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Economic & Non-Economic Characteristics of Land

Instructor: Shawn Grimsley
Land is one of our most important and valuable resources. Without it, we really would not be here. In this lesson, you'll learn about some of the economic and non-economic characteristics of land. A short quiz follows the lesson.

Land Defined

You probably think that the term land is pretty easy to define, and in some respects you are absolutely right. In the broadest terms, land is simply the surface of the earth not comprising a body of water - it's the dirt. However, for purposes of law and real estate transactions, this definition is a bit too simplistic. Instead, you can think of land as the surface of the Earth as well as what is on it and underneath it. An example may help hammer the point home.

Let's say you own 10 acres of property out in the country where you want to build your dream home. The acreage has trees and a small creek running through it that feeds a small pond. Unbeknownst to you, there are also some minerals underneath the property. The land consists of all the natural resources on or below the surface including the water. Since there are no artificial, man-made structures on the property, we can consider this property unimproved land.

When you build your dream home, the land will be considered improved because placing man-made structures on it has developed it. To sum it up, unimproved land is the surface of a geographic area as well as all natural resources on or under it to the center of the earth, while improved land is land that has been developed by humans that is no longer completely in its natural state.

It's important to keep in mind, however, that you may not own all parts of the land. For example, you may own the surface rights, but a mining company may own the rights to the minerals. Likewise, other people may have a right to use the water from the creek running on your property.

Non-Economic Characteristics

We can categorize the characteristics of land into non-economic characteristics and economic characteristics. Let's look at the non-economic characteristics first.

  • Land is permanent. In other words, the surface of the Earth is not going anywhere. Sure, you can cut timber and mine minerals, but the surface, in some form, remains.
  • Land is unique, meaning it's not heterogeneous. No two pieces of land is the same.
  • Land, at least the surface, is considered indestructible. While the surface can be damaged, it can't be destroyed. Yes, it's probably theoretically possible to utterly destroy the surface of the Earth, but if that is going to happen, we would have more important things to worry about.
  • Land is immovable. Again, we are talking about the surface, not the things on or in it like oil, gas, trees and crops.

Economic Characteristics

Now let's take a quick look at the economic characteristics of land.

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