Calculate How Much Money Your Trees Could Be Earning
How do you persuade someone to invest in having healthy, mature trees in their community? For some, the promise of access to nature, wildlife, and all of their tranquil side effects is sufficient reason. For others, the prospect of saving on energy bills and reducing the heat island effect wins them over. Others might be persuaded through aesthetics alone, and be motivated by the beauty that trees cast into their surroundings. But what about revenue – something everyone has an interest in – what if trees actually made your community richer?
This isn’t fantasy speculation. Trees bring money into communities in the form of increased property values, which are captured at a municipal level with property taxes. According to the US Forestry Service, mature trees increase property value by an average of 10 percent. Using this figure, you can plug it in to the property tax rate of a particular city to predict the amount of revenue a property with mature trees will bring in over time (as compared to a non-tree-d property). Today, I’m going to explore how to gauge the revenue trees can bring in to a community, and share a rough method for doing this calculation for your own city or town.
Let’s take Portland, Oregon as an example. The median home value in Portland is $293,000. By adding a single mature tree to a $293,000 property, its value increases by 10 percent ($29,300) to $322,300. The property tax rate in Portland is .0056980, or $5.6980 per $1,000 of assessed value. Therefore this hypothetical home with a mature tree on the property would incur $1,836.46 of owed property taxes, whereas without a tree, the property taxes owed would be $1,669.51. Thus, there is an increase of $166.95 annually that this imaginary homeowner would be paying to the municipal tax base.
OK, so $166.95 annually doesn’t sound like much. So let’s scale this equation to consider the impact of 1,000 trees maturing over a period of 35 years. Now the extra $166.95 that each individual property owner has been throwing into the pot due to their beautiful, tree-lined property has helped the pot to grow to $5,843,250 of additional revenue for the city. That’s all revenue that would be lost if the trees are not able to reach maturity – and that’s a number you can’t ignore!
In order to roughly calculate this figure for your own city, you can use the following formula, which I’m calling The Money Tree Axiom:
$ earned from mature trees = difference in property value x # of trees x # of years
To find the “difference in property value” number takes a few steps – but don’t be intimidated, none of this is complicated. Before beginning, you’ll need to find out the average home value in your area, as well as the property tax rate.
Now do this equation, modified to your needs:
- Average Home Value x Property Tax Rate = A (the annual property tax the average homeowner would be paying without a tree)
- Average Home Value x 10% = B (how much the average home value would increase with the presence of a mature tree)
- Average Home Value + B = C (the new value of the home, as per increase that mature tree brings)
- C x Property Tax Rate = D (annual property tax that owner with mature tree would be paying)
- A – D = E (the increased amount property owner would be paying, due to the tree)
E x [# of trees] x [# of years] = $ earned from mature trees through property taxes alone
You may have noticed that I’ve repeatedly described the trees for this calculation as mature, and that’s for a specific reason. The 10 percent increase in property value figure is contingent upon that characteristic, on the maturity of the tree, which the USDA puts at 15 years of growth. But many urban trees never make it to 15 years old, or are in a state of slow decline for their short lives due to various factors related to their lack of access to sufficient resources. In order to grow to maturity, trees need soil. But few trees have access to as much of it as they need, because they are planted in a scenario in which no one speaks up for their long term needs. Even those cities that have soil volume minimums often fall short of what is actually needed in order to grow a healthy, mature, large-canopy tree. As we’ve illustrated previously, “actual adopted volumes are generally lower than what research indicates trees need. The highest soil volume POLICY was equal to the researched lowest soil volume trees NEED.”
So, how do we better communicate the needs of trees in order to get them the soil volume that they need? I think it’s useful to start thinking about the word “volume,” as we use it in the context of soil for trees, in terms of its meaning in the context of sound, where “volume” refers to loudness and amplitude. Loud sounds call attention to the source; repetitive and loud sounds, even more so. We need to turn up the volume, by creating more straightforward illustrations of why adequate soil volume is essential to healthy trees, and healthy cities.
There is ample research regarding the value of healthy street trees and the cost savings they can provide to individual property owners (as well as all their other ecological and social benefits). In addition to this, we need data, support, and regulation on a municipal level if we want to “turn up the volume” enough to guarantee that the needs of the trees are heard loud and clear. Moreover, we need this sound to be a pleasant one that is adaptable and pleasing to a wide range of people. In particular, it must be a pleasing sound to those who focus on the bottom line: money.
The revenue from trees through property taxes does, of course, come from citizens and other property owners. For some, this may be a deterrent. But on an individual basis, we are talking about a small amount of money annually. Over time and en masse, these small contributions can pay off in big ways, enriching communities at every level.