'Waterhole' and land rents

In a different thread (Relative Appropiration of Land Rents/georgist crank)
we got:

But undeveloped land can certainly
_yield_ rent, investment or no investment. Consider the guy who just
waits at the waterhole, and charges thirsty travelers for a drink of
what nature provided for free.

Whether the income from the investment justifies
the investment is a matter of speculation. If the
income from the investment exceeds the
investment, there is actual income to the "owner" of
the land in terms of a monetary flow that can be
taxed.

I'm familiar with stuff about land rent (and land tax). But here's a puzzle.

Suppose the waterhole was not obvious; in fact, there's nothing but desert
land everywhere. But a clever person (or maybe someone who is good with a
'divining' rod) figures out where the water is and digs a hole to it.

Usually, we allow for the cost of capital investment (digging the hole,
etc). But here, the big thing is *knowing* where to dig. So, when this guy
charges people to drink the water, how much is (taxable) rent and how much
belongs to the guy?

Dan in Philly




.

Relevant Pages