How Do You Value A Tree?

Karl FitzgeraldTrue Cost Economics2 Comments

What’s the worth of the beauty of a tree, in hard dollar figures? What about its climate-stabilising value, the value of its biodiversity, and every other intangible value we’d like to defend?

By Crikey, this is no mere academic exercise, for the Common Wealth is currently being trashed precisely because these values aren’t being measured and accounted for. But there’s real hope, as you’ll see.

MEASURING THE VALUE OF A TREE – Karl Williams

Here’s a beautiful-sounding quote by David Bohn (who’s he?) on a poster that’s been up on my bathroom wall for about twenty years: “Wilderness should exist solely for its own sake. No justification, rationale or excuse is needed. For its own sake and no other reason.” Poetically-moving, yes – but the only problem is that I don’t believe it any more.

Two vastly different worlds must be drawn together. On the one hand, there’s a rapacious economic system that not only demands that Nature’s gifts be expressed in material (i.e. dollar) terms, but that their value be calculated (and significantly undervalued) by what the market is prepared to pay for them ….. and not a cent more. On the other hand, there are the Defenders of the Forest (and oceans, airs, gene pools etc.) who proclaim it sacrilegious to assign any grubby dollar value to living nature, as if it could be treated as a mere commodity.

They’re both wrong, but there’s a way out. These worlds can be drawn together – indeed, they *must* if we are to fully respect the natural world and, on the other hand, not indiscriminately stand in the way of the use – fully costed – of natural resources.

It was in a moment of exhilaration in nature, down in Tassie with K2 and Leo Foley, that I told those guys I’d spill my geoist thoughts and feelings on this monumentally-important subject. We’d just visited the dedicated souls who were defending a well-organised blockade of a logging road in the magnificent old growth that is the Weld Valley, south-west of Hobart. Perhaps only after one has been up close and personal, picking one’s way through the thick understorey, can one appreciate that this area is priceless …… almost!

No, it’s not literally priceless, and it’s not good enough for forest defenders to make such haphazard claims. Poetic flights of fancy might sound terrific at a book reading, but in a court of law or cabinet room, decision-makers must be able to compare apples and apples in a true cost-benefit analysis to properly carry out their responsibilities to all sectors of society.

The need is urgent. That voracious corporate predator, Gunns Ltd., has the Weld Valley (and countless others) in its sights, and all the ancient biodiversity of many such places have been set aside for total desolation by decision-makers who have no idea of how to truly cost natural resources. Indeed, our guide through the thick undergrowth that afternoon was Adam Burling, one of the “Gunns 20” defendants, who are being personally sued by Gunns for $6½ million for attempting to expose its ravenous and obscenely profitable practices.

Valiant though the blockaders’ efforts are, such last minute stopgap measures are high risk and high cost (in terms of both resources and the chance of criminal charges). When the whole system is working against those who seek to save our irreplaceable natural heritage, small groups of under funded conservation groups and individuals will usually be ground down. The Gunns Ltds of this world can muster massive legal machines (paid for by shareholders, and all tax-deductible) and have established all sorts of political connections in order to get the law on its side. Today, money talks and the law sucks.

Fortunately, Rin Tin Tin has run off for help, and geoist measures have come to the rescue, for our philosophy and ultra-practical economic and social system is nothing if not highly-refined in the science and art of valuation. Sure, some of it is work-in-progress, and the rough sketch given here needs a lot of polishing.

But the whole basis of a geoist economy is in monitoring and valuing the use of natural resources, and capturing the full economic rents of them for the benefit of all society. The other side of the coin is that no level of government has the right to monitor the activities and personal assets of people – taxation is legalised robbery, as well as outrageously intrusive. So let’s dispense with all that neoclassical economic nonsense and start to measure the real value of a tree. We’ll sharpen our pencil and first lay down all the different types of values which we’ll eventually factor into our calculation. A short, but not exhaustive, list would include:

the economic value of a tree, of course, such as the market value of its timber and potential wood pulp. Unfortunately, we rarely experience a free and a fair market, all-too-often suffering collusion, cartels, corruption, cronyism and kickbacks – all of which force the market price of the timber products down. It’s testament to a fraudulent economic system that we can pay less than $2 to get the massive Saturday Age newspaper, most of whose pages will never even be opened by purchasers, much less read. Not only do we pay too little for most of our wood products, we generally pay too little for our water, food and fibre in this country. While some are under the impression that they’d financially suffer from a system of natural resource charges, the opposite is true. We must remember that the charges imposed and collected will not be “thrown into the sea”, but will go into the public purse to be used where most needed. Only the squanderers will pay more – and few will be able to waste natural resources in future.

the value of climate-stabilisation, such as the grounding of carbon dioxide and the emission of oxygen. There are a host of “ecological services” delivered by a tree that are ignored by neoclassical economics, whose motto may as well be “If it isn’t a marketable commodity, it’s worthless.”

