EBRD Performance Requirement 5

Land Acquisition, Involuntary Resettlement

and Economic Displacement

Introduction and impoverishment for affected persons and

communities, as well as environmental damage,
1. Involuntary resettlement refers both to physical and adverse socio-economic impacts in areas
displacement (relocation or loss of shelter) and to which they have been displaced. Under some
economic displacement (loss of assets or circumstances, poorly executed involuntary
resources, and/or loss of access to assets or resettlement may leave the client exposed to
resources that leads to loss of income sources or legal action. For these reasons, involuntary
means of livelihood) as a result of project-related resettlement should be avoided. However,
land acquisition1 and/or restrictions on land use.2 where it is unavoidable, resettlement should be
minimised and appropriate measures to mitigate
2. Resettlement is considered involuntary when adverse impacts on displaced persons and
affected individuals or communities do not host communities6 should be carefully planned
have the right to refuse land acquisition, and implemented. Experience demonstrates
or restrictions on land use, that result in that the direct involvement of the client in
displacement. This occurs in cases of: (i) resettlement activities and an assessment at
lawful expropriation or restrictions on land use the earliest stage possible in the project design,
based on eminent domain; 3 and (ii) negotiated can result in cost-effective, efficient and timely
settlements in which the buyer can resort to implementation of those activities, as well as
expropriation or impose legal restrictions on promote innovative approaches to improving
land use if negotiations with the seller fail. the livelihoods and standards of living of those
affected by resettlement.
3. Application of this Performance Requirement
(PR) supports and is consistent with the Objectives
universal respect for, and observance of,
human rights and freedoms and specifically 5. The objectives of this PR are to:
the right to adequate housing and the • avoid or, when unavoidable, minimise,
continuous improvement of living conditions.4 involuntary resettlement by exploring
In cases where there has already been alternative project designs
displacement as a result of conflict, this PR • mitigate adverse social and economic
is guided by the Guiding Principles on impacts from land acquisition or
Internal Displacement.5 restrictions on affected persons’ use
of and access to assets and land by: (i)
4. Unless properly managed, involuntary providing compensation for loss of assets
resettlement may result in long-term hardship at replacement cost;7 and (ii) ensuring that
1
Land acquisition includes both outright purchases of property and purchases of access rights, such as easements or rights of way.
2
E xamples include loss of access to state-owned sub-surface mineral rights by artisanal miners; loss of access to marine fishing grounds due to project activities; restriction
of access to resources located within state-determined exclusion zones not acquired by the client; and demonstrated decreases in agricultural, livestock, forest, hunting and
fishing yields resulting from project-related disturbance and/or pollution.
3
Such restrictions may include restrictions of access to legally protected and internationally recognised areas of biodiversity importance.
4
Universal Declaration of Human Rights and International Covenant on Economic, Social and Cultural Rights.
5
Office of the High Commissioner for Human Rights: Guiding Principles on Internal Displacement.
6
A host community is any community receiving displaced persons.
7
This is usually calculated as the market value of the assets plus the transaction costs related to restoring such assets. The calculation of replacement costs is complex due
to the potential variety of land, land use claimants, and the differing levels of land market development across member countries. For this reason clients should identify and
consult with all persons and communities that shall be displaced by land acquisition as well as host communities who shall receive those who are to be resettled, so as to
obtain adequate information about land titles, claims and use. The valuation method for determining replacement cost should be documented in respective Resettlement and/
or Livelihood Restoration plans. Where land markets are still in a formative stage, clients should seek valuation by external independent professional valuation experts (or if
there are no professional valuation experts, other professionals with relevant expertise acceptable to the EBRD and the client). See also notes 12 and 14 below.

29 Environmental and Social Policy

 resettlement activities are implemented or other compulsory procedures if negotiations
with appropriate disclosure of information, fail) and where such a transaction affects only
consultation and the informed participation those with legal rights.
of those affected
• restore or, where possible, improve the 9. The applicability of this PR will be determined
livelihoods and standards of living of displaced during the environmental and social
persons8 to pre-displacement levels assessment process according to the criteria
• improve living conditions among physically set out in paragraphs 6 to 8 above. Where
displaced persons through the provision of involuntary resettlement has already occurred,
adequate housing,9 including security of the assessment will identify: (i) any gaps; and (ii)
tenure at resettlement sites.10 the corrective actions that may be required to
ensure compliance with this PR. An action plan
Scope of application shall then be agreed.

