In
economics
Economics () is the social science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
, land comprises all
naturally occurring resources as well as geographic
land
Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the planet Earth that is not submerged by the ocean or other bodies of water. It makes up 29% of Earth's surface and includes the continents and various isla ...
. Examples include particular
geographical location
In geography, location or place are used to denote a region (point, line, or area) on Earth's surface or elsewhere. The term ''location'' generally implies a higher degree of certainty than ''place'', the latter often indicating an entity with an ...
s,
mineral deposit
Ore is natural rock or sediment that contains one or more valuable minerals, typically containing metals, that can be mined, treated and sold at a profit.Encyclopædia Britannica. "Ore". Encyclopædia Britannica Online. Retrieved 7 April ...
s, forests, fish stocks, atmospheric quality,
geostationary orbits, and portions of the
electromagnetic spectrum
The electromagnetic spectrum is the range of frequencies (the spectrum) of electromagnetic radiation and their respective wavelengths and photon energies.
The electromagnetic spectrum covers electromagnetic waves with frequencies ranging fro ...
. Supply of these resources is fixed.
Factor of production
Land is considered one of the three
factors of production
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the rel ...
(also sometimes called the three producer goods) along with
capital, and
labor
Labour or labor may refer to:
* Childbirth, the delivery of a baby
* Labour (human activity), or work
** Manual labour, physical work
** Wage labour, a socioeconomic relationship between a worker and an employer
** Organized labour and the la ...
. Natural resources are fundamental to the
production
Production may refer to:
Economics and business
* Production (economics)
* Production, the act of manufacturing goods
* Production, in the outline of industrial organization, the act of making products (goods and services)
* Production as a stati ...
of all
goods
In economics, goods are items that satisfy human wants
and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not t ...
, including
capital goods
The economic concept of a capital good (also called complex product systems (CoPS),H. Rush, "Managing innovation in complex product systems (CoPS)," IEE Colloquium on EPSRC Technology Management Initiative (Engineering & Physical Sciences Researc ...
.
While the particular role of land in the economy was extensively debated in
classical economics it played a minor role in the
neoclassical economics
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...
dominant in the 20th century. Income derived from ownership or control of
natural resources
Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest and cultural value. ...
is referred to as
rent
Rent may refer to:
Economics
*Renting, an agreement where a payment is made for the temporary use of a good, service or property
*Economic rent, any payment in excess of the cost of production
*Rent-seeking, attempting to increase one's share of e ...
.
Ownership
Because no man created the land, it does not have a definite original proprietor, owner or user.
As a consequence, conflicting claims on geographic locations and mineral deposits have historically led to disputes over their economic rent and contributed to many civil wars and revolutions.
In the context of geographic locations the resulting conflict is regularly understood as the
land question
Land reform is a form of agrarian reform involving the changing of laws, regulations, or customs regarding land ownership. Land reform may consist of a government-initiated or government-backed property redistribution, generally of agricultural ...
(see e.g. United Kingdom, South Africa, Canada).
Addressing the land question
Land reform
Land reform
Land reform is a form of agrarian reform involving the changing of laws, regulations, or customs regarding land ownership. Land reform may consist of a government-initiated or government-backed property redistribution, generally of agricultural ...
programs are designed to redistribute possession and/or use of geographic land.
Georgism
Georgists
Georgism, also called in modern times Geoism, and known historically as the single tax movement, is an economic ideology holding that, although people should own the value they produce themselves, the economic rent derived from land—including ...
hold that this implies a perfectly
inelastic
In economics, elasticity measures the percentage change of one economic variable in response to a percentage change in another. If the price elasticity of the demand of something is -2, a 10% increase in price causes the demand quantity to fall ...
supply curve (i.e., zero elasticity), suggesting that a
land value tax
A land value tax (LVT) is a levy on the value of land (economics), land without regard to buildings, personal property and other land improvement, improvements. It is also known as a location value tax, a point valuation tax, a site valuation ta ...
that recovers the
rent of land for public purposes would not affect the
opportunity cost of using land, but would instead only decrease the value of owning it. This view is supported by evidence that although land can come on and off the market, market inventories of land show if anything an inverse relationship to price (i.e., negative elasticity).
