Landowners demand a premium in the rent for developed property before they will be willing to develop agricultural land. According to Capozza and Helsley, this is know as the:

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According to Capozza and Helsley, the concept is known as the "irreversibility premium." This term reflects the additional cost or premium that landowners require to compensate for the irreversible decision of converting agricultural land into developed property.

Landowners Demand a Premium in the Rent for Developed Property