What price the sheer beauty of a tree? We all like to live in “leafy suburbs”, with access to established (i.e. well treed) parks and perhaps even views to forested mountains. The market, as currently configured, totally ignores such values. Call this value the aesthetic, recreational and, indeed, therapeutic value of trees. Would Matisse have been Matisse if he’d never encountered such Things of Beauty? Perhaps our very cultures would be vastly poorer if our ancestors had existed in barren, clear felled lands. What of the effects on the human spirit of contact with nature? Can you imagine someone – even a testosterone-driven 19-year-old kid – spending an afternoon in a forest or garden and then charging off to kick in a telephone box or tag a train?

Our very soil, the source of life in many respects, is retained to a large degree by trees and their understorey. Short-term slash-and-burn cultures (like ours!) know all too well how cleared hillsides often become eroded and agriculturally useless in as little as 3 or 4 years.

Rich biodiversity is a gift of our forests, with a wealth of untapped medicinal products of the trees themselves, plus the fauna to which they provide habitat. Again, it’s a tough call to try and put a $value on this, but we can now make well-educated guesstimates.

Where there’s more trees, there’s greater rainfall.

And then there’s the value of wilderness to humanity, which is a world apart from controlled and manicured gardens, however beautiful. I’m talking of spiritual value here, and the rhetorical question is “Can one know oneself without knowing the world in which one lives – including the world untouched by human hands?”

Wilderness areas often form the catchment areas of our water supplies, and thus contribute greatly to the quality of water supplies.

Let’s not completely disregard that opening quote – what about the intrinsic value of a tree? We should appreciate that it’s not just the value to humans for which we must account, but also the inherent value to the tree itself. Here’s an anecdote to illustrate which had a powerful impact on me at the time. Some years ago, I was hanging out with those amazing peaceniks, the Jains, in their principle home state of Gujarat, India. My dear companion, Dipak, had been showing me around one particular town when the sight and smell of the wild pigs had become too much for me. These creatures seemed to be everywhere humans lived, scavenging off rubbish and even excrement, and were not a pretty sight – or smell. “Why don’t the authorities just get rid of them? – it’d be very easy to round them up and shoot them painlessly” I declared to Dipak. His reply was short, simple but absolutely indisputable, “They have a right to exist.” And isn’t the intrinsic right of a tree to exist worth at least something?

So, how on Earth do we possibly begin to try and put a dollar value on such intangible, subjective, culturally-conditioned and nebulous factors? As we’ll see, to some extent we don’t have to! In many respects, geoism would protect our natural resources such that there’s already a built-in system of valuation in the first place – call it True Cost Economics.

With natural resources forming the basis of government revenue, it is therefore apparent to decision-makers that such resources should be protected as the goose which provides the golden egg of revenue flow for all society’s needs. Furthermore, such revenue streams might extend, it is calculated for most societies, to the real possibility of a Citizens’ Dividend when that revenue stream is in excess of our present spending needs. Then and only then shall we have governments who truly value the environment enough to protect it, rather than just dispensing the occasional environmental protection order to placate the electorate.

For example, take a patch of forest that is greatly appreciated and reasonably accessible to nearby land-holders. If that forest is clear felled or otherwise devalued, then the perceived benefits of holding such nearby land will be diminished …. and the assessed value of that land, and the revenue stream which would accrue to the government body responsible (be it local, state or federal) would be consequently reduced. There’s your inbuilt restraint on foolhardy state action!

But ordinary eco-taxes are based on the value of natural resources, so what’s new here?” some environmentalists might ask. And, of course, they’re right – but haven’t seen the full picture.

