Assessing the value of non-marketable land: The case of Israel

Abstract

Non-marketable land often receives a low economic value, leading to the inefficient use of land. Since there is little reference to this subject, it is appropriate to develop a method for estimating the real economic value of non-marketable land, particularly when designated for various public projects. This paper presents an economic model used for estimating the value of non-marketable land in Israel, based on various measures, such as the distance from Israel's central region, socio-economic state, and proximity to the sea. The model allows rapid estimation of land values when examining a certain location for public projects, hence intended to prevent inefficient land use and low profitability of these projects. The model was subsequently used to estimate non-marketable land in four different regions in Israel where there is an interest in establishing public projects. The findings of the model indicate that these lands have high, yet diverse economic values. Furthermore, the results show that the highest land value was calculated for the location where the largest area was allocated. Thus, the model allows the internalization of the true land costs and may assist to select the land with the highest economic feasibility for such projects, preventing the realization of projects that are not economically worthwhile. There are two main options to integrate such a tool in the decision making process: as a statutory tool, or as a tool to be used by environmental organizations.