In Conservation Easements, the Good, the Bad and the Greedy, real estate expert Charles B. Warren, A.S.A. writes on value:
Now, let’s dip our toes into the question of value, fundamental land economics. Basically the right to build a replica of the World Trade Center in the middle of the Badlands of the Pine Ridge Indian reservation, South Dakota, would probably not have a large value. The right to extract coal from a property where there is none would probably not have a large value. The right to raise alfalfa on land without a supply of water would probably not have a large value. The converse of those propositions would probably also be true. The right to build the World Trade Center, on Port of New York land, was valuable. While the actual value of the right to rebuild it may be in doubt, that there is a value there is likely. By extension the right to build homes in a region with a static or declining economy and population is likely to be small. If the right attaches to land which is remote from that economic activity and its associated population centers, then it is likely to be lower. It may still be higher than alternative values if, for example, the land in question is timberland which was logged 30 years ago and regrowth takes 60. But timberland re-use to country vacation home development has not been widely or wildly profitable, so the net value to the undeveloped land is still usually a small number.
First rule of thumb: trade level. If someone presents a value for a wholesale commodity based on its retail value, that may be bad or greedy.
More to follow:
