schools, health canters etc. are constricting each year, so to sustain this developmental progress the town administrator should design the mechanism to capture the accrued value of properties generated from nearby public infrastructures to support the public sector development in capital.
Land value capture concept is among the most untouched issues in Ethiopia as much as my effort to find background information concerned. In this research paper, I will come up with ideas and create dialogues on land value capturing. I will also try to evaluate major infrastructural development and its relationship on land value increment, the institutional setup to handle the task and societal perception, legitimacy of value capturing in the city, mechanisms to capture and benefits of the captured revenue. In addition, this paper will have used to pioneer in trigger researchers on the issue.
Statement of the ProblemIn Ethiopia, generally and in Amhara region towns particularly, currently infrastructural development is expanding. According to (World Bank groups, 2016) Ethiopia is overinvesting in public infrastructure as compared to other low-income counties. As stated on African business magazine (2017) Ethiopia is continuing to focus its economic policy on developing new infrastructure. This reality needs huge amount of money for the actual construction of public infrastructure and compensation for thus affected or displaced from their land due to the public infrastructural development. Government still cover the cost of the infrastructure from the money collected from different sectors and the birr aid or borrowed from World Bank or other international financial institutions like African Development Bank (AfDB). This action always affects the country’s financial system. In addition, the infrastructural development is delay from the specified completion date due to lack of capital. Therefore, the system to finance the infrastructure from the users of the infrastructure by capturing the share of additional profit which the owner generate due to the existence of the public infrastructure without his contribution should be established. But as (Walters, 2012) stated recovering the cost of specific infrastructure investment requires a careful estimation of relevant cost, the identification of affected land and an allocation process for assigning an appropriate share of the cost to each land parcel. Moreover, generally the questions like Is the infrastructure actually increase the value of the land? Is the impact directly measurable? Up to what spatial extent the impact reflected from the infrastructure. Who is responsible to capture? Is the owner willing to pay the share of the profit? Such and other related questions are difficult to answer and made difficult for the government to capture the land value increment. In the study, area in addition to the difficulties mentioned above lack of up to date data and trained professionals contribute to have low level of implementing value capture techniques.
Hence, the mechanisms that has clear standards, affordable, and acceptable by the societies to capture the land value needs to be develop in order to support public infrastructural development. Because Land value capture is more important to support government revenue as compared to other sectors and the revenue collected from land is not subject to fluctuation and less volatility. Therefore, to sustain infrastructural development, collecting the uplift of land value and financing back for new infrastructural development and for maintenance of existing infrastructure will be the strategies of the city rather than financing the public infrastructural development from the revenue collected in another sectors.
The mechanisms to capture the land value increment should have to support by legal system. In our country property taxation and land laws, the forgotten issue was the means, way, and procedures to capture land value increment created by public infrastructural development. Off course, our lease policy that tries to introduce this new concept in our country is implementing improperly as stated in the proclamation. The lease policy now is used as a means to sale undeveloped land which is against the predefined objective of the proclamation in most Ethiopian towns.
Objectives of the research PaperGeneral Objective
The general objective of this proposal is giving better insight about land value capture and assesses the rightfulness of capturing the existing land value increment due to public infrastructural expansion in Debre markos town, Amhara, Ethiopia. Specific ObjectivesThe specific objective that the research would achieve the following;
To examine the relationship between land value increment and public infrastructural development in the study area.
To assess the rightfulness of value capture in the study area and societal perception over returning share of the value uplift to the government.
To examine tools and methods to capture land value increment and its organizational structure for capture value increment.
The following research questions were forwarded to meet the general and specific objective of the research.
Dose public infrastructural development increase the value of nearby parcels?Is value capture rightful to be applied in the study area?
Is the society willing to pay the share of value increment?
What are the tools and the purpose of land value capturing?
Significance of the study The finding of this study will have expected to contribute an invincible importance for different stakeholders. In Ethiopia currently the need for complex and advanced public infrastructure became essential for economic, social, environmental and political sustainability. Therefore, the concerned body tries to introduce new and public infrastructures in order to meet the demand in an equitable and fear manner. Hence, this study showed the possibility and rightfulness of capturing land value generated from public infrastructural expansion in Debre Markos town. In such way, the research will provide information for the government primarily who has the responsibility to provide public infrastructures should use the finding on his policy drafting to maximize the revenue collected from land value increment induced by public infrastructural development and finance other new infrastructural provisions from the collected income.
Since the issue is “new” and not properly used and addressed in our country Ethiopia, different taxation agencies, landholders, and infrastructure providers also use the result as an input to fill their knowledge gap regarding value capturing. Knowing what, how, when, how much… about the underlying issue is important for socially, economically, environmentally and politically sustain. In addition, the finding will expect to provide farther studying area for fellow researchers and used as a reference for their extensive investigation on the same field of interest.
Delimitation of the StudyThe study would investigate the rightfulness to capture the land value increment due to public action on infrastructural development. Also tries to assess the societal perception, organizational structure and the tools and methods used by those responsible bodies to capture land value. Further, the study would see the potential use of the revenue captured.
The land value increment due to social security, private service provider, general economic development of the country and population growth are out of the theme of this research. The research also examine the relationship between infrastructure and land value increment only in Debre Markos town.
Infrastructure has much importance other than economic gain like social, environmental and political benefits this all are not inclusively considered in this study.
Limitation of the Study
There is nothing in this world fully perfect, all research conducted till now would have its own potential weaknesses as long as it is conducted based on samples and live in a dynamic world.
This study was not without limitations. The researcher faced several constraints and challenges during data collection (difficulty of getting sector heads and vice heads and other key informants in the stipulated time, lack of well-recorded, kept and related data and others). However, these challenges were substantiated by other means such as the use of diverse techniques to collect necessary information for the study and thus the limitations do not have significant impact to decrease the credibility of the study. The diverse techniques were appointing when and where it were good for them, using the other person who represented for the work if the leaders not exist, using effective FGD and Interview; then triangulating the all data and I reached to the conclusions.
Definition of Terms and ConceptsThe researcher uses the following terms throughout the proposal, with the concept described.
Land value – in this proposal land value means the value of a piece of property, including both the value of the land itself as well as any improvement that have been made on it.
Land value capture (LVC) – a technique to collect portion of land value increment gain by the landowner from public funded infrastructure.
Public infrastructures – are infrastructures that are provided and owned by the public for public use.
Financing – refers to the financial arrangements that are put in place to provide committed capital to meet the costs of the project as they are incurred.
Organization of the StudyThis thesis is organized in the five chapters. The first chapter introduces the general overview including the background of the study, statement of the problem, objectives, and some basic research questions of the study. The second chapter presents the in-depth review of the theoretical and practical relationships between land value and public infrastructural development. Land value capture techniques and methods to apply to increase public revenue from land value uplift due to the existence of public infrastructure nearby the property, the use and importance of land value capturing and the role of both the government and the general community in land value capturing. Chapter Three presents descriptions of the study area, research design, methods of data collection, and methods of data analysis, data types, and sources of data, population sampling technique and method of statistical analysis. Chapter four discusses result and discussion. Finally, the fifth chapter summarized the study by way of conclusions and recommendations.
Chapter TwoLiterature ReviewThis chapter is focus on reviewing related literatures on land value capturing and the relationship between public infrastructure developments. Theoretical, practical and legal aspects on the value-capturing concept would be analyzed briefly. Urban land policy of the country and Amhara National Regional State would be assessed and linkages with relevant sectoral policies and legislations are reflected in concisely.
Land valueLand value is the measure of how much a plot of land is worth, not counting any buildings but including improvements (Fraser, 2018). Land value can be thought of as the relationship between a desired location and a potential user. The ingredients that constitute land value are utility, scarcity and desirability. These factors must all be present for land to have value (Gwartney) . The land value is determined by the economic principle of highest and best use of land which produces the highest net return in any term, over a period of time. The property value is dependent on the structural attributes, land rates, land use and the location of the land. It is determined by the specific attribute of the land such as land use, location, accessibility, aesthetics, etc. Factors affecting Land Value are of importance to calculate or estimate land prices, understanding of these factors will provide more accurate and realistic price of land
Land value increment
Today the price of land have risen to unexpected levels and the rise shows no sign of failing. Experience from across the globe shows that its impact on the economy and its participants, have been varied and interesting. Unlike other economic processes, asset bubbles add to the incomes of the owners with them not having contributed anything to it. It is a simple case of being at the right place at the right time (Natarajan, 2017). Economists call it a “free-rider problem”, wherein the beneficiaries partake of a windfall from an event, at no cost to them. In the instant case, the positive externalities generated by specific developments in an area causes all land values to rise.
Ricardo’s Law of Rent, assumes that a substantial portion of the wealth generated through any economic activity ends up in increased land values, which benefits only the landowners.
According to (Natarajan, 2017) unlike other endowments, land and natural resources confer benefits on the owner by the mere fact of being owned, without the need for any value addition to be done by the owner. Further, the rise in value of land or of any natural resource is generally independent of the amount of effort or value addition done by the owner, and is dependent on various exogenous variables. But the full value of the rise is captured by the owner, without the need for sharing or parting with any part of this increase. Land values rise in leaps and bounds due to community activity like new roads, transport links, commercial developments etc. In fact, all these activities, called public goods, generate large amount of positive externalities, most of which are captured by the landowners in terms of increases in land values.
Public infrastructure is a fundamental component in the delivery of key public services in most countries. These services range from the traditional public-sector domains of defense, law enforcement, power generation, water, sanitation and transport to the social infrastructure, such as health care, social security, skills development, knowledge and innovation. The nature of the asset also varies from traditional fixed assets such as bridges and buildings to ICT architecture. In addition, sound public infrastructure is a key driver of enhanced capacity for real economic growth, both in the short and long terms. Infrastructure networks reduce the effect of distance, help integrate markets, and provide the necessary connections to international markets. These networks are also trade enhancing, especially when it comes to exports. Infrastructure services such as energy and water are critical inputs in production chains, the availability and quality of which determine both the quantity and price of outputs. Public infrastructure is defined as facilities, structures, networks, systems, plant, property, equipment, or physical assets – and the enterprises that employ them – that provide public goods, or goods that meet a politically mandated, fundamental need that the market is not able to provide on its own. This definition thus ranges from the direct provision of military installations to privately owned and -operated utilities under government regulation, such as energy (Anon, 2013).
According to Wikipedia, public infrastructure is infrastructure that is own by the public or is for public use. It is generally distinguished from private or generic infrastructure in terms of policy, finance, and purpose. Public infrastructure can be broken down into three main categories. Transport infrastructure, for example tunnels, bridges, ports, roads, rail systems and grid infrastructure. Utilities, for example power generation, waste management, district heating, water, and telecommunications; and Social and service infrastructure, which can be further divided into standard assets, for example administrative buildings and custom-built assets, for example schools, universities, hospitals and major cultural institutions as stated by (Eldrup and Schutze, 2013.
Infrastructure improvements do two things they change the cost of various activities, and they change the rent of various parcels of land. For example, an improvement in transport infrastructure lower the cost of trips for nearby residents. Therefore, people who do not have land are willing to pay more in rent to live in the area. Population and rent in the area is increase due to the road infrastructure. If the population demand for land, increase in the area the rent competition will arise. This competition will cause rent to be increase by the amount of benefits from the infrastructure improvement, so that tenants are no better or worse off (Branigan, 2016).
In Ethiopia, all major types of infrastructures cause the land value to increase. i.e. transportation infrastructure such as roads, airports, railways etc.; utility infrastructures such as water, telecommunication, electric power etc. and social and service infrastructure like, hospitals, universities etc. so in the area where this infrastructure installed, the land value were increase and the government should capture the share of the increment.
Capturing land value increment Value capture refers to the recovery of a share of the increment in land valuation due to the positive externalities from actions other than the landowner’s investments. The appreciation in land valuation occurs due to regulatory changes, investments in public goods infrastructure that increases quality of housing, jobs access, transportation or social benefits and emergence of an important commercial, cultural, institutional, or residential developments in the neighborhood (Anon, 2016). All these changes are associated with increases in land values of the affected properties for no effort of the landowner. The landowners in the proximity of these changes become indirect yet rent seeking beneficiaries of an “unearned increment”. The potential for windfall gains encourages speculative investments in lands in urban areas and its surroundings.
