Developing a land development compensation model for returned land in tract expropriation: Towards a unified urban-rural land market in China

In China, "Returned land" is a certain proportion of the developed land returned to Land-Lost Peasants as compensation for land readjustment. The collective organization receiving the returned land pays land development compensation to the government. However, unreasonable land development compensation has resulted in illegal land use and land financial risks in China's urban and rural land markets, primarily due to its impact on land grant prices. A uniform scientific model still needs to be used to calculate the land development compensation for the returned land. In this study, we first constructed a land development compensation cost for returned land (LDCCR) model from the similarities and differences in the rights of returned land and state-owned granting land, based on land valuation. We then empirically analyze the practicality and validity of the LDCCR model through the F project in Beijing. The results show that our model can effectively reduce the LDCCR by around 30% to return to the normal market value level, compared to the results of government-collective economic organization non-marketization bargaining. Finally, for the different collective organizations in Project F, our model is more reasonable to calculate the LDCCR based on the land valuation considering the use and the scale of the planned construction for the returned land. We find that further standardizing the calculation of LDCCR can reduce inequality in traditional government-village collective organizations' negotiation processes by offering an objective and scientific market reference benchmark. Our study recommends that knowledge of land development compensation-related returned land value changes can help understand redistributive mechanisms in the land market, thereby contributing to building a well-functioning unified urban-rural land market. The study also determined that the LDCCR model would be promising for land readjustment and development between the public and the private sectors in most countries.