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The Economic Value of Trees

Caroline Starnes

When you stare up at a tree, the first thing on your mind is economics, correct? I am going to guess probably not.  For me, however, economics is one thing I see when I look at trees.  Trees have green leaves, money is green, so that means… ECONOMICS! Okay, that was a failure of an attempt to be funny. The real and simple reason that I see economic value in trees is probably that I major in economics.  Able to draw upon my knowledge, I have thought over some of the ways trees connect to the economy. Raising awareness about the economic value of trees can be mutually beneficial for both the environment and us.  An economic argument would provide strong support for tree conservation, a topic that has been traditionally dominated by the words of the scientific community.  

            Okay, I have to explain a little bit of economics.  Bear with me, okay? A key player in this whole tree-economics topic is Gross National Product or for short, GNP.  By definition, Gross National Product is the total financial value of goods and services produced by a country’s economy within a period of time, which is measured by the income of the country’s residents.  GNP strictly includes only financial transactions, not measuring “quality of life”, but rather it simply concerns the health of the economy (Suter).  According to GNP criteria, standing trees do not hold economic value, as they are not involved in a financial transaction (Suter).  Chop the tree down, turn it into paper, sell it and then you can deem it valuable by GNP standards. You could even sell a sapling and it would be included in GNP.  But standing trees? NO. In order to identify the economic value of standing trees, we cannot use Gross National Product as a measurement, as it has significant limitations. Whew! Thanks for hanging in there for all the possibly boring, but I promise, necessary information.

            So then, what does a standing tree do if it’s just standing there? I think the most obvious answers can be discovered through our sense of sight, as we use our eyes to collect information about the physical characteristics of all things, including trees. While exploring Battle Park of Chapel Hill, NC, adjacent to the University of North Carolina, I was specifically drawn to the American Beech, scientific name Fagus grandifolia, because of its aesthetic appeal. Rich green leaves, light colored bark, and impressive heights, make this tree visually pleasing. The lure of Battle Park is its forest. Bikers, walkers, and joggers, flock to this site as a place to escape urban confinement, trading roads for tree lined trails.  The aesthetic appeal of the American Beech and other trees of the forest attract people to Battle Park, which can be better named, tourists. This happens on UNC’s campus as well. Known for its beautiful campus, the school attracts both visitors and potential students. By bringing tourists into an area, such as Chapel Hill, companies can benefit from their business aka financial transactions. The importance of visual appeal also applies to property value. According to the U.S. Forest Service, “Each large front yard tree adds 1% to the house sales price, and large specimen trees can add 10% to property value” (USDA). Although by GNP standards, a standing tree is not economically valuable, it holds value because of its indirect effects on the financial world.

            Maybe we should consider the economic value of trees in the midst of the whole ecosystem.  Trees provide both shelter and food for some animals and insects. One example of this is of the passenger pigeon. Mourned by ornithologists and conservationists such as Aldo Leopold, the extinction of passenger pigeon in 1914, could possibly have been due to deforestation.  Nuts of the American Beech provided food for the passenger pigeons, but this bird species lost a source of sustenance and shelter as Beech and Oak trees began to be cleared (Conrad).  Trees play a part in maintaining a balanced ecosystem, as they provide connections between animals, plants, and earth. A balanced ecosystem is economically valuable. A disturbance in one species or area of an ecosystem can affect another and also the economy. For example, the extinction of an animal species could destroy a market for its products and boost demand for substitute goods. GNP says “no”, but I say, “yes”.    

            Like I previously mentioned in my paragraph about economics, the sales of products produced by trees can be included in Gross National Product and are economically valuable by this measurement. Trees that are chopped down or disturbed in order to create products such as furniture are standing trees at some point. I’ve mentioned that standing trees do not count in GNP. Unfortunately, GNP cannot include the future value of a product. This is reasonable due to the probability of unseen events in the future, such as natural disasters. Although not formally a part of the economy, I believe it would still be beneficial for us to consider these standing trees as economically valuable as they hold the chance of technically doing so in the future.  By doing this there would be more complete data available for our knowledge of how trees connect with the economy. 

            Environmental conservation is constantly a hot topic, because it usually requires spending. To strengthen the argument for and educate the population about conservation, I believe it is important to approach this topic from all different perspectives. People are different and they respond to different things. Providing an economic perspective about trees could produce stronger evidence for the importance of conservation. In order to do so, economic arguments must at some point deviate from the strict boundaries of measurements such as Gross National Product. Creative reasoning within the world of economics is the solution.

Class of 2014

Major: Economics

Hometown: Clemmons, NC

 

Work Cited

Conrad, Jon M. "Open Access and Extinction of the Passenger Pigeon in North America." Natural Resource Modeling 18.4 (2005): 501-19. Print.

 

Ross, Tim. 07-03AmericanBeechFL.jpg. 2007. Photograph. Web.

 

Suter, Keith. "Why Don't Trees Count In Economics?" Australian Broadcasting Corporation, 1998. Web. 29 Nov. 2013.

 

USDA Forest Service. Trees Pay Us Back. Newton Square: USDA Forest Service, 2005. New York State. Web. 26 Nov. 2013.