For a New Economics of Resettlement: A Sociological Critique of the Compensation Principle
Author(s)
Cernea, Michael M.
Abstract
Many development projects intended to alleviate poverty end up increasing poverty by displacing large numbers of people without reestablishing them viably. Projects entailing resettlement will continue into the future, requiring ever-deeper examination of the nature of displacement. This paper appreciates the contribution of economic science to matters of compensation but critiques its limitation to compensation of losses and the inadequate methodology economists often employ in projects with resettlement. The paper argues that the magnitude of the combined material and non-material impoverishment experienced by those displaced far exceeds the redeeming powers of narrow compensation-centered solutions offered by conventional economics. The impoverishment risks embedded in forced displacement are outlined. The paper signals a mismatch between goals and means in resettlement policies and criticizes current methods for the economic and financial appraisal of resettlement operations. A shift is proposed toward an economics centered on the reconstruction of resettlers’ livelihood, for which–in addition to compensation for losses–development investments are necessary. Sociology, anthropology, and economics must integrate their knowledge of impoverishment by displacement, its causes, outcomes, and its remedies.
