Estimating Value Contribution of Tree and Stand Condition1

Key issues in encouraging forest management at the interface level in the oak woodlands are fire abatement, stand improvement, infection reduction, and hazard tree removal. The development of effective management prescriptions for stand improvement and economic returns provide guidance for homeowners, appraisers, and realtors. The purpose of this research project was to determine the effects of stand characteristics (e.g., structure, density and health) on the value of urban/interface forested properties. In this study, the forest characteristic coefficients were statistically significant with an estimated value contribution of about $30,000 each, or over 22 percent of the median property’s value ($262,079). El Dorado and Placer Counties are two of the fastest growing counties within California and have undergone continued urbanization since the 1800’s. The population of El Dorado County has almost tripled in 20 years, from 43,833 in 1970 to 125,995 in 1990. In Placer County the population has more than doubled, from 77,632 in 1970 to 172,796 in 1990 (San Francisco Examiner 1995). This explosive growth has created an urbanization of “traditional” wildlands into suburban communities. California’s forests are a desirable place in which to reside and will continue to succumb to urbanization far into the future. Objective recognition of the beneficial economic and ecological qualities of a property’s forest character will encourage improved management that incorporates the necessities of the natural environment. The forests of the Lake Tahoe Basin today are overstocked and contain heavy infection levels of parasitic higher plants as agents of tree diseases (Tahoe Daily Tribune 1994). The suppression of fire, coupled with an increasing population base, has further reduced the health, composition, structure, and stocking of the Lake Tahoe Basin forest (hereinafter referred to as LTB). Drought, disease, and beetles respect no property boundaries when a forest’s natural defense mechanisms are weakened. These threats have changed a once unbridled vigorous forest into an infected urban forest on both public and private land in California. The existing literature on the implicit price of trees and their presence on residential property summarizes either the interrelationships between condition and associated health of the forest or the economic contribution from the absolute presence of trees on residential property. Literature on the value contribution of trees on urban, suburban, and rural property includes work by Magill (1989), Anderson and Cordell (1985), Chadwick (1980), and Neely (1979). Studies by Standiford and others (1987), Anderson and Cordell (1985), and Colorado State Forest Service/Colorado State University (1979) have attempted to identify the optimum number of trees on a property to enhance the value. These studies utilized both realtors and appraisers to estimate the value contribution or reduction in varied stocking levels from photographs, if all other site conditions were held equal. 1An abbreviated version of this paper was presented at the Symposium on Oak Woodlands: Ecology, Management and Urban Interface Issues, in the Economic and Policy Session, March 19-22, 1996 at San Luis Obispo, CA. This research was supported by a grant from the California Department of Forestry and Fire Protection. 2Economist in the Environmental and Natural Resources Group. Law and Economics Consulting Group, Inc., 2000 Powell St., Suite 600, Emeryville, CA 94608. 3Professor, Natural Resources Management Department, California Polytechnic State University, San Luis Obispo, CA 93407. 4Professor and Project director, Natural Resources Management Department, California Polytechnic State University, San Luis Obispo, CA 93407. 5Associate professor, Agribusiness Department, California Polytechnic State University, San Luis Obispo, CA 93407.