This article is part of a series by Jeffery J. Smith on the surplus—also known as “economic rent”—that exists in the economy. Currently, this surplus is hoarded; yet once shared, this surplus could generate undreamed of possibilities for the entire human population. To see the entire series, visit

No Easy Answer

How much do we spend on nature? On land under our homes, on the farmland portion of our food, on the oil portion of our gasoline? Not even the pros are sure.

Professor Karl E. Case, writing for the National Bureau of Economic Research in “Land Prices and House Prices in the United States", 1994 January, said, “While a great deal of attention has been paid to house prices in the United States, economists have devoted very little time to the study of land prices. In fact, there are virtually no generally available data on land prices in the United States. It’s not clear why this is so… Nonetheless, it remains a puzzle why so little academic attention has been focused on land prices. It is a virtual certainty that the increase in volatility across regions is the result of differentials in land values.”


Top 10 Studies

As we did previously to conjure up the popular articles, again we Google “worth of Earth” and “land value in the US” and “resource value in the US” and “rental value of US land” for the technical ones.

1) “How Much Revenue Would a Full Land Value Tax Yield? In the United States in 1981, Census and Federal Reserve Data Indicate It Would Nearly Equal All Taxes” by Steven Cord in The American Journal of Economics and Sociology, 1985 July.

Ed. Notes: The granddaddy of them all. Lots has happened to the value of land in 30 years. Cord, long the leader of the Henry George Foundation, deserves recognition for going first.

Now we’ll go back only 10 years.

2) Just two years before the peak in land prices … “The Price of Residential Land in Large U.S. Cities” by Morris A. Davis (U Wisconsin) and Michael G. Palumbo (Federal Reserve Board), 2006 May — In 2004, the price of residential structures for homes along the coasts were not much greater than those for the other 3 regions, so that nearly all of the difference in home prices reflected the value of land. The average lot sold for about $75,000 in cities in the Midwest, Southeast, and Southwest, but $245,000 on the East Coast, and $440,000 in West Coast cities. Land’s share of home value had risen to 75% along the West Coast, 65% on the East Coast, compared with about 40% in the other 3 regions and 51% across the entire sample of 46 cities.

Ed. note: If they’d reveal the number of residential parcels in those 46 cities, we could multiply that by the average land value of a parcel to get the total residential land price for the most populated part of the nation. Maybe that’s what Davis did in his next article …

3) “The Price and Quantity of Residential Land in the United States” by Morris A. Davis (U Wisconsin-Madison Department of Real Estate and Urban Land Economics) and Jonathan Heathcote (Georgetown U, Federal Reserve Board, and CEPR), 2006 November — By the second quarter of 2006, residential land was priced at $11.6 trillion, accounting for 46% of the price of the housing stock and 88% of GDP.

Ed. note: Their trillions are at the peak of the land-price cycle. The next figure is near the bottom.

Also, comparing land price to housing price is OK since both are lump sums. But comparing land price to GDP is misleading because GDP is a flow. To be accurate, compare rent, another flow, to GDP. Rent would fall somewhere between 5% and 10% of GDP, nowhere near 88%.

4) “Commercial and Residential Land Prices Across the United States” by Joseph B. Nichols, Stephen D. Oliner, and Michael R. Mulhall, also of the Federal Reserve Board, 2010 February — At the end of 2009 Q3, total land price in the US was roughly $4 1⁄2 trillion.

Ed. Note: Their trillions are near the nadir while the previous figure was for the peak. Pretty huge difference between the two estimates, huh?

5) “The Value of Land in the United States: 1975 to 2005” by Karl E. Case (half of the successful and widely cited Case-Shiller Report), 2007 March — Ignoring agriculture, he estimates the value of land to be $5.6 trillion in 2000.

Ed. Note:  That figure will double in five or six years (see #3 above) due largely to speculation. Another good guy academic, David Albouy of U Illinois and NBER, cited Case’s total in “What Are Cities Worth? Land Rents, Local Productivity, and the Total Value of Amenities”, 2015 April 16. 

Albouy was the only scholar to use the terms "rents" and "values" interchangeably. However, he repeatedly refers to “the total value of local land” for some recent year without giving its figures. Go figure.

OK, now we get to 2015.

6) “Aggregate U.S. Land Prices” by the Lincoln Institute of Land Policy — Their estimate of total market price of land in residential use in the US in 2015 Q3 is about $9 Trillion.

Ed Notes: $9 T is less than the $11.6 T of 2006, the peak (#3), yet housing has recovered its previous peak price. However, official statisticians are back to assigning location only a third of total housing price while in 2006 they gave sites half of total property price.

OK, that was land for homes. Now let’s try to grab the values of land for other uses.

7) “Land Values 2015 Summary” from the USDA, 2015 August —The price of Farmland and Buildings in the United States 2014 was  about two and a half trillion dollars ($2,595,159,000,000). But here the same agency says it was a $200 billion less, $2.38 trillion. Go figure.

Ed. Note: They didn’t separate the values of land and buildings, but rest assured most of that value is of land.

It’s not just farmland whose value is judged by annual output, the harvest. Commercial sites, too, are determined by how much money merchants can make at the location than each year.

BTW, absentee ownership and non-owning users is huge on farmland: “About 40 percent of U.S. farmland has been rented over the last 25 years. Nonoperators owned 30 percent of land in farms in 2012, though that proportion has declined since 1992.”

