Property valuation challenges for properties condemned for environmental

public upgrades.
OdysseasKopsidas1, Leonidas Fragkos-Livanios2

1. Department of Civil Engineering, Alexander Technological Educational Institute of Thessaloniki,

17th Km Thessaloniki-Sindos, 57400, Thessaloniki, Greece, e-mail: odykopsi@yahoo.gr
2. Division of Natural Sciences and Applications, Hellenic Army Academy, 16673, Vari, Attiki,
Greece, e-mail: leonfragos@yahoo.co.uk

Abstract
No property may be taken for public use without just compensation. The issue is what is
“just compensation” and how it is determined in a particular circumstance. Regardless of the
type of valuation, the Greek Constitution (article 17, paragraphs 3-5) clearly forbids estimation
based on possible future projections. In this way, future externalities, positive or negative,
deriving from the change of use are not incorporated. This contravenes the Pareto optimal
resource distribution and even challenges the Caldor-Hicks compensation criterion, especially in
cases of partial takings.
We suggest valuation to include a best-case and a worst-case scenario for possible future
values. A combination of them, e.g. the average, will be used to determine benefits and costs and
the final level of compensation. The most important externality under consideration, especially in
cases of land properties condemned for public large-scale constructions such as environmental
public utilities, should be the environmental effect. The internalisation of possible negative
externalities should be internalised by the construction benefactor.

Keywords: valuation, property taking, Pareto optimum, environmental externalities