Land Investment, Planning Permission, and Uncertainty: A State-Preference Analysis

Abstract

The statutory planning system renders land a state-contingent resource; in addition, investment in land is likely to take place within a portfolio context. With this background, land investment is analysed specifically as a function of portfolio size, the riskless rate of return, the degree of risk aversity, the probability of planning permission, and the rates of development gain, nondevelopment loss, planning gain, and cost.