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Date: 2024-11-12 Page is: DBtxt001.php L0700-UA-NC-L-LAND

UNIT OF ACCOUNT
for NATURAL CAPITAL / LAND



Land

The value of land should be related to a land value unit, and adjusted to reflect all the various uses there are for land, and not just those that a priced into money units as a result of a real estate transaction or the acquisition and development of land for some economic activity like mining, the building of a shopping mall, houses, office buildings and any other economic investment.

There is value in land when the land is enabling eco-services like trees and forests for carbon, wetlands for fisheries, wildland for bio-diversity, natural land for water purification, and so on. Since the start of the industrial revolution, the value of land has been closely linked with the economic activities that are enabled by the land, and no value has been attributed to the natural ecosystem services that are enabled by the land.
Fairly early in my career I became the CFO of an international shrimp fishing company. We operated some 80+ shrimp trawlers around the world, and I quickly learned of the vital role that mangrove coastlines played in the life cycle of shrimp ... and in the profit performance of our shrimp fishing company. Loss of mangrove results in loss of juvenile shrimp and in turn less shrimp catch and less profits. The mangrove plays a critical role in the (profit) sustainability of a shrimp fishing company.


The unit of measure of land could be that 1 hectare of land = 1000 land units. Land use is constrained by a limited and fixed amount of land, and the value will change depending on the use being made of the land.

Land may be used for urban development, suburban communities, rural agriculture, industrial use, tourism and various forms of ecoservice and habitat for bio-diversity.

Many things associated with land and land use could be related to the idea that 1 hectare of undeveloped natural land equals 1000 (say)


Framing the TVM Numbering System

State ... Balance Sheet ... the Accumulated Values

There are positive accumulated values and their are negative accumulated values ... just as there are assets and liabilities in a conventional financial balance sheet.

Multiple numbers are needed to describe the static and the dynamic characteristics of land.

The conventional real estate industry buys and sells land based mainly on economic considerations ... essentially what a buyer is prepared to pay based on the economic potential of the land as for example, being developed into a shopping mall or some other sort of commercial building or for residential construction.

Land ... real estate ... also has value because of its social impact.
Central Park in New York does not have any direct economic value per se ... it is nothing more than a natural piece of land in the middle of Manhattan. However, the residential real estate around the Park benefit from the Park in terms of life style / quality of life. This is social impact arising because of the Park.
In turn all of this is reflected in the real estate value of the property around the Park ... that is the price of this real estate is higher than it would otherwise be without the Park.

Land ... real estate ... also has value and impact as it relates to the environment.

There is a big difference between land that has been paved over with an impervious macadam compared to natural land, and especially tree covered natural land. Impervious surfaces make the run-off from storm water much more damaging than when there are trees and permeable natural soil.

Compared to natural undeveloped land, the natural life associated with the steel and concrete of a built up development is tiny. This has been ignored in the economic valuation of land, but should not be ignored as more and more of natural land is converted for some form of economic development.

More about LAND as NATURAL CAPITAL Open L0700-CS-NC-L-LAND
More about Ecoregions Open L0700-CS-NC-L-Ecoregions
More about LAND as part of the SOCIO-ENVIRO-ECONOMIC system Open L0700-SS-LAND



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