The Use of Eminent Domain in São Paulo, Bogotá, and Mexico City

In this paper, Antonio Azuela examines the conditions under which eminent domain is used in São Paulo, Bogotá, and Mexico City. Brazil, Colombia, and Mexico all went through democratic transitions that changed the legal and political treatment of private property, and all three countries are experiencing increasing judicial activism. Despite these similarities, outcomes of the use of eminent domain differ. Azuela suggests four reasons for the diverse outcomes that shed important light on the design of eminent domain institutions.

First, the placement of eminent domain power at different levels of government matters. When local officials have the power of eminent domain, they are prone to utilize the legal authority to acquire private property for infrastructure development to satisfy the demands of the constituents who elect them. The experience of Bogotá seems to support this argument.

Second, the role of the judiciary in determining the validity of the use of eminent domain and the amount of compensation is important. In Brazil and Colombia, local governments must seek court approval before they can expropriate private property. Although judges in these two countries have typically set compensation at high levels, they normally defer to the expertise and motives of local governments in exercising their eminent domain power. In Mexico, although the constitution gives eminent domain power to the president and the state governors, judges often grant affected owners injunctions to stop the process.

They also modify the amount of compensation and scrutinize the motive of an expropriation, which seems constitutionally dubious in Mexico. While judges in Brazil and Colombia play enabling roles in the use of eminent domain, the judiciary in Mexico complicates land expropriation.

Third, the fiscal implications of compensation also affect the use of eminent domain in these countries. In all three cities examined by Azuela, exorbitant compensations granted by the courts either have put local governments under financial stress or have led to the abandonment of public projects. The determination of just compensation is the thorniest issue. Azuela suggests that better approaches to selecting and educating judges and to constraining them from overstepping their constitutional duties are needed.

This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2008 and is Chapter 7 of the book Property Rights and Land Policies.