A Mission to Ricardian Space
David Ricardo would make a competent advisor to the newly formed USDA Office of Ecosystem Services and Markets (OESM). Overlooking the one detail that Ricardo was a nineteenth century economist, his pertinent studies included the economics of land and the concept of land rent. Ricardo distinguished between land rent and payments to a landlord from a farm operator. He concluded that land rent was a subset of the total payment, and the amount represented the "original and indestructible powers of the soil" that remained after the harvest of food or fiber. His publications include a discussion of supply and demand - if land were unlimited with respect to population, no land rent would occur. But as population grows, and with that growth subsequent demand for food and fiber increases, operators expand their scale of operation to include lower quality parcels. The land rent paid to a landlord of high quality land is determined as the difference between that land's production and the production of the lowest quality land in current use.
Ricardo argued that land taxes ought to be based on land rent because the approach would avoid increasing the price of food to the consumer. Over the decades (and two centuries), his analytical concept appears in ad valorem tax policies that base valuation on current land use, as opposed to market value of alternative uses. Contemporary land economists refer to "the original and indestructible powers of the soil" as Ricardian Space.
Principles of Economy and Taxation was published in 1817 in England. At the time of Ricardo's book, North American population was 7 million, and the planet supported 1 billion people. Two centuries later, U.S. population alone exceeds 300 million, and global population approaches 7 billion! People and their structures have moved into Ricardian Space. Although land as a substrate may be indestructible, land use conversion and land management practices can alter the natural structures on the landscape, and diminish environmental services that benefit to society. Emerging markets for environmental services offer potential incentives for conservation and land management practices. Implemented on private forests, farms and ranches the practices retain or enhance the services.