Economists often expand the term “land” to include the raw materials and energy inputs that come from the natural environment, even if they require considerable processing before they can be used in production. These resources (inputs) are unevenly distributed over the earth, and therefore the costs associated with using them also vary from one location to another. Highly accessible raw materials and fuels are generally less expensive to use that those that are difficult to extract and transport. Therefore, transportation costs must be included in the purchase price of these materials (the total costs involved in getting them to the factory gate).
The total impact of the costs of each resource on locational decisions is proportionate to the degree to which they contribute to the production of the final product.