6. This PR applies to physical or economic Requirements

displacement, that can be full, partial,
permanent, or temporary, resulting from the 10. Clients are encouraged to acquire land rights
following types of transactions: through negotiated settlements even if they
• land rights or land use rights for a project have the legal means to gain access to the land
acquired through expropriation or other without the consent of the seller. Negotiated
compulsory procedures settlements help avoid expropriation and
• land rights for a project acquired through eliminate the need to use governmental
negotiated resettlements with property authority to remove people forcibly. Negotiated
owners or those with legal rights to land, settlements can usually be achieved by
including customary or traditional rights providing fair and appropriate compensation
recognised or recognisable under the laws and other incentives or benefits to affected
of the country, if expropriation or other persons or communities, and by mitigating
compulsory process would have resulted the risks of asymmetry of information and
upon the failure of negotiation bargaining power.
• imposition of restrictions that result in
people experiencing loss of access to physical Avoid or minimise displacement
assets or natural resources irrespective
of whether such rights of restriction are 11. The client will consider feasible alternative
acquired through negotiation, expropriation, project designs to avoid or at least minimise
compulsory purchase, or by means of physical and/or economic displacement, while
government regulation. balancing environmental, social, and economic
costs and benefits.
7. Requirements and responsibilities towards
displaced persons with no recognisable legal Consultation
right or claim to the land they occupy are
contained in paragraphs 18, 32 and 37 below. 12. From the earliest stages and through all
resettlement activities the client will involve
8. This PR does not apply to resettlement resulting affected men and women, including host
from voluntary land transactions (market communities. This will facilitate their early and
transactions in which the seller is not obliged to informed participation in decision-making
sell and the buyer cannot resort to expropriation processes related to resettlement, and in PR 10:

8
These may include those who have legally recognisable rights or claims to the land, those with customary claims to the land, those with no legally recognisable rights or claims
to the land, seasonal resource users such as herders/fishing families, hunter and gatherers who may have interdependent economic relations with communities located within
the project area.
9
Adequate housing or shelter can be measured by quality, safety, affordability, habitability, cultural appropriateness, accessibility and locational characteristics. Adequate
housing should allow access to employment options, markets, and basic infrastructure and services, such as water, electricity, sanitation, health care and education. Clients
should include these aspects of adequate housing in order to offer improved living conditions at the resettlement site, particularly to those without recognisable legal right or
claim to the land they occupy.
10
A resettlement site offers security of tenure if it protects, to the greatest extent possible, the resettled persons from forced evictions.

May 2014 30
 • affected persons shall be given the inventory of affected land and property. The
opportunity to participate in the eligibility census should take into account the needs of
requirements, negotiation of the seasonal resource users who may not be present
compensation packages, resettlement in the project area during the time of the census.
assistance, suitability of proposed
resettlement sites and proposed timing 16. In the absence of specific national government
• additional requirements apply to procedures, the client will establish the cut-off
consultations which involve Indigenous date for eligibility as foreseen in the applicable
Peoples (as provided in PR 7) as well as legislation and project timeline as appropriate.
individuals belonging to vulnerable groups 11 Often the most practicable cut-off date is
• consultation will continue during the during the baseline assessment or census.
implementation, monitoring and evaluation of Information regarding the cut-off date will be well
compensation payment and resettlement so documented and communicated throughout the
as to achieve outcomes that are consistent project area. Setting a cut-off date will provide
with the objectives of this PR. clarity as to eligibility for compensation and
assistance. Persons moving into the project
13. The client will take into account any individuals location after the cut-off date are not entitled
or groups that may be disadvantaged or to compensation or other assistance.
vulnerable. In particular, the client will take
necessary actions to ensure that vulnerable Compensation for displaced persons
groups are not disadvantaged in the
resettlement process, are fully informed and 17. The client will offer all displaced persons
aware of their rights, and are able to benefit and communities compensation for loss of
equally from the resettlement opportunities assets at full replacement cost12 and other
and benefits. These groups should be identified assistance. This is intended to restore, and
through the process of environmental and potentially improve, their standards of living
social assessment (as outlined in PR 1). and/or livelihoods13 of displaced persons
to pre-displacement levels. The measures
can be based on land, resources, wages
Socio-economic assessment and census and/or business activities. Standards for
compensation will be transparent and
14. The client will carry out a socio-economic consistent within the project. Compensation will
baseline assessment on people affected by be provided before displacement or imposition
the project, including impacts related to land of access restrictions. Where livelihoods of
acquisition and restrictions on land use. The displaced persons are land-based, or where
assessment will identify impacts within a land is collectively owned, the client will offer,
project’s social context and the needs and where feasible, land-based compensation,
rights of the affected people and develop taking into account seasonal and agricultural
appropriate actions to minimise and mitigate timing requirements. The client will provide
resettlement impacts. opportunities to displaced persons and
communities to derive appropriate development
15. The client will carry out a detailed census to: (i) benefits from the project.
identify persons who will be displaced by the
project; (ii) determine who will be eligible for 18. Displaced persons may be classified as
compensation and assistance; and (iii) take persons: (i) who have formal legal rights to the

