Usually, the LVT on its own will be sufficient to provide an incentive to develop in an economically efficient manner. The real problem isn't that. The real problem is that people do not desire their neighbours to operate in an economically efficient manner. It is just risk aversion in a different sense except the asset is being paid for by someone else.
Imagine that the US government would buy you a bicycle, any bicycle, at any price, reallocating from things that you don't care about, so long as you tell it how important a bicycle is to you. You are likely to describe it as being a matter of life and death.
The amount any human would pay for a view is different from the amount they require someone else to pay to obscure the view. Economic efficiency is not a goal in any sense. And any incentives such as the ones you provide would be struck down in the court of popular opinion because it is the outcome that is not desired, not the process.
Imagine that the US government would buy you a bicycle, any bicycle, at any price, reallocating from things that you don't care about, so long as you tell it how important a bicycle is to you. You are likely to describe it as being a matter of life and death.
The amount any human would pay for a view is different from the amount they require someone else to pay to obscure the view. Economic efficiency is not a goal in any sense. And any incentives such as the ones you provide would be struck down in the court of popular opinion because it is the outcome that is not desired, not the process.