2. Outline
The Economics of Land Use and
Management
Controlling Land − Own or Lease?
Buying Land
Leasing Land
Conservation and Environmental
Concerns
3. Objectives
1. To explore the unique characteristics of land
and its use in agriculture
2. To compare the advantages and disadvantages
of owning and renting land
3. To explain important factors in land purchase
decisions, methods of land valuation, and the
legal aspects of a land purchase
4. To compare the characteristics of different
leasing arrangements
5. To demonstrate how an equitable share
leasing arrangement can be developed
6. To discuss profitable land management
systems that conserve resources and sustain
the environment
4. LAND RESOURCE
MANAGEMENT
The challenge for developing
countries is to develop land
management programs to increase
the availability of high-quality fertile
lands in areas where population
growth is high, poverty is endemic,
and existing institutional capacity is
weak.
5. RURAL LAND MANAGEMENT
The Rural Land Resources
Management (LRM) Program, at the
World Bank, develops and promotes
knowledge-based technical, social,
institutional and policy choices for our
clients, which improve management
of this critical resource. These
choices focus on:
6. RURAL LAND MANAGEMENT
Developing sustainable land
management through improved land
tenure systems and community
natural resources management;
7. CHALLENGES
Raising the profile of the risk and
vulnerability impacts of climate
change on communities' natural
resources, (land/water) and promote
appropriate adaptation mechanisms;
8. CHALLENGES
Raising the profile of the risk and
vulnerability impacts of climate
change on communities' natural
resources, (land/water) and promote
appropriate adaptation mechanisms;
Mainstreaming of integrated
approaches to Land and Water
resources management for food
security and poverty reduction;
9. CHALLENGES
Creating and strengthening an
enabling environment, which will
enhance national, regional, and
global capacities to implement the
convention to combat desertification
and restore degraded lands.
10. SLM
Sustainable Land Management
(SLM)
SLM is defined as a knowledge-
based procedure that helps integrate
land, water, biodiversity, and
environmental management
(including input and output
externalities) to meet rising food and
fiber demands while sustaining
ecosystem services and livelihoods.
11. SLM
Improper land management leads to
land degradation and a reduction in
the productive and service
(biodiversity niches, hydrology,
carbon sequestration) functions of
watersheds and landscapes. In
layman’s terms, SLM involves:
12. SLM
Preserving and enhancing the
productive capabilities of land in
cropped and grazed areas—that is,
upland areas, down slope areas, and
flat and bottom lands; sustaining
productive forest areas and
potentially commercial and
noncommercial forest reserves;
13. SLM
Actions to stop and reverse
degradation—or at least to mitigate
the adverse effects of earlier misuse
—which is increasingly important in
the uplands and watersheds,
especially those where pressure from
the resident populations is severe
and where the destructive
consequences of upland degradation
are being felt in far more
denselypopulatedareas“downstream.”
14. The Economics of
Land Use and Management
Land is a permanent resource that doesn’t
depreciate or wear out. Land is immobile
and cannot be moved.
Because the supply of land is essentially
fixed, land prices are very sensitive to
changes in demand for its products.
15. Controlling Land − Own or Lease?
How much land to control? How to
acquire it? These are the most
important decisions to be made by any
farmer or rancher. Land acquisition
should be thought of in terms of
control.
Control can be achieved by ownership or
by leasing. Nearly half of U.S. farmland
is leased.
16. Advantages of Ownership
1. Security of tenure
2. Loan collateral
3. Management independence and
freedom
4. Hedge against inflation
5. Pride of ownership
20. Buying Land
Value is determined by:
1. Soil, topography, and climate
2. Buildings and improvements
3. Size
4. Markets
5. Community
6. Location
7. Competing uses
8. Agricultural program characteristics
23. Market Data
Prices of comparable sales are adjusted
for differences in factors contributing
directly to value as discussed earlier. It
is also important to consider:
1. Financing arrangements
2. Relationships of buyer and seller
3. Time of sale
24. Leasing Land
A lease is a legal contract whereby the
landowner gives the tenant the use of the
land for a certain time in return for a
specified payment. Leases on agricultural
land are influenced by local custom.
Type, terms, and length of leases tend
to be uniform in an area.
25. Cash Rent
Rent is paid in cash. It may be due
in advance or at the end of the
production season.
Under a cash lease, the tenant
receives all the income generated
and usually pays all expenses except
property taxes and other ownership
costs of the property.
26. Conservation and
Environmental Concerns
Conservation can be defined as the use
of farming practices that will maximize
the net present value of the long-run
social and economic benefits from land
use. Ordinary budgeting techniques
are often inadequate for deciding how
best to achieve the goals of conservation.
27. Summary
Land is an essential resource for
agricultural production. The
decision to buy or lease land will
affect the production capacity and
financial condition of the business
for many years. In making land-use
decisions, farmers and ranchers
also need to consider the long-run
environmental consequences.
