ABSTRACT
Economic science has traditionally shown a great interest in land use. This interest stems from three economic characteristics of land: (i) land is scarce, (ii) land has alternative use options, and (iii) land has a social value in the economy. The scarcity of goods is important from an economic point of view, as scarce resources may be depleted or even subjected to irreversible destructive processes. This poses the question of how these resources can be dealt with in a sustainable way, in order to make sure that future generations can still use them. Scarcity of land also raises policy questions concerning its efficient usage, since land can be produced only to a limited extent. At the same time, spatial claims are often conflicting, resulting in a need for conflict management. Such conflicting spatial claims stem from physical scarcity, since the choice of a certain form of land use implies the sacrifice of production factors that could be used in an alternative way. This feature is related to the second characteristic of land, namely it has alternative use options, which means that land (and other production factors) can be deployed for different – sometimes complementary, sometimes conflicting – purposes. As this chapter will show, in practice, a multiplicity of different land use functions can be distinguished. As soon as a particular function is no longer practised at a given site, the location can be used for other purposes. However, if land use is exclusively oriented towards a single function, the land often can no longer be used for other purposes, except when different functions can be combined or merged, like in multi-functional land use. The third characteristic of land, its social value, is determined by the interaction of supply and demand in the market. If the population density is increasing, the price of using scarce space will, in accordance with economic theory, increase. Since the total supply of land can in the short to medium term be regarded as fixed, the value of land may be seen as determined by demand (apart from institutional and policy interventions). However, if particular locations are considered for specific uses (e.g., the city centre), the supply of land cannot be regarded as completely inelastic, since alternative – though less preferable – locations do exist, especially when individuals accept to be located outside the city centre. One could say that the pattern of land use reflects competition in the market between alternative uses for sites. Land values and land use are therefore determined simultaneously (Harvey, 2000).