(Huxley, 2010) defined land value capture as an arrangement by the public sector for the acquisition of a proportion of private sector returns for local reinvestment. This can take the form of monetary or in-kind contributions from the private to public actors.
The role of public infrastructure for land value increment Dube et al. (2011) found that properties in areas of higher residential density, located within walking distance, and far enough away to avoid adverse local amenity impact experienced a significant lift in sale price. Importantly, they found that this lift in value exceeded project cost and that increases in local government revenues on the higher property values were significant.
Mulley (2014) has looked at the impact of Sydney’s Liverpool to Parramatta Transit way on property values. In terms of improved employment accessibility, Mulley found that, at the mean, a one-minute saving in travel time to a local shopping or employment center added about $1590 to the mean house price across the corridor (0.7 per cent of the mean house price), with localized effects of up to 2.9 per cent. Jhones et.al 2016 Describe infrastructural development increases accessibility, attractiveness of the land, thereby increase demand for such land. This condition uplifts the value of land.
Funding means, the revenue sources and streams used to pay for the costs of infrastructure over its life. All levels of government are involved in providing public infrastructure, but the nature and extent of their responsibilities vary between jurisdictions and across different types of infrastructure. For most types of economic activity, the role for governments does not extend beyond legal, policy and regulatory functions as markets determine what is produce and consume. Private sector firms compete in making investment decisions in response to market opportunities (as influenced by government policy settings and expectations). Customers create these opportunities through their willingness to pay for goods and services they value. Even very large investments can occur in this way. Additionally, the private sector has been willing to provide significant social infrastructure, such as private museums and private hospitals. It is important that governments recognize the role of the private sector in the provision of infrastructure and not discourage or crowd it out.
As Harris et.al.2014, stated Public infrastructure is different from most other goods and services in the market. In many cases, governments have taken on the role of lead provider for equity reasons, because there is a market failure (such as monopoly characteristics), or sometimes for historical or cultural reasons. At times in a nation’s development -for example, when markets or institutions are yet to reach maturity, government may be the only entity capable of taking on the risk of an infrastructure improvement sought by the community. Equitable access has long been one of the main reasons why governments provide infrastructure, rather than the private sector. Markets may not provide equitable access to a basic quality of service (for example, in areas such as water, sewerage, roads, rail and telecommunications) to groups that are less able to pay or are costlier to supply (such as rural communities). In addition, governments are involved in the provision of public infrastructure because there are market failures that would cause not enough of the good or service to be provide if left entirely to the market. There are three main sources of market failure particularly relevant to public infrastructure: natural monopolies, public goods, and externalities.
The existence of a natural monopoly is a source of market failure for many types of public infrastructure, including aspects of electricity, water and transport. It occurs where it is more efficient for one business to supply the entire market (or a segment of the market) than it would for two or more businesses to do so. For example, it would generally be inefficient to have two distributors of water, each with their own system of pipes running down every street. Conditions of natural monopoly create the potential for a firm to exercise its market power by setting prices higher, and the level of output lower, than would occur under a more competitive market. This leads to a reduction in net benefits to the community. However, natural monopolies can change over time. For example, new technologies and substitutes can reduce their extent and importance.
Public goods exist where provision for one-person means the product is available to all people at no additional cost. Public goods are non-rivalries (consumption by one person will not diminish consumption by others) and non-excludable (it is difficult to exclude anyone from benefiting from the good). If exclusion is technically impossible or economically too costly, the private market is likely to underprovide these goods or services. Roads have traditionally been seen as public goods, but the existence of toll roads shows that this need not always be the case technology can lead to changes in the provision of services that have formerly been considered a public good.
Finally, externalities occur when the actions of an individual or firm create a benefit or a cost for others who are not a party to the transaction, and these impacts are not reflected in market prices. Markets tend to under produce goods with positive externalities (such as education) and overproduce goods associated with negative externalities (such as goods whose production causes pollution).
Responsible Body for Land Value CaptureAccording to (George Hazel consultancy, 2013) If LVC methods are to be used in the particular town, the responsible body should have key actions that need to be delivered. Thus are, made agreement on objectives between key stakeholders, understand and capture value for all partners, develop new governance and business models, protect the funds captured, protect the independence of planning, and Protect confidentiality.
Land value capturing without common consensus on the overall importance among the communities and the responsible body to collect the value increment will cause conflict. To function properly the process of value capturing the system should have to be “free from corruption”. The responsible body must be accountable for both the communities and for the government. Land value capturing is a team work needs to the engagement of multidisciplinary professions.
Regarding to the educational background, those who are assigned for land value capture should be organized from engineers, land managers, economists, valuators, representative of the community and based on the situation politicians may also participate.
Mechanisms to Capture Land ValueBefore introducing the value capture mechanisms, the government should identify who are the major beneficiaries and then determine whether they are benefiting directly or indirectly (Infrastructure Victoria, 2016). After identifying and determining the beneficiaries and there order the government can develop and implement the mechanisms that collect apportion of the value created.
43408881825940010001241543050047625-195580INFRASTRUCTURE INVESTMENT OR PLANNING CHANGE
00INFRASTRUCTURE INVESTMENT OR PLANNING CHANGE
e.g. service users and
operators, businesses and employees
e.g. service users and
operators, businesses and employees
e.g. landowners, occupiers, developers and governments
e.g. landowners, occupiers, developers and governments
22735585715Value capture mechanisms include:
E.g. landowners, Occupiers, developers
– Land tax and stamp duty,
Capital gains tax, income
Tax, payroll tax and local
– Developer contributions
and related mechanisms
– Property development,
Sales and leases, advertising
and telecommunications services
00Value capture mechanisms include:
E.g. landowners, Occupiers, developers
– Land tax and stamp duty,
Capital gains tax, income
Tax, payroll tax and local
– Developer contributions
and related mechanisms
– Property development,
Sales and leases, advertising
and telecommunications services
477296766166New,enhancedor expanded value capture mechanisms include:–Enhanced developer Contributions
– New major beneficiary
– Expanded use of property
Development, asset sales
00New,enhancedor expanded value capture mechanisms include:–Enhanced developer Contributions
– New major beneficiary
– Expanded use of property
Development, asset sales
left116407Direct value capture
– Direct user charges and
Levies e.g. tolls, tickets
Possible future direct
– Infrastructure operator
Charges that could
be built into new or
Arrangements with infrastructure operators
00Direct value capture
– Direct user charges and
Levies e.g. tolls, tickets
Possible future direct
– Infrastructure operator
Charges that could
be built into new or
Arrangements with infrastructure operators
4391131570467Source: (Infrastructure Victoria, 2016)
0Source: (Infrastructure Victoria, 2016)
The figure shows that the value can be capture from both direct and indirect beneficiaries from the public infrastructure and tries to put the method to collect through like lease, user charge, sale service, land tax, etc.
Direct tools are tools recognize the legal or moral obligation to contribute part of the wealth created and indirect tools are local tools to provide special revenues.
Willingness of the community to return share of value incrementPlanning for the future needs of infrastructural system takes place on multiple levels. Many people and organizations provide input for the decisions that help shape the future of the system by which residents, workers and visitors, and by other users satisfied. The infrastructural departments along with partner agencies—municipalities, Metropolitan Planning Organizations, Regional Planning Organizations, counties, public infrastructural authorities, private-sector entities, other state and federal agencies, and most importantly, the general public—all have a role in the infrastructural decision-making process.
An important element of transparency and accountability in the provision of infrastructural services is development of an inclusive public involvement process that helps educate the public and, at the same time, provides early, continuous and meaningful opportunities for participation in decision-making during all phases of infrastructural planning and implementation.
Purpose of Public Involvement
According to Maine department of transportation (2015). Public participation is an integral part of the transportation process that helps to ensure that decisions are made in consideration of and to benefit public needs and preferences. Infrastructural agencies provide opportunities for public involvement in the planning and decision-making processes in order to accomplish multiple purposes, including:
Obtain Quality Input and Involvement – Comments that are relevant, constructive and will contribute to better decisions, plans, policies, programs and projects.
Provide Opportunity to Build Consensus – An effective public involvement process can facilitate and increase public support for specific, recommended actions.
Ensure Accessibility – Public participation opportunities that are geographically, physically, temporally, linguistically, and culturally accessible, help ensure that all stakeholders have a voice.
Ensure Diversity – Good infrastructural planning elicits a range of socioeconomic, ethnic and cultural perspectives, including from people who reside in low-income and minority neighborhoods, and from other traditionally underserved communities.
Establish and Maintain Partnerships – Partnerships with communities and community-based organizations can help create long-term support for the projects, programs, and activities of the infrastructural agency.
Foster Participant Satisfaction – People who take the time to participate deserve assurance that it is worth the effort to join the discussion and provide feedback.
Define the Potential for Influence – A well-crafted public involvement process effectively communicates where and how participants can influence decisions.
Establish the Department’s Commitment – Regular communication by the infrastructural agency can help to establish trust with affected communities, and help build community capacity to provide quality public input.
Establish Relevance – Effective public involvement processes help frame issues so that the significance and potential impacts are well understood by participants.
Generally, if the community is actively involved and aware the importance infrastructure then they will cooperate with the government’s policy on value capture. Otherwise, land value capturing from unconcerned community cause deep-rooted conflict. In our country community, involvement in governments’ activity is rare and this make value capturing difficult.
Importance of Land Value CaptureIt has long been recognize that when the local government creates value by declaring land development the state – i.e., we, its citizens – should be a beneficiary of that value increase (Gordon, 2017). As described on (George Hazel consultancy, 2013) when cities develop, personal and business trips become more complex due to the increasing complexity of people’s lives and customers demanding more valued and personalized services. At the same time as demand is increasing, spending requirements of government are coming under increasing pressure. In order, therefore, for the country to maintain the balance between growth and the provision of enhanced mobility systems to meet those needs, new methods of financing need to be developed to support traditional funding streams. So, the new option to provide funding is value capturing. (Infrastructure Victoria, 2016) support that Value capture is a form of infrastructure funding that helps align the cost of infrastructure more closely with those that benefit from government investment or planning decisions. Value capture mechanisms seek a funding contribution from individuals and/or businesses that directly or indirectly and privately benefit from government investment in public infrastructure or planning decisions. In general, land value capture has the following importance as stated on the discussion paper of (George Hazel consultancy, 2013).
It helps economic growth to be achieved in an environmentally sustainable way.
It helps build a more competitive city region and a higher quality of life for its residents and businesses.
It helps build sustainable, healthier communities.
It helps reduce the cost of living.
It helps reduce congestion and pollution.
Value capture is often touted as the innovative, universal solution to address infrastructure-funding challenges. The captured revenue is used back to finance the infrastructural maintenance and for new infrastructural development.
Other most important significance of land value capture is its ability to protect land speculation (Anon, 2016). If government tax the windfall gains from the owners, they are not interested to preserve the land by anticipating future benefit.
The Success Factors to Capture ValuePerhaps the biggest obstacle to value capture today is institutional resistance. However, with a focus on the value created by a public investment as opposed to the cost of the investment, value capture represents an attractive tool to communicate the benefits of new infrastructure and generate constituent support. This is just one element required for success. SKM consultancy of Australia states that to support the implementation of value capture across the country the governments should closely consider these ten success factors:
DEVELOP A COMPREHENSIVE, LONG TERM PLAN – Value capture programs typically rely on the successful implementation of a number of mutually supportive and coordinated public and private investments to lift economic activity over a sustained period. These strategies also need to extend 20 or more years into the future so that the benefits of a fully mature program, which tend to occur at its back end, can be captured to underwrite financing.
EMBRACE GENUINE AND ROBUST STAKEHOLDER ENGAGEMENT – Stakeholder engagement has evolved into an established and essential component of public infrastructure and urban planning programs at the national, state and local levels. Genuine and robust engagement will help ensure better project outcomes and reduce risk and delays.
CAREFULLY SELECT THE DISTRICT FOR IMPROVEMENT – In setting the boundaries of an improvement district, consideration needs to be given to: the nature and cost of physical improvements needed to create value uplift; catalytic projects that are likely to kick-start development activity; and the attitudes of business and residential property owners to the proposed activities.
