Everything has its price — and Greenland is no exception.
President Donald Trump floated the idea of buying the ice-capped island, though it’s unclear if he was serious. The Wall Street Journal reported that he’s talked about buying it with “varying degrees of seriousness.” In fact, the U.S. unsuccessfully tried to purchase the island in 1867 and 1946.
The U.S. offered $100 million in 1946 for Greenland, which is worth an estimated $1.3 billion in today’s dollars.
However real Trump’s offer might be, the news has invited all sorts of mockery. Some observers have said Greenland will become “tropical paradise” as climate-change worsens, while others have said it’s a political distraction from more pressing issues, including the immigration crisis at the southern border and a possible looming recession.
South Bend, Ind. Mayor Pete Buttigieg, a Democratic presidential hopeful, said buying Greenland is not a solution to climate change.
If Trump is serious about buying Greenland for its geostrategic location, officials say the island isn’t on the block. “We are open for business, but we’re not for sale,” Greenland’s foreign minister Ane Lone Bagger told Reuters.
The island does offer strategic defense value. The U.S. military already has Thule Air Base on Greenland’s northwestern coast; the installation is the military’s northernmost base and its only base north of the Arctic Circle, Defense News points out.
Jason Barr, an economist at Rutgers University, Newark says a price for the autonomous territory owned by the Kingdom of Denmark depends on a variety of factors. Chief among those factors: The reason for buying it. Would Trump want to develop the estimated 20% of the island that is not covered by an ice sheet?
Barr previously estimated the 2014 price for the island of Manhattan averaging $1.74 trillion based on analysis of vacant land-parcel sales. When Barr and a colleague estimated Manhattan’s price, they used the same approach by asking what was the island’s asset.
“It’s easy for Manhattan, because Manhattan is real estate. There’s no gold beneath the streets unless somebody drops their ring,” Barr said. So they scrutinized the price of vacant land sales between 1950 and 2014 to make their conclusion.
What’s valuable about Greenland?
Greenland is about three times the size of Texas and has a population 57,691, according to CIA figures. There’s little qualified labor, a declining population because of emigration and a “potential for natural resource exploitation with rare-earth, uranium, and iron ore mineral projects,” it said.
If all of Greenland’s ice melts, it could make the world’s sea levels rise by 20 feet, according to the National Snow and Ice Data Center. The Associated Press reported that the world’s largest island lost an estimated 13.7 billion tons of ice in one day alone this month.
Greenland’s economy depends a lot on shrimp and fish exports, as well as Danish subsidies, the CIA said. Greenland’s gross domestic product was roughly $2.7 billion in 2016; Denmark had a GDP of $351 billion last year, compared to $20.5 trillion for the U.S.
On Friday, Greenland’s Ministry of Foreign Affairs tweeted TWTR, +1.22% that the country was open for business, but not for sale, linking to the territory’s official tourism site, VisitGreenland.com.
America has made big land purchases in the past. It bought Alaska from Russia in 1867 for $7.2 million ($124.8 million in today’s dollars) — a deal then panned as “Seward’s folly” for Secretary William Seward, who signed the deal.
More than 60 years earlier, President Thomas Jefferson made the Louisiana Purchase, buying 827,000 square miles that now cover 13 states. He shelled out $15 million equating to more than $340 million in today’s dollars.
Barr noted that Jefferson and his French counterparts weren’t using modern economic models when they hashed out the price. ”Fundamentally, from a market point of view, you buy something now to produce income over very long time horizons,” Barr said.