Abstract: In Ethiopia, the state owns all lands within the territory of the country. Cities are incorporating large parcels of land from their surrounding rural agricultural areas through land expropriation. However, these land developments do not consider the nonmarket value of ecosystem services (ES), which is causing a deterioration of the existing ES and reduction on the potential supply of ES from agricultural land. The aim of this study was to estimate the monetary value of nonmarketable ES from the agricultural land using a double-bounded dichotomous choice contingent valuation method. A survey of 524 smallholder farmers was conducted. In the survey, respondents were asked to state their willingness to pay for the improvement of some of the nonmarketable ES: erosion control, air and climate regulation, water regulation, and soil fertility. The estimation was carried out using a bivariate probit model. The results revealed that farmers are willing to pay on average 276 ETB (7.9 USD) per hectare per year for a period of 10 years. We found that individual characteristics such as age, family size, and a recent land expropriation experience adversely affect the willingness to pay by the farmers. On the other hand, individuals with higher income and larger land size are willing to pay more. In general, the study indicated that the nonmarket ES, which are affected by the land expropriation for urban expansion, are valuable for the farmers. Therefore, we recommend that the government consider the value of nonmarketable ES in its land use decisions and hence achieve sustainable land development.

Abstract: Globally, incorporation of agricultural lands into the urban boundary has been a common phenomenon. Governments use various alternatives to access the required land, including land expropriation procedures, which refers to the compulsorily taking of land from the landholders without their consent by paying compensation. In Ethiopia, the urban population is growing rapidly which resulted into an increase in the demand for urban land for housing construction, public services provision, and infrastructure developments. As the Ethiopian constitution prohibits sale of landholders, governments, at various levels, have been expropriating land from the surrounding farmers to meet the demand for urban land. The general objective of this thesis is to improve the understanding of the impacts of local land deals for urbanization on socioeconomics of farmers and the environment. The findings of this thesis revealed that there are gaps in the current practices of land expropriation for urban expansion that should be improved. The results showed that the compensation paid to the affected farmers is found to be economically inappropriate, i.e., not enough to restore the affected farmers’ livelihoods, in contrast with the land laws that allows a compensation amount that would put previous land users in a better or the same wellbeing as before the land expropriation. In addition, it is indicated that the land expropriation process does not take into account the value of ecosystem services, which are benefits obtain from the land, and important for the wellbeing of the society. We conclude that while land expropriation is an important tool to obtain land from the landholders when it is needed for public purposes, the practices in the study area show it is adversely affecting the socioeconomics of farmers and the environment.

Abstract: In Ethiopia, the demand for land for urbanisation is primarily met by converting rural land through expropriation. However, land expropriations are adversely affecting the previous land users by reducing the amount of production and their sources of income. In Bahir Dar, one of the fastest-growing cities in Ethiopia, approximately 300 landholdings are expropriated each year, on average, for urban expansion. This paper assesses the land expropriations to examine whether they offer economically appropriate compensation for the previous land users. Land expropriations for urbanisation between 2007/2008 and 2016/2017 were analysed based on data on land expropriation and its compensation payment obtained from the Bahir Dar City Land Administration and Management Office. Data were analysed using an exponential growth model and a stochastic budgeting technique in which Monte Carlo simulations are performed. Between 2007/2008 and 2016/2017, more than 1500 ha of land were included in the city's boundary through expropriation from 2900 landholders. The affected farmers received compensation that represents only 37 per cent of the value of current crop yields and its growth. The current compensation scheme ignores the impact of inflation on the prices of crops and assumes constant yields. It also excludes the value of crop residuals. We propose a workable discounted compensation framework that considers crop price and yield growths. This will make the compensation scheme more appropriate and make the affected farmers better off.