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What is the social value of a tree?

Afforestation from a socioeconomic perspective

What is the social value of a tree? 

We have repeatedly talked about our desire to plant trees in order to slow down global warming and restore ecosystems worldwide. These are important benefits of tree planting, but there are other benefits that are much harder to measure but whose impact is no less important. These are the socioeconomic benefits that trees bring to the communities where they are planted.

Broadly, the socioeconomic benefits of trees can be divided into two types: those that we can measure in terms of money and those that we cannot. Let me take you through each of these in some detail in the coming weeks.

This week I will start with those effects that can be measured in monetary terms. For simplicity, let us call these effects the “measurable effects”. There are broadly three types of measurable effects of trees: those effects that benefit individuals, those that benefit firms, and those that benefit taxpayers (that is both individuals and firms).

Trees and house prices

The most obvious way in which individuals benefit from trees is through the increased value of their homes. Various research has shown that the presence of trees in a community increases the value of the homes in that community. These benefits vary widely, but can be measured directly by an economic method called hedonic pricing. For example, researchers from the University of Minnesota found that a 10% increase in tree cover within 100 meters of a home in Dakota County, Minnesota, increased the average sale price of that home by 0.48%, or $1371.

You can think of it like this: if there is a park with 20 trees near a home, then planting one additional tree increases the value of that home by 0.24%, or $686. From the perspective of the homeowner, planting a tree then represents a solid investment. But remember: all homeowners within the 100 meter radius benefit. So, assuming that each homeowner in the 100m radius owns 100 square meters of land, then we have 314 homes whose price rises by $686. Thus one tree planted brings the community $686*314 = $215.404 financial return. The next tree would bring only marginally less, and so on. Other studies have found similar results: on average, the planting of trees in a community brings positive financial returns (for example, see Donovan (2010) and Wolf (2013)).

Trees and businesses

Similarly, research has shown that local businesses tend to be more profitable when they are located near trees. “Shoppers claim that they will spend 9% to 12% more for goods and services in central business districts having high quality tree canopy,” concluded Kathleen Wolf from the University of Washington in her 2005 paper (http://www.naturewithin.info/CityBiz/BizTreesAll_JFor.pdf).

In other words, the presence of trees in a community creates a positive feedback where homeowners can afford to spend more and choose to spend their tree-generated cash in areas that also have more trees.

Trees and public roads

Finally, the presence of trees is known to decrease heat in urban areas, which helps save money on air-conditioning and road maintenance. A 2005 study by USDA Forest Service found that shade from hackberry trees planted alongside streets in California saved $7.13/m2 over the 30-year lifetime of a road compared to unshaded streets.

On a kilometre-long stretch of a five-metre wide road, that is a public saving of $35.650. This saving is much larger than the cost of planting the hackberry trees. This money can be used to benefit taxpayers in more productive ways.

Conclusion: money does grow on trees, but…

The curious cases above demonstrate the importance of trees in increasing our society’s wealth. Trees are beneficial to all members of society. However, we need to be very careful about interpreting the results of these studies, as some scientific methods allow for various interpretations and mistakes. Therefore, when deciding whether to plant or cut trees for monetary benefit, the decision-maker (be it an individual, a firm, or a government) should carefully consider the evidence used for making their decision, as well as all possible aspects of their actions on themselves and those around them.

Finally, just like planting trees may have positive financial consequences, cutting trees may result in financial losses. Cutting a tree in one’s own backyard may reduce the value of one’s home and those in the neighborhood, lower the sales of local businesses and increase air-conditioning and road maintenance costs. Remember: money does grow on trees, and it is our responsibility to make the most out of this fact.

Edited 17/09/2015

Author: Martin Tengler
Picture: Chrys Rynearson