CREATE A SHARED VISION – A widely scoped stakeholder engagement program involving all stakeholders (including the media) will assist in getting the right message out and building alliances. It is far better to have robust debate and informed stakeholders than an information vacuum and misinformation.
ESTABLISH A CLEAR AND BALANCED GOVERNANCE FRAMEWORK – Government agencies and commercial interests invest hard capital to create value, but as a form of public private partnership operating within a democratically elected system of government, the success of these programs often relies heavily on the non-financial contributions. Support from other interests, such as neighborhood associations, educational institutions, local health and social service agencies and various other special interest groups needs to be facilitated through an appropriate governance framework.
USE INCENTIVES TO ATTRACT PRIVATE INVESTMENT AND BETTER DESIGN – Local government planning and development controls are increasingly turning to incentives rather than prescriptive standards to achieve better development outcomes and reduce costs. Tailored precinct zoning and development controls, such as planned unit developments and transferable development rights, are often required to achieve higher density residential and commercial development while maintaining public standards for open space.
SECURE THE ABILITY TO INFLUENCE OUTCOMES – Planning controls and compulsory acquisition powers need to provide urban renewal authorities with the ability to undertake widespread urban renewal programs where necessary or desirable in the broader public interest. The ability to repackage and sell land varies by jurisdiction, so it is important to obtain current and accurate legal advice on any limitations that may exist on land acquired through compulsory acquisition.
UNDERSTAND THE RISKS AND REWARDS FOR ALL STAKEHOLDERS – The high-profile failures of several large public-private partnerships in Australia, including the Cross-City Tunnel ($700 million) and Lane Cove Tunnel ($1.1 billion) in Sydney and the Clem 7 ($3.2 billion) and Airport Link ($4.8 billion) in Brisbane, highlight the need for all parties to understand the risks and rewards of these models. Such failures cost private sector investors billions of dollars, but the general public also loses because future opportunities to involve much needed private sector investments will be more costly and harder to secure.
SECURE CONSISTENT AND COORDINATED LEADERSHIP – While political leadership is important, sustained leadership that transcends administrative and political change, and maintains a consistent vision for the project is essential given the long-term nature of urban renewal and public transport investments.
BUILD TRUST AS A CORE VALUE – Trust is an overriding value in public-private partnerships. Building and maintaining trust can be established through small efforts that evolve into larger efforts but require continual effort and commitment to be maintained
Challenges and opportunities for value capture
Value capture approaches have the prospective to generate new fund source to support the cost of major public infrastructure projects. There are some opportunities – and some challenges – to consider.
Just another tax?
Many in the property industry are skeptical about value capture, arguing that it is simply code for levying yet more taxes on property developers. Property owners already pay stamp duty, land tax and capital gains tax, and we are wary of government adding a value capture tax on top of them.
There are challenges in integrating value capture mechanisms into existing taxation and governance arrangements. Australian governments already capture value for many projects through existing taxation and charging regimes, such as through increases in sales or income tax or local infrastructure charges on developers. In theory, these regimes are designed to reflect the additional costs associated with the new infrastructure that must be met by the different levels of government. However, there is a risk that the various taxes and charges are poorly coordinated; overlap; or place an undue burden on households and businesses without a commensurate investment in improved public infrastructure services (Australian government, 2016).
It is important to ensure that those who benefit from new public infrastructure contribute a fair share – including property owners and direct users of the infrastructure. If beneficiaries of an infrastructure project feel they are gaining a benefit, and that benefit exceeds the tax or other payment they face, then the ‘just another tax’ objection can be overcome. The question then is how to design the payment or contribution to achieve this outcome?
A key step in overcoming these objections is early engagement with beneficiaries through the planning and concept design phases of a project. This allows beneficiaries to understand the benefits being generated by a project and assists in shaping the final design of a project to maximize potential benefits and the framework for capturing contributions.
Demonstrating the nexus between the payment and the benefit
For value capture to attract community support there needs to be a clear nexus between the payment being made and the benefit which is received by the beneficiary of the infrastructure.
In some cases, the nexus is obvious. A new expressway will typically deliver valuable timesaving to heavy vehicle users. If these users can see that the value of the time saving exceeds the toll charged per trip on the expressway, then there is generally a willingness to pay. For example, the Australian Trucking Association expressed its support for NorthConnex, the toll road being built as a tunnel under Pennant Hills Road in Sydney to connect the M1 in Wahroonga with the M2 in Pennant Hills (atansw.wordpress.com).
Without this access, there could be no construction on the land – and no employment generated. In other cases, there is frustration that a payment is levied upon a landowner or developer – but that there is no obvious nexus to a project which delivers a benefit to the occupant of that land, nor when that benefit may be realized.
Identifying who will benefit from a project
When government out of general taxation revenue funds a new public infrastructure project. All taxpayers share the burden – even though many of them will not use or directly benefit from the infrastructure that is built. At the same time, those who benefit from the project may earn a windfall gain through an increase in the value of their property or business – for example if that property or business happens to be located near the new project or the land is re-zoned in conjunction with the project.
When selecting and designing value capture strategies, a challenge is developing a comprehensive understanding – and measurement – of all those who will actually benefit from the project being delivered. To leverage value capture effectively, the direct and indirect project beneficiaries need to be identified, together with the nature, timing and quantum of the value uplift to be received by each group of beneficiaries as a result of a project. Having a robust understanding of each beneficiary’s willingness and capacity to pay for the new infrastructure is not just good economics – it goes to the heart of delivering value capture in a fair and balanced manner.
For many projects governments currently do not have the data or appropriate tools to fully understand the value profile or determine how best to identify the beneficiaries. In addition, this work will need to be done on a case-by-case basis to ensure the specific circumstances of the project or outcome can be achieved (Australian government, 2016).
Why would you pay if you did not have to?
Imagine you own land close to the proposed location of a new railway station. It would be rational for you to pay an amount towards the cost of the new railway line or station, if that amount was less than the increase in value your land will enjoy as a result of the new railway line. But equally, if you thought the line would be built without you making a contribution, you certainly would not volunteer it
So a key challenge for governments wishing to adopt value capture is to design a process which reveals the willingness to pay of beneficiaries; and to maintain a clear and credible position that, in the absence of a contribution from value capture approaches, the project will not proceed(Australian government, 2016).
Does the value uplift come from the public infrastructure alone?
While infrastructure projects can create additional value in their own right, the extent to which they are able to do so often depends on how well they have been integrated into wider network and land use planning activities. When a government rezones land that generally increases its value. When a government builds a new road or railway line that benefits particular land that also increases its value. When there is a new road or railway line and the land is rezoned, that produces an even greater value increase. It also leverages the benefits of the new transport infrastructure because more people can benefit from it if the land served by it now has more people living or working on it. Conversely, where new transport infrastructure is built, but land is not rezoned, this may be a missed opportunity. Well targeted and carefully planned rezoning can provide an excellent opportunity for value to be unlocked and subsequently captured. It makes sense to integrate public infrastructure investment decisions into land use planning decisions as early as possible in the decision-making process. The sale of development rights by governments is a tool that can create and capture value. A government’s decision to invest in a new project or rezone adjacent land transforms the land or infrastructure into a valuable asset. The development rights relating to this asset can be sold or leased to developers, or packaged with the delivery of the infrastructure and made subject to tenders by private sector contractors(Australian government, 2016).
A key challenge with establishing any form of value capture mechanism is managing the mismatches in timing between when capital is required for construction of the project (and the financing required at that time); when the value benefits arise; and, according to the particular mechanisms employed, when some of that value is transferred to the party building the project (be that government or other party).
Speculative increases in property values often occur as soon as a new project is announced. For example, properties around likely station locations will generally see a rise in value following the announcement of the establishment of a new rail alignment, well before the project enters construction or even financing stages. However, on other occasions this may not happen until the project has been built and the property development around the station has been started. There may well be financing tools to resolve this timing mismatch. Certainly though, governments need to understand this mismatch. It may be easier to secure acceptance of value capture where some or all of the required payment is deferred until the time that the benefits flow.
Legal grounds for land value capture in EthiopiaUnder the article 1446 of the civil code of Ethiopia, public domain is defined as infrastructures that are under the control of the public administrative organs and provide service for the public such as road, canals, railways etc. And Chapter 3, Section 1 of the civil code under article 1501 described the relationship of land value and improvement as, where considerable works are to be done in a given area in consequence of which the value of the parcels of land situate within such area will be altered. Therefore, from both articles of the civil code we can conclude that public infrastructure constructed by the government affect the value of the land near by the developments. Proclamation no 80/1993 and 272/2002 lease holding of urban land and the reenactment of lease holding of urban lands under article 12 and 10 sub article 3 respectively states that each regions or city government shall utilize at least 90% of the lease payment it collects for expanding public infrastructures. Our countries old lease proclamations introduce the possibility to capture land value and financing back for further development. Also the recent lease proclamation no 721/2011 define lease bench mark price as a price determined by taking into account the cost of infrastructural development, demolition cost as well as compensation to the paid to displaced person. Amhara regional state regulation No.49/2007 under article 2 sub 1(B) declares that the land holding is under lease system in the study area. All the above legal documents inclusively agree on the possibility and responsibility of the government to capture the land value increment in order to raise fund for new infrastructural expansion and maintenance.
Chapter ThreeResearch MethodDescription of the study area
Location and area coverage Debre markos town is found in east central Ethiopia, which is located in east Gojjam zone of the Amhara national regional state. It has a latitude and longitude of 10°20’N and 37°43’E respectively. The town is located in the north west of the capital city of the FDRE of Ethiopia, Addis Ababa at a distance of 300 Km and 265 Km to the capital of Amhara Nation Regional State, Bahir Dar. Specifically, it is located in the Amhara regional state, East Gojjam zone. Debre markos town is now serving as the capital and administrative center of east gojjam zone.
Figure 3.1 locational map of Amhara regional state and the study area
Historical Background of Debre Markos TownDebre markos town is one of the oldest town in Ethiopia; Dejazmach Tedla Gualu who was the then administrator of the town founded it in 1852. Its name was initially called Menkorer. The name of the town was changed to Debre Markos after its principal church, which was constructed in 1869 and dedicated to St. Mark, King Teklehaimanot who came to power in 1879 proclaimed that the town shall be named Debre Markos instead of Menkorer. Debre Markos is one of the reform towns in the region and has a town administration, municipality and 7 kebeles. The town has a structure plan that was prepared in 2009. It was the capital of Tekle Haymanot, Negus of Gojjam during his reign and as a result, its population “fluctuated greatly with the presence of absence of the army” of the Negus. When the king resided in the town, it had between 20,000 and 40,000 inhabitants; in his absence, between 5,000 and 6,000..The palace of Negus Tekle Haymanot was remodeled in 1926 by his son Ras Hailu Tekle Haymanot, in the style of European buildings after his tour of Europe in the party of Ras Tefari. By 1935, the town had postal, telegraph, and telephone service.
In 1957, Negus Tekle Haimanot School in Debre Marqos was one of 9 provincial secondary schools in Ethiopia. The next year, the town was one of 27 places in Ethiopia ranked as a First Class Township. In 1960 a branch of the Ethiopian Electric Light and Power Authority had started operation in Debre Marqos. The city also has University that was foundation stone was laid on January 2005. It was inaugurated on 18 November 2007.
Climate (Temperature and Rain tall)Debre Markos’s climate is classified as warm and temperate. In winter, there is much less rainfall in Debre Markos than in summer. In Debre Markos, the average annual temperature is 15.9 °C. About 1321 mm of precipitation falls annually. The variation in the precipitation between the driest and wettest months is 297 mm. During the year, the average temperatures vary by 3.4 °C.
As meteorological data has shown that the annual mean average temperature of the town for consecutive for 13 years is around 16.210c and the maximum temperature reaches up to 22.590c (Abebe, G., 2017). The amount of rainfall recorded in the town varies from one month to other. Generally, June, July, August and September are months that receive high rainfall in a year.
