The Unearned Increment
In this paper, Philip A. Booth shows land value capture is closely linked to institutions that define property in land. Thus, we need to consider how property has been constructed in the law, political philosophy, and constitution of a country to understand the outcomes of land value capture there. Philip A. Booth provides an institutional analysis of the experiences of land value capture in Britain and France. Britain has a long history of government attempts to capture land value by using betterment levies. In contrast, France has employed direct state intervention in urban development to achieve the same goal. Despite these differences, Booth argues that the two approaches are both converging toward a contractual agreement system wherein private developers are asked to share their development profits with the state. Although the approaches are similar, the nature of contracting in the two cases differs due to dissimilarities in local administration.
Booth also identifies three problems associated with land value capture in Britain and France: (1) land valuation; (2) the use of contracts to secure infrastructure financing for new development; and (3) the unclear objectives of whether land value capture is for income redistribution or cost recovery. He argues that solutions to these problems can be found only by taking into consideration the two countries’ different legislative and constitutional orders.
This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2011 and is Chapter 4 of the book Value Capture and Land Policies.