Accession Number : ADA454623
Title : Loss-of-Use Damages From U.S. Nuclear Testing in the Marshall Islands: Technical Analysis of the Nuclear Claims Tribunal's Methodology and Alternative Estimates
Descriptive Note : Congressional rept.
Corporate Author : LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
Personal Author(s) : Lazzari, Salvatore
Report Date : 12 Aug 2005
Pagination or Media Count : 43
Abstract : Key oversight committees in the 109th Congress have held joint hearings on the Republic of the Marshall Islands (RMI) Changed Circumstances Petition, which requests $522 million in additional compensation for loss-of-use of Enewetak and Bikini atolls due to U.S. nuclear testing. The $522 million appears to be significantly overstated because the methodology - sample rent data, assumptions, and statistical procedures (i.e., the sampling technique and the use of the exponential regression model) overestimates the per-acre rental rate for land on Enewetak and Bikini, the key variable in the loss-of-use calculation. Rents on Enewetak and Bikini are overestimated because an exponential regression model was applied to rents established not in a competitive, free market for agricultural land on Enewetak and Bikini, but rather to government-established, and predominantly commercial, rents on the more urbanized and densely populated, Majuro and Kwajalein atolls. Most land in the RMI is leased at the official government rate established by the RMI cabinet. This rate, which was set by the RMI at $2,500/acre on January 1, 1979 and increased to $3,000/acre on October 1, 1989, serves as the benchmark for all lease transactions. The RMI government is not only the tenant in over 40% of the leases - a major source of the demand for RMI land but RMI government officials were also effectively the landlords during the estimation period when rents were government-controlled. Applying this methodology to unrepresentative sample rent data leads to projected rent/acre of $112,995/acre for the year 2027, which is equivalent to land asset value of nearly $1,774,024/acre. The Nuclear Claims Tribunal's (NCT) methodology also assumes that vaporized islands were not vaporized, undervalues the rentals on alternative atoll habitation, and assumes that 100% of the rental proceeds would have been saved.
Descriptors : *COST ESTIMATES , *LAND AREAS , *ATOLLS , MARKETING , KWAJALEIN ATOLL , BIKINI ATOLL , ENEWETAK ATOLL , HABITABILITY , MARSHALL ISLANDS , NUCLEAR EXPLOSION TESTING , STATISTICAL PROCESSES
Subject Categories : Economics and Cost Analysis
Distribution Statement : APPROVED FOR PUBLIC RELEASE