Compensatory Value of Urban Trees in the United States

METHODS

Field data were collected to determine the entire urban forest structure (e.g., tree species composition and number of trees on all land uses) of eight cities: Atlanta, Georgia; Baltimore, Maryland; Boston, Massachusetts; Jersey City, New Jersey; New York, NewYork; Oakland, California (Nowak 1993a, b); Philadelphia, Pennsylvania; and Syracuse, New York. Trees in these cities were sampled based on methods developed by the USDA Forest Service for a number of urban forest research projects (e.g., Nowak 1993a, b; Nowak et al. 1998, 2000; Nowak and Crane 2000). These data represent the entire set of comprehensive urban forest structure and monetary value data available for the United States. City tree data [except for Oakland (1989)] were collected between 1996 and 1999 and analyzed using the Urban Forest Effects (UFORE) model based on a stratified random sample of approximately 200 0.04-ha (0.1-ac) plots per city (Nowak and Crane 2000). Data collection included location, species, stem diameter at 1.37 m (4.5 ft) above the ground (dbh), tree and crown height, crown width, and canopy condition.

The compensatory value of the trees was calculated based on procedures prescribed by the Council of Tree and Landscape Appraisers (CTLA 1992). Compensatory value derived using these procedures is regularly used to determine monetary settlement for damage or death of plants through litigation, insurance claims, loss of property value for income tax deductions, and real estate assessments. It is based, in part, on the replacement cost of a similar tree and is an estimate of the amount of money the tree owner should be compensated for tree loss.

CTLA compensatory value calculations are based on four tree and site characteristics: tree trunk area [crosssectional area at 1.37 m (4.5 ft) above the ground], species, condition, and location. Tree trunk area and species are used to determine the basic value, which is then multiplied by condition and location ratings (0–1) to estimate the final compensatory value of the tree.

For transplantable trees, average replacement cost and transplantable size were obtained from local International Society of Arboriculture publications to determine the basic replacement price ($ per square unit of cross-sectional area) for the tree. Basic replacement price was multiplied by tree trunk area and species factor (0–1) to determine the tree’s basic value. Minimum basic value for a tree [dbh ≥ 2.54 cm (1 in)], prior to species adjustment, was set at $150. Local species values (0–1) were obtained from International Society of Arboriculture publications. If no monetary or species data were available for the state in which the tree was located, data from the closest state were used.

For trees larger than transplantable size:

where replacement cost is the cost of a tree at the largest transplantable size, basic price is the local average cost per unit trunk area ($ per cm²), TA_A is trunk area of the tree being appraised, and TA_R is trunk area of the largest transplantable tree. Local average replacement cost, transplantable size, basic price, and species values (0–1) were obtained from International Society of Arboriculture publications. If no data were available for the state, data from the closest state were used.

For trees larger than 76.2 cm (30 in.) in trunk diameter, trunk area was adjusted downward based on the premise that a large mature tree would not increase in value as rapidly as its trunk area would increase. The following adjusted trunk area formula was determined empirically based on the perceived increase in tree size, expected longevity, anticipated maintenance, and structural safety (CTLA 1992):

where d = trunk diameter in cm.

Basic value was multiplied by condition and location factors (0–1) to determine the tree’s compensatory value. Condition factors were based on crown dieback: excellent (<1% dieback) = 1.0; good (1%–10% dieback) = 0.95; fair (11%–25% dieback) = 0.82; poor (26%–50% dieback) = 0.62; critical (51%–75% dieback) = 0.37; dying (76%–99% dieback) = 0.13; dead (100% dieback) = 0.0.

Available data required using location factors based on land use type (ISA 1988): golf course = 0.8; commercial/industrial = 0.75; cemetery = 0.75; institutional = 0.75; parks = 0.6; residential = 0.6; transportation = 0.5; forest = 0.5; agriculture = 0.4; vacant = 0.2; wetland = 0.1.

As an example of compensatory value calculations, if a 40.6-cm (16-in.) diameter tree (1,295 cm² trunk area) has a species rating of 0.5, a condition rating of 0.82, a location rating of 0.4, a basic price of $7 per cm² ($45 per in²), and a replacement cost of $1,300 for a 12.7-cm (5-in.) diameter tree (127 cm² trunk area), then the compensatory value would equal:

Data for individual trees in each city were used to determine the total compensatory value for the city. To estimate the compensatory value of urban forests nationally, total compensatory value of each city that had field data was divided by total city tree cover (m²) to determine average compensatory value per unit tree cover ($ per m²).

The median standardized compensatory value ($ per m²) was multiplied by total urban tree cover in the coterminous United States (Dwyer et al. 2000; Nowak et al. 2001b) to estimate the national compensatory value of urban trees. Tree cover estimates were based on 1991 advanced, very high-resolution radiometer (AVHRR) data (Zhu 1994). Lowest and highest standardized values were used to estimate the potential range of national values. State urban tree cover estimates were multiplied by the median standardized compensatory value to estimate the compensatory value of urban forests in each state.

RESULTS

Total urban forest compensatory values ranged from $101 million in Jersey City, New Jersey, to $5.2 billion in New York, New York (Table 1). Average value per urban tree ranged from $394 in Atlanta, Georgia, to $1,187 in Baltimore, Maryland. Average value per m² of tree cover ranged from $22.98 in Jersey City to $63.72 in Baltimore (Table 1). Based on the individual city compensatory values per m² of tree cover, the total compensatory value of urban trees in the coterminous United States is estimated at $2.42 trillion, with bounds on the estimation between $1.75 trillion and $4.85 trillion. States with the highest estimated urban forest compensatory values are Georgia, Alabama, and Ohio (Table 2).

