What's All the Land in America Worth?

A blog about business and economics.
Dec. 20 2013 4:06 PM

What's All the Land in America Worth?

184220730
Land!

Photo by David Becker/Getty Images

After yesterday's post on the aggregate value of all the housing in America, a couple of correspondents noted to me that for recent decades you can actually compute the value of all the land in America from the Federal Reserve's Flow of Funds report (PDF). The short answer is that all the privately owned land in America is worth about $14.488 trillion—which is a lot.

Here's how the math works. Table B.100 "Balance Sheet of Households and Nonprofit Organizations" has a line for real estate in its nonfinancial assets section. It tells us that households and nonprofits own $21.61 trillion in real estate. Then at the bottom on line 45 it tells us that the replacement cost of all the structures owned by households and nonprofits is $13.8 trillion. So all you need to do is subtract the replacement cost of the structures from the total value of the real estate to reach the conclusion that a little bit over one-third of the total real-estate value—about $7.812 trillion—is land.

Then you repeat the procedure for B.102 "Balance Sheet of Nonfinancial Corporate Business." Here we learn that corporate America owns $9.867 trillion of real estate and that the replacement value of the structures on it is about $8.109 trillion. Subtract and we conclude that there's $1.758 trillion* worth of land in the corporate sector.

Advertisement

Last we turn to noncorporate business, which owns $9.704 trillion in real estate and has a replacement cost of structures of $4.786 trillion, giving us $4.918 trillion in land.

Add it all up and you get $14.488 trillion in land value.*

Now how good is the Fed's data on this? I don't know. Certainly estimating the replacement cost of structures can be hard. But this is what's on the books. And when David Albouy and Gabriel Ehrlich tried to estimate the total value of residential land through an independent method (PDF) they came to the conclusion that "approximately one-third of housing costs are due to land, with an increasing share in higher-value areas, implying an elasticity of substitution between land and other inputs of about one-half." That's very similar to the residential piece of the Flow of Funds. 

So who cares? Well, you should care. This number is high enough that it tends to confirm that view that taxation of land and other natural resources, supplemented by pollution fees and things like congestion charges could replace all taxes on labor and investment and still fund an ample welfare state and public sector.

* Correction, Dec. 20, 2013: This post originally contained two mathematical errors, one stating that the value of corporate land is $1.762 and another stating that the aggregate value of all land is $16.42 trillion.

TODAY IN SLATE

The Juice

Ford’s Big Gamble

It’s completely transforming America’s best-selling vehicle.

Should the United States Grant Asylum to Victims of Domestic Violence?

The Apple Watch Will Make Everyone Around You Just a Little Worse Off

This Was the First Object Ever Designed

Don’t Expect Adrian Peterson to Go to Prison

In much of America, beating your kids is perfectly legal. 

Moneybox

How the Apple Watch Will Annoy Us

A glowing screen attached to someone else’s wrist is shinier than all but the blingiest jewels.

Music

A Little Bit Softer Now, a Little Bit Softer Now …

The sad, gradual decline of the fade-out in popular music.

Is Everyone Going to Declare Independence if Scotland Does It? 

I Tried to Write an Honest Profile of One of Bollywood’s Biggest Stars. It Didn’t Go Well.

Trending News Channel
Sept. 12 2014 11:26 AM Identical Twins Aren’t Really Identical
  News & Politics
Jurisprudence
Sept. 14 2014 2:37 PM When Abuse Is Not Abuse Don’t expect Adrian Peterson to go to prison. In much of America, beating your kids is perfectly legal. 
  Business
Moneybox
Sept. 12 2014 5:54 PM Olive Garden Has Been Committing a Culinary Crime Against Humanity
  Life
Inside Higher Ed
Sept. 13 2014 8:38 AM “You’re More Than Just a Number” Goucher College goes transcript-free in admissions.
  Double X
The XX Factor
Sept. 12 2014 4:05 PM Life as an NFL Wife: “He's the Star. Keep Him Happy.”
  Slate Plus
Behind the Scenes
Sept. 12 2014 5:55 PM “Do You Know What Porn Is?” Conversations with Dahlia Lithwick’s 11-year-old son.
  Arts
Music
Sept. 14 2014 11:44 PM A Little Bit Softer Now, a Little Bit Softer Now … The sad, gradual decline of the fade-out in popular music.
  Technology
Future Tense
Sept. 12 2014 3:53 PM We Need to Pass Legislation on Artificial Intelligence Early and Often
  Health & Science
New Scientist
Sept. 14 2014 8:38 AM Scientific Misconduct Should Be a Crime It’s as bad as fraud or theft, only potentially more dangerous.
  Sports
Sports Nut
Sept. 12 2014 4:36 PM “There’s No Tolerance for That” Pete Carroll and Jim Harbaugh say they don’t abide domestic abuse. So why do the Seahawks and 49ers have a combined six players accused of violence against women?