Economic and Soc ia l Evaluat ion of Converting
Agr i cu l tu ra l Land t o Non-Agricultural Uses
Joanna Gore ck a - Po znans k a J u n i o r Fellow Center f o r Metropol i tan Planning and Research The Johns Hopkins Univers i ty J u l y , 1978.
Economic and Soc ia l Evaluat ion of Converting Agr i cu l tu ra l
Land t o Non-Agricultural Uses
Motto: " . . . t h e writers of h i s t o r y have seldom noted t h e impoytance of
land use . They seem not t o have recognized t h a t t h e d e s t i n i e s
of most o f man's empires and c i v i l i z a t i o n s were determined
l a r g e l y by t h e way t h e land was used ..." Tom Dale and Vernon G i l l Carter, Topsoi l and C i v i l i z a t i o n , 1955
I . S c a r c i t y of Agr i cu l tu ra l Land and World Food Prospects
I n d u s t r i a l growth and urban development have a major effect upon a g r i -
c u l t u r a l land use as a whole.
va luable f o r a g r i c u l t u r e , l i k e topography, l oca t ion , f e r t i l i t y , c l ima te ,
a l s o make it s u i t a b l e f o r o t h e r u ses .
Some of t h e phys ica l q u a l i t i e s which make land
During t h e p a s t few decades, i n both advanced c a p i t a l i s t and s o c i a l i s t
coun t r i e s , non-ag r i cu l tu ra l use o f land was considered as t h e h ighes t and
b e s t use . In s o c i a l i s t coun t r i e s , as a r e s u l t of fundamental i deo log ica l
b i a s toward material expansion, t h e primacy of i n d u s t r i a l product ion has been
t h e most s t r i k i n g c h a r a c t e r i s t i c o f economic p o l i c y . Also, t h e s t rong econ-
omic competit ion between t h e s o c i a l i s t and c a p i t a l i s t p o l i t i c a l blocks has
r e in fo rced t h e emphasis given t o r a p i d growth i n t h e product ion of indus-
t r i a l goods.
are s t r o n g l y entrenched i n t h e s o c i a l i s t c o u n t r i e s . Hence, many of those
coun t r i e s have converted t h e i r a g r i c u l t u r a l land t o " b e t t e r t t ( i n d u s t r i a l )
uses even i n t h e f ace o f food shor t ages .
The ideology of growth and t h e b e l i e f i n t h e power o f technology
In c a p i t a l i s t coun t r i e s t h e "best use" of land has been based upon t h e
concept t h a t t h e b e s t a l l o c a t i o n of land i s t h a t p a t t e r n of use which b r ings
t h e h ighes t r e t u r n t o i t s ope ra to r s .
monetary terms.
u l t i m a t e c r i t e r i o n of land use p a t t e r n s .
a g r i c u l t u r e i n t h e U.S. has been lower and no t growing as fas t as t h e r e t u r n
i n i n d u s t r i a l , commercial, o r r e s i d e n t i a l use , land has been r e - a l l o c a t e d from
a g r i c u l t u r a l t o i ndus t r i a l - -u rban uses (Raleigh Barlowe, 1958, p . 1 4 ) .
And, t h i s r e t u r n i s measured i n s t r i c t l y
Therefore , t h e c r i t e r i o n of h ighes t r e t u r n i n money was t h e
Because t h e n e t r e t u r n earned by
This
p a t t e r n f o r t h e United S t a t e s a l s o seems t o be p re sen t f o r o t h e r coun t r i e s .
2
Table 1
4 2L( Commercial and i n d u s t r i a l
Res iden t i a l
Cropland and a r a b l e p a s t r u e
Fores t and graz ing a 0 F: $ 4 - - c d L 4
Barren and waste !
Decreas ing us e -capaci t y
A comparison of t h e average l a b o r p r o d u c t i v i t y i n a g r i c u l t u r e (measured
by t h e gross va lue added) i n Poland, and i n o t h e r c o u n t r i e s , sugges ts t h a t
l abo r p roduc t iv i ty i n t h e non-ag r i cu l tu ra l s e c t o r i s from two t o t h r e e times
as high as i n a g r i c u l t u r e . Exceptions are B r i t a i n , Belgium, and t h e
Netherlands ( W . Herer and W . Sadowski, 1977, p . 174) . Hence, as a r e s u l t of
economic ga ins i n non-ag r i cu l tu ra l land use , t h e competit ion among land use
p r a c t i c e s has favored more i n t e n s i v e land use . As a r e s u l t , every yea r
wi tnesses a l a r g e number o f high p o t e n t i a l p r o d u c t i v i t y a g r i c u l t u r a l lands
being s h i f t e d t o non-ag r i cu l tu ra l uses i n both s o c i a l i s t and c a p i t a l i s t
count r ies - -d iminish ing each n a t i o n ' s , and hence t h e wor ld ' s , s tock of pro-
duc t ive farm land . Also, growing popula t ion i n urban and i n d u s t r i a l areas
r e q u i r e s a g r i c u l t u r a l products (food and raw m a t e r i a l s ) . I t i s q u i t e
n a t u r a l t h a t most urban and i n d u s t r i a l c e n t e r s a r e loca ted nea r h ighly pro-
duc t ive a g r i c u l t u r a l areas. Expansion and growth of those urban cen te r s
encroaches on a g r i c u l t u r e ; i n many cases i t i s t h e most product ive a g r i -
c u l t u r a l land.
