US land speculators see lucre in solar projects as ...
UK Progressive Conservatives support a Land Tax
Speculators profit handsomely from land. Can’t all of society? We trim, blend, and append three 2012 articles from: (1) Los Angeles Times, Feb 18, on solar sites by J. Cart; (2) USA Today, Feb 8, on farmland by C. Raasch; and (3) Cambridge U Conservation Assoc, reprinting from the Egremont blog, Feb 8, on LVT by David Cowan.
by Julie Cart, by Chuck Raasch, and by David Cowan
Land speculators see silver lining in solar projects
No water, the wind blows all the time, a Godforsaken place. The modern-day gold rush is about more than renewable energy. Solar companies and land speculators are gobbling up scarce private land in the California deserts, driving prices up 10- to 20-fold, or even higher.
Desolate acreage that a few years ago might have sold for less than $500 an acre can now fetch as much as $20,000 an acre. Farmers are also getting in on the action. Alfalfa and cotton fields are being converted to solar and wind farms as the industry's big players put together mega-deals.
A family of alfalfa growers in Gila Bend, Ariz., sold 3,000 acres of cropland to a consortium of investors, who then sold the land to Spanish solar giant Abengoa for $45 million.
Runaway real estate prices carry a risk. Prices have risen so sharply and sales have been so spotty that establishing the true value of raw desert land is difficult.
Solar companies are reluctant to speak publicly about land prices, partly out of fear that they will inflame an already overheated market. Developers try to fly beneath the real estate radar, often buying contiguous parcels under different names or through third parties to avoid igniting a land rush.
The market has spawned speculators, investors who have purchased or control options on land, whose only plan was to sell to a solar company.
What solar developers require: mostly flat land near transmission lines, and reliable sunshine. Depending on the size of the plant, companies may need a few hundred or a few thousand acres.
Most of the utility-scale solar farms sprouting in the desert are on federal land, which companies lease for a nominal yearly rate. But some developers prefer private property, even at high prices, because public land carries a thick sediment of bureaucracy: a snarl of federal and state environmental laws that requires time-consuming and expensive analysis before the first shovel of dirt is turned.
To meet the exceptionally high front-end costs, solar developers are dependent on federal loan guarantees, tax rebates and other subsidies to finance construction of multibillion-dollar solar plants. Renewable energy subsidies have been accelerated by the Obama administration, and the land-buying frenzy is in part caused by the approaching end of some federal incentives.
To see the whole article, click here .
JJS: People who speculate in land are not necessarily bad but they are doing something wrong, even if it is right in our current property regime. Land is something nobody made and everybody needs. And its value is something everybody (society) made, everybody needs, and each member of society deserves as compensation for being excluded from all other locations.
If society did bother to recover what’s rightfully its own common wealth, then there’d be no unearned profit to lure speculators. Further, if government did not tilt the playing field and distort prices with its tax breaks and subsidies, then land prices would not get inflated. And if government did charge polluters for polluting (along with zero subsidies for all and any energy producers), then we’d no the true worth of solar alternatives.
Then our economy could cure itself of its addiction to fossil fuels and switch to clean alternatives quickly and smoothly. Plus, if government didn’t try to pick winners as by subsidizing ethanol and sprayed agriculture, we’d know the true value of farmland, too.
Farmland goes for a premium as commodity prices tick up
The Agriculture Department predicts that net farm income in 2012 will be the second-highest on record, at $91.7 billion, down 6.5% from 2011. But the USDA is forecasting a 5.9% rise in farmland prices this year.
While the stock market is struggling toward pre-2008 crash levels and home prices have plummeted, the average price of farmland increased by 31% from 2006 to 2011, to slightly more than $3,000 an acre. But in many parts of the traditional Corn Belt-- from Ohio to Iowa -- prices routinely doubled to $10,000 an acre or more this winter.
High prices of corn, wheat and other commodities, low interest rates, investors seeking better returns than can be found in the stock market or bank CDs, and demand for food abroad have produced record net farm income.
Rising demand for protein in diets abroad, especially in China and other rapidly growing economies in Asia, has driven up prices of corn, wheat, and other basic commodities. Those countries lack the land to grow feed for animals and must import it. Droughts, highlighted by the fire devastation of Russia's grain crops in 2010, cut into global grain stocks.
About 20 million acres -- roughly the size of South Carolina-- were devoted to soybean exports to China last year and another 20 million fed corn to ethanol plants. Both were double the acreages from 2006 for those respective markets. In the USA, demand for corn to fuel ethanol plants has boosted prices, and federal farm policies designed for an era of grain surpluses have kept millions of acres of farmland fallow.
Doctors, lawyers, business owners who in the past put savings in the bank or the stock market are sinking it into farmland. So are investment funds. Still, the chief buyers are life-long farmers who want to expand production rather than get rich buying and selling land.
Farm equipment is much bigger and covers far more ground than a generation ago, per-acre yields are substantially higher, and the consolidation that overtook the poultry, beef, dairy, and pork industries in previous decades has descended this century on grain production. One farmer and two employees can plant 1,000 acres -- roughly 1.5 square miles -- in a day.
To see the whole article, click here .
JJS: One aspect overlooked is the quality of the food raised. Sure, land that is force-fed fertilizer and is trampled by heavy machinery running on fossil fuel can put out more quantity -- for a while. At some point, the ecosystem could rebel from the loss of its microorganisms in the soil, the lowered aquifer, the near total absence of hedges, birds, and wildlife.
If this direction proves to be a short-term boom but a long-term bust, why should government policy favor it? For us to know which system is best, we’d have to get rid of subsidies for agri-business and instead charge factory farms for the risks and damages they impose.
And for that to become politically feasible, all of us would have to stop seeing land as an object of speculation for lucky individual owners and investors. Instead, we’d have to see land as our nest egg for all of us in society. It’s an attitude catching on in England.
Progressive Conservatives should support a Land Value Tax
In this year’s Macmillan Lecture, the Conservative MP Nick Boles proposed a series of ideas to improve Britain’s economic competitiveness. By far the most fascinating idea was a land value tax.
In the past it has usually been those on the socialistic Left and the libertarian Right who have advocated a land value tax (LVT). But Mr Boles is a prominent Conservative modernizer, founder of the Policy Exchange think tank, and known to be close to the party leadership.
For too long, landowners and speculators have been able to reap sizeable economic outputs from rising land values, though contributing little economic input. But let landowners pay the LVT bill. The reduction in speculative activity would help drive down prices and rent, so ensuring that growth in the land market is based on sustainable and real returns instead of artificial and speculative booms.
LVT would also be a new ‘eco-tax’ that discourages construction on expensive ‘greenfield’ areas in favor of cheaper ‘brownfield sites’, so limiting urban sprawl. This brings the consequent benefits of reduced commuting distances and less costly road works, which contribute to CO2 emissions and atmospheric pollution.
The LVT would not harm enterprise. It would boost productivity, discourage urban sprawl, could replace the plethora of punitive property taxes, and would be relatively simple to administer and collect. The introduction of a LVT ought to be viewed as the most legitimate way to raise new revenue.
To see the whole article, click here .
JJS: May the Old World show the new one some new tricks!
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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