If land went public... By Burkhard Varnholt; economy
..it would probably be the biggest initial public offering of all time – a godsend, which the land, if it could decide for itself, would scarcely refuse. But, reality, steadfast as ever, will ensure that the idea remains purely hypothetical. Or maybe not? Unlike other natural resources, land is relatively easy to classify, survey and evaluate. And since the free trading of shares issued by an openly managed enterprise is the best way to create scarcity prices, the floatation of public land could be an efficient way of counteracting its increasing degradation, misuse and (un)fair distribution. This form of independence would probably protect the land better than international conferences, whose non-committal declarations of intent are usually the expression of a basic political helplessness. An outline reveals that an IPO of public land would not only be of advantage for sustainable land use, but in principle would also be politically and practically feasible.
What would this involve? To list public land on the stock exchange would first require its transfer to a special-purpose company (“Land plc”). This company would then acquire the mandate and the economic interest in sustainably optimising the use of its estates. The estates to be transferred would have to be checked, classified and assessed by an independent body. The founder states would regulate their rights and obligations in a memorandum of association among one another and vis-à-vis Land plc. This memorandum would also have to specify principles relating to the use of revenue resulting from monetisation. Supranational organisations like the United Nations or the World Bank would acquire an important role in these negotiations. For example, for each country transferring land to the company, the World Bank could set up an escrow account for profits from the floatation and future dividends. This would prevent the current generation from selfishly squandering the revenues. Of course this would involve establishing rules on how countries transferring land to the company could profit from the revenues generated by Land plc. The company would then have to be equipped with all the personnel, legal and organisational requirements necessary for sustainable management. A central component would be an economically, ecologically and socially sustainable business model. The growing shortage of land would provide a natural impetus for “Land plc”. Three potential benefits would assume an immediate relevance:
1. “What I own I value.” A nation of shareholders in the land would probably be more committed to the protection of the environment than a government exposed to strong lobbyist influences.
2. Transparent , sustainable management can sometimes succeed better in private-sector companies than in the body politic. The bleak budget situation of many industrial nations illustrates this.
3. Poor countries would become richer – and good regulations would ensure that not only the current generation profits from this.
Is all this wishful thinking? Perhaps. But measured by the sustainable benefits and the at least conceptually and politically manageable challenges, the intellectual game is worth it.