TopographyDebre Markos has been built up on rugged terrain that its elevation ranges between 2249 to 2509 meters above sea level. It characterized by plain flat plain topographic landscape although there have been different rivers and hill shade features towards to peripheral town which are the main constraints for physical expansion of the town. Debre Markos has fragmented topographic morphology. Uniform slopes hardly exist. Small pockets of plain lands are found here and there along with steep or rugged landscape. Thus, a typical feature of uneven landscape that is inconvenient for different construction including road network construction characterizes every neighborhood of the places within the boundary.
Population characteristicsAccording to CSA (2007), the population of the town was 62,497. Out of this 29,921 (47.87%)
were males and 32,576 (52.1%) were females; 16,325 (26.14%) were within the age group of 0- 15 years, 42,185 (67.49%) 16-60 years, and 3,987 (6.37%) 61 years and above. The population growth rate at low variant was 2.4%, while household size in the town is calculated to be 3.2. The majority of the urbanites worshiped Ethiopian Orthodox Tewahido church. 97% of the inhabitants are speakers of Amharic language. The remaining 3% of the inhabitants are speakers of Tigiregna, Agew and Afan Oromo. According to CSA (2013), the population projection figure of the town had been estimated 38291 male and 41689 female inhabitants which is a total of
79980 populations. Based on Debre Markos city administration mayor office, currently Debre Markos has a total population of 119,429 of whom 55,624 are males and 63805 are females.
Characteristics of sample kebelesKebele two, three and four of the city are characterized by highly developed in public infrastructure as compared to other kebeles of the town. Based on the data from Debre Markos city administration mayor office the sample kebeles has 63286 population of whom 29961 are males and 33325 females with the total area of 2357.226 hectare.
Table 3.1 population and area of the sample kebeles
Kebele Male Female Total population Area(hectare)
02 6438 8636 15074 736.217
03 11869 12218 24087 438.775
04 11654 12471 24125 1182.234
Total 29961 33325 63286 2357.226
Research methodologyIn order to make closer investigation of the rightfulness of land value capturing the required methods were followed. Starting from stating the locations to the data analysis methods the necessary steps were sited. The required information was collected from both primary and secondary source. The primary data has been collected from household survey, focus group discussion; key informant interview and field observation and both open and close ended questionnaires. Secondary data were collected from the written published and unpublished documents and literature that is relevant. The type of research methods that were used in the study is mixed research, which use both qualitative and quantitative data. Totally, the research methodology will organized under the following section.
Site SelectionThis research were done in Debre Markos town, which is the capital city of East Gojjam zone and Gozamin woreda. This place is selected purposely, the rationale behind the selection of the study area are, firstly, data can be easily collected. Secondly, the town unpredictably grow in public infrastructural development form government funding and the society collect the uplift of the land value without returning some share of revenue for the government. Thirdly, the municipality is not still aware of capturing land value increment resulted from public infrastructures to support the ongoing development of the town. Fourthly, the community compete to speculate land near the area where infrastructure is developed. Finally, municipality claimed the financing procedure for the delays for some infrastructural developments.
Target PopulationA number of individual, governmental institutions and organizations were involved in the study. These include such as Town Administration/Municipality, Land Administration and Management Agency and household respondents from six villages of kebele two, three and four, experts from Kebele and offices of urban municipal, managers of public infrastructure provider which amount to 5000 in number were the target populations of the study.
The research design refers to the overall strategy that the researchers choose to integrate the different components of the study in a coherent and logical way, thereby, ensuring he/she will effectively address the research problem; it constitutes the blueprint for the collection, measurement, and analysis of data.
The research method that was used for this study is mixed research. In this case quantitative and qualitative research method will use to obtain information.
The issue of land value capture were seen with socio economic and perception of the community, availability of effective capturing mechanisms, and the spatial and economical extent that the infrastructure affect the value of land. Therefore, this method were believed suitable for the study.
Sampling DesignA sample design is a plan for obtaining a sample from a given population and the procedure that needs to follow in the research to achieve the sample. In order to select the study site and respondents: both probability and non-probability sampling techniques would be used.
The study sites (villages with in the kebeles) were selected based on purposive sampling technique and respondents were selected by using systematic random sampling technique.
Sampling FrameThe researcher has got a complete list of households’ numbers who live in the study areas from their respective kebeles. The entire target populations were listed in numerical order that is represented by ‘N’ and the sample size (size of the sampled) is represented by n.
Sampling Techniques and its sample size
For this study, the researcher were used purposive sampling techniques to select six villages from 3(three) kebeles (2,3 and 4) out of the seven administrative kebeles of the city. Purposive sampling is used because of unfair distribution of public infrastructural among all kebeles of the town, the required sample size were determining by using Yemen formula i.e.
n = designates the sample size
N = designates total number of households in six village of three kebele 5000
e= designates maximum variability or margin of error 8% (0.08)
1= designates the probability of the event occurring.
Therefore, the sample size would be n=N1+N(e2) = n=50001+5000(0.082)= 152 by adding 10% none responsive rate the final sample size will be 168. Systematic random sampling technique were used to select the study participants. The total number of households was identified through reviewing the records in each kebele administrative office. Then, the total number of households were divided into the required sample size in each kebele proportional to the size of the household. The first household were selected by dividing the total population by sample size. The case team leaders in Debre Markos municipality were selected as key informants for interview. In addition, the land valuators at the Municipality and public service provider managers like telecommunication, electric city, road and water was involved in the interview. Further, a top official from kebele administrators were interviewed for the research.
Table 3.2 List of Kebeles, Total HHs and Sample Size of the respondentsSN Kebele Total number of households Sampled house hold Total sample household including none responsive rate
1 Kebele 2 1191 36 40
2 Kebele 3 1903 58 64
3 Kebele 4 1906 58 64
Total 5000 152 168
Data Source and Data CollectionFor successfully go through the underlying problem the researcher was used both primary and secondary data. For primary data, the researcher uses questionnaires for land related professionals, key informants, households, interview (structured and unstructured) as well as direct field observation, and for secondary data, the researcher were used different written documents and internet websites.
Primary data collection methodsAfter the research problem and the study area were identified, the type of data that is required to study the problem is the crucial issue. Consequently, this research was done from qualitative and quantitative data types. The qualitative data for this research was collected from the local respondents of the study area and field observation. Therefore, primary data for this research was conducted from questionnaires, key informant interview, focus group discussion and checklist for field observation.
Questionnaires SurveyFor this thesis, both open-ended and close-ended questionnaires were used. Closed question is a questionnaire item in which optional response categories are provided for the respondents (Bailey, 1976). Open-ended questions are questionnaire item for which predetermined response option are not provided (Newman, 1976). The purpose of collecting data from systematically selected households of the sample areas, the selected officials of the town municipality was to acquire reliable data about the land value capture: rightfulness of capturing the existing land value increment due to public infrastructural development in the study area. Questionnaires was prepared in the wording and order that is easy to understand and respond by the respondents. After setting the questionnaire, a formal pilot test was carried out on 10 households to check the respondent’s reaction to the questions and to test the significance and clarity of questions. Three assistant data collectors were employed and give an orientation to enable them understand the questions. Difference in wordings happen in the translation of questionnaire to the local language (Amharic) were managed during data collection process. The questioner was distributed for the respondents by moving to each respondent’s house.
Key Informant InterviewKey informant interviews involve interviewing of knowledgeable individuals who were likely to provide the required information, ideas and insights on a particular subject. In this study 10 key informants from different government office and three kebeles, were identified carefully in consultation with the town administration, land administration, Kebele leaders. The key informants were those who live and work long in the study areas. Interviews was conducted at the study areas using both structured and non-structured interview questions.
Focus Group DiscussionAccording to (Krueger, 1998) group interviews equated with questionnaire interviews which allow sensitive issues to be more freely discussed in groups when individuals would not wish to discuss them alone with a stranger. Focus group discussion interviews were therefore carried out using structured and non-structured questions formulated to address the objectives of the study. Focus group discussions was conducted for selected members in order to supplement and approve data that generated using questionnaire and interview. Two focus group discussions comprising 6 members, which have 12 in numbers, were held to get detail information in the study area. These focus group discussions consist of experienced individuals on the land issues and land administration, landholders and experts to offer supportive input to this research, knowledgeable individual on value capture mechanism. The data collected using primary data collection tools would be helpful to f identify key issues on value capture mechanism.
ChecklistsChecklists structure a person’s observation or evaluation of a performance or artifact. It can be simple lists of criteria that can be marked as present or absent, or can provide space for observer comments. These tools can provide consistency over time or between observers. For this research, checklists were used for assessing the rightfulness of capturing the existing land value increment due to public infrastructural expansion.in the study area, to observe the opportunities and constraints to apply value capture, to assess whether value capture is implemented or not in the study area.
Secondary data collection methodsFor this research, secondary data collection was made from various sources. Reports and archives, other official researchers, quarterly and annual reports, etc. were used to investigate land value capture. Secondary information was collected from relevant sources of different published ; unpublished documents of books, research papers, journals, articles, thesis works and different internet websites.
Data Analysis and Triangulation
Data was analyzed qualitatively and quantitatively. After the relevant data were collected, appropriate data has been selected and after that, the data were checked and converted into formats that is suitable for analysis and interpretation. Data collected from different sources were tabulated because tabulation makes the data orderly and easier for presentation. After tabulating the qualitative data was checked for completeness and consistency. Descriptive analysis were carried out to explore the sociodemographic characteristics, perception and attitude of the respondents. Bivariate analysis were used primarily to check which variables would have association with the dependent variable individually. The variables was analyzed by using excel and Stata software. Both the qualitative and quantitative data was interpreted and summarized in order to draw conclusions and foreword recommendations.
Regarding to checking the validity of the data, the researcher used methodological triangulation method that is checking, verifying, and compering the same issue collected by deferent tools. The response from the household’s questioner, key informant’s discussion, interview of different officials and the finding from related literatures are expected to triangulate so as to enhance the accuracy of the study and to create full picture on the underlying problem.
Chapter FourIntroductionThis chapter brings us to the systematic analysis and presentation of data gathered from the field. The chapter has utilized different times and imputes. These are the result of respondents’ idea, focuses group discussion, relevant works of scholars and voice of informant if present relating to the issues under investigation and discussion such as sex, age, educational background of the sampled household respondents and status of informants in key informant, interview and focuses group desiccations. The rightfulness of capturing the existing land value increment due to public infrastructural expansion in Debre markos town described by using deferent selected criteria. Thus, the impact, societal perception, its challenges and opportunities, method and responsible bodies and legal ground to implement value capture in the town are the main issues of the analysis.
Socio – Demographic Characteristics of Sample RespondentsRespondents by Sample Area (Study Area)The total numbers of sampled respondents (n=168) of which 40 from Kebele 2, 64 from kebele 3, 64 from kebele 4 were selected for quantitative and qualitative data collection from the study areas. From the above number of the sampled respondents 45 female and 123 are male households (Table 4:1). The sampled household number is (n=168) from the total population of (N=5000) calculated by using Yemen sample calculation methods. The ratios of male to female in the three kebeles showed some difference between the number of men and women. Nevertheless, significant male and female households in the three kebeles were participated in the study.
Table 4.1: List of sample Kebeles and number of selected respondents
Name Kebele 2 Kebele 3 Kebele 4 Total
Number of respondents 40 64 64 168
Male 32 47 44 123
Female 8 17 20 45
Category of the RespondentsDuring field survey, the researcher has contacted 190 respondents. Of this 168 given questionnaire to answer provided questions, 10 were key informants while 12 gave their ideas and views on focus group discussion. This clearly shows that, almost all sample study groups have provided their responses to forwarded questions. This has helped in order to find out the real problems concerning to the legitimacy of value capture and its efficient tools needed to implement in the study area, so as to forward possible solutions to the identified problems.
No Methods applied Sample respondents Responded Percent (%)
1 Questionnaires 168 163 97.02
2 Interviews 10 10 100
3 Focus Group dissuasion 12 1 100
Table 4.2: Category of the respondents
As indicated on the table 4.2 the sample respondents that participate on questioners were 168 out of them 5 respondents are not willing to respond and 163 that is 97 present of respondents responded on ideas, key informants those 10 in number were participated and also 12 FGD were responded to research question.
