When the railways arrived in America’s Wild West, many fortunes were made.

Land is a fantastic way to create wealth from virtually nothing. If you add lots of people to a dusty paddock, it immediately increases in value — often for very little effort.

In America from the 1850s onwards, probably only access to water gave unused land more added value than the arrival of rail.

The great American essayist Ralph Waldo Emerson described the railroad as “a magician’s rod, in its power to evoke the sleeping energies of land and water”.

Between 1850 and 1871 alone, US railroad companies received more than 70 million hectares of public land, an area bigger than the state of Texas.

Investors reaped enormous profits.

The question about the land being opened up by the Metronet rail projects in our own Wild West is this: just who is going to make the money?

On Tuesday, Transport and Planning Minister Rita Saffioti announced the McGowan Government would take over two big parcels of land around the new Metronet stations at Bayswater and Forrestfield, sidelining local councils.

“The Midland, Bayswater and Forrestfield station precincts will be brought into a redevelopment area known as the Metronet East Redevelopment Area to ensure vibrancy, housing and jobs are the focus of each revitalisation,” Saffioti said.

“Metronet East will maximise development opportunities and provide market certainty to capitalise on the transport infrastructure delivered under Metronet.”

What the statement didn’t explain was just who would benefit from maximising “development opportunities” that will flow from the land grab — and who gains the most from “market certainty”.

“In the Bayswater and Forrestfield areas, the State Government has heavily invested in transformative infrastructure to act as a catalyst for this future growth,” the Metropolitan Redevelopment Authority says on its website.

“To capitalise on this investment, maximise development potential in these areas and provide market certainty, Bayswater and Forrestfield will be established as MRA projects.”

For Bayswater, maps released with the plan show about 50 residential and business properties each side of the railway line that are affected, clustered along King William and Hamilton streets to the south and Beechboro Road South and Railway Parade to the north.

The Forrestfield land is bounded by Dundas, Milner and Maida Vale roads and contains mainly light industrial lots.

The sites for the two stations themselves have already been deemed to be planning control areas, putting them fully under the WA Planning Commission.

“The planning control area can remain in place for five years,” the website states.

“However, it is intended that it will be removed when the Redevelopment Scheme is gazetted in mid-2020 and planning authority for the designated areas is transferred to Metropolitan Redevelopment Authority.”

So the effect of all of this is that the Government has taken all of this prime land — just made more valuable because of the Metronet project — out of the hands of local government and will control its commercialisation.

The Government says the MRA will then continue to control what happens to the land around the stations within the new precincts:

“Our role will be to determine the intended place and development outcomes, establish a planning framework, including an amended redevelopment scheme and once this in place, assess development applications.”

So the effect of all of this is that the Government has taken all of this prime land — just made more valuable because of the Metronet project — out of the hands of local government and will control its commercialisation.

What we know is that it will seek much higher densities from the land on rail corridors than had been available under council planning, further increasing values.

One of the MRA website’s frequently asked questions raises the issue of whether these higher densities will lead to increased traffic:

“Expert traffic consultants will be engaged to determine traffic scenarios in the areas as part of planning works to ensure ongoing functioning of the road network.”

Ongoing functioning? The MRA doesn’t even manage to answer the question it asks of itself.

So how tall will buildings be in the redevelopment area?

“Building heights and zoning of the area will be determined throughout 2019 after consultation with stakeholders and community.”

And will local communities have a say in what happens on these two sites?

“In late 2019 the public will have the opportunity to comment on a draft amended redevelopment scheme and associated statutory planning framework documents,” the Government says.

Governments around the world have become increasingly interested in what is known as “land value capture” which I explored in several columns in 2016.

So if the Government is not going to make much from the real estate activity around the Metronet stations, who will?

Simply put, it’s a way of governments raising funds from the value that their infrastructure projects add to land prices.

Before the 2017 State election, Labor predicted a total of $267 million in value capture revenue across the six years of developing Metronet rail lines.

If that’s the Government’s expected take, just imagine what the developers are likely to make.

But a senior public servant told the Parliament’s Budget estimates hearing last year that value capture revenues would not be “a big bang approach” and wouldn’t even raise $100 million within the four-year forward estimates period.

“Value capture, if we use the mechanisms that government is considering, which are developer contribution-type arrangements, it could be over a period of 30 years that you actually get the revenue in from those developer contributions,” Metronet project manager Anthony Kannis told the parliamentary hearing.

So if the Government is not going to make much from the real estate activity around the Metronet stations, who will?

And why would land developers not be required to pay handsomely up front to get in on the ground floor of such an opportunity?

Inflated land values create fortunes when the railway arrives.

The taxpayers should see some benefit from that windfall.