3
In t h i s paper we w i l l only cons ider t h e lo s ses of a g r i c u l t u r a l land
f o r non-ag r i cu l tu ra l uses as a r e s u l t o f i n d u s t r i a l and urban develop-
ment. We w i l l d i s cuss s u b s t a n t i a l l o s ses of a g r i c u l t u r a l land due t o
e ros ion , d e s e r t i f i c a t i o n , s a l i n a t i o n , e tc . As a r e s u l t of t h e conversion
of a g r i c u l t u r a l land t o non-ag r i cu l tu ra l u ses , t h e annual l o s s of a g r i -
c u l t u r a l land has been very l a r g e . In Poland, 18% of t h e a g r i c u l t u r a l
land converted t o o t h e r uses i n 1975 was prime--most product ive a g r i c u l t u r a l
land. The problem o f tak ing over a g r i c u l t u r a l land f o r non-ag r i cu l tu ra l
uses i s a l s o very se r ious i n t h e United S t a t e s , e s p e c i a l l y i n i t s sprawling
p a t t e r n of land use f o r urban development, which has been ope ra t ing over
t he e n t i r e post-war pe r iod . For example, cu r ren t estimates by t h e U.S. s o i l
Conservation Serv ice wi th r e spec t t o C a l i f o r n i a , i n d i c a t e t h a t a t o t a l o f
1,733,656 acres are expected t o be urbanized and a t o t a l o f 808,871 acres
are expected t o be devoted t o r e c r e a t i o n . This i s c a l c u l a t e d t o an average
of 388 acres p e r day t h a t w i l l be converted during t h i s pe r iod (1967-1980).
Approximately 25 percent o f t h e t o t a l acreage t h a t i s expected t o be
converted i s prime a g r i c u l t u r a l land (Classes I and 11). Table 2 which
p resen t s a summary of land use changes t h a t were found t o have occured i n a
30 yea r -pe r iod n e a r a l a r g e r e s e r v o i r o f water i n Kentucky (James McEvoy I11
and Thomas D i e t z , 1977, p . 11).
There are many examples where highways, a i r p o r t s , and new suburbs
remove more than a m i l l i o n acres of prime a g r i c u l t u r a l land each yea r . This
raises the ques t ion- - to what ex ten t w i l l t h i s removal of primary a g r i -
c u l t u r a l input--land--impinge on t h e a b i l i t y of t h e United S t a t e s t o cont inue
t o i n c r e a s e i t s output o f a g r i c u l t u r a l commodities t o supply both i t s own
needs and those of o t h e r na t ions? The tendency t o use a g r i c u l t u r a l land
4
Table 2
Changes i n Land Uses Recorded Over a 30 Year Per iod Near a Large Reservoir
Type o f Use 1938 1951 1960 1967 To ta l Change
Agr i cu l tu ra l 111,285 110,617 110,186 104,144 7141 (-)
Res iden t i a l 310 941 1,388 7,191 6881 (+)
Commercial 18 39 53 127 109 (+)
Publ ic 48 64 44 199 152 (+)
Water 5,535 5,535 5,535 5,535 0
To ta l 117,196 117,196 117,196 117,196
Note: a l l f i g u r e s i n acres.
of high va lue f o r o t h e r uses has been genera l i n n e a r l y a l l I1advancedt1
coun t r i e s , no t only i n t h e U.S. Besides land a l l o c a t i o n between indus-
t r i a l and urban development, another very important f a c t o r having a s t r o n g
impact on land use i s a g r i c u l t u r a l technology developed i n t h e las t 25
yea r s . This new technology has c rea t ed a sense of s e c u r i t y t h a t s o i l and
d e f i c i e n c i e s can be overcome with f e r t i l i z e r s , i r r i g a t i o n , dra inage , and
o t h e r measures.
a l l t hese technologica l s o l u t i o n s , and reduct ion o f a g r i c u l t u r a l land can be
o f f s e t by a d d i t i o n a l i npu t s of f e r t i l i z e r s , p e s t i c i d e s , machinery, equipment,
e tc . The success measured i n a g r i c u l t u r a l p roduc t iv i ty p e r u n i t of land with
app l i ca t ion of new technology has c rea t ed a view o f unl imi ted power of tech-
no log ica l achievements which w i l l s o lve t h e problem of a g r i c u l t u r a l p roduct ion .
The problem i s :
Loss of t h e b e s t a g r i c u l t u r a l land can be s u b s t i t u t e d by
Can a g r i c u l t u r a l technology abo l i sh t h e s c a r c i t y o f land
5
resources?
conversion of a g r i c u l t u r a l land t o non-ag r i cu l tu ra l uses would n o t c r e a t e
problems of food shor t ages .
mental fact about a g r i c u l t u r e i s t h a t it r e q u i r e s land and good a g r i c u l t u r a l
l and i s f i x e d , and now a diminishing supply. In t h e United S t a t e s and
European c o u n t r i e s , good a g r i c u l t u r a l land is a l r eady i n use and reducing
t h e impact of conversion t o o t h e r u s e s .
o f t h e modern i n t e n s i v e a g r i c u l t u r a l technology i s e s s e n t i a l l y based on
energy r e sources ; f o s s i l f u e l i s converted t o g r a i n and f i b e r .
if t h e p r i c e of o i l was low, r e l a t i v e t o p r i c e s o f o t h e r product ion f a c t o r s
over t h e p a s t 15-20 y e a r s , then t h e r e have been investments i n a g r i c u l t u r a l
technology which are extremely energy i n t e n s i v e (machinery, equipment,
f e r t i l i z e r , i r r i g a t i o n - - a l l o f them use enormous amounts o f energy r e sources ) .