DISCUSSION

The urban forests of the United States are a valuable resource with approximately 3.8 billion trees (Dwyer et al. 2000; Nowak et al. 2001b) and an average compensatory value of approximately $630 per tree. Total tree values for a city will vary based on the total number and location of trees in the city, species composition, diameter distribution, and tree condition. Increased number of trees and a greater proportion of healthy trees, large-diameter trees, high-value species, and/or trees in more valuable locations (e.g., golf courses, institutional lands) will lead to greater urban forest compensatory values.

State compensatory tree values (Table 2) are based on extrapolations of median sample values ($ per m² of tree cover) to state tree cover estimates (Dwyer et al. 2000; Nowak et al. 2001b). These state values are approximations based on limited samples; actual state values could vary significantly from these estimates based on specific species, diameter distribution, and tree health found within urban areas in the state. More data are needed to help quantify urban forest structure, health, functions, and value at the state level, as well as how urban forests are changing through time. A USDA Forest Service National Urban Forest Monitoring Program is being proposed and tested to help obtain these necessary longterm data (Nowak et al. 2001a).

Extrapolations of compensatory values to urban forests at the city or neighborhood scale based on data provided in this manuscript should be done with caution because individual forest structures and values can vary considerably at the local scale. Based on the data from the eight cities analyzed, overall citywide compensatory values ranged between $23 to $64 per m² ($2.1 to $5.9 per ft²) of tree cover. However, 75% of the city values were between $27 and $39 per m² ($2.5 and $3.6 per ft²) of cover. Extrapolation of values to other cities should be based on values from cities in the same region with similar structural characteristics.

Compensatory values are one of several ways by which urban forests can be valued. Compensatory values are based, in part, on replacement costs and are related to compensation of owners for tree loss. The estimates of compensatory value are an approximation of the structural asset value of a tree with a specific species, size, condition, and location.

The values of urban forests can also be estimated based on the functions that they perform (e.g., aesthetics, pollution removal, temperature modification). These functional values are only indirectly related to the compensatory value of the tree. In general, the greater the compensatory value of the forest (i.e., increased numbers of trees, tree size, and better tree health), the greater the ability of the forest to produce functional benefits.

As an illustration of these two types of tree value (compensatory and functional), consider a factory (with a replacement cost of $1 million) that produces 10,000 widgets per year with a net profit of $100,000 per year.

The value of the physical structure of the factory is based on the cost to rebuild or replace the factory with a similar structure. The factory also has an additional value based on the potential or actual profits of the factory outputs. The value of the factory structure ($1 million) is comparable to the compensatory value of the forest. The net profit ($100,000 per year) is analogous to the functional value of the forest. Compensatory value is based on the structure in place as an asset, while the functional value is an annual value based on the various functions of the particular structure. Trees can have negative functional values (e.g., trees can increase annual building energy use in certain locations), which are analogous to monetary losses in factories. Similar to factories, trees also have various maintenance costs, which are essential for maintaining overall functional benefits or profits. Management of urban forests is needed to enhance functional values and improve human health and well-being, and environmental quality in cities. Maximizing net functional benefits of the urban forest will lead to the greatest value to society.

To more effectively estimate the functional values of urban forests, research is needed on how urban forest structure affects functions (e.g., how differing amounts, species, locations, sizes, and other factors of trees affect air pollution) and what value society places on these functions. Research on some of the functional benefits and values of urban forests has begun (air pollution removal, carbon storage, energy conservation), but other functional values still need to be quantified with reference to urban forest structure (e.g., aesthetic values, social and community values, wildlife values). As an example of functional values of urban forests, it is estimated that urban trees in the coterminous United States currently store 700 million metric tons (775 million tons) of carbon ($14,300 million value) with a gross carbon sequestration rate of 22.8 million metric tons of carbon per year (25.1 million tons carbon per year) ($460 million per year) (Nowak and Crane 2002).

The compensatory and functional values of the urban forest should ultimately link together. An individual being compensated for tree loss should also be compensated for the loss of functions that the tree would have provided over time (similar to loss of profit from a factory). With information on flow of benefits over the life of a tree and the functional values that they generate, a total compensation of loss (both structural and functional) could then be calculated for trees. Such calculations would require information on tree growth and life spans, as well as adjustments of future values back to present values using an interest rate. For example, a factory with a continuous annual net profit of $100,000 and a cost of capital of 10% has a present value of a flow of benefits over time of $1,000,000. This present value is equivalent to the total functional value of the factory. However, given the diversity and complexity of the urban forest and the numerous benefits it provides, and the difficulty in estimating total monetary benefits from particular urban forest structures, comprehensive functional valuation of the urban forest resource will be difficult.

Another complication in comparing CTLA-based compensatory values with the functional values of trees concerns who receives the compensation. The CTLA approach is aimed at estimating the compensatory or structural value of the tree for the tree owner. However, various functional benefits have values to a wide range of urban residents; benefits such as cooler air temperatures and aesthetics may accrue to those who live in the local neighborhood, while benefits such as improved air quality may have a wider regional impact. Given the current state of knowledge and difficulty in quantifying functional benefits, it is important to recognize the differences between compensatory (or structural) and functional values of the urban forest and their possible linkages.

CONCLUSION

The urban forest resource in the United States is significant, not only in terms of numbers of trees and extent of canopy but also in terms of the value of this resource and the numbers of people it affects. Based on CTLA methodology, the physical resource (or tree infrastructure) of the urban forest nationwide has a compensatory value of more than $2 trillion. In addition, this resource annually provides numerous functions that significantly affect human health and environmental quality in and around urban areas and generate large functional values. The structural (or compensatory) value and functional values of the urban forest provide useful guides for urban forest resource management.