Bounty: True Total Trillions Yanks Spend on Land
A best guess—minus the politicizing that goes into minimizing all rents.
May 30, 2018
Jeffery J. Smith
I’d rather be vaguely right than precisely wrong.” — J. M. Keynes

We want to know the worth of Earth in America—the entire value, as accurate as possible, and up-to-date. Yet the US agencies are not providing such a number. So it looks like we’ll have to figure it out ourselves.

We have calculated one guess, $39 trillion (Ch 15). However, it’s much bigger than the official estimate by Larson, $23 trillion. Can our far out outlier be correct? Further, earlier scholarly tabulations used statistics almost a decade old; how much would a current total be? And finally, all researchers so far have used lump sum prices while ongoing rents are more useful; how much is the latter?

It’d be great to have an army of eager grad students pitch in. Professors have that luxury, so why don’t they … never mind. If you want something done right …

What we lack in experience, we’ll make up for in unbiased adherence to impartial logic. A real scientist says the world is round, that space is flexible, time relative, and things too small for you to see make you sick and die. Compromise is nowhere near doing real science. Unlike those whose careers are on the line, we can follow reason wherever it may lead. So we won’t low- or high-ball. We’ll merely tally as precisely as possible. And live with the results.

Why do we make the effort? Because once one does measure rent, others can see it, and rent becomes real—and quite useful. A serviceable estimate will fill in a huge gap in our numerical knowledge of economies. One, the business cycle’s phase becomes visible. And two, so does the size of the surplus that the economy generates.

To total up all the rents, one needs the figures for all:

  • ‍land—downtowns, home sites, farms, fields, forests, underground ores, oil deposits, etc,
  • ‍water consumed and waterways,
  • ‍airwaves for all telecommunications, and
  • ‍if you’re not to leave anything out, incidental locations like marina berths, airport landing slots, etc,
  • ‍the above, whether owned privately or publicly, and
  • payments of principle, interest, insurance, taxes, etc on these assets.

That should cover it.

Off the Rails

The several researchers we’ve already read came up with statistics, but only for the most common use, residential land, which topped out at about $12 trillion (Ch 13).

The most complete figure was Larson’s $23 trillion for all land, urban and rural. He called it a draft estimate, said his study attempted to provide baseline methods upon which further research can draw. He asked for refinement, yet his brethren ignored him. We won’t.

Larson admits it was a best guess, one with gaps needing filling. When including land owned by state and local governments, did he include roadways? By focusing only on the surface, could he encompass oil, ores, and airwaves? Did Larson incorporate the “F” and “I” of FIRE? The answers, as far as I could tell, are “no”.

The biggest total was Albouy’s $30 trillion. It was incomplete—for metro land alone—yet it clobbered all other estimates for total property (never-made land plus man-made buildings). How can the discrepancy be so great?

50% of marriages end in divorce. Thus if you don’t file for divorce, your wife will.”

First, most official estimates for land were only for residential land. When officials subtracted a value for buildings, they subtracted a replacement cost. Doing that ignores depreciation of the building, exaggerates its value, and shrivels the value of the location. Larson used those shriveled estimates for residential land.

Second, he also used official figures for land in other uses, when he could find them. 

Those figures were woefully incomplete and similarly minimized (Ch 18). By and large, official figures, even Larson’s, are gross underestimates for some reason.

Third, Larson unavoidably left out lots of things and used figures for 2009, close to the bottom of land prices in the recent recession. Albouy, too, left out lots—all rural land—and also based his total on prices from 2009. What Albouy did differently was avoid aggregate assessments of land plus buildings (Ch 13).

Instead, Albouy’s team used individual sales. Not sales of property but only sales of land. From those prices, they extrapolated a total for all land. Just as “replacement cost” and other tricks make official small figures unrealistic, actual land sales make Albouy’s big figure realistic, despite being so much greater.

On the Rails

Caveats: I’m able to use only the publicly available stats. Maybe the stats one pays a business for are better. Maybe somewhere are good stats for free. So it goes. We’ll play with the cards we’re dealt.

Albouy and others did not use current numbers but stats close to the bottom. Since then, housing has recovered all its lost value. Since most of the change in housing value is not in the building but in its location component, we can use that percentage increase for land (Ch 13).

According to Zillow, since 2009, the increase to 2018 has been 12%. That means Albouy’s $30 trillion is likely now about $33.6 t. Coincidentally, the increase from 2015—the year of Eberling’s $5.5 t for federal land—has likewise been 12%. That raises federal holdings to $6.6 t. Add those two and get $40.2. Add the $3 t for farmland—the USDA figure was up-to-date—plus the fraction for water and now we’re at $43.5 trillion.

Forty-three and a half trillion. After spending so much time down the rabbit hole of officialdom, I feel like I’m performing alchemy, cobbling together such a biggie when they arrive at such littles. Besting the best official guesstimate by so much does give one pause.