The p resen t o i l p r i c e i n c r e a s e s , o f course badly affect t h e a g r i c u l t u r a l
s e c t o r and decrease. p k o f i t a b i l i t y and u t i l i t y of energy i n t e n s i v e tech-
nology.
t h a t need l a r g e amounts of f e r t i l i z e r s and i r r i g a t i o n which are both energy
i n t e n s i v e . I t i s no t p o s s i b l e t o s u b s t i t u t e a g r i c u l t u r a l land by a growing
inpu t of energy r e ~ o u r c e s because g loba l resources o f t r a d i t i o n a l f u e l are
l i m i t e d , and t h e p r i c e system i s a l r eady t ak ing i t s limits i n t o account .
An i n t e r e s t i n g approach t o t h e above problem i s t h a t of Ferdinand E . Banks
(1976). The i n c r e a s i n g p r i c e s of o i l as well as t h e law of diminishing
r e t u r n s , w i l l pose some limits on energy use f o r a g r i c u l t u r a l purposes .
Long be fo re t h e f u l l impact of technology upon product ion was c l e a r l y
understood, Alfred Marshal l , from t h e e a r l y c l a s s i c a l school , formulated
t h i s law which proclaims t h a t "whatever may be i n t h e f u t u r e developments
A r e s u l t o f t h i s b e l i e f i s t h e o p t i m i s t i c convic t ion t h a t
But i n s p i t e of those expec ta t ions , t h e funda-
The most important c h a r a c t e r i s t i c
Therefore ,
A misfor tune of t h e green r evo lu t ion i s t h e new hybr ids of corn
6
of t h e arts of a g r i c u l t u r e , a continued increase i n t h e app l i ca t ion of
c a p i t a l and labour t o land must u l t i m a t e l y r e s u l t i n a diminution of t h e
e x t r a produce which can be obtained by a given amount of c a p i t a l and
labour (Alfred Marshall , 1938, p . 153) . The phenomenon of t h e increas ing input of product ion, and decreasing
r e t u r n s pe r u n i t o f t h i s i npu t , i s now common i n t h e world 's a g r i c u l t u r a l
product ion (energy i n t e n s i v e t y p e ) .
c a p i t a l which is br inging now diminishing r e t u r n s . The Law of Diminishing
Returns can be recognized inrbdiminishing p roduc t iv i ty ( r e tu rn ) of a g r i c u l -
t u r a l output pe r e x t r a u n i t of energy inpu t .
i sh ing r e t u r n p e r e x t r a u n i t o f input of f e r t i l i z e r s on a g r i c u l t u r a l ou tput ;
f u r t h e r app l i ca t ion of f e r t i l i z e r s would no t i nc rease a g r i c u l t u r a l produc-
t i o n s i g n i f i c a n t l y . There a r e c a l c u l a t i o n s :already done which show t h a t
doubling a g r i c u l t u r a l output r e s u l t s i n energy input i nc reas ing t e n f o l d .
Therefore use of l a r g e r amounts of f e r t i l i z e r s may make economic sense only
i n t h e s h o r t run, but energy resources are l imi t ed and more c o s t l y every
yea r .
of a g r i c u l t u r a l technology based on i n t e n s i v e energy use .
Energy became t h i s product ive input of
Already documented i s t h e dimin-
So f a r , we have almost exhausted t h e p o s s i b i l i t y of our cu r ren t form
We w i l l now explore another op t ion f o r a g r i c u l t u r a l product ion:
In Europe and t h e
new
land which can be converted t o a g r i c u l t u r a l land.
United S t a t e s , good a g r i c u l t u r a l land i s a l ready i n use but t h e r e a r e s t i l l
some p o s s i b i l i t i e s of convert ing v i r g i n land i n t o a g r i c u l t u r a l product ion
i n Afr ica and Lat in America. (Asia a l ready uses a v a i l a b l e a g r i c u l t u r a l
l and . )
eco logica l s o p h i s t i c a t e d knowledge a r e necessary f o r br inging i n t o pro-
duct ion any s i z a b l e q u a n t i t y of new land .
a g r i c u l t u r a l economic va lue , i t must be "produced" and it w i l l cause very
But t h e exper t s po in t out an enormous amount of c a p i t a l , energy, and
Before v i r g i n land w i l l reach
7
high c o s t s , probably h ighe r than conserva t ion of a v a i l a b l e a g r i c u l t u r a l
resources . More p r e c i s e l y , c o s t s o f b r ing ing new land i n t o a g r i c u l t u r a l
p roduct ion are needed t o be determined.
