Meaning of Land

Land includes all natural resources received as a free gift of nature. Land includes all natural objects available to mankind on the surface of the earth, above the surface, and below the surface, such as soil, water, forests, mountains, mines, seas, lakes, etc., that participate in the production process.

Characteristics of Land

Among the factors of production, land is an important factor. The characteristics of land are as follows:

(a) Land is a free gift of nature: Land cannot be produced or created by anyone. Land is a naturally occurring object. Humans can only improve the land and increase its utility.

(b) The supply of land is fixed: The supply of land cannot be increased even if human needs for land increase, nor can it be decreased. The amount of land is only what nature has provided. Since the size of land is limited, its supply cannot be increased even if the price of land increases, and similarly, its supply cannot be decreased even if the price of land decreases.

(c) Land is indestructible: Both the creation and destruction of land are impossible. Neither can anyone create or add to it, nor can it be destroyed. Since land is a free gift of nature, it has no production cost, but it has value because land is scarce.

(d) Land is a fixed factor of production: Land cannot be moved from one place to another. Therefore, land is immobile, such as land, mountains, rivers, seas, etc., cannot be moved from one place to another.

(e) Land is a passive factor of production: The use of land depends on human activity. Humans can get more and more production from land by using their skilled labor. If land is left unused, its production will be zero, for example, the production capacity of dry hilly land can be increased by developing it as a tourist destination or a religious site. Therefore, land is a passive factor of production.

(f) The form and fertility of land vary: Land exists in various forms such as mountains, hills, seas, plains, lakes, ponds. Similarly, the production capacity of land also varies from place to place. The land in some places is more fertile, while production is lower in other places.

(g) The price of land varies according to location: The price varies according to the production power of the land, for example, the price of hilly land is lower than that of the Terai valley. The price of urban land is higher than that of rural areas.

(h) The law of diminishing returns applies to land: When land is used as a fixed factor in production, the law of diminishing returns applies to production. Even though total production increases as the amount of labor and capital increases, the marginal production decreases. Therefore, the law of diminishing returns applies to land.