8) “Roadway Land Value” in Transportation Cost and Benefit Analysis II by Victoria Transport Policy Institute, 2015 Dec 10 — Failing to charge road users the equivalent of rent and taxes on roadway land underprices roads compared with other land uses, and underprices space-intensive travel modes (driving cars). This increases the amount of land devoted to roads and encourages lower-density urban development… creates more automobile dependency… the annual rental value of the nation’s rights of way ranges between $305 and $366 billion in 2002… The price of the abutting land (most streets are in high-value cities) is $7.1 Trillion.

Ed. Note: Wow. Their method of calculating location value was far more sanguine re land than the guys working for the Fed or the Feds.

9) “The Value of Water In Agriculture Land Markets” by Chris L. Thompson and Bruce B. Johnson, in the Journal of the ASFMRA, 2012 — The value of water across western Nebraska in 2010 derived from the residual rent approach using Water Optimizer ranged from $231 to $252 per acre.

Ed. Note: About 50 million American acres are irrigated. Water used to farm should’ve rented for $12.5 Billion in 2010. Water has other uses, too.

OK, enough beating around the bush. Here we have an official estimate of the value of most of the land under the major uses.

10) “New Estimates of Value of Land of the United States” by William Larson of the Bureau of Economic Analysis (in the US Commerce Dept), 2015 April 3 — The contiguous (lower 48) United States plus the District of Columbia (1.89 billion acres) in 2009 prices cost $23 trillion.

Ed. Notes:  It’d be nice to think that this is the ultimate answer. However, it’s not. It’s for 2009—the bottom of the recent cycle—not for 2015, after land has climbed out of the trough. $23 T is not enough.

Decoding Jargon

One thing about specialists. Their field is easy for them. So they can’t see how it’s hard for others. Even if they try to meet the layman halfway, usually they don’t make it. They may use an analogy which they later regret, like the solar system model for the atom—way off base. So instead, lay people must meet the specialists on their turf. That means learn their jargon.

Which is not easy. What makes it harder, when you come across a new word or an old one used in a special way, who do you turn to? There’s no translator and no key for the columns, charts, and graphs.

All the excitement about exploring a new terrain, a new world of numbers, fades, replaced by dismay at climbing the steep learning. Barely underway, and tired already. But one soldiers on.

One wonders to what degree jargon is useful to convey thoughts precisely to other specialists and how much is it used as a code, a badge, a way of creating a group with insiders and outsiders. Humans are that way. Every generation and every discipline does it.

Formal language is how most academics feel they must write. The great geonomist Bertrand Russell did not. Mere mortal economists, however, can’t shake themselves free of the cover-thy-butt jargon habit.

Grains of Salt

Some of these estimates are drawn from official stats and official stats are abysmal. The Feds get them from states who get them from counties—when they get them at all—who get them from assessors, whose performance is all over the map. Some localities have assessments that are older than a half century. Some states have laws—caps and limits—that require lower, inaccurate assessments. Hence you find states whose location values in the market are sky high but whose assessed values are so low they’re lower than a state with a small population and a pittance of site value. Some above figures are likely to be underestimates.

When assessors/appraisers separate property value into land and buildings, their estimates are biased toward buildings and underestimate the contribution of location. A million dollar house in San Francisco is actually a $800,000 site with a bungalow on it. Same goes for $10 million dollar apartments in New York; those are $8 million sites. Remove the building and maybe it’s easier to see. In the wealthy ski resort Aspen CO, a vacant lot fetches $10 million easy.

Besides bad data, almost all the studies fail to distinguish between value and price. Value is not price. Value is the entire amount one is willing to pay to own or control a location, including interest, insurance, taxes, etc.

Collectively, natural value is the amount that all users would pay for all the sites at any one point in time. Yet if all land in the US were put up for sale at one time, it could not fetch anything near price totals. The greater supply of parcels on offer would drive down their price, perhaps to a figure about the same size as the annual rent for all the land.

We’re so used to buying and selling everything, including land, that we automatically assume that price is value. It’s not. We who're uncomfortable with land as commodity should know better.

Re-Size Down, Then Up

While lump-sum price is not compatible with GDP, the flow annual rent is. That figure would be anywhere from 1/10th to 1/20th of the total price of all land of all kinds in the nation. Quit a come-down but still a lot of dough.

Most researchers leave out lots of land. The category “land” would have to include both private and public. Roads, around another $10 billion annually, plus parking. And all land uses must be tallied. not just residential but also commercial, industrial, agricultural, pastures for ranching, sylvan, mining, oil drilling, etc.

Besides terra firma, there’s water, over $50 billion annually to agri-business. Besides surface and subsurface, add supra-surface—the airwaves, and soon geosynchronous orbits. All that should be counted as they all belong in the same category: nature-having-market-value. Include them all and the total of natural rents would likely exceed a fifth of GDP (=$3.3 T).

Coming Up

So that’s what individual academics had to say. Next we’ll see what academic centers and government agencies have to say. They’re the ones with a mandate to measure common assets.

Academics and their dry style really make us laypeople work. I wade through it so you don’t have to. You only have to decipher mine. I pester bureaucrats with penetrating questions, appealing to their self-image as professionals. I’d love to recruit a credentialed simpatico to put the questions to the statisticians, putting the queries in the requisite academic jargon. Then get the helper to translate the answers.

Universities make scholars study statistics and other things that their phones can do for them. What if, instead, they made students study writing? How to compose a clear sentence, and how to write intriguingly. If academics wrote more clearly, would they think more clearly? I bet they would. You should’ve seen my thinking before I started writing..

This article is part of a series by Jeffery J. Smith on the surplus—also known as “economic rent”—that exists in the economy. Currently, this surplus is hoarded; yet once shared, this surplus could generate undreamed of possibilities for the entire human population. To see the entire series, visit

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