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How to compensate landowners when they suffer a compulsory acquisition of their property is a long-standing problem. In general, the subject is usually stated as a two-sided problem. First, it is a fairness problem regarding what measuring instrument should be used to decide a fair amount of compensation to the landowner. Second, it concerns how the chosen measuring instrument should be applied in practice from a legal point of view. 

The main purpose of the thesis is to reconstruct the compensation system. Broad questions addressed include how the market value should be determined, what efficiency and fairness requirements the compensation has in this context, and how the conditions of different situations affect the view of what is an efficient and fair compensation. The thesis uses a mixed-method that contains a legal dogmatic method, as well as a law and economics, and a fairness approach. 

The thesis finds that the market value can, in an economic context, only be determined as a range of probable prices and the result is largely influenced by the appraiser. To determine the market value of real property one needs to use qualitative approaches, even though the result is a quantitative measure. From a legal point of view, the court has to decide the specific price within the range that corresponds to the legal market value. To approach this problem, the court needs to use the underlying purposes of the compensation, such as full compensation and the general sense of justice. From a fairness perspective, both the legislator and the courts have modified the compensation rules in order to fulfil other goals that go beyond the economic market value. One key finding is that the market value in a legal context has a much higher degree of flexibility than in an economic context. Another key finding is that the design of the rules matters for the overall utility of society since an unfair system will generate demoralization costs. Therefore, the thesis argues that an adequate design of the compensation system has to take in to account the differences between different situations, since these differences decide what can be considered an adequate compensation. Overall, the thesis concludes that the current system should differentiate how the compensation has to be determined between different situations to a much larger extent. Thus, the extent to which a specific level of compensation achieves legal and societal goals depends on the situation.