Average Reciprocity of Advantage

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to person, and some landowners might be risk-averse enough that they would not have found the bet attractive. Compounding this problem is the fact that different landowners will place different values on the payoffs offered by the various scenarios. Some owners might greatly enjoy civic goods which the relevant governmental actions promote—e.g. the sorts of public works which require the exercise of eminent domain—while others might be largely indifferent to those benefits. As a result, different landowners would likely differ in their assessment of the bet offered by any given regulation, and there is no guarantee that each landowner who suffers an actual net loss was one who ex ante would in fact have found the bet attractive.60 Thus, even on the probabilistic account, there is still no assurance that those burdened by the contested legal rule have in fact enjoyed an average reciprocity of advantage with respect to it.

4.3 Basic structural problems

Moreover, there is an inherent problem with the logical structure of general reciprocity justifications for imposing restrictions without compensation. One way to approach the difficulty is by observing a peculiar difference between these justifications and the ordinary way of thinking about physical takings. Ordinarily, under the law of physical takings, the amount of monetary compensation which the owner of taken property receives is not reduced by the amount of value which the owner receives from the general effect of public project for which the condemnation occurred.61 This makes sense, because everyone else receives the same benefit without having to surrender their property. Thus, deducting the project’s benefit from the compensation paid would effectively make the condemnee worse off relative to everyone else.62 One might therefore expect a similar approach in the regulatory takings context. However, the opposite is true when general reciprocity of advantage is invoked to justify denying monetary compensation to burdened landowners: the general benefit received from the system is counted as diminishing claims for compensation.

The puzzle deepens when we consider how the law treats compensation for partial takings. When the government condemns only a portion of a privately owned parcel rather than the entire parcel, it may reduce the compensation that it pays for the taken portion if the portion that was not taken benefits from the public

60These sorts of probabilistic argument have the additional curious feature of entailing that even those owners who enjoyed net benefits from the application of a legal rule could have a claim for compensation (or at least a justified complaint about the rule) if their risk preferences and personal valuations of potential payoffs would have led them ex ante to reject the bet which good fortune happened to allow them to win. Thus, although this sort of argument would, if successful, potentially allow regulations to evade objections from people who had ended up net losers as a result of the regulation’s application, it would open those regulations to objections from people who had in fact profited from the regulations but who would not have wished ex ante to chance that outcome.

61See e.g. Sackman et al. 2012, vol. 3, s. 8A.03[2].

62See e.g. Krier and Serkin 2004, 866 (‘To be sure, condemnees are still worse off relative to all the rest of the public who realize the benefits of the same government project but retain their property as well’).