You see, proponents of ordinary eco-taxes, which are a very valuable but lesser substitute for geoism, usually don’t, at this stage of the game, see the Biggie – the need to apply them to land itself. Non-land eco-taxes, such as proper and fully-costed natural resource charges on water use or air pollution, are in themselves an ever-diminishing source of public finance. When you fully tax water, you quite rightly force water users to pay the full cost of water – and therefore to use water sparingly. But, with less water use, the revenue stream from water will, er, dry up. The same goes for taxes on other natural resources such as air pollution charges, fishing licences, mining & logging rights, etc. However, taxes on land don’t force land out of use, but rather force all land holdings to be put to its optimum use, because the land holders can’t afford to sit on land, paying the land value taxation (LVT), and not utilise it according to how the land has been zoned.

Further, by economically encouraging land to be put to its optimum use, it won’t mean that land will be “flogged” or overused. Rather, it will lead to urban infill as vacant or unused land is brought into production rather than having cities sprawling ever further. Valuable land near railway stations, shopping centres and universities will be much more intensively used, all leading to a much more compact cityscape, which is itself much more amenable to the provision of public transport. And when you have less sprawl, you have far less wastage of resources as infrastructure doesn’t have to stretch as far, and as commuting distances are reduced.

Speaking of public transport, the main (and almost unrecognised) reason we don’t have proper public transport infrastructure in Australia is because the massive cost of laying down the infrastructure is effectively a transfer of wealth from taxpayers to landholders. But when we collect the LVT, the enhanced values of land serviced by such infrastructure is “recycled” back into the public purse, enabling the hefty reduction of fares.

Enough of theory – let’s look at a hypothetical situation and crunch a few numbers, and make it interesting by taking a sizzling controversy. I live next to Melbourne’s jewel in the environmental crown, Sherbrooke Forest, so I’d like to assume that a geologist who’s bushwalking there one morning happens to stumble upon some intriguing signs which warrant further investigation. Lo and behold, he’s discovered a massive lode of highly concentrated and easily-excavated titanium, falling exactly within the 800-hectare boundaries of the forest.

As we saw, nothing is priceless, however sacrilegious that may sound. We need to somehow determine the value of what will be lost by the clearing of the forest, and compare that to what will be gained, taking into account all the intangibles that are currently disregarded.

Obviously, then, studies need to be made as to the value of the titanium deposit, and the usual geological surveys are performed, albeit somewhat restricted in this situation because of the forest cover.

So let’s say that the geologists do their studies and their fairly accurate estimate of the total economic value of the deposit comes in at around $500 million. At present, a fraction of this amount would be enough for government decision-makers to give the go-ahead to mine unless the affected area was a marginal electorate. In this case, the media is agog with furious debate, but there’s presently no means of properly evaluating the true costs of what would be lost if Sherbrooke Forest was sacrificed in favour of mining the titanium deposit.

It’s no surprise that such gross undervaluation of our natural assets exists, considering that our entire system of measuring economic performance is utterly perverted. Essentially, our national accounts have a profit and loss statement but no balance sheet. That is, the treasury – which should be the custodians of our nation’s assets – takes no account of what those assets might be and, for practical purposes, largely treats our environment as worthless.

It works like this. If a tract of forest is clear felled, then no account of the loss of the flora, fauna and all the related benefits is made. Indeed, trashing such natural resources will usually show up positively, as it results in “economic activity” as far as employment and exports are concerned. Similarly, the accounting for road accidents will not measure the human suffering nor the damage to property, but will rather show a boost to our GDP with the increase in measurable activity in hospitals, panel-beaters etc. It’s no surprise that a leading exponent for sanity in this all-important indicator is a dedicated geoist, Clifford Cobb, who has been a foremost contributor to the aptly-named GPI (Genuine Progress Indicator). I’ll leave it to you to Google on GPI yourself, assuring you that you’ll be well rewarded in terms of the insight and wisdom that Cliff and his collaborators have put into this analysis.

Meanwhile, back at the abacus, the minerals are worth $500 million and the true value of the forest is, as yet, an indeterminate amount. One of them has to go. Let’s start valuing.

Firstly, we must recognise that the proponents of mining can further claim that they’ll harvest the timber before they mine, and so we need to account for the value of the timber products (magnificent hardwoods in this case) and the related economic activity (x year’s work for x timber workers and associated industries). Conventional economics already handles this type of valuation pretty well, so we’ll skip this analysis and accept the approximate market valuation of $20 million here. So, in order to prevent the clear felling and mining of Sherbrooke Forest, the true value of the forest will have to be estimated to be at least $520 million.

