4 McPherson: Benefit-Based Tree Valuation $1.21 million. Assuming that the typical basin was designed to hold 21,216 m3 (17.2 ac ft) of runoff and filled once annually for 20 years, the control cost was $2.85/m3 ($0.0108/gal) (K. McBride, pers. comm.). Aesthetics and Other Benefits Many benefits attributed to urban trees are difficult to price (e.g., beautification, privacy, wildlife habitat, sense of place, well-being). However, the value of some of these benefits can be captured in the differences in sales prices of properties with and without trees. Anderson and Cordell (1988) found that each large front-yard tree was associated with a 0.88% increase in sales price. In this analysis, aesthetic (A) benefits ($/tree/year) are expressed for a single tree as: A = L × P where L is the annual increase in tree leaf area (LA) and P is the adjusted price ($/m2 LA): P = T × CM where Tlarge tree contribution to home sales price0.88% × median sales price Ctree location factor (%) that depreciates the benefit for trees in side or backyards or outside of residential areas Mlarge tree leaf area. To illustrate the sensitivity of the tree’s overall benefit- based value to T, benefits were calculated using the median sales prices for single-family homes in Fort Collins ($212,000) and nearby Boulder ($413,000) (McPherson et al. 2005a). The values for C and M were 1.0 and 675 m2 (7,290 ft2), respectively, in both cities. All other benefits were as- sumed to be the same for Boulder and Fort Collins. RESULTS—SINGLE-TREE EXAMPLE Estimates of tree value using the trunk formula method in- creased from $154 at year 1 to $1,910 at year 20 and $5,807 at year 40 when dbh was projected to reach 51 cm (20.4 in) (Figure 2). The cumulative value of benefits produced by the tree followed a similar trend, although the relative rate of increase slowed with age compared with values calculated with the trunk formula. At year 20, cumulative benefits to- taled $1,023 and at year 40, they totaled $3,102. After 40 years, benefit-based values were 53% of cost-based values in Fort Collins. However, this percentage was 86% for the tree in Boulder as a result of the higher residential median sales price, nearly double that of Fort Collins. In Fort Collins, two-thirds or more of total benefits were attributed to aesthetic and other benefits (Figure 3). The rate of increase of the aesthetic benefit slowed with age because it ©2007 International Society of Arboriculture Figure 2. Value of a green ash in Fort Collins estimated by the trunk formula (cost-based) and benefit-based ap- proaches. The Boulder values assumed a median home sales price nearly twice that in Fort Collins. is driven by annual change in leaf surface area. Although total leaf area increased with tree age, the annual rate of increase slowed after the first few years. On the other hand, cost-based value increased as a function of dbh and resulting trunk area, explaining slightly higher rates of increase throughout the 40 years relative to benefit-based values. These differences in ways of mathematically expressing growth patterns (i.e., leaf area versus dbh) were largely responsible for the different rates of increase seen in Figure 2. Over the 40 year period, aesthetic and other benefits to- taled $2,025 (65%). Runoff reduction benefits resulting from rainfall interception totaled $476 (15%), energy savings were $280 (9%), net air quality benefits were valued at $243 (8%), and CO2 reductions were $78 (3%). DISCUSSION—SINGLE-TREE EXAMPLE An attractive feature of the benefit-based approach to tree valuation is that the relative contribution of different benefits Figure 3. Projected annual benefits for the green ash in Fort Collins.
January 2007
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