Real Estate valuation, appraisal and taxation is based on land "as improved". Improvements are usually defined as human made changes to the land such as site work, infrastructure or buildings.
Who are we to decide and determine that land is "less than" without our intervention and "improvement"?
Why is "unimproved" land not called "perfect" and "improved" land called "meddled, tainted or scarred"?
The common test of whether land is "improved" or not is called the Highest and Best Use analysis (HBU). The Appraisal Institute defines highest and best use as āThe reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible and that results in the highest value.ā
This approach to valuation is based on idea of maximum productivity: the highest and best use is always the use that would produce the highest value for a property, regardless of its actual current use. HBU also focuses on present value and fails to take into account future generations and any negative impacts of HBU maximization.
Maximum productivity and equating everything, including land and real estate, to the highest financial value are huge parts of the global climate and nature predicament we face.
Instead of Highest and Best Use we propose Higher and Better Use. Land values should based off of and prospective development plans made using a holistic approach to valuation that accounts for both positive and negative externalities, not just the highest financial value.
What if all real estate development was based on not only financial feasibility, maxing out the density, height and square footage but also the maximization of the climate, nature, carbon, biodiversity and social impacts?
RealValue: the Core Benefits of Natural Capital is our contribution to this paradigm shift.
See the entire BASIN Manifesto
BASIN is a collective effort. Want to add to or edit this post or have other suggestions for the BASIN Manifesto? Members can email TMO to do so.
As a collective, everything here can also be "collected". Collected posts are redeemable for our upcoming BASIN STREAMS 1155 tokens. Stay tuned for details.