The first-listed value above is “climate-stabilising effects, such as the grounding of carbon dioxide and the emitting of oxygen”. Now, to try and put a value on this isn’t so difficult as it’s actually a serious study of late – with the economic costs of climate change hastening such research, many well-funded studies have already been performed. It shouldn’t come as a great surprise that the calculated economic worth of some of the planet’s life-preserving biosystems have clocked in at some astronomical figures (quadrillions of dollars, by some measures). Such calculations are based on the economic cost of the consequences of climate change along with the costings of human measures to mitigate the effects of climate change.

Some of the more obvious costs of climate destabilisation and global warming are:

Rise in sea levels
Extreme weather events
Spread of tropical diseases
Damage to agriculture

One way of measuring the value of Sherbrooke Forest’s “ecological services” is to estimate the quantity of carbon dioxide (the main greenhouse gas) it absorbs, and apply that to the cost of carbon dioxide emissions.

The cost of such emissions have, fortunately, been brought to the fore in recent years with attempts to limit emissions by the application of carbon emission trading. The set of figures used by the Kyoto protocol is a widely-accepted model, although the costs vary somewhat according to various scenarios. To stabilise the emission of carbon dioxide in the long run, Kyoto deemed that each tonne of carbon dioxide emitted should be costed at around US$300. However, if the severity of experienced climate change requires that emissions be rolled back to 1990 levels, a tonne is costed at US$679.

Going further, if temperature increases start to spiral out of control, as some models predict, then more drastic measures need to be taken to clamp down on emissions. In such a nightmare scenario, to severely curtail emissions to try and limit temperature rises to about 2°C, a tonne should be costed at US$732. Nightmares have never been my bag, so I’m going to apply the Precautionary Principle and adopt this slightly higher figure – if it all turns to be a false alarm, the planet can have a rip-roaring carbon-guzzling party later. So we’re going to use the cost per tonne of US$732, which is about A$975 today.

The other side part of the equation is the carbon-absorbing capabilities of the forest. Let’s call on the NSW Dept of Primary Industries, which recently calculated that planting 100,000 hectares of new forest can take up to 2 million tonnes of carbon dioxide per year (or 20 tonnes/hectare) from the atmosphere.

Shuffling around on the abacus: 800 hectares @20 tonnes/hectare x $975 = $15,600,000/year. Converting this annual figure to a present value by dividing it by 5%, we arrive at a figure of $312 million, being the worth of the climate-stabilisation services of Sherbrooke Forest.

A brief word of explanation about this conversion. This annual value of a perpetual income stream can be converted into the present value (a lump sum) by a widely-recognised calculation using the prevailing interest (or capitalisation) rate. For instance, how much would you pay today to receive $1 per year in perpetuity if the current interest rate was 5%? Without getting sidetracked with explanations, you’d pay $1/0.05 or about $20.

Now, if this figure of $312 million seems excessive, then consider that, four years, ago the respected but somewhat conservative journal Nature published a paper that calculated the value of all the goods and services that the planet provides – it termed them ‘ecosystem services’ – were found to be worth almost twice the total GDP of the Earth.

Yet the valuation model used here is actually conservative when contrasted against some others. Go figure out every disaster that might occur due to failure of the biosphere, to lesser or greater degree, and calculate the price of insurance against all of it. Or, when faced with the looming possibility of ecological meltdown, estimate the cost of replacing the Earth, which may include finding and colonizing another planet.

The noted biologist, Robert Costanza, has taken this less conservative approach and, as one might expect, has arrived at astronomical values for the value of the entire Earth, at least in the hundreds of quadrillions of US dollars.

Moving right along, the second-listed value is that of “the sheer beauty of a tree” – to put a dollar value on is a somewhat curlier job, it seems, so subjective and elusive is such an assessment. But our task is actually much less complicated than it appears.

How much is a work of art worth? Simply, it’s worth whatever people are prepared to pay, and the market mechanism finds an equilibrium point at which buyers and sellers agree on a price. It’s basically the same deal with real estate. How can you put a price on a spectacular view? “Easy!” comes the response from any real estate agent in Sydney, who all know the going rates for greater or lesser views of the waters of Sydney Harbour (better ones fetching a premium of hundreds of thousands of dollars). Similarly, we can estimate the value of access to a railway station, the peacefulness of a certain neighbourhood, proximity to highly-regarded schools …. and views of, and ready access to, Sherbrooke Forest.

