Financing Land Acquisition for Infrastructure Projects

Abstract

Land acquisition for infrastructure projects that require large amount of funding can be financed by an equity-like protocol. The auction protocol does not require a knowledge of the reservation value of the land acquired nor does it require a determination of post-development value of the land in the surrounding area. Competition among private players transfers the value of pecuniary externalities, manifested in land price appreciation, to the gov ernment which it can use to partially finance the project that may also have non-pecuniary positive externalities valued by society.