Land Value Tax Enables Green Growth (Forrester, 2026)

Summary

"Land Value Tax Enables Green Growth" is an article by Paul Forrester of the Wharton Business School, University of Pennsylvania, in the Erasmus Journal for Philosophy and Economics (EJPE) 19(1), Summer 2026, published online 12 October 2026. EJPE is a peer-reviewed journal whose accepted submissions are anonymously double-blind reviewed by at least two experts. The article appears as a First View item in a guest-edited special issue on degrowth and is licensed CC BY 4.0.

Forrester shares the degrowth movement's goal of reducing humanity's use of natural resources but rejects its premise that this requires a smaller economy. He argues that the conflict between growth and the environment "is contingent on the private ownership of natural resources" [1, p. 1], and that public appropriation of natural-resource value through a land value tax (LVT) and severance taxes would permit "green growth", meaning growth from adding more value to resources rather than from using more of them [1, p. 3]. The paper is a normative and analytic argument: it presents no original data, estimates or model.

The Contingency Thesis

Forrester defines relative decoupling as falling resource use per unit of GDP and absolute decoupling as growth with constant or declining total resource use. He relays that relative decoupling is long-running, citing a World Bank blog for the statement that a barrel of oil buys more than twice as much GDP as in the 1970s [1, p. 4], and attributes the absence of absolute decoupling mainly to the Jevons paradox. Degrowth scholars, he reports, conclude that absolute decoupling is impossible. He replies that this inference from the historical record is limited, because green growth "might be possible but inconsistent with the institutions that have been in place historically, such as the private ownership of natural resources" [1, p. 17].

He calls public appropriation neither strictly necessary nor sufficient for green growth, but the most significant institutional step toward decoupling [1, p. 9].

Underuse of Land, Overuse of Depletables

The core mechanism is an asymmetry between two kinds of resource. "Under a regime of private ownership, inexhaustible resources tend to be underused, and exhaustible resources tend to be overused" [1, p. 10]. The remedies differ accordingly:

• Inexhaustible resources (land). An annual tax on rental value makes owners pay the opportunity cost of idle land and removes the payoff to holding it for appreciation.
• Exhaustible resources (oil, coal, old-growth forest). An annual tax on a deposit would push the owner to extract sooner, so the public captures value through a severance tax (compare Gaffney's California proposal) collected at extraction and calibrated to the in-situ value, meaning the value of the finished resource minus all improvements [1, pp. 13-14]. Its aim is to delay extraction and weigh future generations' interests. He presents it as going beyond a Pigouvian carbon tax, which he also endorses, because it addresses depriving later generations of the resource and not only the climate harm [1, p. 16]. See resource rents.

He adds that a tax tracking unimproved resource value rises when efficiency gains raise demand, so the Jevons rebound dissolves [1, pp. 19-20]; this is asserted, not modelled.

No Deadweight Loss, and the Growth Claim

The utilitarian leg of the argument is the standard public-finance one: "A tax on any good that has a perfectly inelastic supply does not cause deadweight loss, because the supply of the good does not change in response to the tax" [1, p. 7]. On this view natural resources are part of any optimal tax base (see deadweight loss). Forrester then adds a growth claim: shifting the base off labor and capital onto resources "would also accelerate growth by reclaiming the deadweight loss of taxation" on the former [1, p. 18], and would make output less resource-intensive and more labor- and capital-intensive.

Justice: Symmetrical Pre-Political Entitlements

The deontological ground runs: people are entitled to what they create; no one made natural resources; so "all people have symmetrical entitlements to natural resources" [1, p. 8]. Taxes on labor and capital are therefore objectionable, while taxes on resource value reflect equal entitlements. Forrester cites his own Law and Philosophy article and Daniel Layman's 2020 book on Locke and nineteenth-century radicals for these deontological and republican grounds [1, p. 8]; the former is summarised at Forrester's Property Rights and Natural Resources. Private appropriation of rent, in the classical view he follows from Smith to Henry George, lets owners levy a private tax on others [1, p. 8]. For depletables, the symmetry is intergenerational [1, p. 14].

The Urban Argument (Part III.1)

Forrester notes that most land value sits in cities and argues that private land ownership obstructs dense, green urban growth. His political-economy sketch is that homeowners lobby for setbacks, single-family zoning, floor-area ratios and height limits that raise land values, while speculators with low carrying costs may hold land idle [1, pp. 11-12]. Under LVT, he argues, homeowners would own buildings but not land and so lose the incentive to lobby for such rules [1, p. 12, fn. 13]. A transition to an LVT with untaxed buildings and liberalised land use, he argues, would trigger "a development boom in the central locations", which are also the greenest places to live [1, p. 12].