Gender (Sex) of the RespondentSex (gender) is among the most important demographic variables as in many analyses. In the current study the sex (gender) distribution of respondents are presented in table 4.3 below. Thus, in the study areas there were both male and female respondents contacted during field survey on the subject under discussion. There were more male respondents (73 percent) than female ones (27 percent), because culturally unless the man is not alive or not available during the survey, women do not usually appear to respond to such like issues and culturally they do not constitute as household head if her husband is alive.
Table 4.3: Sex of the respondents
Valid Male 119 73
Female 44 27
Total 163 100
Age of RespondentsSampled respondents were grouped under different age group, i.e. 18-25, 25-35, 35-45 and >45 years. Large numbers of the respondents were grouped under the year of 36-45 and >45 year, in percentage 71 (43.56 percent) and 50 (30.67 percent) respectively. (Figure 4:1).
Figure 4.1: Age of the respondents in the study area
This implies that large numbers of the respondents were experienced in life and capable of challenging government value capturing actions, of easily understanding the outcomes of value capturing and its cost and benefit, and aware of the rightfulness and appropriate tools if they engaged on the value capture project. Age distributions of the sampled respondents are crucial for the participatory managing land related issue and give critical ideas about land value capture for the expansion of infrastructure and for the developments of the towns.
Family size of respondents
Family size of respondent household grouped into four as indicated in (Table 4:4). That means family size from 0-3, 4-6, 7-9 and 10 and greater family sizes in each of the three kebeles. High numbers of respondents have family size 4-6 and 0-3, which constitutes about 39.26 percent and 36.81 percent respectively. Respondents who have family size 10 and greater account about 8.59 percent whereas about 15.34 percent of the respondents were having family size between 7 and 9 (Table 4:4). As family sizes becomes high, the willingness to pay share of the value uplift become low.
Table 4:4 Family size of the respondents Family Size Frequency Percent willing Unwilling
Valid Size 0-3 60 36.81 22 38
Size 4-6 64 39.26 16 48
Size 7-9 25 15.34 5 21
Size 10 and greater 14 8.59 3 11
Total 163 100 45 118
Educational BackgroundAs one of the important socio-demographic variable, the literacy status of the households is also studied. Some respondents have education level that falls under Certificated and above which accounts about 44.79 percent followed by Grade 1-8, which accounts about 19.63 percent. Some 11.04 percent of the respondents were not attended formal education. Those of respondents who have followed secondary school (9-10) regularly constitute 10.43 percent and those who reached secondary school (11-12) constitute 14.11 percent. Thus, who are more educated perceived implementing and value capture is rightful and rational as long as the infrastructures increase the value of the land and its impact properly measurable. (Table 4:5).
Table 4:5 Educational levels of the households Educational levels of the households Frequency Percent Rightful Not rightful
Valid Not attend formal education 18 11.04 12 6
Grade 1-8 32 19.63 27 5
Grade 9-10 17 10.43 12 5
Grade 11-12 23 14.11 21 2
Certificated and above 73 44.79 58 15
Total 163 100.0 130 33
Length (Duration) of Residence in the AreaThe duration of stay or simply the length of residence in certain area determines the type and amount of asset (resources) that a person is thought to produce and possess. For instance, it implies the condition of tenure status of the person. In the study area, an attempt is made to approach the households on the issue of how long they stayed in that locality. Thus, 16.56 percent of the households mentioned that they have been in the locality less than ten years. About 30.06 percent of the respondents lived in the study area for more than 10 and less than 21yrears. Some 19.02 percent of the respondents lived between the ranges of 21-30 years. About 34.36 percent of the respondents lived for more than 30 years.
The respondents have enough knowledge about the impact of infrastructure on land value since they observe the daily change of the development situations in the area. They can give significant information for the study.
Figure4.2: Length (Duration) of Residence in the Area
Infrastructural expansion in Debre Markos cityThe data collected from different tools prove the existence of different public infrastructures in Debre Markos town. The effort made to identify the respondent’s attitude about the responsible body for provision of infrastructures indicates 78.82 present of the respondents believed state and local government were the responsible body to provide. The remaining 17.18 present perceive the community should play their role in the provision of public infrastructure. However, in reality in the town both state and local government was the duty to provide public infrastructure. The private sectors and the community has no significant contribution. As indicated by key informants’ interview the fund source of public infrastructure fund is brought from the annual budget of the local government and the fund borrowed or aide from international fund providers for smart city growth. The major public infrastructures existed in the city are.
Transport infrastructureDue to increase in population and complexity of the transportation technology in the city, transportation infrastructures are constructed each year to accommodate the increment in population and vehicles movement. According to the infrastructure, case team officers of the city municipality explanation transportation infrastructure increases accessibility by reducing distance and travel cost between areas. This situation increases the demand of the community to live nearby this infrastructure. The increase in demand also contribute for increasing land value. At the same time, willingness to pay for properties near transport stations were increase. Likewise, the finding of Salon & Shewmake, 2011 conclude that the type of transport service, the distance between the property and the station, the quality of the service and transportation alternatives determines the increase in property value that is the same with this research.
Different roads are expanded in the town especially within the past five years the construction of roads dramatically increasing to respond the increasing flow of the community and economic activity in the city. As pattern of settlement is a major variable that affect the value of land, the average population density around transportation infrastructure is one person per 83.637m2.
Asphalt road proximity highly affect the value of the property in the town not only the value, the land use 30-50m from the center of the asphalt toward both side of the parcel as the master plan show are changed to commercial center and prohibited to constrict building below the defined building height. This cause the land value to increase in this area. As Table 4.6 shows 30 household respondent lives nearby asphalt road with a total family size of 178 (5.93 per household) on the total parcel area of 8260meter square (275.33 m2 per household) which is a population density of 1 person per 46.404 m2.
Coble road are constructing and expanding dramatically starting from 2006 Ec. And different job opportunities are created beyond accessibility such as Bajaj taxi servicing, opening garage, small shop centers etc. alongside the road changes even the land use to mixed without the permission of the city administrative office this create additional land value for the community who has the parcel nearby the road. As the survey, data shows 67 household respondent lives nearby coble road with a total family size of 308 on the total parcel area of 18415 meter square that is a population density of 1 per 59.788 m2
Construction of pista road that is relatively far from the center of the town makes the area livable and demanded by specially the new comers and low-income societies that contribute to the uplift of the land value in the neighborhood. 42 household respondent with family size of 181 lives nearby pista road on the total parcel area of 20953 meter square which count a population density of 1 per 115.762 m2.
As the survey data shows 23 household respondent lives nearby new opening soil road with a total family size of 127 (5.773 per household) on the total parcel area of 18780 meter square (853.636 m2 per household) which is a population density of 1 person per 147.874 m2. (Table 4.6)
Table 4.6 density of settlement around road infrastructure
Density of settlement asphalt coble pistaSoil Total
Valid Household 30 67 43 23 163
family size 178 308 181 127 794
Fam_siz per HHs 5.93 4.60 4.21 5.52 4.87
Parc_area HHs 8260 18415 20953 18780 66408
area per HHs 275.33 274.85 487.28 816.52 407.41
Density 46.40 59.79 115.76 147.87 83.64
As the table, shows when the quality of the road infrastructure increases the settlement became denser. This implies the existence of higher demand to have land or live around road infrastructures. Higher demand to live in a particular location automatically increase the value of the and in that location.
To facilitate the interaction between villages and cities and to interconnect the road infrastructures in the city, bridges “small” which is constituted as transportation infrastructure were constructed on wuseta, chemoga and Wutrn Rivers.
UtilityThe government provides different public utilities for public use in the town. Thus, utilities facilitate the development and modernization of the city. As the EELPA Debre markos district head officer states that the city owe electric power utility starting from 1960 when a branch of the Ethiopian Electric Light and Power Authority had started operation in Debre Markos. Clean pipe water is also distributing to the community. To facilitate the exchange of information in the town telecommunication was expanded both in network coverage and in types of service. The town administrator also prepare waste disposal site and store the waste in a proper manner to protect the health of the community. Solid wastes are collected from each house and store in one place by the associations established under city municipality for this purpose. As the municipality urban plan implementation, clean and buity, head officer explained land parcel which is accessible for are thus that has access for pipe water for the seek off charging the community for the service. Different service providers under the control of the city municipality also provide liquid waste disposal.
Social and service infrastructuresSchools ranging from kg up to higher education are constructed. Debre markos university, teachers and poly technique collage, and other many preparatory, secondary and primary schools exist in the city that attracts low-level commercial service providers and the community to establish their life nearby and appreciate the value of land parcel. In addition, Gojjam cultural institution that is under proposal stage to construct, king teklehymanots Palestine and other cultural places exist in the city. Deferent administrative buildings serving for federal, regional and city levels are expanding. All has their own contribution on land value increment. The public entertainment place also capitalize the land value nearby and attract different service providers compete to get land parcel around the entertainment area. The major pooing social service that is worship places are expanding in number and type within five years and attracts their followers to live nearby thus religious institutions.
Challenge and opportunity for expanding infrastructure in the town
Opportunities for expansion infrastructure in Debre Markos
As the respondents from the survey, discussion, and interview public infrastructure is expanding in the town because infrastructures are constituted as an asset that provide higher yield and tends less volatile than equities over the long run. Infrastructure also expand to respond the dynamic increment of population and acute problems that the city face or expected to be face like natural disaster, flooding, fire, sanitation, etc. change in technology and interest also force the city to expand public infrastructure. Government expand infrastructure to get political profit or acceptance especially when the election time approach the ruling party devote its potential to win the voice of the people. One of the instrument used to get voice of the community in the study area is promising and constructing different types of public infrastructure. Infrastructure also construct to change the quality life, it makes life easy and enjoyable. The final reason provided from the respondents for the expansion of infrastructure is since infrastructures are an indicator of civilization, if the city has access for modern types of infrastructure it will become more developed, attractive and productive. The finding of (Aschauer, 1990) shows the quality and types of nation’s infrastructure is a critical index of its economic vitality. Reliable transportation, clean water, and safe disposal of wastes are basic element of a civilized society and a productive economy. This research also has the same result
Challenges for expanding public infrastructure
In the study area infrastructural expansion ware affected by
Lack of finance- since it requires huge capital for both construction and maintenance. 83.44 present of the respondent, believe there is a shortage of finance to properly manage the expansion of public infrastructure. They support their assumption by saying in the town different public infrastructures start to construct but takes many years to complete. The focus group discussion also provide the information that in the town due to lower revenue collected by the municipality public infrastructures was and will construct when the global fund providing institution give aide or borrow. Otherwise, it is difficult to expand infrastructure with the revenue of the city administration alone.
Lack of communication among service providers- they all has no common future plan for the city. They plan individually, the infrastructure constructed by one demolished by other. They did not work in collaboration. (Orace discassion paper, 2014) also arrived on the same finding it states in the modern world, tradition can hamper progress, transformation accelerate it. More effective way of driving success lean on collaborative process across every stage and between every contractors, organizations or specialist providers.
Corruption – it is a huge economic burden in the study area and has impact on the city where money is diverted from basic infrastructure.
Lack of public and private interaction- week private and public interaction impose huge difficulties on the expansion of public infrastructure.
Decision given by higher officials under the cover of response for good governance – higher officials of the town provide a decision that is contradict with the rules and regulations, for example in the city 40 meter asphalt road indicated in the master plan of the town in the center of the city constructed by 20 meter with the order of the higher officials.Land value increment and public infrastructureThe relationship between public infrastructure and land value increment determine the rightfulness and legality to implement land value capture. When the infrastructure constructed or under constructed increase the value of land parcel, the government as a service provider will have the right to reclaim share of the value uplift. As the figure 4.3 shows the house rental price on different land use under different quality of road. When the quality of the road increase the price of rental house in each land use increase. This prove the premise that road infrastructure increase the value of land parcel.
Figure 4:3 impacts of road on different land use rental price
Similarly the simple regression of rental house price and road infrastructure shows the increase in price of land when the nearby infrastructure quality increase.
Table 4.7 regression result of rental price of house and road infrastructure
The table shows on average the land parcel that is located around the new opening soil road rented for 417.39 birr whereas the house located nearby asphalt road were rented on average for 2430.94 birr. This increment in rental price show the direct relationship between infrastructure and land value increment.
