Benefit-Based Tree Valuation

Benefit-based tree valuation provides alternative estimates of the fair and reasonable value of trees while illustrating the relative contribution of different benefit types. This study compared estimates of tree value obtained using cost- and benefit-based approaches. The cost-based approach used the Council of Landscape and Tree Appraisers trunk formula method, and the benefit-based approach calculated the net present value (NPV, total future benefits minus costs discounted to the present) of future benefits and costs using tree growth data and numerical models. In a hypothetical example, the value of a 40 year old green ash (Fraxinus pennsylvanica) was $5,807 using the cost-based approach and either $3,102 (for a tree growing in Fort Collins, CO, U.S.) or $5,022 (for a tree growing in Boulder, CO) using the benefit-based approach. This example, however, did not consider planting and management costs. In a multitree example, 15 years after planting five pistache (Pistacia chinensis) street trees in Davis, California, the trunk formula (cost-based) value was $8,756, whereas the benefit-based value NPV of benefits was negative at discount rates ranging from 0% to 10%. Negative NPVs occurred because future sidewalk repair costs were projected to be in excess of benefits, a relationship not fully captured in the cost-based approach to valuation. Removing and replacing the five pistache street trees was not cost-effective at 7% and 10% discount rates, primarily because high future sidewalk repair costs associated with retaining the trees were heavily discounted. Planting the five pistache trees in their current location was not an economically sound decision, but planting the same trees in a nearby shrub bed would have saved an estimated $1,102 (10%) to $12,460 (0%) over 40 years. These examples illustrate the use of the benefit-based approach as a decision support tool for design and management.