<p>The distinction between land and physical capital is based on some of their economic properties, particularly relating to investment: whether it can be reproduced or not; whether it has a finite lifetime (compared to the human lifetime).</p>

<p>Almost all land is <em>not</em> reproducible, and does <em>not</em> have a finite lifetime.</p>

<p>Physical capital <em>is</em> reproducible, and <em>does</em> have a finite lifetime.</p>

<p>Hence, almost all land is not physical capital.</p>

<p>There are corner cases, where land is reproducible, and may appear and then disappear again in less than a handful of human lifetimes: in those very rare cases, that particular land behaves more like physical capital rather than how land generally behaves, and so could be classed as such.</p>

CC BY-SA 3.0
2015-09-16T15:00:54.793Z
Which definition of Physical Capital are you using?
user31782
CC BY-SA 3.0
2015-09-18T12:44:35.977Z
"Physical capital is reproducible, and does have a finite lifetime." -- Could you provide some reference for this?
user31782
CC BY-SA 3.0
2015-09-15T07:05:18.350Z
2015-09-15T07:05:18.350Z
410 gone
<p>Land itself is not included in the statistical concept of fixed capital, even though it is a fixed asset. <strong>The main reason is that land is not regarded as a product (a reproducible good)</strong>. </p>

<p>But the value of land improvements is included in the statistical concept of fixed capital, being regarded as the creation of value-added through production.</p>

<p>A little bit of research could have spared this question as I found it on wikipedia here: <a href="https://en.wikipedia.org/wiki/Fixed_capital" rel="nofollow">https://en.wikipedia.org/wiki/Fixed_capital</a></p>

CC BY-SA 3.0
2015-09-12T06:36:39.103Z
But Land can be produced, e.g. in some countries they scattered sand upon water at the edges of beach and then made hotel houses etc. I had already read that wiki article and I recall that somewhere they said "usually Land is not fixed capital" that means land can be fixed capital in some cases. And my question is even if land is not reproducible why is it not a fixed capital? What is the exact definition of fixed capital?
user31782
CC BY-SA 3.0
2015-09-12T06:39:47.830Z
Here I got it "***Usually** the value of land is not included in physical capital as it is not a reproducible product of human activity***" -- https://en.wikipedia.org/wiki/Physical_capital Are there cases where _Land_ is considered as fixed capital?
user31782
CC BY-SA 3.0
2015-09-19T07:30:06.133Z
What is the difference between asset and capital? Are all natural resources not considered as capital? e.g. Coal, petrol etc?
user31782
CC BY-SA 3.0
2015-09-11T19:31:55.127Z
2015-09-11T19:31:55.127Z
od320
<p>What everyone else has said is true when viewed from an economics standpoint.  However, accountants see land as fixed capital with its value being the total amount invested.  They (accountants) define any resource that is effectively static for a long period of time to be fixed capital.</p>

CC BY-SA 3.0
2015-09-15T07:34:48.833Z
That may be, but we're not on accounting.SE.
FooBar
CC BY-SA 3.0
2015-09-16T15:02:46.660Z
Which definition of 'Fixed Capital' do they(accountants) use?
user31782
CC BY-SA 3.0
2015-09-16T15:17:45.903Z
"...fixed capital is that portion of the total capital outlay that is invested in fixed assets (such as land, buildings, vehicles, plant and equipment), that stay in the business almost permanently - or at the very least, for more than one accounting period." - [wiki](https://en.wikipedia.org/wiki/Fixed_capital)
milk
CC BY-SA 3.0
2015-09-18T12:34:47.167Z
Why in Economics Land is not considered as a fixed capital?
user31782
CC BY-SA 3.0
2015-09-18T13:31:00.610Z
You should read all the information on this page...  The answer to your question is undoubtedly here.
milk
CC BY-SA 3.0
2015-09-19T07:27:06.017Z
I've read all this page and asked in comments too but couldn't find the answer.
user31782
CC BY-SA 3.0
2015-09-14T23:18:10.683Z
2015-09-14T23:18:10.683Z
milk
<p>As far as I know 'Fixed Capital' includes things which don't deteriorate or get used up upto a long, e.g. tools, machinery and building etc. My question is that since Land fulfills this criteria, why is it not considered as a Fixed Capital?</p>