Using valuation methodology and software in constant development, valuers could estimate the premium that the market would pay for both very close and very distant access to Sherbrooke Forest, being the difference between property values today and when the mine site will be more of an ugly and noisy liability. Similar studies were done in London recently when estimating the boost to real estate values when the 10-station Jubilee underground line was constructed. Hardware Lane stocks the book “Taken for a Ride” which documents this fascinating study, revealing how British taxpayers shelled out about £3½ billion to construct the line, so that nearby landowners could have their land values boosted by almost £14 billion!

So we apply a similar methodology which shows, to pull a few figures from the air, that adjoining properties would fetch around $100,000 more if Sherbrooke Forest remained, that properties within 15 minutes walk would be worth $20,000 more, and so on. But let’s not overlook those distant western suburbs, whose residents still benefit – albeit in much lesser degree – in having an urban forest at their disposal for a Sunday drive. We’ll only assign $10 as the worth of the forest to them, but as there’s a few hundred thousand outer western suburb dwellings, we’re still looking at a few $mill here. We’ll assume, for convenience sake, that the value of country properties would be unaffected by the any mining.

So then: crunching, rather loosely, all these numbers, we estimate that Melbourne’s 2 million (almost) dwellings have their values enhanced by a weighted average of $100. Therefore, in terms of property values alone, Sherbrooke Forest is worth about $200 million.

But wait! – there’s more. The beauty of the forest is also worth something in terms of the therapeutic and social value of the trees, which we wouldn’t expect to be factored into land values, as estimated above. Now, if I was doing a full-on study, I’d be interviewing health resort managers about their estimates as to the contribution of fresh air and greenery to their patients’ recovery, as well as interviewing social workers and Outward Bound leaders as to the social benefits to screwed-up kids of the experiences to be had in such an accessible forest. I’d tabulate, corroborate and peer-review all this before presenting you with a guesstimate, but seeing I’m not paid a cracker for this job, I’ll just present you with a nice round $10 million value.

Which brings me to an important point: a verifiable, objectively-measured, indisputable valuation is better than a guesstimate such as this. And a guesstimate is better than a wild guess. But cop this, you skeptics: EVEN A WILD GUESS IS BETTER THAN NOTHING! For skeptics to dismiss even a wild guess and declare that no $ estimate can be made at all, and thus assign no value at all, is to effectively make an estimate of the value as zero! I can, with utmost certainty, declare that I can make a more accurate estimate than my opponents by, say, estimating the total value of the therapeutic and social benefits to be one lousy buck. To this, skeptics can raise no argument. Are you with me? For critics to dismiss the estimate of $10 million in this example, they would have to present alternative estimates and be forced to deal with these tricky, intangible areas – it’s just not good enough to ignore the problem and thereby effectively declare the value to be zero.

Onward geoist soldiers – the next value relates to the soil of the forest, much of which will be lost in the mining proposal. But we’ll concede a few points to the miners, accepting that they’ll retain most of the soil and use it elsewhere. However, some will surely be lost, plus there’ll be some lost to run-off which will silt up some waterways and Port Phillip Bay. Guesstimate of the damage: another $10 million.

Next is the value of any lost biodiversity. Admittedly, Sherbrooke Forest is not extensive in area and not unique and, to my knowledge, is not home to any endangered species, but we still need to factor in the Precautionary Principle. This is because our scientific knowledge is constantly updated as discoveries of myriad new species (especially invertebrates) comes to hand. Who knows what Sherbrooke Forest really holds, and what would be lost forever if it were mined? Applying the indisputable validity of the wild guess (compared to those who don’t even deal with the issue), the conservative guesstimate here is $1 million.

What of the value of decreased rainfall? We need look no further than Perth and surrounds, which has lost about a quarter of its rainfall in the last 30 years, basically attributed to less transpiration of water vapour through tree clearing. The economic cost of this can be calculated, in terms of lost production or of the cost associated in acquiring water from other sustainable sources, such as salinification. But, as the forest area under examination is relatively small here, we won’t research the guesstimates greatly. So, crunching loose numbers of $1000 per hectare (because of the lushness of the rainforest of Sherbrooke) and, for 800 hectares, an annual value of $800,000 for the extra rainfall generated in the region. Thus, the net present value of the annual worth of Sherbrooke Forest’s rainfall effect, $800,000, would be $800,000/0.05 or $16 million.

