January 16, 2004

New Property Right: Eminent Domain Immunity

In much of the world, mineral rights are held by the state. In other parts, mineral rights are joined with the ownership of the land and some places the two are held by separate entities. I had a light bulb go on while commenting on this article on the comparative free market implications of trains and cars. The discussion had turned to eminent domain and I just thought, what if eminent domain was just a segregable property right like mineral rights would be? If you had the right, you could force the owner to sell and give him just market compensation. Why not? It makes at least as much sense as air rights, pollution rights, water rights, or mineral rights. Why not place these rights on the market and auction them off to prospective infrastructure builders? The state could exercise these rights if they wanted to. People could buy their own property's eminent domain rights and if a private store wanted to move in (as is often the case) they would be forced to buy up the right to force out the current property holders and not only pay the market rate, but also the eminent domain right rate.

I haven't thought through this idea through all its implications but I would guess that the original sale rate would approximately equal the nuisance value of having to build around a particular property for the train, road, or other traditional infrastructure improvement. You'd have to set these things well ahead of time so that there would be an available formula to apply before any particular project was considered.

Posted by TMLutas at January 16, 2004 11:38 PM