While t h e conversion of a g r i c u l t u r a l land t o non-ag r i cu l tu ra l uses
t akes p l a c e , a v a i l a b l e a g r i c u l t u r a l technology i s n o t ready t o so lve t h e
problems of s c a r c i t y o f a g r i c u l t u r a l l and because of growing c o s t s o f energy,
and diminishing r e t u r n s of energy inpu t s i n a g r i c u l t u r a l p roduct ion . Bringing
t h e new land t o a g r i c u l t u r a l uses doesn ' t seem t o be a good op t ion according
t o t h e c o s t s of t h i s ope ra t ion . The f a c t o r s mentioned above r e s t r i c t t h e
p o s s i b i l i t y o f growth o f a g r i c u l t u r a l p roduct ion wi thout meaningful changes
i n land use p a t t e r n and new achievements of technology--saving r e sources .
Nowadays, t h e supply of a g r i c u l t u r a l l and f o r product ion o f food has become
one of t h e most important a spec t s of eco log ica l s c a r c i t y - - t h e f u t u r e of our
p l a n e t depends on how much food we can produce t o f eed our people . Approx-
imate ly 4 b i l l i o n people i n h a b i t t h e e a r t h today and i f t h e c u r r e n t ra te
of popula t ion growth cont inues , t h e r e w i l l be 8 b i l l i o n people on t h e
globe i n 2010 and 16 b i l l i o n by 2045 (even g iv ing o p t i m i s t i c assumptions
t h a t f e r t i l i t y i s bound t o d e c l i n e ) .
a s h e e r lack of food. "The n u t r i t i o n a l s h o r t f a l l i s such t h a t even wi th
a p e r f e c t d i s t r i b u t i o n of c u r r e n t world food product ion, everyone would be
somewhat malnourished ...I1 So i n c r e a s i n g popula t ion p r e s s u r e always c r e a t e s
t h e need f o r food. But how much land is needed i s d i f f e r m t a r e a s t o sa t -
i s f y t h e s e requirements v a r i e s with p r o d u c t i v i t y o f land , t h e l e v e l of
t echno log ica l development and consumption h a b i t s of people .
p l u s produced by t h e United S t a t e s doesn ' t seem t o be very o p t i m i s t i c ,
The United S t a t e s no longer has l a r g e b u f f e r s tocks of food o r s i z a b l e
amounts of product ive land t o feed t h e world. The sharp p r i c e r i se of
Even today, f a r t o o many s u f f e r from
The food s u r -
8
a g r i c u l t u r a l p roducts during t h e l a s t few yea r s i n d i c a t e s t h a t t h e world
l i v e s on a very t h i n margin of food supply which i s vu lne rab le t o t h e
s l i g h t e s t diminut ion of supply ( W . Ophuls, 1977, p . SO).
The ques t ions which have t o be r a i s e d are: Can t h e world produce
Also, enough food; what w i l l be t h e c o s t s ; and with what adjustments?
what are t h e chances t o win t h e race between technology development and
popula t ion growth?
Let us d i s c u s s f o r a wh i l e , t h e problem of technology a v a i l a b l e f o r
a g r i c u l t u r a l p roduct ion . O f course , t echno log ica l p rog res s has played a
very important r o l e i n he lp ing man t o keep ahead i n t h e r ace , bu t people
g e t used t o it and they regard t h e flow of new technology as end le s s .
S t i l l , wi thout a doubt, new technology can he lp i n so lv ing man's f u t u r e
land-requirement problems, bu t man has t o use t h i s technology whi le under-
s tanding t h e phys ica l l i m i t s of our p l a n e t . Current forms of a g r i c u l t u r a l
technology w i l l n o t f u l f i l l t h e needs f o r food product ion f o r reasons
which were d iscussed on previous pages.
a g r i c u l t u r a l technology can p o s s i b l y a l t e r t h i s assessment , bu t un fo r tuna te ly
such a new technology i s no t y e t i n s i g h t .
change toward resource sav ing technology.
Therefore , on ly new l e v e l s of
This new technology has t o
Some authors l i k e J . Gil l ies and F . Mi t t lebach , argue t h a t because
the a l l o c a t i o n of a g r i c u l t u r a l l and i s determined by market p r i c e s , i f t h e
p r i c e s of a g r i c u l t u r a l p roducts r i s e then a returrl y i e l d i n a g r i c u l t u r a l
use of land w i l l be h ighe r , and then we w i l l observe a t r a n s f e r back from
urban t o a g r i c u l t u r a l u ses .
Let us a l s o d i scuss another p o s s i b i l i t y f o r a g r i c u l t u r a l p roduct ion:
r e v e r s a l conversion of non-ag r i cu l tu ra l land t o a g r i c u l t u r a l uses i n t h e
s i t u a t i o n of food supply sho r t ages . When we look a t mi les of a s p h a l t ,
9
highways, and a i r p o r t s , houses and s t r ee t s , commercial, i n d u s t r i a l , and
r e s i d e n t i a l areas, t h e problem of r e v e r s a l conversion t o a g r i c u l t u r a l uses
seems t o be a r h e t o r i c a l one. We a l s o have t o admit t h e fact t h a t t h e
a g r i c u l t u r a l l and i s n o t simply a f a c t o r of product ion because f o r
a g r i c u l t u r e , t h e fundamental p r i n c i p l e i s t h a t i t d e a l s with l i f e wi th
l i v i n g subs tances .
i t s mean of product ion i s t h e l i v i n g s o i l .
s o i l conta ins m i l l i a r d s of l i v i n g organisms, t h a t f u l l e x p l o r a t i o n of which
i s fa r beyond c a p a c i t i e s of man."
