1. Space and Economics Chapter 2: Land use theory
Author
Wim Heijman (Wageningen, the Netherlands)
July 20, 2009

2. 2. Land use theory 2.1 Functions of land 2.2 Land rent
2.3 Land rent and the intensity of land use
2.4 The price of land

3. 2.1 Functions of land Location of raw materials
Location and carrier of capital goods
Input for agriculture
Location and carrier for housing, recreation, infrastructure

4. 2.1 Functions of land Land fulfills needs
Ecological footprint: the amount of land per capita needed to fulfill human needs

5. Ecological Footprint 1997

7. 2.1 Functions of land

8. 2.2 Land Rent Land rent: profit of a hectare
Johann Heinrich Von Thünen ( ): “The Isolated State”
Isotropic plane
The quality of the soil is equal
Transportation costs are proportional to the distance

9. J.H. von Thünen ( )

10. 2.2 Land Rent Questions: Which crop is grown where?
What explains the productivity of land and the intensity of land use?
Solutions:
Land will be used for the activity that generates the highest possible rent.
The closer to the market the higher the intensity of land use and the more productive the land.

11. 2.2 Land Rent Gross Revenue per ha: pq minus Production costs kq
minus Transportation costs qat
Rent R : pq – kq – qat

12. 2.2 Land Rent
R = pq – kq – qat
Three rent functions for three different crops:

13. 2.2 Land Rent
Rent curves

14. 2.2 Land Rent
Crop zones:
Von Thünen rings

15. 2.3 Land Rent and intensity of land use
David Ricardo ( ), takes the differences in land quality into account.
According to Ricardo’s land rent theory the intensity of land use (input of labour per ha) is the highest on the land of the highest quality.

16. David Ricardo ( )

17. 2.3 Land Rent and intensity of land use

18. 2.3 Land rent and intensity of land use
General land rent equation:

19. 2.3 Land rent and intensity of land use
Cobb Douglass production function (01) for a hectare at the distance a from the market, with q for production, w for quality of the land, l for input of labour:

20. 2.3 Land rent and intensity of land use
Von Thünen effect: if distance a increases the input of labour l decreases
Ricardo effect: if quality w increases the input of labour l increases

21. 2.4 The price of land
Price of land P is the summation of discounted rents

22. 2.4 The price of land Land speculation:
If agricultural land changes into residential land then the price will increase. Speculators anticipate that and buy agricultural land for relatively low prices. They hope to sell it at high prices for residential or industrial use in the future. If they are successful they may gain high profits.

23. 2.5 Application

24. 2.5 Application

25. 2.5 Application

26. 2.5 Application

27. 2.5 Application

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29. 2.5 Application
Situation in 1830

30. 2.5 Application
Situation in 2000