How the distribution of rights and liabilities in relation to betterment and compensation links with planning and the nature of property rights: Reflections on the Polish experience

•The balance of rights in relation to betterment and compensation influences the planning process.•In Poland there are very broad compensation rights for value decline due to planning regulations.•The use of value capture instruments in Poland is limited.•In Poland theory behind 'planning by law and property rights' should be revisited.•The initial distribution of rights and liabilities given by planning regulations has a large impact on the quality of the built environment.

Many Polish cities are faced with a dilemma: to enact their local land-use plans and be exposed to the immediate financial consequences of their adoption, or to protect their budgets against these costs and give up the control of the development of cities. There are very broad compensation rights for value decline due to planning regulations and for areas designated in plans for the public roads. At the same time, current planning system policies and instruments in Poland largely neglect how the costs of providing urban infrastructure and services are socialized and how the benefits of development processes are privatized. The use of value capture instruments is very limited. This paper discusses the distribution of rights and liabilities in relation to the two main sides of the property-values effect caused by land-use planning regulations and public works in Poland, in the background of the new planning system and property rights approach adopted in the country.