"Its products a r e t h e r e s u l t s of processes of l i f e , and
A cub ic cen t ime te r of f e r t i l e
( E . F . Schumaker, 1973, p . 110)
Land i s t h e mele-economic f a c t o r o f product ion because man has n o t made
it and when i t i s s p o i l e d , man cannot make it aga in .
ve r s ion of non-ag r i cu l tu ra l l and would be extremely c o s t l y i f we even
assume t h a t s o r t w i l l no t be contaminated with p e r s i s t e n t , harmful sub-
s t a n c e s and i t s f e r t i l i t y w i l l n o t be destroyed-- the c o s t s of r e v e r s a l
w i l l be dependent on c o s t s of development o f t h i s land dur ing n o n - a g r i c u l t u r a l
u ses .
with t h e c o s t s of conserva t ion of prime a g r i c u l t u r a l l and .
i r r e v e r s i b l e l o s s we mean t h a t we never w i l l be a b l e t o b r i n g back land t o
a g r i c u l t u r a l purposes as cheaply as t h e c o s t s of conserva t ion (Mason M .
Gaffney, 1965, p . 546)
Also, r e v e r s a l con-
I t seems t o be very expensive t o a t tempt such a c t i v i t y i n comparison
Therefore , by
A l l t h e s e d ivaga t ions b r ing us t o t h e conclusion t h a t world land use
We w i l l d i s c u s s below p r a c t i c e s should be c o r r e c t e d as soon as p o s s i b l e .
t h e economic mechanism of land conversion.
10
11. I n s t i t u t i o n a l Bias: Market F a i l u r e , Government Regulat ion F a i l u r e
Our s o c i e t i e s , both s o c i a l i s t and c a p i t a l i s t , are g iv ing a f i n a n c i a l
t a r g e t t o a p a r t i c u l a r eocnomic a c t i v i t y , without regard t o any damage it
may cause i n o t h e r p a r t s of t h e economy. Conversion o f a g r i c u l t u r a l land
t o non-ag r i cu l tu ra l uses i s a t y p i c a l example
Marx, more than a century ago, descr ibed this watchword of market
cap i t a l i sm as fol lows:
might be observed on the land market -- p r i v a t e owners s t r i v e t o maximize
cu r ren t b e n e f i t s a t t h e expense o f the f u t u r e .
soc2e ty on the Tmplications whichmay affect o t h e r markets doesn ' t
o f t h i s a t t i t u d e . Karl
"Apres nous l e deluge." T h i s kind o f a t t i t u d e
The f u t u r e wel l -being of
e n t e r the c a l c u l a t i o n s of p r i v a t e land ope ra to r s .
P ro tagon i s t s o f t h e market system b e l i e v e i n t h e f l e x i b i l i t y of market,
and i t s adjustment t o t h e p r i c e s i g n a l s .
s i g n o f food shor t age , as a r e s u l t o f diminishing a g r i c u l t u r a l l and , and
i n c r e a s e of a g r i c u l t u r a l product ion c o s t s , w i l l b r ing back land , c a p i t a l ,
and people t o the a g r i c u l t u r a l s e c t o r .
respond smoothly and appropr i a t e ly t o t h e p r i c e s i g n a l s genera ted by a g r i -
c u l t u r a l land s c a r c i t y , high c o s t s of r e v e r s a l conversion, h igh c o s t s of
developing new land f o r a g r i c u l t u r a l u ses , e t c . As I descr ibed it i n t h e
f i rs t p a r t o f t h i s paper , i n d u s t r i a l and commercial w e s of land are br inging
h ighe r r e t u r n s t o employed c a p i t a l and, t h e r e f o r e , i nd iv idua l owners p r e f e r
those uses .
They are convinced t h a t t h e f i r s t
But t h e market may f a i l t o
In t h e market economy, market va lue doesn ' t make any d i f f e r e n c e
between goods taken from n a t u r e , l i k e land o r manufactured goods. Therefore ,
t he land i s t r e a t e d l i k e any o t h e r market good according t o t h e p r i n c i p l e
of prof i t -making and market, i n s e t t i n g p r i c e s without tak ing any respons i -
b i l i t y f o r goods which are purchased. If prime a g r i c u l t u r a l land i s purchased
11
f o r o t h e r uses and t h e o f f e red p r i c e i s a t t r a c t i v e f o r farmers' t r a n s -
a c t i o n s , conversion of a g r i c u l t u r a l land t o o t h e r uses w i l l then t a k e
p l a c e .
The market ignores na tu ra l (> resources a s s p e c i a l goods, and s c a r c i t y
o r unrenewable cha rac t e r s o f resources are not taken i n t o account. The
land market assumes t h a t t h e supply of land a v a i l a b l e t o each ind iv idua l
ope ra to r i s l i m i t e d only by h i s w i l l i ngness and a b i l i t y t o pay.
phys ica l supply of land, o r f u t u r e p rospec t ive s c a r c i t y of a g r i c u l t u r a l
land doesn ' t appear on t h e market, which doesn ' t assume t h e ex i s t ence
of limits.
goes t o those who can pay more.
h ighe r r e t u r n s than farmers are w i l l i n g t o pay h ighe r p r i c e s f o r land .