11
For the purpose of this Policy, vulnerable groups refers to people who, by virtue of gender identity, ethnicity, age, disability, economic disadvantage or social status may be
more adversely affected by project impacts than others and who may be limited in their ability to claim or take advantage of project benefits. Vulnerable individuals and/or
groups may also include people living below the poverty line, the landless, the elderly, women and children headed households, refugees, internally displaced people, ethnic
minorities, natural resource dependent communities or other displaced persons who may not be protected by national and/or international law.
12
The rate of compensation for lost assets should be calculated at full replacement cost including transaction costs. For losses that cannot easily be valued or compensated for
in monetary terms, in-kind compensation may be appropriate. However, this compensation should be made in goods or resources that are of equivalent or greater value and
that are culturally appropriate. See notes 7 and 14.
13
Livelihoods may consist of wage-based incomes, and/or incomes derived by individuals, families and/or communities from resource utilisation.

31 Environmental and Social Policy

 land (including customary and traditional rights framework will outline the general principles,
recognised under national laws); (ii) who do not procedures and entitlement framework
have formal legal rights to land at the time of consistent with this PR. Once the individual
the census, but who have a claim to land that is project components are defined and the
recognised or recognisable under national laws; required information becomes available,
or (iii) who have no recognisable legal right or the framework will serve as a basis for the
claim to the land they occupy. development of a detailed Resettlement
Action Plan (RAP) or Livelihood Restoration
19. The documentation for ownership or occupancy, Plan (LRP) in accordance with paragraphs
such as title deeds and lease agreements 26 to 39 below.
(including the bank accounts established for
payment of compensation), should be issued Monitoring
in the names of both spouses or single head
of households, as relevant. Other resettlement 23. Monitoring of the resettlement and livelihood
assistance, such as skills training, access to restoration process will be carried out in
credit and job opportunities should be made accordance with PR 1 and should involve the
equally available to men and women and participation of key stakeholders such as
adapted to their needs. affected communities.

20. The client should consider offering alternative 24. Depending on the scale of a project’s
methods and/or modalities for compensation resettlement, it may be appropriate for the
especially in countries and regions where client to commission an external completion
women are less likely to have access to report of the RAP/LRP to determine that the
formal financial institutions and/or have provisions have been met. The completion
bank accounts. Under circumstances in report should be undertaken after all inputs
which national law and tenure systems do in the process, including any developmental
not recognise the rights of women to hold or initiatives, have been completed. The report
exchange property, provision should be made to may identify further actions to be completed
ensure, to the extent possible, that women are by the client. In the majority of cases, the
enabled to have access to security of tenure. completion of corrective actions identified by
the completion report should bring the client’s
Grievance mechanism obligations for resettlement, compensation,
livelihood restoration and development benefits
21. The client will establish an effective grievance to a close.
mechanism as early as possible in the process.
It will be consistent with this PR and with the Displacement
objectives and principles of PR 10 in order to
receive and address in a timely fashion specific 25. Project-related land acquisition and/or
concerns about compensation and relocation restrictions on land use often leads to both
that are raised by displaced persons and/or physical displacement of people as well
members of host communities. It will include as their economic displacement. Thus, the
a recourse mechanism designed to resolve requirements of this PR in respect of physical
disputes in an impartial manner. displacement and economic displacement
may apply simultaneously. In such case, the
Resettlement and/or Livelihood specific requirements concerning economic
Restoration Framework displacement established in paragraphs 36
through 39 should be incorporated into the
22. A Resettlement and/or Livelihood Restoration Resettlement Action Plans or Frameworks
Framework will be developed where the exact respectively.
nature or magnitude of the land acquisition or
restrictions on land use related to a project
with potential to cause physical and/or
economic displacement is unknown due
to the project development stage. This

