Land (economics)
Use of land as capital for production
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Factor of production
Land is considered one of the three factors of production (also sometimes called the three producer goods) along with capital, and labor. Natural resources are fundamental to the production of all goods, including capital goods. While the particular role of land in the economy was extensively debated in classical economics, it played a minor role in the neoclassical economics dominant in the 20th century. Income derived from ownership or control of natural resources is referred to as rent.
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Ownership
Because no man created the land, it has no definite original proprietor, owner, or user.
No man made the land. It is the original inheritance of the whole species.
Consequently, 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 (see e.g. United Kingdom, South Africa, Canada).
Addressing the land question
Land reform
Land reform programs are designed to redistribute possession and/or use of geographic land.
Georgism
Georgists hold that this implies a perfectly inelastic supply curve (i.e., zero elasticity), suggesting that a land value tax 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 a vital 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 critical role in the economy than capital.
Academic
Some United Kingdom and Commonwealth universities offer courses in land economy, in which 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 suggested the creation of a school of rural economy at the university.
Accounting
As a tangible asset, land is represented in accounting as a fixed asset or a capital asset.
Sustainability
The sustainable use of land is the focus of some economic theories.