The empirical premises are relayed from other scholars. Hsieh and Moretti (2019) and Duranton and Puga (2023) are cited for the macroeconomic cost of restricting housing in high-productivity cities (see Hsieh and Moretti), Glaeser and Kahn (2010) for California regulation pushing development toward higher-emission inland areas, and Jones and Kammen (2014) for higher suburban footprints [1, pp. 11-12]. The page LVT reduces sprawl covers the evidence for the density mechanism directly.

Conclusion: LVT, Not Degrowth

Forrester concludes that "our aim should not be to shrink the economy" but to maximize the labor-and-capital side that adds value to resources [1, p. 20], and that LVT, not degrowth, should be the cornerstone of a green new deal [1, p. 1]. He faults degrowth programmes for lacking a normative theory of a just distribution of natural resources [1, p. 3].

Relation to the Georgist Case

The article extends the ecological Georgism lane into the growth debate: it reads the resource-rent tradition as a response to degrowth, contrasting George's anti-Malthusian optimism with the neo-Malthusian tone of ecological economics [1, p. 9]. It reuses the classical rent and fixed-supply arguments, adds severance-tax logic for depletables, and grounds the case in symmetrical entitlements rather than climate externalities alone.

Nuances and Limits

• One author, no empirical test. The central claim that LVT and severance taxes deliver absolute decoupling is a philosophical argument. The Jevons-offset and homeowner-lobbying mechanisms are not measured.
• Relayed empirics. The oil-per-GDP figure, the zoning productivity losses and the California emissions result come from a World Bank blog and other scholars, and belong to those sources.
• A tension in the zero-deadweight-loss premise. The premise applies to fixed-supply assets. But the paper says an annual tax on an oil deposit would speed extraction, and that severance taxes are meant to change extraction timing [1, p. 13]. A tax designed to alter behaviour is in tension with the claim that resource taxes are neutral, and the paper does not reconcile the two. It also concedes it cannot compute the right severance rate [1, p. 15].
• Unreferenced Friedman line. The statement that Milton Friedman regarded LVT as "the least bad tax" [1, p. 7] carries no citation in the paper; for Friedman's views see land value tax.
• Not a settled finding. "LVT enables green growth" is Forrester's conclusion from his premises; the degrowth scholars he cites contest the decoupling premise.
• Scope. Land-value capture is the clean case; the depletable-resource side is more contested, and the paper favours private ownership plus severance tax over state ownership for most countries, citing the resource curse [1, p. 15, fn. 17].

See Also

• Ecological Georgism — the wider case for rent capture on environmental grounds.
• Resource Rents — capturing rent from land and depletable resources.
• Deadweight Loss — the fixed-supply argument for untaxed-distortion tax bases.
• Property Rights and Natural Resources (Forrester, 2026) — the companion justice paper cited here.
• LVT Reduces Sprawl — evidence on the density and land-use mechanism.
• A Severance Tax on California Oil? (Gaffney, 2006) — severance-tax design for a depletable resource.
• Urban Growth and Its Aggregate Implications (Duranton and Puga, 2023) — one of the urban-economics studies Forrester relies on.

Sources

1. Paul Forrester, "Land Value Tax Enables Green Growth," Erasmus Journal for Philosophy and Economics 19(1), Summer 2026 (First View, special issue on degrowth), 23 pp., CC BY 4.0. DOI https://doi.org/10.23941/ejpe.v19i1.1038; landing page https://ejpe.org/journal/article/view/1038; PDF https://ejpe.org/journal/article/download/1038/799. Page locators are PDF pages. Full text read; final journal pagination not yet assigned. Journal policy: anonymous double-blind review by at least two experts (EJPE About page). — used for the contingency thesis, the underuse/overuse and annual-rent versus severance-tax argument, the deadweight-loss and justice arguments, the Part III.1 urban argument and its cited scholarship, and the conclusion (B-claim for the argument as the author's own; Tier 1 as a peer-reviewed article by a university-affiliated author; no original data, so empirical statements are relayed and graded no higher than the works Forrester cites).
2. Paul Forrester, "Property Rights and Natural Resources," Law and Philosophy, 2026, DOI https://doi.org/10.1007/s10982-026-09566-7 — cited only as it appears within source 1 (p. 8, deontological and republican grounds, with Layman 2020); used for no claim beyond that attribution (B-claim, relayed).