Article from 2011-2012 Newsletter By Mark Porter
There are many reasons why it may be necessary to determine the monetary value of a tree. Various methods to assign a value for trees have evolved over the past 100 years. In North America, the Council of Tree and Landscape Appraisers (CTLA) provide guidance, methods, and standards of practice for tree appraisal.
Why do we place value on amenity, landscape, shade and ornamental trees (ALSO Trees)? The acronym ALSO Trees is useful to describe or broaden our understanding of the function and use of urban trees. Amenity trees are used to provide pleasure by the owner or public. Landscape trees improve visual resources, increase property values, and invite families and friends to gather in relaxing places. Shade trees provide cooling relief for our homes, place of business and decrease energy consumption. Ornamental trees can define a theme; fill our interest with color, form, and style; and draw interest similar to prized artwork.
What is the point of all this talk about ALSO Trees? Apart from other commonly known uses of trees e.g., fuel wood, agricultural commodities and timber, urban trees are often considered very low on the pecking order in some communities. Familiarity with the function and use help justify value.
The reason for most valuations is to form the basis for a rational decision. Problems and questions requiring decisions vary widely. It is essential that we identify the purpose and use of valuations. An appraisal assignment may be required to satisfy a wrongful tree removal claim also known as a tort remedy in legal jargon. Other appraisal assignments may involve a liability insurance claim such as a damaged tree caused during a vehicle accident, maybe a road-widening project that requires a government agency to acquire property through the powers of eminent domain. Providing a value prior to tree preservation efforts may require a contractor to purchase a bond covering damage or loss to trees due to negligent construction activities.
How Communities Measure Benefits of Trees
The USDA Forest Service offers a state of the art free software suite of tools called i-Tree. The tool provides urban forestry analysis and benefits. i-Tree calculates costs savings that trees provide such as storm water retention, carbon sequestration (pollution absorption) and energy savings. This popular software strengthens urban forestry management and advocacy efforts. Species, placement and canopy size play a role in determining the dollar value of a tree over its lifespan. By calculating the economic value of the environmental services provided by a population of trees i-Tree assists urban forest managers communicate and justify maintenance expenditures.
Recent Studies Consider Various Benefits
Trees and Real Estate
A recent study in Portland, Oregon, showed that properties with well-maintained trees and landscapes reduced time on the market for real estate sales compared to properties with minimal or no canopy cover. Trees and landscapes can contribute up to 20 percent of total market value. Consulting arborists sometimes look at the contributory market value of trees as a test of reasonableness for other valuation methods employed.
Trees as a Tax Base Generator
Shopping centers with well-maintained trees and landscapes create a more inviting environment thus contributing to higher revenues for local business thus higher tax revenue benefiting communities and local governments. This study considered the social economic benefits trees provide in both the United States and Japan.
Another research project at a school district demonstrated as canopy cover and green space increases so do test scores (reading, math, and English). This study was conducted utilizing aerial mapping imagery that enabled square foot calculations of schools with green space compared to schools with expansive areas of blacktop, cement and dirt. This data has yet to be shared on a large scale to educational administrators.
Can Trees Play a Role Reducing Crime and Domestic Violence?
Another study in a Chicago suburb demonstrated reduced crime and domestic violence with an increase in green space. This study showed identical apartment buildings side by side. One with literally no green space the other with well-maintained trees, shrubs beds and lawns.
Work Place Moral and Patient Recovery Time
Similar research show improved moral in the workplace and faster recovery times for patients with a view of trees and landscapes. All the research clearly indicates that as canopy cover and green space increase so do the benefits.
What about Vandalized, Damaged, and Destroyed Trees?
When a tree is damaged or destroyed, consulting arborists employ specialized skills including utilizing diagnostic tools and techniques as well as continued training to place a value on existing trees. Depreciation formulas are used for both trees available at local nurseries and trees that are too large to be reasonably replaced.
When a value is sought for damaged or destroyed trees consulting arborist typically consider three approaches to value:
- Depreciated cost approach (replacement or reproduction costs)
- Income approach (based on income and expense data, i.e. nurseries, orchards, Christmas tree farms, well-landscaped rental properties commanding higher rents)
- Market approach (i.e., nursery stock, timber value, firewood value, contributory real estate market value)
Similar to real estate appraisal the cost, income and market approaches are accepted techniques and the foundation of the valuation profession.
Damaged Trees and Plants
The cost of repair method may be used if a damaged tree or plant can be repaired in a timely and satisfactory manner to return to its former condition.
When extensive damage has occurred including other hardscape features such as walks, landscape structures, lighting, and irrigation a cost of cure approach is used. The cost of cure method includes restoring plants and the property to its pre-causality condition.
When a Tree Is Destroyed Beyond Reasonable Repair
Consulting arborists commonly use depreciated replacement cost or trunk formula method (TFM).
Depreciated replacement cost is indicated when both:
- A damaged tree needs to be replaced because it is unreasonable to repair
- A replacement is available at a local nursery
The value is expressed as the plant cost, shipping, installation, sometimes monitoring during the re-establishment period, less depreciation.
TFM is used if a similar sized replacement tree is not commonly available. In other words the damaged tree is too large to find in a local nursery. Both replacement cost and TFM depreciate forspecies (species relationship with the environment geographically or regional), condition and location factors relating to the quality and use of the site, placement and contribution to the overall landscape.
If a tree was in very poor condition or say growing under a powerline in the back corner of the yard not cooling our home the depreciation considers these factors in the final value. Typically the larger and better condition of the tree, planted in a favorable spot in the landscape that allows it to grow to maturity and if well maintained, the higher the value. On the contrary, if prior to a damage claim consider if the tree was judged to be a hazard or infested with pests or disease that could not be reasonably corrected by pruning, cabling, bracing or pest treatments. In that case, worthless.
Important Points to Remember:
- Understanding the various benefits and value trees provide the better we can advocate for urban forestry and justify expenditures.
- Research supports important social and economic benefits too valuable to ignore.
- Trees can be valued many different ways.
- If a tree is damaged, destroyed or taken within the powers of eminent domain, the tree can be appraised by a qualified consulting arborist and help recover fair compensation for the tree owner.
- Keep in mind an appraisal is an opinion of value and not a guarantee.
- If a tree is damaged for any reason or lost in a fire, maintenance receipts and photographic records help justify prior condition and reasonable value loss.
Mark Porter is a consulting arborist with Mark’s Tree Service and Consulting in Riverside, California. He is a member of the American Society of Consulting Arborists, a certified arborist (WCISA CA #465), and a certified tree risk assessor (PNW ISA #1035). He can be reached at email@example.com.