What you've calculated, I believe, is the square yardage of the actual skirt - the area, assuming it's a rectangle.
I've thought about it a bit, and here's how I think you'd find the necessary yardage for your skirt. I've just picked numbers randomly - to actually calculate this, you'll need to do some measuring.
Let's say your yarn knits up at 5 stitches and 5 rows per inch (I'm just picking easy numbers). At this point, you need to find out how much yarn per stitch. I imagine for this part, you'll just have to knit up a bit and then frog it, taking care to note where a row starts and ends, measure it, and then divide to get yard (or inch) per stitch. You could do this from your swatch once you've measured it for gauge. Let's say 150 stitches (the number in your width, assuming a rectangle) is 5 yards.
So now you know how many yards of yarn per row of your skirt. Here's where the row gauge is used. At our assumed 5 rows per inch and 20 inches of skirt, that's 100 rows for the skirt. At 5 yards of yarn per row, that makes 500 yards for the skirt.
Does this seem like a reasonable method to anyone else? I've got a lot more experience in the math field than the knitting field so it's hard to say if this will actually work.