May 2014 32
Physical displacement displaced persons choices among feasible
resettlement options, including adequate
26. In the case of transactions as described replacement housing or cash compensation
in paragraph 6 that involve the physical where appropriate; and (ii) provide relocation
displacement of people, the client will develop a assistance suited to the needs of each
RAP that covers, at a minimum, the applicable group of displaced persons, with particular
requirements set forth in this PR, regardless attention paid to the needs of the poor and the
of the number of people affected. The plan vulnerable. Alternative housing and/or cash
will be designed to mitigate the negative compensation will be made available prior to
impacts of displacement, identify potential relocation. New resettlement sites built for
benefits and establish the entitlements of displaced persons will offer, at a minimum,
all categories of affected persons (including pre-displacement living conditions and where
host communities), with particular attention achievable, sustainable and cost-effective
paid to the needs of the vulnerable. The plan opportunities to improve the standard of living.
will document all procedures to acquire land
rights, as well as compensation measures and 31. In the case of physically displaced persons
relocation activities. It will establish procedures under paragraph 18 (i) or (ii), the client will offer
to monitor and evaluate the implementation the choice of replacement property of equal
of resettlement activities and take corrective or higher value, or cash compensation at full
action as necessary. replacement value where appropriate.14

27. The scope and level of detail of the RAP will vary 32. In the case of physically displaced persons
with the magnitude of displacement and the under paragraph 18 (iii), the client will offer them
complexity of the measures required to mitigate a choice of options for adequate housing with
adverse impacts. In all cases, it will describe the security of tenure so that they can resettle legally
ways and means by which the objectives of this without having to face the risk of forced eviction.
PR will be achieved. • Compensation in kind will be offered in lieu
of cash compensation where feasible, unless
28. The RAP should incorporate measures to the conditions described in footnote 14 can
provide displaced people with legal assistance be demonstrated to exist. This applies to
to enable them to complete administrative those who have customary and traditional
requirements prior to land acquisition and, if rights recognised under the laws of the
needed, to seek redress from the courts. country; to claimants who, prior to the cut-off
date, do not have formal legal rights to land,
29. The client shall consult with the affected but who have a claim to such land or assets,
persons in preparing the RAP and shall for example, through adverse possession;15
summarise the information contained in and, subject to the qualifications noted
the RAP for public disclosure to ensure that in paragraph 18, to those who have no
affected people understand the compensation recognisable legal right or claim to the land
procedures and know what to expect at the they occupy.
various stages of the project (for example, when • Based on consultation with such displaced
an offer will be made to them, how long they will persons, the client will provide relocation
have to respond, grievance procedures, legal assistance sufficient for them to restore, and
procedures to be followed if negotiations fail). where possible improve, their standards of
living at an adequate alternative site.16
30. If people living in the project area must move
to another location, the client will: (i) offer 33. In cases where affected persons reject

14
Payment of cash compensation for lost assets may be appropriate where: (i) livelihoods are not land-based; (ii) livelihoods are land-based but the land taken for the project
is a small fraction of the affected asset and the residual land is economically viable; or (iii) active markets for land, housing and labour exist, displaced persons use such
markets, and there is sufficient supply of land and housing. Cash compensation levels should be sufficient to replace the lost land and other assets at full replacement cost in
local markets. See also notes 7 and 12.
15
A method of acquisition of title to real property by possession for a statutory period under certain conditions.
16
Relocation of informal settlers in urban areas often has trade-offs. For example, the relocated families may gain security of tenure, but they may lose advantages of location.

