Joel Makower is a widely respected writer and consultant on issues of sustainable business, clean technology and green markets. His essays on environmental business and technology are a regular feature of our Sustainability Sundays. Take it away, Joel:
Heres something to ponder as you lie beneath a sprawling elm or maple or oak on a lazy August afternoon:
Just how much is that tree worth?
Priceless, you might be thinking at the moment, as your hammock sways gently in the shade. But, of course, thats nowhere near wonky enough for those seeking to put a price tag on the value of a healthy environment.
A report released last week by the Casey Trees Endowment Fund and the National Park Service attempted to document the economic value of nearly 2 million trees in the District of Columbia. It focuses on the value to our nations capital and its residents of air pollution removal, reduced building energy use, and reduced atmospheric carbon, while acknowledging additional benefits of trees, including air temperature reduction and improved water quality -- all of which contribute to improved human health and well-being.
The study used the USDA Urban Forest Effects Model (UFORE) to analyze data collected from 201 one-tenth-acre field plots randomly located within a grid pattern in D.C. and divided into land-use categories. UFORE was designed to use standardized field data from randomly located plots, along with local hourly air pollution and meteorological data, to quantify urban forest structure and numerous urban forest effects for cities around the world.
The resulting value of D.C.'s trees: about $1,875 per tree -- or $3,615,044,000 for the 1,928,000 trees considered in the study. That value was derived from:
As you can see, some of the value recurs annually (such as carbon sequestration and building energy use savings), while others are calculated over the life of the tree -- a bit of mixing apple and orange trees, as it were. But you get the point.
There are other sources of value not quantified in the D.C. study, such as hedonic pricing -- the economic ripple effect on nearby properties and commerce -- and improved human health, including mental health. (A good summary of the economic benefits of urban trees can be found in a 2004 paper by the University of Washingtons Kathleen L. Wolf, available here in PDF.)
But enough wonky pondering. Now, back to that hammock -- and the $3,750 worth of trees holding it up.
Trees are real. Money is a mental model. This is like asking, "How many maps is that landscape worth?"
Money is a mental model.
I'll try that line on my mortgage company. Or my employer - hey add a few '0's on that ol' paycheck - it's only a mental model.
Kidding - but knowing the value of a tree - of anything - is a good thing. It lets you abstract the value of a grove of trees over a Wal-Mart. Of a green strip of trees and brush lining a parkway.
Is a Wal-Mart worth more than a grove of trees? Not if you can't name a value for the trees.
As well when we start building habitats off-world this kind of study will allow the designers to bottom-line 'trees' for the place. Some of us have our eye on the future.
What this proves is that there is more than 'intrinsic value' in nature - something that economists have had trouble dealing with since day one, and have solved by calling all these natural things 'externalities'.
The risk now is that we've put a value on a tree, we'll miss the fact that the value of a grove of trees is exponentially more than each tree in isolation (Gestatlt - the whole is greater than the sum of its parts).
When will fiscal economists find a way to value all the extra stuff inbetween the trees, and in truth, why do we need to reduce it all to $$$ anyway? What price on the experience of connecting with nature, accompanied by frosty beer, good book, and hammock in the shade?
I think it's very important not to put economists in an antagonist position. While it is true that many people working in finance are trying to accumulate as much personal wealth as they possibly can, I dare to say if it weren't for economists, the US economy would not be as healthy and robust (more so than any other economy in the world) right now. As much as I would like to see envrionmental issues given top priority, it is a fact that in today's world at least, that a healthy economy will come before altruisic causes like the environment. Yes it's dubious whether the hypothetical walmart needs to be built on that ecologically cruical wetland, but tell that to the economist whose job demands him to continue the company on its treadmill of growth so that they can stay number one on the Fortune 500 list. Not always possible, but if you can find a way to show the economist that the environment is in their interest beyong just 'green washing' they will take further interest. That's why you need to have a value for trees, etc.
It would be interesting to know if these sorts of valuations start creeping into local government financial balance sheets.
If it werent for economists we likely would still be burning coal in our homes and factories and wouldnt be even 200 years from getting the tech needed to improve things.
The risk now is that we've put a value on a tree, we'll miss the fact that the value of a grove of trees is exponentially more than each tree in isolation
Well, no. A grove of trees is like a wall of bricks. A single brick is meaningless, absent it's value as a brick. Combine that brick with labor, time and captial and voila - a wall composed of bricks that has more value than in sum that a pile of bricks.
why do we need to reduce it all to $$$ anyway? What price on the experience of connecting with nature, accompanied by frosty beer, good book, and hammock in the shade?
Well the price of the book, hammock, beer and the dollar value of your labor per hour should get you a rough estimate.
