Response: Testing the Value of Eminent Domain

Response by Christopher Serkin

In their new article, Sebastien Gay and Nadia Nasser-Ghodsi add some empirical evidence to the ongoing debate over compensation for eminent domain. Their model raises a number of interesting questions, some of which are identified below, but their principal contribution is actually conceptual. They identify countervailing pressures on property values resulting from the possibility of eminent domain. On the one hand, they hypothesize that property buyers will discount the value of property at risk of eminent domain. On the other, they identify the offsetting premium that buyers should pay for a community's economically beneficial use of eminent domain, an effect too often ignored by courts, scholars, and politicians. Gay and Nasser-Ghodsi perform an important service by drawing attention to these potential benefits of eminent domain.

Theirs is not casual speculation, however. They actually set out to test their thesis. Their model is straightforward but insightful. They hypothesize that the risks and rewards of eminent domain should be reflected in property values in ways that can be detected and empirically tested. This response considers the risks


89 Tul L. Rev. 115 (2014)