Using compensation instruments as a vehicle to improve spatial planning: Challenges and opportunities

Planners are increasingly adopting market-oriented compensation instruments. This is not only the result of a shift from government to governance, but also because governments are increasingly required to compensate private citizens for losses incurred due to planning regulations. Market-oriented compensation instruments have a broad scope as they also enable non-financial compensation opportunities. Non-financial compensation schemes normally use - not necessarily transferable - rights to compensate for a loss in economic value. Countries that adopt such instruments - such as The Netherlands, the US and Spain - often not only use them for compensation, but also to recoup some of the windfall profits that are then used for the improvement of urban and regional areas. The benefits of these instruments are currently being debated and this article adds to the discussion by revealing the circumstances in which non-financial compensation instruments make a useful contribution to the planning of tomorrow's world. The assessment found that an instrument's success mainly depends on its specificity, its capability to facilitate co-production and its capability of finding an effective balance between loss and compensation through rights. Although we generally present a favourable view of these instruments, the article ends with a discussion of some of their drawbacks. (C) 2010 Elsevier Ltd. All rights reserved.