Also, farmers are no t p r o t e c t i n g t h e a g r i c u l t u r a l land a g a i n s t conversion.
For example, farmers from C a l i f o r n i a t r i e d t o p r o t e c t t h e i r farm d i s t r i c t s
from encroachment.
p a r t because those farmers are ambivalent. They want t h e i r land l e f t i n
farme, but they a l s o want a chance t o s e l l it a t t h e b e s t p o s s i b l e p r i c e .
I t seems t o be h ighly doubt fu l t h a t a g r i c u l t u r e can create b a r r i e r s a g a i n s t
conversion.
land and he w i l l be g lad t o s e l l i t .
This
Under land market cond i t ions , t h e con t ro l o f land normally
On t h e market, developers expect ing
In gene ra l , such e f f o r t s have no t been success fu l ; i n
A farmer doesn ' t know when he might r ece ive an o f f e r f o r h i s
Allan Schmidt%(l968, p . 25) r e sea rch shows t h a t land p r i c e s on t h e
market are much h igher than farmland va lues , measured i n terms of a g r i c u l t u r a l
ou tput . For example, f o r farmland valued a t $300 a farmer may r ece ive
$1000 t o $3000 from a developer who i s tak ing over h i s land f o r non-agricul-
t u r a l u ses . According t o t h e estimates mentioned above, farmers w i l l seek
f o r a chance t o s e l l t h e i r l and . I t has been p ro jec t ed t h a t i n t h e t h i r t y
years remaining, three-fourths of C a l i f o r n i a ' s e x i s t i n g farmland w i l l be gone
(Richard Merrill, 1976, p . 1 7 4 ) . Private market of land may, as a r e s u l t ,
1 2
cause s e r i o u s i n c r e a s e s i n food p r i c e s and then the market a l l o c a t i o n of
resources w i l l a f f e c t s o c i e t y a t l a r g e . The e f f e c t s o f land market t r a n s -
a c t i o n s w i l l s p i l l over due t o food p r i c e i n c r e a s e s .
food p r i c e i n c r e a s e s may a f f e c t poor c o u n t r i e s e s p e c i a l l y , and r i c h c o u n t r i e s
with income d i s t r i b u t i o n problems.)
(Food shor t ages and
But i n a country l i k e t h e United S t a t e s , t h e i d e a of i n t e r v e n t i o n i n
t h e land market has many opponents. Robert C . E l l i ckson (1976, p . 719)
cons ide r s a g r i c u l t u r a l l and as an e l a s t i c supply ; h i s p o l i c y of a g r i c u l t u r a l
land conserva t ion may reduce food p r i c e s , bu t a l s o s i g n i f i c a n t l y raises
housing p r i c e s .
some impl i ca t ions , b u t what w i l l happen i f t h e p r e s e n t tendency of con-
v e r t i n g a g r i c u l t u r a l land t o o t h e r uses cont inues? O f course , t h e r e i s a
r i s k i n conserva t ion o f a g r i c u l t u r a l l and , because we may overes t imate
ou r f u t u r e needs f o r i t , bu t t h i s e r r o r seems t o be more t o l e r a b l e than
t h e burdens of a l l c o s t s r e l a t e d t o t h e r e v e r s a l p rocess of non-agr icu l -
t u r a l land t o a g r i c u l t u r a l u ses .
I agree t h a t conserva t ion of a g r i c u l t u r a l l and w i l l have
Some regu la to ry a c t i o n s have been undertaken t o c o r r e c t t h e market
system.
be co r rec t ed by r egu la to ry ordinances l i k e zoning and t a x a t i o n , which a r e
based on land use p lanning , and a r e designed t o b r i n g some o r d e r t o t h e land
market. The r o l e of zoning i n t h e conserva t ion o f a g r i c u l t u r a l l and i s t o
prevent improper use of land and undes i red development. Zoning, as t h e case
s t u d i e s and l i t e r a t u r e i l l u s t r a t e d , i s n o t taken s e r i o u s l y i n land market
t r a n s a c t i o n s .
and I1bestv1 uses , zoning i s changed as des i r ed : t e c h n i c a l and l e g a l d e f i c -
i e n c i e s of zoning are well known. Therefore , zoning doesn ' t accomplish t h e
expec ta t ion of b r ing ing some o r d e r i n t o land conversion--but i n s t e a d ,
Market imperfec t ions i n t h e a l l o c a t i o n o f land i s supposed t o
Because land i s supposed t o be used according t o i t s 'Ihighestl '
13
in t roduces more unce r t a in ty and inc reases t h e r i s k of land holding by making
t h e da t e of land conversion less p r e d i c t a b l e . Ins tead of c o r r e c t i n g imper-
f e c t i o n s i n t h e market, zoning inc reases them. In p r a c t i c e , zoning only
s a n c t i f i e s what every ind iv idua l wishes on t h e land market.
p u b l i c r egu la t ion i n t h e United S t a t e s shows na ive assumptions t h a t once
p u b l i c c o n t r o l s ( l i k e zoning) are c rea t ed , they w i l l be adminis tered i n t h e
widest p u b l i c i n t e r e s t .
clear and e x p l i c i t purpose o f land planning t h a t takes i n t o account broader
s o c i a l a spec t s of land use . Zoning, as a t o o l of ca r ry ing on a land use p l an ,
i s s u f f e r i n g from t h e same weakness as t h e planning o f land use .
indeed genera l planning o rgan iza t ions which t r y t o v i s u a l i z e t h e f i n a l
course of land use , bu t they have no means t o c a r r y ideas i n t o ope ra t ion .