Impacts of public infrastructure on land valuePublic infrastructures in Debre markos town creates numbers of benefit ranging from direct benefits to people who use it, infrastructure operators, businesses and employees to indirect benefits for sections of the community, such as land owners, occupiers, businesses, developers and governments, particularly through increased land values, profits social security etc. and wider benefits to the community, including increase in productivity and enhanced livability.Using public infrastructure provides many direct benefits for Debre markos town communities. For example, roads connect communities and provide access to jobs and services, as well as connecting businesses with their customers, workforces and supply chains. Utilities provide households and businesses with services such as water, energy and telecommunications. Hospitals, schools and universities improve the health and education of the community, increasing their quality of life and access to opportunities – while also creating a productive, skilled and capable workforce.
Providing public infrastructure also creates indirect benefits for sections of the community whether or not they use it. Public Infrastructure can increase nearby property values and economic activity. For example, private landowners benefit from increases in property values (i.e. ‘land value uplift’) when places become more attractive because of being near to schools, transportation, parks and other facilities.
Infrastructure investment can also generate increased economic activity and productivity growth generated from increased movement of people, improved access to jobs or a larger employee pool due to proximity to infrastructure. Increased economic activity and productivity growth generates higher profits for businesses, increased wages and revenue, resulting in benefits for the broader community.
Infrastructure may also induce the Possibility for Planning and zoning changes that create indirect benefits for landowners and developers. This can include making planning scheme amendments (including re-zoning the use of land) and the provision of planning and building permits. At ‘the stroke of a pen’ changes to zoning or the provision of development, approval for specific landholdings can generate significant windfall gains for some landowners and developers.
However, as we all know infrastructure can also create negative impacts and costs to some parts of the community. This includes impacts such as pollution, increased noise levels and reduced amenity. Negative impacts should be considered in any infrastructure investment and value capture strategy. Nevertheless, in case of Debre markos the infrastructure expansion level is not reach to the point that create negative externality or affect the communities.
Spatial extentBased on the data from the interview and focal group discussion in the city on average the impact of one public infrastructure ware reflected up to 150 meter from the center of the infrastructure to the individual land parcel. The town administrator and the municipality is also now working to make the town accessible for infrastructure and planned specially to construct coble stone road in each village that means almost all parcel value of land in the city increase in price which points out to implement value capture. This opportunity shows the future possibility to apply land value capturing in the city. Likewise, the data collected from the survey shows the mean distance that the respondents believe the infrastructure affect the value of and is 130.24m.
Change in land value priceAs the public infrastructure, office head statement in the city public infrastructures could change the price of land approximately by five present. He strengthen his statement when public infrastructure constructed somewhere the demand to live and have land around the infrastructure will increase dramatically. Along with other factors that increase land value like change in zoning due to the development of the village, and expansion of especially commercial centers the infrastructure alone also appreciate land value and this increment from the city perspective is expected from 3-7 present. He also state this data is the suggestion of his office not the exact information, he said there was no comprehensive study on the impact of infrastructure on land value in the town.
Rightfulness of land value capturing in the cityWhen public infrastructure is well designed and executed, it often increases the value and price of land located nearby. In urban areas, land value normally reflects the totality of all nearby services (and nuisances) that make a particular place suitable (or unsuitable) for different land use such as for residential, commercial or industrial purposes. In most cases, the land value created by new or improved public infrastructure brings a windfall to those landowners who own the best location without his/her contribution.
Because private landowners appropriate publicly created land values, most members of the public end up paying twice for infrastructure. First, they pay taxes to create or improve infrastructure. Second, if they want to take advantage of that infrastructure by locating their home or business nearby, they must pay a landowner a premium rent or price for the privilege of getting access to the infrastructure that their taxes created.
The ability of private landowners to appropriate publicly created land value is the fuel behind land speculation. However, it tends to create an artificial scarcity of developable land and thereby inflates land prices. Inflated land prices drive residents and businesses away from the most valuable (and productive) land towards cheaper, but more remote (and less productive) sites. The use of sub-prime sites creates sprawl and reduces productivity.
Very wealthy individuals and corporations own the best-served land in most communities. However, tax is collected from the public at all for expanding the infrastructure and enriching those who are already the most affluent and powerful. This is part of the dynamic of growing inequality.
So in order to solve inequality and achieve the following benefits land value capture should be inevitable and rightful to apply. If government were more vigorous in terms of value capture, Land prices became moderate (Land prices reflect the benefits that people expect to receive from owning it. Taxing land values more heavily reduces ownership benefits, thereby reducing what prospective purchasers will pay.); because land values reflect the value of public infrastructure, landowners would pay in proportion to the public benefits that they receive. This is comprehensible, justifiable and equitable; Taxes would be highest where land values are highest. This would induce development on high-value sites (to generate income from which to pay the tax). High-value sites tend to be urban infill sites near infrastructure amenities (like transit), and this is where we want development to occur. Increasing development near infrastructure within cities and nearby suburbs reduces development pressure in outlying areas. This reduces sprawl. Compact cities require less infrastructure. They are more sustainable both environmentally and fiscally.
Most publicly created land value is a windfall to owners of parcel. If more publicly created land value was captured for public purposes, other taxes could be reduced. Therefore, having the above justification and value capture is rightful to implement in the town.
From the total 163 respondents 79.14 present believed that implementing land value capture is rational for government as far as he provide well-served infrastructure and the value of land uplift due to his action. Whereas 20.86 present did not agree on the rightfulness of implementing land value capture method whatever the infrastructure affect the value of land or not. They support their decision by stating government as a government is established to serve, support, and protect the community. If this all is not fulfilled, the need for establishing government system became under question mark.
Figure 4.4: rightfulness of implementing land value capture
Land value capture tools/ methods implemented in the cityIn the study area, the value uplift can be captured by using different mechanism for example lease is one mechanism that is introduced in the town in 2001 Ec. In the town having the objective of capturing the land value increment due to deferent factors and provide additional fund for infrastructural expansion in the town.
The second mechanism used to capture land value is applying community contribution for the proposed infrastructural development. The community elders’, municipality office heads and edir leaders organize and ask the community to contribute share of the infrastructural cost. Each household expected to pay the defined amount of money that the community decided to pay on the meeting. Moreover, the payment for the infrastructure developer made in advance from the account of the edir and the edir leaders receive the money from the households monthly. The contribution of the community influential persons such as elders and edir leaders play significant role on the collection of the contribution for supporting infrastructural development in the town.
The third mechanism which is implemented to capture land value is participating the community in the actual construction process this is different from others because the contribution is not in monetary form rather the household in the side of the infrastructure are responsible to dig the utility line such as the sewerage line and expected to (pump) water to the constructed dich, which indirectly reduce the cost of infrastructure provision. This is the best practice I found in the town from other countries experience they all focus on monetary contribution. The contribution is not only constricting on the household level the community in mass also participate on the site clearance tasks, protecting the construction site from any damages, feed the labors construct the infrastructures so as to improve the quality of the infrastructure etc.
Efficiency of the methods implemented to capture land valueThe method implemented to capture land value in the city lack legality except lease. The amount of money contribute is depend on the willingness and agreement of the community. There is also no legal ground to enforce the community to contribute for infrastructural expansion and the method is not sustainable. Even the lease price is not determined based on the overall cost of past, current and future possibility of infrastructural expansion undertaken around the parcel. Rather, now in the city lease is used as an instrument to sale undeveloped land at higher price that is against the proclamation. Still, the lease police is full of gap regarding value capture, lease as value capturing tool in the city is not implement on all the parcel only the parcel that is provided after the commencement or effective date of the proclamation are expected to pay the value increment. The land parcels owned before the lease police are not included or expected to pay share of value uplift for the government unless and otherwise it is entered into transaction and change the old ownership type to lease holding. Therefore, the methods implemented in the city are not efficient and sustainable way to fund infrastructural expansion.
Alternative toolsThe respondents on the survey questioner suggest the alternative tools to fund infrastructure in the city as they believed are raising additional financing through value capture, adopting lower cost technology, using the resource found in the city, and considering cross border financing arrangements, that is generating revenue by importing infrastructure to other country such as power and clean water.
Along their suggestion, numerous value capture mechanisms are cited in the international literature. However, not all land value capture mechanisms might fit for a particular situation in a specific country. Therefore, in order to use and apply the mechanism it should be practical, acceptable by both the government and payer, clear, equitable, cost effective, sustainable and not be subjected to double taxation. In addition to deciding the most appropriate mechanism in particular circumstances, there is also a need to consider the geographic area over which infrastructural investment costs should be recovered. Mechanisms can apply either at a jurisdictional level or to a series of smaller areas. The type of infrastructure being constructed influences the geographic area used for the mechanism. The most common value capture method applied in different country and appropriate to use in the study area to raise sustainable fund for infrastructure are.
User charge- applied for the use of a specific asset each time the asset is used, in-principle providing the clearest form of value capture mechanism. Road tolls and public transport fares are common forms of user charges applied for transportation infrastructure. Charging the user of a service the cost of providing it has two purposes. First, it creates a signal to the user about the costs involved and so promotes the appropriate use of the service ‘allocative efficiency’. Second, it is seen as equitable because those people who do not directly benefit from the service also do not fund the provision of the service. In order to facilitate a ‘fee for service’ approach to charging, the service must be excludable such as stadium, public transportation, pubic swimming pool etc.
Property development, asset sales and leases – Government can capture value uplift through the sale or lease of publicly owned land that is within the vicinity of new transport infrastructure projects. Most large projects either use land renewal schemes or utilize state owned land for development. By implementing a strategy to sell the development rights of unused land, or specifically integrating development options into the project the uplift can be captured by allowing the market value the land through an auction. Leasing of public land results in a continual stream of revenue and retains public control in the long term. Furthermore, if public sector infrastructure improvements enhance that land in the future, that enhanced value can be returned and recycled by future rent increases.
Joint development- is a process whereby a private developer creates or pays for a public facility (like a transit station) in exchange for permission to create a private development above or adjacent to that public facility. If the infrastructure created by the developer has a cost roughly equivalent to the land value consumed by the private developer for its private development, then this too would be appropriately characterized as “value capture.”
Land value tax – is a property tax applied to capturing only the general increase in the price of land due to improved accessibility from infrastructure. As land cannot be relocated or reduced in supply, value uplift translated to land prices can be taxed without creating market distortions. One of the main benefits of implementing a value capture scheme using land taxation is the ability to target the unearned economic rent received by a large group of individual landowners.
Tax increment financing (TIF) – defined as levying taxes on the future increment in property value within a development project to finance development-related costs, including infrastructure improvements
Special assessments -are additional property taxes or special charges on property levied within a defined area where new or improved infrastructure benefits those properties.
Development impact fees (DIFs) are one-time payments created to defray the cost of new or improved infrastructure. They are applied to privately owned property. Thus, DIFs transfer privately created value to the public sector.
Negotiated exactions – defined as functionally similar to development impact fees, except they are not determined through a formal or formulaic process and are not typically applied to off-site infrastructure provisions
Willingness to pay share of value upliftSince the land value capturing mechanisms are not well backed by legal prescription and no efforts under taken to change the consciences of the community regarding the importance of value capture in our country, 72.39 of the respondents are not willing to pay the share of the value increment. Whereas 27.39 present of the respondents are willing to give share of the value uplift to the government. (Table: 4.8). Even due to corrupted administrative and procedural system, the communities’ incentives to give share of the land value increment reduced. The communities are not quite sure on the proper use of the money if they pay. They strongly underline their unwillingness by saying we will not give our money for official’s self-enrichment.
Table 4:8 willingness to pay share of the value uplift
_willing to pay Frequancy Percent
Valid No 118 72.39
Yes 45 27.61
Total 163 100
However, the willingness to pay value uplift increase when the parcel became closer to the infrastructure. As the table 4.9 shows the farthest the parcel from the center of the infrastructure the less willing the landowner to pay share of the value increment.