You might be thinking of 'economics' as the bad guy, or at least $$$ as an icky thing. Value - money - is what it is which is many things but it's mostly a way to keep score. It's no more evil than a tally stick at the pool hall.
Which is all this is - a way to value a grove of trees - or wetland - against other uses. It's a tool to utilize prove that your grove of trees has more value to the community than if it were replaced by something else.
This isn't evil it's just a way to keep score
it is a fact that in today's world at least, that a healthy economy will come before altruisic causes like the environment.
More - if a grove of trees as a value greater than a proposed (to continue a bad example) Wal-Mart then preserving the environment ceases to be an altruistic thing and becomes part of the economy. You can't depend on altruism but you can sure 'nuff depend on (if you will) greed to motivate people.
Yes, money is just a way to keep score, or put in another way, a means of comparing the relative value of two or more things. That value does not have to be cold, hard tangible things measured as the number of board feet in a given tree...but it is important to have a standard unit of value and to try to compare the tangible and intangible benefits of leaving a tree to grow vs. cutting it down to make room for the proverbial Walmart.
What I find encouraging about studies like the Casey Tree Endowment Fund is that they find such significant tangible benefits in a living tree that the argument for cutting them down seems lost even before you take into account more nebulous concepts like existence value.
The challenge of course is to devise policy so that private land owners have a way to capitalize on the value of a living tree, instead of only being able to profit by cutting them down.
As much as I would like to see envrionmental issues given top priority, it is a fact that in today's world at least, that a healthy economy will come before altruisic (sic) causes like the environment.
I'm sure it's been said here before, but ultimately, nature doesn't need our altruism. Humans do, as there can be no economy (or humans!) without a viable natural environment, not vice versa. Valuation of natural systems is a tool, though imperfect, to help us in decision making. I see the disregard for "externalities" as the "error terms" in approximate economic modeling of the real world. It remains to be seen how much error we are robust to...
Um - I didn't say anything about economists. But that's another subject.
Um - yes, money is a signal; money is information. Bankers have to pay close attention to it. Competence with money makes life a lot easier. It's important. But it's not physically real. We can't say what money is made of. We can't show how money obeys the laws of thermodynamics or gravity, or other physical realities.
We can get into all kinds of trouble when we confuse symbols with physics, the map with the territory, the menu with the dinner.
I was recently kayaking in foggy, stormy seas. I paid close attention to my chart and compass. I paid even closer attention to the tides, currents and waves. In one instance, it would have been suicidal to think, "Hmm, the chart says that ledge shouldn't be there."
When our maps are flawed pictures of reality, we need to improve our maps. That's also true of our economics.
There is only one trueth in economics... he who dies with the most toys wins.
Is more economics the solution to the disjuncture between our model of our place in the biosphere and our actual place within it?
"a healthy economy will come before altruisic causes like the environment"
There's the problem right there, no? Someone's already hinted at the misplaced use of the concept of altruism...
Ecology and economics split off at their etymological root. Seems the question in bringing them back together is: On whose terms? Of course, economics holds sway currently - we feel mightier than nature, or at least mightier than those who value its intrinsic value - so economics dictates the terms of the merger.
At the very least, I'm suspicious of jumping on board with environmental economics. As soon as you assent to their validity, they seem to validate destruction by the highest bidder. The idea needs matching against the pitfalls of globalisation, i.e. presumably other countries' natural assets will be valued as pretty insignificant by a US corporation, who will be able to afford it. "How many millions is this bit worth? Here you go..."
The list of values has some glaring omissions, such as the aesthetic value of trees or their social value (e.g. the value of shady spots as gathering places, the importance of natural landmarks, privacy, noise reduction), let alone their value in the urban ecosystem (as habitat, food sources, the value of leaf mold to soils and soil organisms, the importance of trees in reducing storm runoff, etc.). On the other hand, it also doesn't include the cost of trees; urban trees need a lot of care, and they can cause damage and allergies or block warming sun in winter or cooling breezes in summer, depending on their location. The value of any given tree may be very far from the average, since large trees are exponentially more valuable along the parameters they measured, and the position of trees vis-a-vis buildings or blacktop has a big role in its value for cooling or shading. There is extensive literature about urban forest costs and benefits, and this contribution seems overly simplified. Still, it's good to remind people that the urban forest is a huge asset that we are too prone to take for granted. Many cities now have citizens' groups that care for trees (here in Syracuse the Cornell Cooperative Extension runs something called CommuniTree Stewards, for example), pruning and mulching and planting trees in city parks and along roadsides. It's a great way to add to your community's health and well-being!
Yes, I realized even as I typed out the world 'environment' and 'altruism' in one sentence that I was reflecting the current view of those things, and that it perhaps would have been more appropriately stated otherwise.
Still, I think my intended meaning was more or less understood.