Significance
Land plays an important role in advanced economies. In the UK the "non-produced asset of land" accounts for 51% of the country's total net worth, implying that it plays a more important role in the economy than capital.
Academic
Some United Kingdom and commonwealth universities offer a courses in ''land economy'', where economics is studied alongside law, business regulation, surveying and the built and natural environments.
This mode of study at Cambridge dates back to 1917 when
William Cecil Dampier
Sir William Cecil Dampier FRS (born William Cecil Dampier Whetham) (27 December 1867 – 11 December 1952) was a British scientist, agriculturist, and science historian who developed a method of extracting lactose (milk sugar) from whey.
H ...
suggested the creation of a school of
rural economy
Rural economics is the study of rural economies. Rural economies include both agricultural and non-agricultural industries, so rural economics has broader concerns than agricultural economics which focus more on food systems. Rural developmen ...
at the university.
Accounting
As a tangible
asset
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can ...
land is represented in accounting as a
fixed asset
A fixed asset, also known as long-lived assets or property, plant and equipment (PP&E), is a term used in accounting for assets and property that may not easily be converted into cash. Fixed assets are different from current assets, such as cash ...
or a
capital asset
A capital asset is defined as property of any kind held by an assessee, whether connected with their business or profession or not connected with their business or profession. It includes all kinds of property, movable or immovable, tangible or i ...
.
Sustainability
The sustainable use of land is the focus of some economic theories.
See also
*
Economics of Land Degradation Initiative
The Economics of Land Degradation (ELD) Initiative is a global initiative which aims to increase awareness of the benefits of sustainable land management and economic consequences of land degradation.
The ELD Initiative was co-founded in 2011 by ...
*
Factors of production
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the rel ...
*
Land consumption
Land consumption as part of human resource consumption is the conversion of land with healthy soil and intact habitats into areas for industrial agriculture, traffic (road building) and especially urban human settlements. More formally, the EE ...
*
Land monopoly
Concentration of land ownership refers to the ownership of land in a particular area by a small number of people or organizations. It is sometimes defined as additional concentration beyond that which produces optimally efficient land use.
Distri ...
*
Land reform
Land reform is a form of agrarian reform involving the changing of laws, regulations, or customs regarding land ownership. Land reform may consist of a government-initiated or government-backed property redistribution, generally of agricultural ...
*
Land value tax
A land value tax (LVT) is a levy on the value of land (economics), land without regard to buildings, personal property and other land improvement, improvements. It is also known as a location value tax, a point valuation tax, a site valuation ta ...
*
Means of production
The means of production is a term which describes land, labor and capital that can be used to produce products (such as goods or services); however, the term can also refer to anything that is used to produce products. It can also be used as an ...
*
Property rights (economics)
Property rights are constructs in economics for determining how a resource or economic good is used and owned, which have developed over ancient and modern history, from Abrahamic law to Article 17 of the Universal Declaration of Human Rights. Re ...
*
Real estate appraisal
Real estate appraisal, property valuation or land valuation is the process of developing an opinion of value for real property (usually market value). Real estate transactions often require appraisals because they occur infrequently and every pr ...
*
Social metabolism
Social metabolism or socioeconomic metabolism is the set of flows of materials and energy that occur between nature and society, between different societies, and within societies. These human-controlled material and energy flows are a basic featu ...
References
Further reading
* Anthony C. Fisher (1987). ''"Natural resources,"'' ''
The New Palgrave: A Dictionary of Economics'', v. 3, pp. 612–14.
* João Pedro Galhano Alves (2009). ''"The artificial simulacrum world. The geopolitical elimination of communitary land use and its effects on our present global condition"'', Eloquent Books, New York, USA, 71 pp.
* Pierre Coulomb (1994). ''"De la terre à l’état: Eléments pour un cours de politique agricole"'', ENGREF, INRA-ESR Laboratoire d’Economie des Transitions, Montpellier, France, 47 pp.
{{natural resources
Environmental economics
Urban economics
Factors of production
Georgism
Land value taxation
Natural resources
Production economics