While better than nothing, a lump sum price for every square mile, every underground mineral, every aboveground airwave, etc misleads. Selling all land and natural resources at one same time could never fetch anywhere near those huge estimates. That aggregate price must be brought down to earth.

A lump sum payment for all land is a fiction. OTOH, an ongoing rental value is an energy—part potential, part kinetic. How much people do pay and are willing to pay each year for the nature they use is both more accurate and useful.

To convert our estimate of price to an estimate of rent, we could use the ratio of price to rent. Then divide price by it. Some say the ratio is the same as the commonly occurring interest rate of 5% or 20:1.

However, 10:1 may be more realistic.

* HUD’s average selling price of apartment complexes (multi-family housing) was $1 million. Their an annual figure of rental receipts was $100k, one tenth. The ratio is about 10:1.

* The OMB’s estimate of federal receipts was about $0.5 trillion. Ebeling’s estimate of federal natural assets was $5.5t. Here the ratio is about 10:1.

* The accumulated price for land from Zillow, Lincoln, and the BEA were about $27t-$28t. At that time, Quora figured we spend at least $2.72t on land; Quora said the data they found had gaps. Yet again, the 10 to 1 ratio holds. 

Applying the 10:1 ratio to our own estimate of the aggregate price of land puts land rent at $4.4 t. Yet we’re not finished. People don’t just pay a price or rent to own or control some land or resource. They also pay interest, insurance, taxes, etc. Census says the property tax was over $13 billion in 2012. Since then property has increased 43%, says Zillow, so property tax payments are up $18.6 billion—not much.

Data is like people—interrogate it hard enough and it will tell you whatever you want to hear.

If you think $4.4 t is a lot, check out what our friends with credentials have estimated for the total of all rents:

* Dr Mason Gaffney of UC Riverside put the figure for society’s spending on land and resources at $5.3 trillion.

* Dr Fred Foldvary at San Jose State, adhering to Dr Terry Dwyer’s work (formerly at Harvard), came in higher at $6 trillion.

* OTOH, Dr Nic Tideman put it at only roughly 10% of GDP or NDP, a far cry from his $31 t for aggregate lump sum price of all land.

How can two of these totals be trillions more than mine? Those guys may have found sources more complete. Recall, ours left out portions of rural land value; in the countryside, there is more land than just farmland. And there is more “land” underground—oil and ores. Mason included what I could not find. Meanwhile, Fred used a third of national income since land is one of the three basic factors.

A total for rent of five or six trillion, with a ratio of 10:1, puts the aggregate price of land at $53 or $60 trillion. That makes our aggregate price for land—$44t—seem not so huge after all. Whether $44t or $60 t, all are easily feasible if John Rutledge’s $300 trillion for assets (Ch 18) is reliable; land would clock in at $180 t, minimum.

Which estimate is the best guess? Given that:

  • ‍land is one of the three basic factors, its rent should be a lot,
  • ‍national income, at about $18t, may mean rent is one third the total flow,
  • ‍Fred’s source, Terry Dwyer, an Australian, specializes in such calculation and used Aussie figures which are far more accurate than US figures,
  • real estate typically dwarfs stocks and bonds, and
  • ‍Rutledge’s $300 t suggests land alone should be immense, therefore …

These are persuasive reasons to go with not my $4.4 t but Fred’s $6 trillion.

Getting Personal

How much is $6 trillion? Per capita—your share of $6t as a registered voter in America—it’s about $3000 … every month. Or, about $36k per year … until land value rises again, pulling the per capita amount up with it. If something seems too good to be true … can this be a mirage? Two thirds of $6 t, or $4 t, closer to my best guess of $4.4 t, is $2k/mnth or $24k annually.

All these estimates by geonomists need to be authenticated, but by whom? Critiques can’t rest on solid data, because they don’t exist. While we welcome critiques, a critic must employ reason and address methodology. That takes experience in dealing with rents, something most economists lack.

At least now we have a decent ballpark figure, a new standard by which to gauge the estimates of mainstream economists and bureaucrats who’ve gone before and who’ll come later. May this finding nudge statisticians and academics to dig deeper, to improve upon our calculations—and with great ease, since the accompanying text above isn’t in jargon. Plus, kicking off a discussion on rent in general would be progress, too.

This article is Part 20 of a series highlighting the forthcoming book, “Bounty Hunter: a gadfly’s quest to know the worth of Earth,” by Jeffery J. Smith. To date, the experts have not risen to meet the challenge. Indeed, some have even stood in the way. Yet the payoff for knowing this datum is huge.

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Jeffery J. Smith

JEFFERY J. SMITH published The Geonomist, which won a California GreenLight Award, has appeared in both the popular press (e.g.,TruthOut) and academic journals (e.g., USC's “Planning and Markets”), been interviewed on radio and TV, lobbied officials, testified before the Russian Duma, conducted research (e.g., for Portland's mass transit agency), and recruited activists and academics to A member of the International Society for Ecological Economics and of Mensa, he lives in Mexico. Jeffery formerly was Chief Editor at