Question

How would the following effect the productivity of Land?

1. Location
2. Investment on Land
3. Security of Tenancy

Answer 1

1. Location: Productivity sometimes depends on the location. In the case of agricultural land, location has advantages with respect to irrigation and marketing. For example, if the land is situated near a water source, irrigation becomes easy and the land becomes highly productive.
2. Investment in land: It is also an important determinant of land productivity. Investment means any expenditure undertaken to construct an asset to enhance the productive power of the land. For example, the construction of irrigation facilities is an example of investment in land. The higher the investment, the higher the productivity of land in the future.
3. Security of Tenancy: Land is always used by a tenant cultivator. The productivity of land depends on the security of the tenant. If the tenant is not certain whether his tenancy will be renewed, he will not be enthusiastic about an investment this year because, by the time the investment starts yielding results, he may no longer be the tenant.