What a difference a tree makes

Trees are wonderful. They are beautiful to look at, good for your mental health and help cool down their immediate neighbourhood. Even if you are a city slicker like me, the value of trees is evident to everyone. And if you didn’t appreciate the value of trees in the past, then the pandemic lockdowns should have made the point. I live in a leafy neighbourhood on the River Thames. Being in lockdown and taking walks under the trees along the river was a much better pandemic experience than being stuck in a high-rise in East London near an A&E.  

As I said, the value of trees is evident to everyone. But economists must make a research project out of that…

Lu Han and his colleagues wanted to know how much a tree in a city is worth. To do this, they looked at Toronto, which between 2007 and 2017 suffered from an extensive emerald ash borer infestation that threatened ash trees everywhere. Originally, the city expected to lose all its 860,000 trees or some 8% of the tree canopy in the city.

Luckily, the resulting destruction was not quite as bad, but it was pretty bad. The chart below shows a coloured satellite image of Scarborough in the Northeast of Toronto, which has a relatively high population of ash trees. The tree canopy is coloured in dark green, while lighter shades of green indicate grass and shrubs. Houses are red and streets are grey.

Evolution of the tree canopy in a part of Toronto

Source: Han et al. (2024)

Now, if you want to know how much a tree in Toronto is worth, you can try to chop one down and see what the neighbours have to say about that. But that would probably not be the best alternative since it is rather unsystematic, non-analytic, and possibly fraught with a lot of tutting from otherwise overly polite Canadians (I don’t recommend that course of action in the United States, the outcome may be rather different).

So instead of donning their best lumberjack shirts and chainsaws, the economists looked at property transactions in the region. If the tree cover is reduced because the ash trees are dying, the value of the houses nearby should – in theory – drop.

Alas, that is exactly what happened. The neighbourhoods most affected by the ash borer infestation saw up to 6% of their tree cover destroyed and experienced house price declines of 5% because of that. Doing the maths, that means that having an ash tree next to your house increases the value of the house by approximately 0.4%.

So, there you have it. Economists have shown that trees have value, and it is not small.