The land could have been protected, but that has an expensive opportunity cost, compared to selling it as building land. Once you've decided that the line is a complete basket case, and rail traffic is on a plunge into the abyss, it takes a very forward thinking person to add 'but in the future that may change, so we're going to spend a lot of money preparing for that possibility.In most cases people are talking about the land associated with the route, the track-bed and this could have been protected by converting it into a footpath or cycle route, which has been done in some cases.
What loss has occurred here? Most urban tram routes ran along roads and the roads still exist, they haven't been closed, it isn't feasible to leave the worn, disused tram rails in the road for 70+ years, but if you had the money to rebuild the tramlines many could be run along the same routes today. It isn't like the disused railway example, where 97% of the route is still available but someone has built something in the middle 3% of it.
With trams, I was thinking it is a shame they closed, rather than just protecting the rights of way. It was a fairly short period of time between trams being considered archaic, and lines starting to open again. Given the ridiculously high cost of opening new lines, having routes in situ and operation would surely mean we'd have much more working mileage now, in places it would be far more utilised than beeching rural closures