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On structured buyer-seller negotiation for agricultural land acquisition - simulation experiments with rule-based models and utility fucntions

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  • Usha Sridhar

    ()

  • Sridhar Mandyam

    () (Ecometrix Research)

Abstract

The acquisition of land from landowning communities for the purpose of expanding industry has been a part of economic strategy in many developing countries in the past decade. The lack of a structured negotiation framework to ensure equity and transparency in the process of acquisition has been an important issue in many of these countries, particularly India. Among the core issues are the lack of a well defined process framework, authorized regulatory and statutory entities to participate and oversee the process, and transparent mechanisms for calculating and communicating offers and valuations between the buyer and the seller communities. There is a need to explore alternative negotiation frameworks and models for calculation and valuation of bids and asks which can ensure an adequate level of equity and transparency. The models must ensure that the compensation packages cover certain basic needs of the small and medium farmers for whom loss of land is also loss of livelihood. In this paper, we propose a framework for land acquisition negotiations in which mathematical models for the buyer generate price offers not only for land but also wage and other compensations. We also present utility-based models and a rule base for the seller to evaluate the offer, and mechanisms for the seller’s responses to be communicated via intermediaries to the buyer in cycles of negotiation. Using simulated data representative of the agricultural land scenario in India, we explore ways in which the models and the framework could be used to support diverse and realistic land acquisition situations. Software for the implementation of the mathematical models and rule engine for evaluation of the bid-ask process described in this paper have been developed by the authors. The software can be customized for specific applications.

Suggested Citation

  • Usha Sridhar & Sridhar Mandyam, 2009. "On structured buyer-seller negotiation for agricultural land acquisition - simulation experiments with rule-based models and utility fucntions," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 16(2), pages 1-30, December.
  • Handle: RePEc:unt:jnapdj:v:16:y:2009:i:2:p:1-30
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    References listed on IDEAS

    as
    1. Morris, Sebastian & Pandey, Ajay, 2007. "Towards Reform of Land Acquisition Framework in India," IIMA Working Papers WP2007-05-04, Indian Institute of Management Ahmedabad, Research and Publication Department.
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    Keywords

    Land acquisition models; farmer compensation; negotiation process;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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