What, then, of the spiritual value of wilderness, whatever that means? How can one measure the benefits of any change or even transformation that sometimes occur when one is alone in nature? While such experiences often tend to be called priceless, we beancounters insist that everything has a price. The problem is not really different in nature from determining the value of goods or services in the market – what are people prepared to pay for them? For instance, those prepared to make many personal sacrifices in their efforts to preserve old growth (‘ken oath!) would, if obliged to sit down and estimate just how much the preservation is worth to them, be able to arrive at a dollar value even it’s no more than the value of their own time and resources sacrificed. Similarly, donations to organisations campaigning against forest destruction are also some sort of estimate of the value people attribute to the value of something not in their immediate vicinity.

Let’s pull some guesstimates out of the ether. Let’s assume that there would be around 1 million Melburnians and 50,000 others prepared to chip in an average of $100 each to try and save Sherbrooke Forest because of this feelgood factor it confers on them. But such money is usually donated where there is only a chance (let’s assume 50/50 chance) of the campaign succeed. Therefore, let’s say that 1,050,000 souls would donate $100 each if there was half a chance of saving the forest, then they may well donate $200 each to guarantee the safeguarding of Sherbrooke. Admittedly, there are all sorts of bells and whistles you could add to this simple model, but here we’re basically illustrating the overall process. DING!– we have another $210 million.

We score a big fat nothing on the water quality factor – as Sherbrooke doesn’t fall within any catchment area, it contributes nothing to the quality of our water supplies.

We’ve left the best until last – it’ll be a cracker of a calculation that nails the intrinsic value of the forest (that is, not the value to us humans, but the inherent value of the forest to exist in its own right). Again, it’s not crass or vulgar to make such an estimation, for there’s some sort of price for everything. Even human life has a price, despite all the rhetoric about life being infinitely precious. Thousands of Australians are killed each year on our roads, yet practically every life could be saved if we didn’t value commerce and convenience more than these lives, because this is what’s preventing authorities setting the speed limit at 30 km/hour (at which there’d probably be no deaths at all). Similarly, military commanders could divert resources to reduce the risk of injury and death to their troops but don’t, on the grounds of reduced effectiveness. Medical schemes, with limited resources, recognise similar limitations, especially if patients are elderly or have reduced quality of life. They’ll never tell you this, though – they have to maintain the absurd illusion that all life is priceless. The other illusion is that life will be saved (forever), rather than merely prolonged, as if death ain’t one out of one.

So what’s a human life – or, rather, the prolongation of a human life – worth? It must, I reckon, be expressed in terms of the ordinary human dimension – the cost borne by the rest of society to pay for its prolongation. I put it in terms of what an average-earning person could battle to save in one year (about $20,000), and multiply this by some factor, which I reckon is about 50 (the number of working years). In other words, the worth of one human life is equivalent to the lifetime savings of another.

So now we have the nice round figure of $1,000,000 – the value of (prolonging) a human life. In other words, most people would agree that a human life wouldn’t be worth prolonging if it came at any more than the cost of sentencing another human to a lifetime of unpaid wage slavery. Want to argue with this? Fine – just don’t avoid the hard call of ascribing a figure, and don’t then avoid justifying why you’re effectively going to put to hard work xxx people for xxx years to “save” this life.

Having doubts about what society will think of you? Oh dear. They’re not worth worrying about, really. Take my word for it and think for yourself. You’ll feel much better later.

So if we value the intrinsic life of a human, we can also do it for animals and plants and, with this guesstimate, we have a ball-park figure to use as a guideline. Taking account of the different life spans & lesser degrees of awareness (sorry, little microbes – you don’t rate), my bespoke software has spat out these numbers – an average of $512.30 for fauna and $1.45 for flora (over 1 year old – call me a seedist if you will). Applying guesstimates of 10 major fauna forms and 5000 major flora forms per hectare in Sherbrooke, we arrive an intrinsic value of fauna of $4,098,400 and for flora, $5,800,000 – a total of , say $10 million . Hmmm…. a guy could get a God Complex if he did this all day.

If dollar valuations like this $10 million sound too abstract, then we can make comparisons as a reasonability check. Contrasting this $10 million with the estimated valuation of the inherent worth of one human ($1 million), we see that we’re in the same ball park. That is, the worth of all living organisms in 800 hectares is equivalent to that of 10 humans. Personally, I think we’ve erred on the side of overvaluing human life, but let’s not get too bogged down here. Obviously, there is no one correct answer, only answers that feel closer to the truth than others.