Table: 4.9 impact of proximity on willingness to pay land value uplift
Valid Proximity Willing to pay Total
No yes 0-50 17 21 38
51-100 19 14 33
101-150 12 3 15
151-200 19 3 22
201-250 11 2 13
251-300 10 1 11
301-350 5 0 5
351-400 9 0 9
401-450 2 0 2
451-500 14 1 15
Total 118 45 163
Organizational Structure involved in land value capturingIn Debre markos town there is no defined responsible body to capture the land value uplift due to public infrastructural development of course even the mechanism to capture land value is not implemented in a clear manner. However, when sale or transaction occur the municipality will appoint surveyors both at municipality and kebele level that is employed from surveying, land administration, civil engineering, etc. professionals to value the properties based on the land grade which is prepared by the office plus the value of the building using cost approach. The price specification about the cost of all kind of building construction materials are provided by regional office. As the municipality officers told me, the cost specification in principle required to modify after three months but in the case of Debre markos they use more than one year without revision due to the weakness of the officials. Therefore, the value capturing from transaction even is not based on up-to-date data and not based on the reliable value uplift information.
Prerequisite for land value captureAs the respondents of key informants indicated in order to implement land value capture mechanisms the number of pre-conditions should be meet. Firstly, there must be public infrastructure constructed or proposed to be constructed somewhere in the town. Secondly, the infrastructure must positively capitalize nearby land value. Thirdly, its impact in terms of spatial extent and added money should be assessed. Fourthly, the community and the responsible body should agree on the value capture project. Fifthly, appropriate and value capture method should be designed. Finally, it needs to curtain that the collected revenue outweigh the implementation cost. If this all are fulfil value capture became possible.
Constraints to capture land value
Lack of professional valuers – In order to exactly quantify or calculate the amount of both the overall value increment due to public infrastructural and the taxable share from the value uplift, the professional who has the competence and skill to identify the factors that affect value capture, the appropriate method to implement for a particular situation, aware the legal system to capture land value and has the ability of working in group is needed. But in the case of the study area lack of professionals to determine and implement land value is perceived as a constraint to apply value capturing. In addition the problems related to identifying who is benefited from the infrastructure and determining whether they are directly or indirectly benefited from the infrastructure need experienced professionals.
Weak land information administration and management system- The respondents of the study are spotting presence of a huge gap in land related information in the City Administration. Without a proper updated cadastral maps and land registry system, it is difficult to have a clear picture of the land tenure and a land auditing system. The city government priority should therefore be to assess the existing system, improve the institutional set up to carry out land registration, and in collaboration with the community, develop an efficient land registration system. This is important because having a strong land information, registration and management system in place actually helps for efficient and transparent land value capturing in the City. As aforementioned above, these can indeed be achieved through strengthening the intermittently launched land titling, registration and cadastral mapping efforts of the City Administration. Building up of a strong land registration and management system may include land parcel identification systems and online availability of land information so that the City Administration, prospective land owner and the public at large can be well informed about the change in value of each pot before and after the infrastructural expansion.
Unwillingness of the community the community are not willing due to several factors to give the share of the value uplift accrued from public infrastructural development
Lack of good governance and trust on the use of the money collected from the community
Corruption and unfairness on infrastructural development and expansion- developing the town based on the willing ness and orders of influential persons or political power holders rather than the physical demographical, economical condition of the town which kill the incentive of the community to con tribute for the development
Lack of legal support for capturing the value up lift
The laws enacted both in the federal and regional level lacks the rules, which allow and govern land value uplift. They did not clearly state when, from whom, at what situation land value capture is implemented. This does not mean our legal system is closed and silent regarding the possibility of value capturing. For instance our country land lease polices are designed to facilitate land value capturing. For example, proclamation number 080/1993 under article 12 states that each town administration shall use at list 90% of the revenue collected from land lease in accordance with this proclamation, for building urban infrastructure and for the construction and expansion of low cost houses. Likewise proclamation number 272 article 10 sub article 3 give the power to each region or city government to use 90% of the collected lease payment for expanding urban infrastructure. However, the current lease proclamation no 721/2011 is silent on the utilization of the lease payment and its purpose even if it define the lease bench mark price as the threshold price determined by taking in to account the cost of infrastructural development, demolishing cost as well as compensation to be paid to displaced persons in case of built up areas and other relevant factors. Hence, the legal system of our country lave the place to consider capturing land value uplift generated from public infrastructural expansion.
CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS.5.1. CONCLUSIONThis study was intended to access the rightfulness of implementing land value capture to finance infrastructure from publicly created value, the relationship between land value and public infrastructure, societal perception toward paying share of the value uplift, the tools and methods implemented to capture land value and the organizational structure involved to implement the task. The emphasis was given to the case of Debre markos town in three kebeles. To undertake investigation the qualitative and quantitative research method was used and data was collected by using of data collection mechanism. Data collection under taken from 10 key informants, interview and two focus group discussions (having 6 numbers) which was 12 in number. Totally, 168 questionnaires were accessible to household’s surveys and 163 were filled by interview mode five sample respondents did not agree to fill the questionnaires. The selected participants were interviewed to obtain depth information.
In Debre markos town land value capture was demonstrated through relationship between the existing infrastructures and land value increment, willingness of the community to pay share of the value accrued, the rightfulness of implementing the mechanism to capture value uplift, and the structural organization implement value-capturing tools. So the result of this study discloses that, currently implementing land value capture in Debre markos town has great challenge to provide additional fund source because of absence of trained valuator, problem on willingness to pay, corruption and unfair infrastructure development and expansion, problem on legal support to capture land value increment.
Land value capture is a mechanism to cover the cost of infrastructure development by capturing part of the value created by infrastructure. This is based on the value of the parcel nearby the infrastructure reflect accessibility of the location. People always prefer a land parcel that has convenient access to services and activities, business owners need to locate on the place that is easy to attract consumers. All this accessibility are largely determined by the type and quality of infrastructure, which make the land more valuable than others do. Therefore, it is rational and rightful to capture a portion of the value uplift to finance public infrastructural development.
In the study area, land value capture is implemented in a traditional way. The influential persons informally communicate the community to contribute and support the infrastructural expansion in terms of money and other in-kind support in addition to the only legal way of land value capturing mechanism implemented in the country that is lease.
Demographic and economic condition around infrastructure and proximity to the infrastructure are fundamental indicators to apply land value capture. High population, strong economic condition and close distance to infrastructure generate high demand for land and property. This increase the value of land without any change undertaken by the owner on the property. The situation make land value capture rightful and obligatory in order to rise fund for infrastructure. However, this requires collaboration between different development stages.
Land value capture is expected to create equity among poor and rich communities, protect land speculation, moderate the price of land, reduce other taxes if it is clearly designed and implement. The success of land value capture is also based on the ability of responsible body to capture only the share of land value uplift.
For this reason land value capture was not properly implemented which has impact on infrastructural expansion. Therefore, policy makers and land administration Agency must design how closely supervise urban infrastructures; strengthen public and private collaboration and avoid individualism, rent seeking and work on how to introduce and raise fund through implementing efficient and value capturing mechanism. Generally, the dramatic expansion of public infrastructure affect nearby and value in the town but it is characterized by week organizational structure and inefficient collection of value capture in the town. This situation creates challenge on the development and expansion of public infrastructure of the town. So, the government has to be facilitating how land value uplift are captured from the communities and finance back for infrastructural expansion on the town.
Therefore, the town administrator should appoint professional land valuers who has the skill and competence to capture value uplift based on the impact of the public infrastructure on each and every parcels of land in the town administrator and develop the appropriate value capturing mechanism to support infrastructural development. Establishing accountable responsible and transparent administrating system should be decisive issue for the town in order to create trust among the stakeholders. In addition, the town should fight against corruption and unfairness on the provision of the infrastructure and must be free from the politician’s personal prejudice rather it must be only according to the development priority and master plan of the town. If this all became feasible land value capturing became effective and meet its objective.
5.2. RECOMMENDATIONIn this subsection of the chapter, the researcher gives some recommendations based on the finding of the study.
Aware community to develop commitment and responsibility of expanding public infrastructure- As it has observed in the analysis part, the community are not willing to pay even if they believed implementing value capture is rightful measure as long as the infrastructure increase the value of the nearby parcels. This shows the urgent need of awareness creation in order to create commuted, responsible community.
Strengthen urban land information management and improve collaboration between and among different sector- without having strong land information administration, and management and collaboration, it is difficult even to identify which area and parcel of land are affected by the infrastructure and implement land value capture.
Identify the area that is affected by a particular project and determining the overall value change occur to implement land value capture.- one infrastructural project may not affect the whole parcel in the city at the same rate. Therefore, identifying the catchment area and the change in and value should be crucial in order to implement land value capture.
Develop sustainable, acceptable, easy to implement, cost effective, and a mechanism that do not subject the communities for double taxation that has legal support to execute- having strong land information system and aware community contribute nothing unless the mechanism is acceptable, cost effective and sustainable to finance public infrastructure.
Avoid incongruous intervention of higher officials on expansion of public infrastructure that deprive the buity and development of the town- the finding of the study shows the impacts of higher officials decision for the sake of their political or personal gain will reduce the communities incentive to pay share of value uplift and expansion of infrastructure in the town. Therefore, avoiding such distractive decision is more important.
Government intervention must necessary on implementation of rules and regulation that guidance for pubic infrastructural expansion by capturing the share of private land value increment accrued from public infrastructure- the government should play its role on providing strong, efficient, and acceptable legal framework to implement and enforce land value capture.
Further study on impact of particular land value, strength and weakness of particular land value capturing mechanism, measured monetary impact of value increment, reasonable percentage of the value needed to capture, and other related issues should be done and displaced their finding.
A proclamation to provide for the lease holding of urban lands, 1993, proclamation No. 80.
African business magazine, 2017. written by Neil Ford 21 MARCH 2017 http://africanbusinessmagazine.com/sectors/infrastructure/ethiopia-plots-90m-infrastructure-spending-spree/ accessed on 2/13/2018
Anon, 2015. Toward a Framework for the governance of infrastructure. Public governance and territorial development directorate public governance committee. OECD, September 2015.
Bailey, K. D. 1978. Methods of social research. New York: Macmillan.
Branigan, J., 2016. Land Value Capture in the Australian Federation Issues. Smart infrastructure facility, university of Wollongong, Australia.
Civil code of Ethiopia, 1960.
Clark, J,. Harvey, N., milosavljevic, F., singh, P., 2016. Implementing value capture for transportation infrastructure, applicability for south-east queensland, university of queensland, Australia.
Dube, J., Rosiers, F., Theriault, M., and Dib. P., 2011. Economic Impact of a Supply Change in Mass Transit in Urban Areas: A Canadian example. Transportation Research Part A 45(1): 46-62.
Eldrup, A., and Schutze, P., 2013. Organization and Financing of Public Infrastructure Project, main report, pRINFOHOLBæK-HEDEHUSENE-KØGE publisher, Copenhagen, Danish.
Ethiopian news agency 12 Oct, 2016. http://www.ena.gov.et/en/index.php/economy/item/2085-infrastructure-pulling-factor-for-investment-in-ethiopia-says-ey accessed on 2/13/2018
Fraser, S., 2018. “What Is the Definition of Land Value?” Home Guides | SF Gate, http://homeguides.sfgate.com/definition-land-value-7962.html. Accessed 23 March 2018.
George Hazel consultancy, 2013. Land Value Capture. Discussion paper, Metrolinx, Toronto, Canada. Pp 1-40.
Gordon, J., 2017. Land Value Capture- Funding Infrastructure, Bringing house price down. Planning for real need not speculator greed in oxifordshire.
Gwartney, T. Estimating land value. http://www.henrygeorge.org/ted.htm. Accessed 23 March 2018
Harris, P., Mundy, W., and Lindwall, P., 2014. Public Infrastructure, Productivity Commission Inquiry Report, volume 1, No. 71, 27 May 2014. ISBN 978-1-74037-485-9.
http://en.m.wikipedia.org/wik/Public_infrasstructure Definition of public infrastructure. accessed on march 12/2017
Huxley, J., 2010. Value Capture Finance, making urban pay its way, in Notay, A., and Clark, G., (edu). ULI Europe.
Infrastructure Victoria, 2016. Value Capture Option, Challenge and Opportunities for Victoria, infrastructure Victoria publication.
