The task of a valuer is to use as many approaches as are possible under a particular set of circumstances to weigh all the evidence and determine a value that can be supported in a court of law.

Valuation methods include ‘summation’, capitalisation, and comparable sales. However, working agricultural properties are assessed using the productivity method including capitalisation of the net return from all on farm activities. In Australia, all of the principles and practice of valuation have been derived from judgements handed down by the Supreme Court, the High Court and the Privy Council. The capitalisation rate is assessed by a study of the market, including all other investments in the economic system. It is based on an analysis of risk and certainty.

As there is considerable uncertainty to do with the likely effects of open cut mining and hydraulic fracking used in CSG mining on the hydrological cycle and other stabilisation services, a high degree of uncertainty will exist in the minds of prospective buyers.

This uncertainty will, without doubt, increase the capitalisation rate applied to all of the net financial benefits accruing from the land to the landholder, resulting in a lower valuation.

An increase in the ‘cap’ rate of only 1%, will effectively reduce the value of a landholding by about $100,000 per one million dollars, and improvements that do not contribute to the production value of the land may be discounted or ignored.