Tenkanen, Aulis: The Valuation of Waterside Areas in the Compulsory Purchase of Emerged Land, with Special Relevance to Accretions to Holiday-Home Plots. Helsinki 1983, ISBN 951-99472-1-3. Doctoral thesis.


This study deals with the valuation of emerged land, i.e. land accretions resulting mainly from a reduction in the level of a body of water or from land uplift, which is still in progress along the western coast of Finland. Land accretions do not outright belong to the owners of adjacent land. However, the owner of adjacent land is usually entitled to obtain the accretion by compulsory purchase, in which full compensation has to be paid in accordance with the appraised value.

The airn of the study was to answer the following questions:

- What are the determinants of the value and price for waterside areas consisting of emerged land, with special relevance to land accretions to holiday-home plots?
- What hypotheses or principles have been used, or can be used, in the valuation of emerged land in cases of expropriation under the Land Division Act or the Waters Reallotment Act?
- What need exists for the improvement of appraisal procedures used in the expropriation of emerged land?

The empirical part of the study was mainly based on data from the documents of compulsory purchases or from other public sources. The data were complemented by a questionnaire sent to plot owners who had already used their right to redeern land accretions between the new shore line and their own land parcels. The data, which covered about 170 individual land accretions in various parts of the country, were subjected to statistical analysis, including the use of non-parametric tests.

In the case of compulsory purchase of land accretions to holiday-home plots, particular emphasis was placed on the unit price ratio computed as the quotient of the unit price for the land accretion and the current unit price for a hypothetical waterside plot including that same land strip. The unit price ratio varied greatly both in voluntary price agreements and in the appraisals by the surveyors performing compulsory purchases. The median unit price ratio obtained from classified data on mineral land accretions was about 0.4. Very poor quality land was found to correspond to lower unit price ratios.

The price formation of land accretions to holiday-home plots was found to resemble the price formation process described by the theory of isolated exchange or bilateral monopoly. lf there is no established convention governing local price agreements, the current market price of accretion strips cannot be precisely determined merely on the basis of known waterside plot prices, equity has also to be taken into consideration.

Several other hypotheses were also examined in order to explain the actual pricing of land accretions to be joined to the adjacent holiday-home plot or part of it. With a view to potential standardisation of the present appraisal practice in situations where the current market price of land accretions is indefinite, one hypothesis was found to roughly match the valuation practice in certain key instances. According to this hypothesis, the value of a land accretion to be redeemed can be ascertained in the following manner:

The economic value corresponding to the conveyor´s potential for exploiting the land accretion in his own possession is first ascertained. Then an equitable proportion of the total profit accruing from the conveyance of that land accretion is added to the value thus obtained. The said proportion should depend on the size and, in particular cases, also on the quality of the land accretion. lf an accretion is of sufficient quality and size, it may have an efficient use in and of itself, even without additional land; its economic value then tends to equal the current market price of ordinary waterside land.

On the basis of the results, some proposals for the amendment of current regulations on emerged land were suggested.