"I would say it is the planning permission that has capitalised the land, not you doing anything to it e.g. land values didn't wait for the Olympic area to be redeveloped, they rose before hand, same for underground extensions etc ... This is why so much political corruption is linked to land deals, land is capitalised at the stroke of a pen. In effect the planner (representing society) is dolling out free gifts. These gifts enable a rise in tax revenue but because tax isn't linked strongly enough to land values there is a net gift to the land owner paid for by everyone else (including non land owners). In your example you are assuming that the forest has zero value and thus you should not have to be charged by society for removing it. 100% of your profits are not legitimate because of externalities." - Adrian