Solar Generation Raises Land Prices in the Greater LA Desert

The Los Angeles Times reports that some remote land owners far east of LA are growing rich selling their land to renewable power generators.   In the past, such land might sell for $500 an acre as it was hot, had no water access and really windy. Now, some of these properties sell for $20,000 an acre. That's not such a bad rate of return!  What has changed?  The anticipated rise of the "green economy" and Obama and State incentives that nudge renewable power generators to seek more land to place solar panels and wind turbines.  Since the land is a fixed factor of production, its owners gain a windfall as demand for it increases.  Recall basic supply and demand.  The supply curve of land is vertical, as demand increases for rural land --- prices rise.   The article hints that there is political risk here for rural land owners. During this age of budget deficits at the Federal and State level and given volatile politics concerning the merits of pursuing the "green economy", it is conceivable that the current green incentives could be cut back in the future.  If this scenario plays out, then this desert land could sharply fall in value.  The other interesting piece of this article is the point that most of the land in the desert is public land and that renewable power generators face much less "red tape" when they negotiate with private land owners.