CC BY-SA 3.0
2015-09-11T14:40:34.520Z
I don't know which tag would be applicable so I've randomly picked what might be an approximate tag to this question. I'd appreciate if someone could edit my question appropriately.
user31782
CC BY-SA 3.0
2015-09-12T12:02:33.747Z
What gives you the idea it doesn't?
FooBar
CC BY-SA 3.0
2015-09-12T13:00:25.130Z
@FooBar In my book it is written there are four requirements for production, viz. "Land"-"Labour"-"Physical Capital"-"Human Capital". Land could have been included in 'Fixed Capital' which is a part of Physical capital.
user31782
CC BY-SA 3.0
2015-09-12T13:03:09.707Z
Ah, now I understand your question.
FooBar
CC BY-SA 4.0
2022-10-14T03:03:25.027Z
Your question doesn't make sense. You said "fixed capital includes things which don't deteriorate... eg machinery".   You picked the worst example because machines do deteriorate.
H2ONaCl
<productivity>
Why is Land not considered as a fixed capital?
user31782
# Why is Land not considered as a fixed capital?

(Asked by: username_0 on 2015-09-11)

As far as I know 'Fixed Capital' includes things which don't deteriorate or get used up upto a long, e.g. tools, machinery and building etc. My question is that since Land fulfills this criteria, why is it not considered as a Fixed Capital?

**Tags:** productivity
> **Comments:**
> **username_0**: I don't know which tag would be applicable so I've randomly picked what might be an approximate tag to this question. I'd appreciate if someone could edit my question appropriately.  
> **username_1**: What gives you the idea it doesn't?  
> **username_0**: @FooBar In my book it is written there are four requirements for production, viz. "Land"-"Labour"-"Physical Capital"-"Human Capital". Land could have been included in 'Fixed Capital' which is a part of Physical capital.  
> **username_1**: Ah, now I understand your question.  
> **username_2**: Your question doesn't make sense. You said "fixed capital includes things which don't deteriorate... eg machinery".   You picked the worst example because machines do deteriorate.  

---

## 3 answers

### Answer by username_3 on 2015-09-15. Score: 5

The distinction between land and physical capital is based on some of their economic properties, particularly relating to investment: whether it can be reproduced or not; whether it has a finite lifetime (compared to the human lifetime).

Almost all land is *not* reproducible, and does *not* have a finite lifetime.

Physical capital *is* reproducible, and *does* have a finite lifetime.

Hence, almost all land is not physical capital.

There are corner cases, where land is reproducible, and may appear and then disappear again in less than a handful of human lifetimes: in those very rare cases, that particular land behaves more like physical capital rather than how land generally behaves, and so could be classed as such.

> **Comments:**
> **username_0**: Which definition of Physical Capital are you using?  
> **username_0**: "Physical capital is reproducible, and does have a finite lifetime." -- Could you provide some reference for this?  

---

### Answer by username_4 on 2015-09-11. Score: 0

Land itself is not included in the statistical concept of fixed capital, even though it is a fixed asset. **The main reason is that land is not regarded as a product (a reproducible good)**.

But the value of land improvements is included in the statistical concept of fixed capital, being regarded as the creation of value-added through production.

A little bit of research could have spared this question as I found it on wikipedia here: <https://en.wikipedia.org/wiki/Fixed_capital>

> **Comments:**
> **username_0**: But Land can be produced, e.g. in some countries they scattered sand upon water at the edges of beach and then made hotel houses etc. I had already read that wiki article and I recall that somewhere they said "usually Land is not fixed capital" that means land can be fixed capital in some cases. And my question is even if land is not reproducible why is it not a fixed capital? What is the exact definition of fixed capital?  
> **username_0**: Here I got it "***Usually** the value of land is not included in physical capital as it is not a reproducible product of human activity***" -- https://en.wikipedia.org/wiki/Physical_capital Are there cases where _Land_ is considered as fixed capital?  
> **username_0**: What is the difference between asset and capital? Are all natural resources not considered as capital? e.g. Coal, petrol etc?  

---

### Answer by username_5 on 2015-09-14. Score: 0

What everyone else has said is true when viewed from an economics standpoint. However, accountants see land as fixed capital with its value being the total amount invested. They (accountants) define any resource that is effectively static for a long period of time to be fixed capital.

> **Comments:**
> **username_1**: That may be, but we're not on accounting.SE.  
> **username_0**: Which definition of 'Fixed Capital' do they(accountants) use?  
> **username_5**: "...fixed capital is that portion of the total capital outlay that is invested in fixed assets (such as land, buildings, vehicles, plant and equipment), that stay in the business almost permanently - or at the very least, for more than one accounting period." - [wiki](https://en.wikipedia.org/wiki/Fixed_capital)  
> **username_0**: Why in Economics Land is not considered as a fixed capital?  
> **username_5**: You should read all the information on this page...  The answer to your question is undoubtedly here.  
> **username_0**: I've read all this page and asked in comments too but couldn't find the answer.  

---