Therefore , decision-making i n land conversion i s h igh ly d i spe r sed , and a
fragmented process not t ak ing t o account t h e o v e r a l l wel l -being of s o c i e t y
(Marion Clawson, 1971, p . 5 ) . No person o r o rgan iza t ion i s r e spons ib l e
f o r t h e f i n a l r e s u l t o f land use a c t i v i t i e s . In t h i s s i t u a t i o n , each land
ope ra to r i s seeking f o r h i s own ga in .
The h i s t o r y o f
The reason f o r zoning f a i l u r e i s t h e lack of a
There are
The o the r instrument which i s used t o p re se rve a g r i c u l t u r a l land i s
t a x r e l i e f laws; lower t axes on farm land a t t h e edge o f c i t i e s .
and C a l i f o r n i a adopted these measures but none of t hese programs which have
aimed a t p re se rva t ion of a g r i c u l t u r a l land has been e f f e c t i v e .
ample, i n Ca l i fo rn ia , land conserva t ion on t h e Williamson Act r e q u i r e s farmers,
i n r e t u r n f o r t a x r e l i e f , t o s ign c o n t r a c t s t o keep t h e land un-developed
f o r a t l e a s t t e n yea r s , though t h e land owner who wants t o develop h i s
proper ty ea r l i e r can u s u a l l y ob ta in t h e agreement by paying a s u b s t a n t i a l
pena l ty .
p r o d u c t i v i t y r a t h e r than t o i t s p o t e n t i a l va lue f o r t h e developer and,
Maryland
For ex-
Land under c o n t r a c t i s taxed i n propor t ion t o i t s a g r i c u l t u r a l
According t o A . Schmidt, e s t ima t ions of a g r i c u l t u r a l va lue are very low
i n comparison wi th r e a l es ta te va lue . In f ac t , t a x a t i o n measures d o n ' t
d i c t a t e t h e use o f land f o r h ighe r r e t u r n .
l i k e zoning and t a x a t i o n , are very weak i n p r e s e r v a t i o n of a g r i c u l t u r a l
l and . Also, i n s o c i a l i s t c o u n t r i e s , r egu la to ry ins t ruments don ' t p revent
a g r i c u l t u r a l l and from conver t ing t o o t h e r u ses . Usual ly a s t r o n g indus-
t r i a l lobby e a s i l y f i n d s a way t o avoid p e n a l i t i e s o r t a x a t i o n , which have
t o be p a i d i n case of conversion. In Poland, i n 1975 and 1976, 60 pe rcen t
of developers avoided payments r equ i r ed by law i n 1971.
Both r egu la to ry ins t ruments ,
15
111 Soc ia l Cri ter ia f o r D i rec t ing Land Use
A s descr ibed above, i n d i v i d u a l a c t i o n on t h e land market r e s u l t s i n
Among a misuse of land , and s h i f t i n g c o s t s t o o t h e r members of s o c i e t y .
l and use e x p e r t s , t h e r e i s an opinion t h a t g r e a t e r p u b l i c c o n t r o l of land
use i s c e r t a i n l y needed. Therefore , land market has t o be c o n t r o l l e d by
land-use p lanning based on t h e maximization o f p u b l i c welfare. Land-use
planning i s supposed t o be t h e oppos i te o f improviza t ion .
pe r spec t ive i n land-use p o l i c y and diminished r o l e s f o r p r i v a t e compe-
t i t i o n f o r land seems t o be an avoidable i s s u e because land i s t o o impor-
t a n t t o be l e f t t o p r i v a t e - p r o f i t motivat ion. The market system g ives t o
The long-run
p r i v a t e owners t h e freedom t o dec ide how they might use o r abuse t h e i r
l and . Pr iva te p rope r ty r i g h t s are on a market system p r i n c i p a l .
a c t i o n t o d i r e c t land use p r a c t i c e s and t o r e s t r i c t some f ree market oper-
a t i o n s , has t o be undertaken-especial ly wi th growing competi t ion f o r land
uses .
exc lus ion of market. There i s a p o s s i b i l i t y t o s u b s t i t u t e i n d i v i d u a l
p rope r ty r i g h t s with l i m i t e d ownership r i g h t s i n t h e use o f land . A s an
i n d i v i d u a l owner o f a r i f l e has no r i g h t s t o use it f o r a11 purposes and
occas ions , some r e s t r i c t i o n s should a l s o be app l i ed t o p r i v a t e land owners.
Pub l i c
Planning of land use i n c a p i t a l i s t systems doesn ' t mean t h e necessary
The p r e s e r v a t i o n of a g r i c u l t u r a l l and , from o t h e r u ses , might be achieved
by t h e formation o f a s p e c i a l new market o f prime a g r i c u l t u r a l l and; t h i s
land could then be used o r s o l d only f o r a g r i c u l t u r a l p roduct ion . Of course ,
t h e d i f f e r e n c e between t h e a g r i c u l t u r a l va lue o f land and t h e development
va lue should be p a i d t o t h e farmers as a form o f compensation. There i s
a l s o t h e p o s s i b i l i t y of a g r i c u l t u r a l land conserva t ion by purchasing
ownership r i g h t s from farmers (by t h e l o c a l government) f o r a p e r i o d o f
30 yea r s t o make s u r e t h a t t h e a g r i c u l t u r a l l and w i l l n o t be s o l d f o r o t h e r
16
uses . There are many a v a i l a b l e s o l u t i o n s , bu t they w i l l r e q u i r e g r e a t e r
s o c i a l c o n t r o l .
