Economic issues in valuation of and compensation for loss of Native Title rights

For valuation methodology to be appropriate in the Native Title context it will need to accommodate the ‘special (even unique) features of Native Title’. While compensation for loss or diminution of Native Title rights might be arrived at through negotiation, the impact on the right to negotiate of the 1998 amendments to the Native Title Act 1993 (NTA) may have removed this opportunity. Even were a negotiated outcome achieved, questions of whether the outcome is equivalent to a free and equitable exchange would continue.

This is but one of a number of questions and a degree of uncertainty that exist in valuating Native Title rights under the NTA. This paper is a response to some of these questions, and shows how economic analysis can provide insights into the nature of Indigenous rights and interests and into the nature of compensation. Also offered is a behavioural-based approach in which the value of those special features of Native Title rights might be estimated in monetary units. The emphasis given to the use of money for compensation under the NTA (s.51 (5)-(8)) provides additional reason to provide estimates given in monetary units of value.