With the assumptions provided in the text, the estimation of the land cost is as follows:
- Calculate ratio (a) by using data for Structures value, divided by Structures & Equipment value (BEA data).
- Calculate ratio (b) (Structures cost/Structures + Equipment cost) by assuming that it is equivalent to ratio (a). Structures & Equipment cost is the gross operating surplus of the industry.
- Calculate ratio (c) by using the ratio of Land value/Structures value (Manvel study, 1966) and data for Structures value (BEA). Non-availability of structures (value) data (from BEA) for the earlier years of analysis led to the extrapolation of NAICS structures stock (value) data by using SIC structures stock (value) data.
This calculation provides Land value for a specific year.
- For ratio (d), use the cost of structures net of depreciation. Land is not depreciated. By using
the estimate for structures cost and ratio (d), calculate Land cost. This number is used for the weight of land in the calculations.