Leaf Litter

The Money Tree

Kevin Heatley of Biohabitats ISM applies natural capital to tree conservation.

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Yes, I think we can all agree that the money tree is a tired metaphor that should be pruned at the base and thrown directly into the chipper. Yet it is one that very effectively describes the relationship between our forest cover and the tangible economic benefits trees provide. Plus, it got your attention, didn’t it? Be honest. Mention free money (or even just money) and a crowd of people will turn their heads in unison so quickly it would make a school of herring jealous. Ever see the Antiques Roadshow? Put a price on what was until moments ago a piece of attic junk and all of the sudden a newfound sense of reverence appears. This is one of the main strengths of quantifying natural capital; it gets the attention of segments of society that would ordinarily not consider native ecosystems as anything more than an impediment. Instead of dismissing ecological considerations as tree-hugging, sentimental fluff, or merely applying an ornamental green veneer to a “business-as-usual” development, understanding that ecological and biological systems represent tangible accrued value can dramatically change the perspective of a land owner or decision maker.

Nowhere is this more evident than when dealing with the protection and conservation of community forests. Although trees frequently elicit a strong emotional response from people and might even be considered as “charismatic mega-flora,” our urban environments have unfortunately witnessed a significant reduction in canopy cover over the last several decades. How many of you have experienced that sick feeling in your stomach as you discovered a favored landscape or awe-inspiring giant had fallen victim to sprawl? While it may be a strong motivator for readers of Leaf Litter, it is obvious that appeals to the intrinsic value of trees have not met with great success on a national level. Bringing tree conservation to the table requires us to use a conceptual framework and language that is within the comfort zone of the broader population. To put it simply, “money talks.” We have seen it on vegetation and community forest projects across the United States. Natural capital is a very effective tool for improving the dialogue during resource management discussions.

Applying the concept of natural capital to tree cover and vegetation requires a fundamental understanding of the types of value models that can be applied to this resource. Estimates of tree value can be based upon either functional (benefits) or compensatory (structural) appraisal formulas. An easy way to conceptualize the differences between these two values is to imagine a factory that, when operational, produces a net profit of $500,000 per year. Let’s say the factory building and equipment inside are worth $2 million. The compensatory value in this example is associated with the $2 million structural asset while the functional value is analogous to the $500,000 annual profit per year. In terms of trees, a compensatory appraisal is an approximation of the structural asset value based upon variables such as species, size, condition, and location. The functional value of the tree cover relates to the many benefits provided by these plants; stormwater interception, air filtration, carbon sequestration, micro-climatic temperature regulation, solar radiation interception, wildlife habitat enhancement, etc.

Recent research by the USDA Forest Service helps to illustrate the different approaches to forest value. Working with community forest information, the forest service has estimated the compensatory value of urban forests in the coterminous United States as approximately $2.42 trillion (yes, trillion) (1) and the functional value of the carbon storage performed by these plants as $14,300 million (2). Given the time required for trees to grow and maximize their value, this tree cover and the accompanying benefits provided represents accrued intergenerational equity, much in the same way that housing, bridges and roads built years ago still provide shelter and transportation corridors. A development or site modification that unnecessarily destroys a healthy viable tree canopy is literally liquidating an asset that has appreciated over decades or centuries.

The Biohabitats team has worked with both compensatory and functional models to estimate forest and individual tree value. The key issue is recognizing which models are appropriate in differing circumstances. For instance, during a recent forest cover analysis at a military installation we made use of the USFS Urban Forest Effects Model (UFORE) to determine the functional carbon sequestration value of the naturalized forests on the base. In addition, we applied the Council of Tree & Landscape Appraisers compensatory Trunk Formula Method to trees growing in more formalized landscapes on the grounds. These methodologies and the areas of the base targeted for each appraisal were identified after careful consideration of the challenges and goals enumerated in the Integrated Natural Resource Plan for the facility. The resulting information has proven valuable in addressing tree retention and forest conservation during construction planning.

So should we run out and put a price tag on everything green? Wouldn’t that make it easy to figure out what to save and what to sacrifice? An informed consumer is important to an efficient marketplace, right? Well…..maybe not. Beyond the inherent limitations of trying to place a price on goods and services that are historically not traded in a marketplace and whose benefits may not accrue to a single “owner”, a larger philosophical issue applies to the use of economic valuation and cost/benefit analysis. As a society, do we choose to give consideration only to those things that have instrumental and utilitarian value or are some things unacceptable at any price? Markets exist for human slavery and child pornography yet we wisely attempt to suppress them. If a species or ecosystem has no tangible economic value to humanity should it be sacrificed? Ultimately it is a reflection of how we define ourselves in relation to the rest of the biota; is it a part of who we are or merely a tool? These are deep thoughts for a newsletter, so let’s unwrap our arms from around that tree and reach out to our less eco-conscious friends and neighbors with the pragmatic tools at hand. Show them that there is indeed money in their trees!


(1) Nowak, D.J., Crane, D.E., Dwyer, J.F., 2002. Compensatory value of urban trees in the United States. Journal of Arboriculture 28(4) pp.194-199.

(2) Nowak, D.J., Crane, D.E., 2002. Carbon storage and sequestration by urban trees in the USA. Environmental Pollution 116, pp. 382- 389.

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