Arboriculture & Urban Forestry 33(1): January 2007 9 Table 5. Present values (PVs) for two scenarios: plant five pistache trees in current streetside location or plant in nearby shrub bed, years 1 to 40. Discount rate (%) 0 4 7 10 PV benefits PV costs 6,012 6,012 6,158 1,971 3,780 3,780 3,386 1,315 2,552 2,552 2,075 974 Net PV Street Shrub Street Shrub Street Shrub 12,824 12,824 16,589 4,129 −3,765 8,695 −147 4,041 394 2,464 476 1,578 ing of infrastructure repair costs projected to occur later in the time horizon for the streetside planting. This example illus- trates that the decision where to plant the trees has a profound economic impact on their future value. CONCLUSIONS One purpose of this study was to compare estimates of tree value obtained using cost- and benefit-based approaches. In the single-tree example, values at 40 years after planting a green ash were $5,807 using the cost-based approach and $3,102 in Fort Collins and $5,022 in Boulder using the ben- efit-based approach. This example did not include tree plant- ing and management costs and thus was not a full accounting of net benefits. It illustrated how the benefit-based approach reveals the magnitude of benefits by type and can explicitly reflect effects of tree location on benefits such as energy savings. When tree care costs are relatively small, estimates of the PV of future benefits alone may track cost-based es- timates of value. In such cases, benefit-based values are an- other way to assess fairness and reasonableness of cost-based appraisals. For five pistache trees in Davis, California, the total ap- praised value 15 years after planting was $8,756. Assuming 25 years of continued growth, the undiscounted cumulative value of benefits was $8,629, very similar to the cost-based estimate. However, adding the projected cost stream and dis- counting resulted in negative NPVs that ranged from $−6,481 (0% discount rate) to $−1,129 (10%). Negative NPVs reflect future infrastructure repair costs projected to be well in ex- cess of benefits. The benefit-based approach can capture this relationship, whereas the cost-based approach cannot. Another purpose of this study was to examine the use of the benefit-based approach as a decision support tool for de- sign and management. Municipal arborists are frequently faced with choices regarding which species to plant where and whether to retain existing trees or remove and replace them. These questions were answered in the multitree ex- ample using the benefit-based approach. Removing and re- placing the five pistache street trees was not cost-effective at 7% and 10% discount rates, primarily because high future infrastructure repair costs associated with retaining the trees were heavily discounted. At the lower discount rates, the tree removal and replacement option became relatively more cost- effective. Planting the five pistache trees in their current location was not an economically sound decision, because NPVs calcu- lated for 40 years after planting ranged from $−3,765 (0%) to $476 (10%). Planting the same trees in a nearby shrub bed would have saved a substantial amount of money, because NPVs ranged from $1,578 (10%) to $8,695 (0%). Hence, by accounting for future costs as well as benefits, the benefit- based approach can help landscape architects and municipal foresters evaluate the long-term economic implications of tree planting and management decisions. Putting this knowl- edge to work will help ensure that our investments in green infrastructure keep paying us back. LITERATURE CITED Anderson, L.M., and H.K. Cordell. 1988. Residential prop- erty values improve by landscaping with trees. Southern Journal of Applied Forestry 9:162–166. Cassel, W. (Ed.). 2004. Regional Plant Information. Interna- tional Society of Arboriculture, Rocky Mountain Chapter. Denver, CO. CO2e.com. 2002. Market Size and Pricing. Accessed via the World Wide Web. http://www.co2e.com/stratagies/ AdditionalInfo.asp?PageID273#1613 (accessed 10/23/ 02). Council of Landscape & Tree Appraisers. 2000. Guide for Plant Appraisal (9th ed.). International Society of Arbo- riculture, Champaign, IL. Figure 7. Average cumulative benefits, costs, and net benefits per pistache (0% discount rate) for two sce- narios, planting streetside and in shrub bed, years 1 to 40. Benefits were the same for both scenarios. Cullen, S. 2000. Tree appraisal: What is the trunk formula method (9th ed.)? http://www.tree-tech.com/cullen- tf.shtml (accessed 3/28/02). Arboricultural Consultant Summer: 7–8. ———. 2002. Tree appraisal: Can depreciation factors be rated greater than 100%? Journal of Arboriculture 28: 153–158. ©2007 International Society of Arboriculture
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