33 Environmental and Social Policy

 compensation offers that meet the establishing commercial activities elsewhere;
requirements of this PR and, as a result, (ii) lost net income during the period of
expropriation or other legal procedures are transition; and (iii) the costs of the transfer
initiated, the client will explore opportunities and reinstallation of the plant, machinery or
to cooperate with the responsible government other equipment, as applicable.
authority, and if permitted by the authority, play •p  rovide replacement property (for example,
an active role in the resettlement planning, agricultural or commercial sites) of equal
implementation and monitoring. or greater value, or cash compensation at
full replacement cost where appropriate, to
34. The client will identify and assess potential persons with legal rights or claims to land
adverse impacts on host communities that which are recognised or recognisable under
could be affected by the resettlement process. the national laws (as provided for in paragraph
Any mitigation measures agreed with the host 18 (i) and (ii)).
community should be included in the RAP. •p  rovide assistance that will offset any loss of
a community’s commonly held resources.17
35. Where communities of Indigenous Peoples This could take the form of initiatives that
are to be physically displaced from their enhance the productivity of the remaining
communally held traditional or customary lands resources to which the community has
under use, the client will meet the applicable access, in-kind or cash compensation for loss
requirements of this PR as well as those of PR 7. of access or provision of access to alternative
sources of the lost resource.
Economic displacement • c ompensate economically displaced persons
who are without legally recognisable claims
36. In the case of transactions described in to land (see paragraph 18 (iii)) for lost assets
paragraph 6, involving economic displacement (such as crops, irrigation infrastructure and
only, the client will develop and implement an other improvements made to the land) other
LRP. The LRP will establish the entitlements than land, at full replacement cost. The client
of affected persons and communities and will is not required to compensate or assist
ensure that these are provided in a transparent, opportunistic settlers who encroach on the
consistent and equitable manner. project area after the cut-off date.
•p  rovide additional targeted assistance (for
37. If a transaction of the types described in example, credit facilities, training or job
paragraph 6 causes temporary or permanent opportunities) and opportunities to restore,
loss of income or livelihood through, for and where possible improve, their income-
example, interruption or elimination of a earning capacity, production levels and
person’s access to his/her employment or standards of living. In the case of businesses
productive assets, regardless of whether the experiencing temporary losses or having
affected people are physically displaced, the to close as a result of project-related
client will: displacement, both the owner of the business
and employees losing pay or employment are
• promptly compensate economically displaced eligible for such assistance.
persons for loss of assets or access to •p  rovide transitional support to economically
assets. This process should be initiated prior displaced persons, as necessary, based on
to displacement. Where compensation is to a reasonable estimate of the time required
be paid by a responsible government agency, to restore their income-earning capacity,
the client should collaborate with the agency production levels and standards of living.
to help accelerate the payments.
• compensate, in cases where land acquisition 38. The client will summarise the information
affects commercial structures, the affected contained in the LRP for public disclosure to
business owner for: (i) the cost of re- ensure that affected people understand the

17
E xamples of these include rangeland and pasture, non-timber forest resources (for example, medicinal plants, construction and handicraft materials), woodlots for timber and
fuel wood; water resources for agriculture, recreation or fishing.

May 2014 34
 compensation procedures and know what to
expect at the various stages of the project.

39. Where communities of Indigenous Peoples are

economically displaced (but not relocated) as
a result of project-related land acquisition, the
client will meet the applicable principles of this
PR as well as those of PR 7.

Loss of public amenities18

40. Where a project involves the loss of public

amenities, the client shall undertake
meaningful consultation, in accordance with
PR 10, with the locally affected community
to identify and, where possible, agree upon a
suitable alternative.

Private sector responsibilities under

government-managed resettlement

41. There may be cases where land acquisition

and resettlement are the responsibility of the
host government. In such cases, the client will
collaborate with the responsible government
agency, to the extent permitted by the agency,
to achieve outcomes that are consistent with
the objectives of this PR. In addition, where
government capacity is limited, the client
will play an active role during resettlement
planning, implementation and monitoring. The
client will prepare a plan (or a framework) that
together with the documents prepared by the
responsible government agency, will meet the
requirements of this PR. The client may need
to include in its plan: (i) a description of the
entitlements of displaced persons provided
under applicable laws and regulations; (ii) the
measures proposed to bridge any gaps between
such entitlements and the requirements of this
PR; and (iii) the financial and implementation
responsibilities of the government agency and/
or the client.

18
Loss of cultural heritage is covered in PR 8.

35 Environmental and Social Policy