Don’t miss trees for the wood in valuing our green cover
PremiumEconomic valuations of forests have been made but we need tools to estimate what trees are worth
The value of a tree goes beyond the realm of classical economics, which chiefly values its usable part: that is, the timber. But a tree is much more than just timber. Current estimations are largely done on the basis of total weight and quality of the timber and the produce from it that can be sold in the market.
Trees also improve water retention, capture carbon from the atmosphere, provide the habitat for various animal species, restrict soil erosion, keep winds in check, and also provide shade. These are intangible benefits that are yet to be recognized in our pricing calculus. The true value of a tree, therefore, must encompass its lifetime contribution, taking into consideration its heritage—which is designated by the tree’s age, rarity and size.
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A Supreme Court bench headed by former Chief Justice of India S.A. Bobde, while hearing a plea against tree felling for the Setu Bharatam project in West Bengal, set up a committee of five experts in 2020 to quantify the monetary value of a tree. This panel used a quick-estimation method to put a tree’s annual economic value at ₹74,500 by factoring in its provisioning of oxygen at ₹45,000, bio-fertilizers at ₹20,000, and of other micronutrients, etc. The report found the economic value of a heritage tree, with a lifespan of more than 100 years, to be more than ₹1 crore. However, this was not accepted by the West Bengal government, which argued that such high value for trees would stall development projects and constrain economic growth. As a result, in March 2021, the Supreme Court was constrained to constitute another seven-member committee to revisit that assessment and suggest suitable guidelines.
We must integrate multiple objectives to make such an economic valuation, and it needs to be done for each individual tree based on the benefits it provides. Trees in urban settings, for example, create green public places, improve local air quality, reduce heat, and offer us an aesthetically pleasing environment, in addition to having a positive impact on urban groundwater. In rural areas, trees support farm production by controlling erosion, provide shade and shelter, and replenish the soil while complementing farming activities.
Trees outside forests, such as those under urban forestry, avenue plantation and agro-forestry projects, can also help India meet its 2030 Intended Nationally Determined Contribution (INDC) targets of sequestering 2.5-3 billion tonnes of CO2 equivalent. Further, several Sustainable Development Goals (SDG), like those of Sustainable Cities and Communities (SDG 11), Climate Action (SDG 13) and Good Health and Well-being (SDG 3), could be achieved through planned urban forestry. The loss of such linked co-benefits must also be taken cognizance of when trees are cut for development projects.
We must value trees by themselves, as distinct from forests. Many efforts on the latter have been made. In 2002, a special purpose vehicle called Compensation for Loss of Ecological Value was introduced in Himachal Pradesh to compensate for the use of forests for purposes like mining and road and railway building, based on the findings of a 2000 study on the economic value of the state’s forests.
Under a Supreme Court order, the adoption of a forest’s net present value (NPV)—a project-investment decision tool that uses a discounting parameter to calculate the current value of future benefit flows, net of the costs accrued—was enforced across the country for decisions on the diversion of forests for non-forestry purposes, and this NPV was placed in the range of ₹4.38 lakh to ₹10.43 lakh per hectare in 2008. It was revised in 2014 by a study commissioned by the ministry of environment, forests and climate change to ₹5.65- ₹55.55 lakh per hectare. This is yet to take effect, however.
While many such scientific studies have been conducted to estimate the value of natural forests in India, we lack literature on the valuation of trees outside forest areas. According to a review of the valuation of ecosystem services from urban trees done in 2012, tree valuation is constrained by data availability, with the available analysis focusing on just one or two significant benefits. Also, these studies were done in isolation, rather than by comparing all benefits across a range of species, cities and climate zones.
The first step in the valuation of benefits that accrue from trees would be to map different species and their associated locations. This must be coupled with a valuation calculus to capture a tree’s total economic value. The result can be used to analyse the costs of action (versus inaction) when it comes to the clearance of development projects that require the felling of trees.
In this regard, it is pertinent to mention the Tree Benefit Calculator, which is based on i-Tree’s street tree assessment tool that estimates the benefits of individual street-side trees in the United States. Such a tool in the Indian context would be beneficial for decision-making and policy formulation in the long-run, given how rapidly India is urbanizing.
The current order of the Supreme Court that factors in various intangible benefits from trees is a commendable step in the right direction. Introducing an incentive-based mechanism for those engaged in the plantation and protection of trees outside forest areas must be the next step.
Asi Guha, project associate at the Economics Centre at WRI India, contributed to this article.
Madhu Verma & Elphin Tom Joe are, respectively, chief economist, and project associate at the Economics Centre, WRI India. These are the authors’ personal views
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