So, adding up the worth of the trees and other life forms of Sherbrooke Forest, we have:

climate stabilisation ~ $312 million
amenities to landowners ~ $200 million
therapeutic and social value ~ $10 million
biodiversity ~ $1 million
increased rainfall ~ $16 million
spiritual value ~ $210 million
intrinsic value ~ $10 million

These add up to $759 million, which sounds more exact than it is, given the crudity of many of the guesstimates, but the point is that it seems that the true value of the forest is about equivalent to or greater than the value of clear felling and mining it (about $520 million). Given that the forest’s value is at least in the ballpark compared to the mining value, it should certainly force authorities to halt any mining and do its sums a lot more carefully.

Sure, you can bag the short cuts and subjective values used here, but how could anyone deny that this methodology is better than what’s in use today? Presently, it’s the market rules and the environment can go to Hell, and you couldn’t sit down and design a system any more clumsy, pig-ignorant and utterly corrupt as what we have at the moment. The proof positive of this is there for all to see who ventures to the logging coups where *our* natural heritage is being pissed up against the wall. Yes, these awesome tracts of old growth are only “worth” as much as some corporation will bids for them. And if that corporation is anything like Gunns Ltd, it’ll manage to have its trifling “market” bid accepted.

So, the state won’t get anything for a forest’s recreational, climate-stabilising, biodiversity-contributing, inherent value – just a fraction of the *economic* value. That is, the state – even if we assume there will be a fair market process whereby bidders will raise the price paid to the maximum the market should offer – will only get what the rainforest products are worth on the open market. If some corrupt, Third-world country is underselling Australia because it (or its dictatorial kleptocrats and their cronies) want quick bucks from the highest cash bidder, then the knock-on effect is that we’ll be offered even less. And if the rainforest is inaccessible, then the logger’s costs to build extensive logging access roads into the coups will effectively be deducted from their bid. So, as history has shown, when we factor in all the administrative costs and infrastructure that the state often provides to attract logging companies, we’re almost *paying* them to clear fell our forests for woodchips!

Are the enormity of the ecological and other services figures surprising when compared to what’s at stake? If we end up trashing the planet and making it uninhabitable, what’s the cost of reconstruction? Can you imagine the vastness of the task of even experienced reconstruction subcontractors completing the task of replacing Earth, even if they could do so without using Earth itself as a base?

Or try and grasp at the true $ value of the Earth from another perspective – by estimating the replacement costs for the Earth’s biosystems from a serious scientific experiment in total self-sufficiency. The so-called Biosphere 2 experiment involved over US$240 million being spent on developing the infrastructure to support 8 people for two years in a self-contained “bubble” environment. Despite these efforts from some of the world’s great scientific minds, the project failed and fresh air had to be pumped in to save the lives of the participants. So, by this guesstimate, the Earth is worth around A$320 million/8 people × 6.5 billion people on Earth = $260,000,000,000,000 (around 6500 times the world’s current GDP).

This represents the minimum value of the Earth using today’s technology. And, because the project failed, the true value of the Earth must be higher than this unimaginable amount. This seems like a fitting place to end.

2 Comments on “How Do You Value A Tree?”

  1. Hi

    Am writing an article on the same.. with references & ur article truly blows me away.. I have no words left to start my own article now….

    Help… i thought i’d just put a value in a few particulars (mainly functional values) like – timber, o2, h20, erosion control, soil fertility, recycling…mostly nature’s free services from a single tree

  2. Hi all

    Looks like no discussion here!
    Am the only one who’s ever commented in July 0f 2009!

    With the wrong spelling in my name, it was before when I might have been hastier!

    Not hasty enough though!

    Today, nearly a decade later am back!
    Researching the same topic and making true to the promise that I am wringing an article on the same topic! —Valuing, Appraising Trees, Forests and Natural Ecosystems.

    Now, with some vision to help bring humanity, art and ecology together. While Generating enough Monetary Resources to Pay People to keep and nurture Living Trees!

    So, Wish me luck!

    Thank you

    Love

    V

    #SangeetAnandProject
    #AncientScience
    #Ecocentric.in
    #AuraAlchemy
    #NirvanaDosa
    #Ikarushka

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