A very interesting paper was recently published on how to measure the amount of compensation that is due to abandoned Palestinian property in 1948. The author also suggest that the cost of the compensation can be easily afforded by the Israeli state without much impact on the public finances.
Frank D. Lewis
Department of Economics, Queen’s University, Kingston, Ont., Canada K7L 3N6
Explorations in Economic History, Volume 44, Issue 4, October 2007, Pages 523-537
Abstract: This paper extends the analysis of “Agricultural Property and the 1948 Palestinian Refugees: Assessing the Loss” [Lewis, F.D., 1996. Agricultural Property and the 1948 Palestinian Refugees: Assessing the Loss, Explorations in Economic History 33, 169–194] to non-agricultural property. The urban property abandoned by refugees is valued on the basis of transfer prices, tax payable, and inferences about rent. The estimated value of the property is much higher than was reported by the United Nations Conciliation Commission in 1951. Still the total implied by this paper and [Lewis, 1996] is such that if Israel were to pay the overall loss as compensation, the transfers are unlikely to have a serious impact on its economy.
All this to be taken with a grain of piquant salt!!!