Jhones, J., Harvey, C., Milosaljevic, F., and Singh, P., 2016. Implementing Land Value Capture for Infrastructure, Applicability south east Queensland. The University of Queensland, Australia.
Karley D., and Corinne M., 2012. “Accessibility and residual land value uplift: Identifying spatial variations in the accessibility impacts of a bus transitway,” Working paper (2012).
Krueger A., R., 1998. Moderating Focus Groups. Sage Publishing. ISBN 0-7619-0821-8
Maine department of transportation, 2015. Pubic Involvement of in Transportation Discussion Making, USA, October 2015.
Mulley, C., 2014, ‘Accessibility and residential land value uplift: Identifying spatial variations in the accessibility impacts of a bus transit way’, Urban Studies
Natarajan, G., 2017. Land value as an unearned increment. Urbanomics. http://gulzar05.blogspot.com/2007/11/land-value-as-unearned-increment.html. Accessed 23 March 2018.
Newman, I. 1976. Basic procedures in conducting survey research. Akron, OH: University of Akron.
Re-Enactment of Urban Lands Lease Holding Proclamation, 2002. Proclamation No. 272, negarit gazeta, 8th Year, No. 19, Addis abeba, Pp 1732.
Shishir, M. and Adam, S. 2012. Decision Support Framework for Using Value Capture to Fund Public Transit: Lesson from project specific analysis. Son jose, mineta transportation institute, pp. 1-216.
The Lease System Operative Additional Cities Determination, Council of Regional Government Regulation, 2007. regulation No. 49, zikire hig gazeta, 12th year, No 10, Bahir Dar.
United nation, 1997. The Vancouver action plan-recommendation D-3, united nation conference on human settlement, Canada.
Urban lands lease holding proclamation, 2011. proclamation No. 721, negarit gazeta, 18th year, No. 4, Addis abeba, pp 6220.
Walter, L., C., (2012). Value Capture and Land Policies. To what extent are property related taxes effective capture instrument, in Ingram,G.,F. and Hong, Y., H., (edu),Cambridge, lincoin institution of land policy.
World Bank Group, 2016. Ethiopians great run, the growth acceleration and how to pace it.
Australian government, 2016. Using value capture to help deliver major land transportation infrastructure, roals for Australian government, ISBN 978-1-925401-96-7, discussion paper.
Aschauer, D., A., (1990). ‘Why infrastructure is important?’, transportation research board, pp. 21-68.
Oracle discussion paper (2014). The challenges of managing public infrastructure project.
Salon, D., and Shewmake, S., 2011. Opportunities for value capture to fund public transport: A comprehensive review of the literature with a focus on East Asia. Transportation and Development Policy.
Appendix one: time and budget plan needed to complete the research
Table 1. Detail time specification proposed for the overall research compilation
Task performed Time proposed for each task
Data collection One month (30days)
Preparing data collection tool 10 days
Arranging tools 6days
Distributing questionnaires and collecting data 20days
Making key informants discussion
Collecting distributed questionnaires 2days
Data analysis 5weeks (35days)
Organizing and managing data 15 days
Analysis and interpretation of data 20days
representing into meaningful information
interpreting the represented information 10days
Developing conclusion and recommendation 1 week (7days)
Writing the research paper 1 week (7days)
writing the overall document
verifying the written document 5days
Preparing for submission the research 1 week (7days)
Table 2. Detail budget specification proposed to undertake the investigation
Expenditure Item Unit QtyUnit price (birr) Total price (birr)
For selecting the sample study area Days 10 192 1920
Training per diem for data collectors:3 Days 3*1 192 576
Training per diem for researcher: Days 1 192 192
Field data collection allowance for data collectors:3 Days 3*10 192 5760
Field data collection per diem for researcher to supervise data collection process Days 10 192 1920
Printing data collection tools and final research paper No 260 2 520
Photo coping data collection tools and final research paper No 1500 1 1500
Mobile card for researcher No 4* 3 100 1200
White paper No 1 400 400
Pen No 10 5 50
Highland water for FGD participants No 12*0.5L 8 96
Transportation for researcher(sample area selection) contract 3000
Transportation for researcher to supervise data collection
(survey data) contract 2000
Transportation for researcher for interviewing and undertaking FGD contract 700
Transportation for data collectors(survey data) Lump sum 4000
Sub total 23834
Contingence (5%) 1191.70
Appendix Two: questionnaires and checklists
A Questionnaire for “A Study on land value capture: assessing the mechanisms to capture land value increment due to public infrastructural development” in Debre Markos city
Background: as you may know, Bahir Dar University is one of the major Ethiopian university, which is starting its operation on May 6, 2000. Beginning from that time up to now the university graduate many professionals in different field of study. One of the major theme that the university give more emphasis in order to provide degree for student is that each graduate student should conduct and participate on problem solving researches. Having the above objective Institution of land administration is establish in Bahir Dar University to provide professionals on land related discipline. So that the student who attend the institute needs to conduct problem solving research in order to graduate. Therefore, as one of the postgraduate student of Bahir Dar University I planned to study may research on land value capture to support the financial constraints faced by the government on public infrastructural development. Accordingly, the university research committee decided to conduct a study that will feed into policy advocacy on value capture and its efficient mechanism to capture land value uplift resulted from infrastructural expansion.
Hence, the general purpose of this questionnaire is to get valuable data and information on land value capture: mechanisms to capture land value increment due to public infrastructural development for the partial fulfillment of master’s degree in Land Administration and Management. The information gained through this survey will use for only academic purpose. Thus, I kindly requesting you to have a look at the following questions and answer accordingly in a kind way. The information you are providing here is extremely important to analyze land value capture and the mechanisms to capture land value increment due to public infrastructural development. In addition, I assure you that each data of information collected via this tool are to be very much confidential except for the purpose pointed out here above. Many thanks in advance for taking your time to respond these questionnaires.
Category I: Questionnaire for households
Name __________________________________ age ________________
Your total family size ________________________
Household head sex 1. Female 2. Male
Address kebele _____________________ house no _________________
How long you live in the locality
Do you have land parcel in the city? 1. Yes 2. No
Land use type 1. Residential 2. Commercial 3. Agricultural 4. Industrial 5. Other_______
Area of your parcel ______________
Actual land use (current land use) 1. Residential 2. Commercial 3. Agricultural 4. Industrial 5. Other _________________
Way of land acquisition 1. Owned through lease 2.old possession 3. Owned but not lease 4. Rented 5. Informally occupied 6. Other _____________________
Dose public infrastructures like transportation, utility, social and service exist in your village 1.yes 2. no
Types of road/transportation infrastructure exist 1. Soil 2. Pista 3. Coble 4. Asphalt 5. all
Width of the road _______________________
Age of the road _________________________
Types of utility exist 1. Waste management 2. Water 3. Electric power 4. Telecommunication 5. all
Types of service and social infrastructure 1. Administrative office 2. Educational institute 3. Health center 4. Cultural places 5. Religious institution 6. all
How far your parcel from the infrastructures ______________________________________
Is pubic infrastructure expanding in the town? 1. Yes 2. No , give detail reason for either cases_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
What did you think the constraints for infrastructural expansion in the town? _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
Who you expect the responsible body to provide public infrastructure? 1. Local government 2. State government 3. The community 4. Other _____________________
Dose public infrastructure development in your locality has an impact on the value of land 1. Yes 2. No
How much is the market price of rental house in your village ______________________________________________________________________________________________
Did you think size, shape and orientation of the parcel has impact on land value?
Which parcel orientation are more demand in the town?
Do you think the people has the demand to live in your village? Why ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
What are the impacts of public infrastructural development on land value _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
Is the infrastructural development delayed from its completion date due to financial constraints 1.yes 2. No
What did you think the sustainable fund source of infrastructural development ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
Who is more beneficial from land value uplift? 1. Government 2. Landowner 3. Community 4. Other ______________________
Is implementing land value capturing in the city rightful? 1. Yes 2. No
Do you think the community should return share of the value uplift generated from the public infrastructure to the government? 1. Yes 2. No
Up to what special extent dose the impact of infrastructure reflected on land value_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
Is there any land value capture mechanism implemented in the town? 1. Yes 2. No
Did you ever contribute for infrastructural expansion? 1. Yes 2. No , explain for either cases________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Category Two: Interview and Discussion questionnaires
Background: as you may know, Bahir Dar University is one of the major Ethiopian university, which is starting its operation on May 6, 2000. Beginning from that time up to now the university graduate many professionals in different field of study. One of the major theme that the university give more emphasis in order to provide degree for student is that each graduate student should conduct and participate on problem solving researches. Having the above objective Institution of land administration is establish in Bahir Dar University to provide professionals on land related discipline. So that the student who attend the institute needs to conduct problem solving research in order to graduate. Therefore, as one of the postgraduate student of Bahir Dar University I planned to study my research on land value capture to support the financial constraints faced by the government on public infrastructural development. Accordingly, the university research committee decided to conduct a study that will feed into policy advocacy on value capture and its efficient mechanism to capture land value uplift resulted from infrastructural expansion.
Hence, the general purpose of this interview is to get valuable data and information on land value capture: mechanisms to capture land value increment due to public infrastructural development for the partial fulfillment of master’s degree in Land Administration and Management. The information gained through this survey will use for only academic purpose. Thus, I kindly requesting you to respond the following questions in a kind way. The information you are providing here is extremely important to analyze land value capture and the mechanisms to capture land value increment due to public infrastructural development. In addition, I assure you that each data of information collected via this tool are to be very much confidential except for the purpose pointed out here above. Many thanks in advance for taking your time to respond these interview questionnaires.
II questioners for focus group discussion and key informants interview
Field of graduate __________________________
Work experience _________________________
What are the importance of public infrastructure development?
Who is responsible to provide public infrastructure in the town?
How you express the population density nearby public infrastructure?
Is land value increment has relationship with infrastructural development? How?
Up to what spatial extent dose the infrastructure affect land value
By what persent the infrastracture increse land value?Do you believe that the government should collect the benefits derived from public infrastructural development?
Which legal provision give the power to collect land value
What are the benefites of land value capturing for both the community and the government?
What are the land value capturing mechanisms existing in your locality?
Do you think the community are willing to pay the value increment to the government?
Who is responsible or empower to collect land value increment in the town? Do you think they are competent and fit for the purpose, explain the issue with respective to the educational background of the responsible bodies.
What do you think the prerequisite to capture land value? Please explane
What are your recommendations for implementing efficient land value capturing mechanism?
How can you determaine the gread of land?
How mach is the price of each land gread?
How the land price for each gread is calculated?
III Land related professions and infrastructure provider manager’s interview questionnaires
Field of graduate __________________________
Work experience _________________________
How you express the availability of public infrastructure in the town?
How public infrastructures affect the value of the land from your point of view?
Who is beneficial from land value uplift generated from public infrastructural development?
What are the constraints for infrastructural expansion in the town?
Is all infrastructure increase the value of the land?
How you express the demand of the community to have land around the infrastructure?
Up to what spatial extent one infrastructure can affect the value of the land?What is the fund source of public infrastructural expansion in the town?
What do you think the sustainable funding source of infrastructure?
Do you think land value capture is permitted in our country legal system?
Is the community contribute for infrastructural development? How they contribute?
Who is empower to collect value increment in the town?
What are the land value capture mechanism/tools implemented in the town?
Do you think the physical characteristics of the parcel affect the value of land?
Is different types of infrastructure affect the value of land differently? Clearly explain
Category Three: Checklists
IV Field observation checklist
Availability of infrastructure
Quality of infrastructure
Age of infrastructure
Purpose or use
Types of infrastructure existed
Social and service infrastructure
Pattern of settlement or land use around the infrastructure
Land use type
Density of settlement
The types of interests over the land
Land rental value
Rental price of real estates
Price for deferent service provisions
Demand for land around infrastructure
Demand of the community to have land
Willingness to pay the rental price
Legal framework for land value capturing
Organization responsible to capture land value
Responsible department to capture value
Educational background of the employee of responsibly body
Methods they apply to capture land value
Transparence and accountability
Benefits of land value capture
Benefit for the community
Benefit for the government