Comment by recursivecaveat

W/r/t oil: suppose before you survey there is a 25% chance that there is oil under your property. So the unimproved value of your land is surface_value + 0.25 * oil. After you drill, 75% of the time you receive a reduction in value of 0.25 since you have good evidence of the absence of reserves, 25% of the time you increase the value by 0.75. It seems to me that the LVT has no impact at all on the expected value of surveying for oil.

Of course if you believe the estimate to be incorrect, the incentives can shift, and there is some opportunity for mafiscence by falsely showing the 'absence' of oil that you know exists for a temporary tax break.