Planning and Design

Cost/Benefit Analysis

The net economic contribution of trees is coming to be better quantified and appreciated with the use of computer-assisted methodologies. It is now possible to calculate an approximate economic impact of tree resources on a community-wide metropolitan and even global basis.

Recently, researchers from around the globe developed an estimate of the economic contribution of the planet’s natural systems. This particular study placed the net economic worth of the environmental services provided by the world’s forest biome at $4.7 trillion annually.

A comprehensive study at the metropolitan level modeled the projected costs and benefits of planting and maintaining 95,000 trees around the Chicago area over a 30-year period. The researchers projected that the value of the air pollution attenuation, energy-saving, hydrologic and other benefits provided by trees would exceed the costs to plant and maintain them by an average of nearly three-to-one. It was estimated that investments in trees yield an average net present value (benefits less costs) of $402 per tree planted and to have an average payback period of between 8 and 19 years (depending on location, species and discount-rate assumption).

However, planned urban forests are not without costs. Planting and maintaining trees requires an investment of not only monetary resources but human resources as well. It should be noted that without proper planning and maintenance, trees can have negative impacts: uprooted sidewalks, leaf collection in such areas as streets and culverts, disrupted utilities and tree damage. These effects all incur costs to the community and private landowners. However, the costs of planting new trees and maintaining existing trees are tangible and the benefits of trees are often diffused and enjoyed as “public goods” by society at large.

Click here for a worksheet authored by Brian Kane of the University of Massachusetts and Jeff Kirwan of Virginia Tech. This worksheet is meant for demonstration purposes only.

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Cost/Benefit Analysis
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