The i n d i v i d u a l s , co rpora t ions , government agencies , e t c . , p l a q i n
o rde r t o maximize t h e i r own ga ins , and land use p o l i c y i s t h e aggregated
r e s u l t o f a c t i o n on t h e s e p r i v a t e p l a n s .
r e l i e f r e f l e c t compet i t ion between d i f f e r e n t groups o f i n t e r e s t r a t h e r than
s o c i a l coopera t ion and s o l i d a r i t y toward land resources problems.
For example, zoning and t a x a t i o n
The most important i n t e r v e n t i o n i n t h e land market seems t o be t h e
major t r a n s f e r o f p rope r ty r i g h t s , as mentioned above.
may c r e a t e nega t ive changes such as food p r i c e i n c r e a s e s .
n o t want t o t o l e r a t e t h e s e changes- -espec ia l ly t h e poor w i l l be t h e worst
a f f ec t ed .
comprehensive p l an which would inc lude s o c i a l c r i t e r i a o f land-use.
Despi te enormous amounts of l i t e r a t u r e and d i scuss ions , t h e r e doesn ' t e x i s t
Comprehensive land-use planning (Robert Nelson, 1977, p . 1 9 2 ) . A compre-
hens ive , long-range, l i f e p l an has t o con ta in a v a r i e t y o f imp l i ca t ions
which an i n d i v i d u a l doesn ' t recognize , because they may be i n c o n s i s t e n t
wi th h i s a c t u a l pe r sona l g o a l s .
A f ree land market
Soc ie ty w i l l
Land use reform should be in t roduced by t h e formula t ion of a
1 7
BIBLIOGRAPHY
Arrow, Kenneth, O . , 6 F i she r , Anthony, 0. t'Environmental P rese rva t ion ,
Uncer ta in ty and I r r e v e r s i b i l i t y , " QUE, May, 1974.
Bank, Ferdinand. The Economics o f Natural Resources, New York: Plenum
Press, 1976.
Barlowe, Raleigh. Land Resource Economics. Englewood Cliffs: P ren t i ce -
Hall, 1958, p . 16 .
Clawson, Marion. "Urban Sprawl and Specula t ion i n Suburban Land," Land
Economics, 1962, pp. 9 9 4 1 1 .
Clawson, Marion. "Negot ia t ion and Land Conversion," Jou rna l of t h e
American I n s t i t u t e o f P lanners , January, 1971.
Clawson, Marion. "Suburban Land Conversion i n t h e United S t a t e s ," RFF, - Balt imore, 1971.
E l l i ckson , Robert , C . "Ticket t o Thermidor: A Commentary on t h e Proposed
C a l i f o r n i a Coas ta l Plan," Southern C a l i f o r n i a Law Review, 1976, pp. 715-732.
Gaffney, Mason, M . "Soi l Deplet ion and Land Rent," Natural Resources
Jou rna l , January, 1965, pp. 537-557.
Gi l l ies , J . , 6 Mit te lbach , F . 'IUrban Pressures on C a l i f o r n i a Land: A
Comment," Land Economics, 1953, pp. 80-83.
Gibson, James, A. "On t h e Al loca t ion o f Pr ime A g r i c u l t u r a l Land," Jou rna l
of S o i l and Water Conservat ion, 1977, pp. 271-279.
Harvey, Robert , O . , 6 Clark , W . A . V . "The Nature of Economics o f Urban
Sprawl," Land Economics, February, 1965, pp. 1-10.
Herer, W . , 6 Saudowski, W . "Migration from Agr icu l tu re - -Ef fec t s and Costs,"
Oeconomica Polona, 2/1977, pp. 165-196.
Herf indahl , O . , 6 Kneese, A . V . Economic Theory o f Natura l Resources.
Columbus, Ohio: Charles E . Merril, 1974.
18
Kno t i l l a , J . , V . , 6 Fishe r , Anthony, C . The Economics of Natural Environment.
Baltimore: Johns Hopkins Press, 1975.
Marshal l , Al f red . P r i n c i p l e s of Economics. New York: MacMillan, 1938, p . 1 5 3 .
McEvoy, James, 111, and D i e t z , Thomas. Handbook f o r Environmental Planning.
New York: John Wiley Sons, 1977.
Merr i1 , 'Richard . Radical Agr i cu l tu re . New York: Harper Row, 1976.
Nelson, Robert , H . Zoning and Property Rights . Cambridge: MIT Press, 1977.
Ophuls, W . Ecology and t h e P o l i t i c s of S c a r c i t y . San Francisco: Freeman and
Company, 1977.
Schmidt, Al lan . Wonvert ing Land from Rural t o Urban Uses," RFF, Baltimore, -
1968.
Schumaker, E . F . Small i s Beau t i fu l , New York: Perennia l L ibrary , 1973.
