Urban trees deliver an annual return that many financial advisors and money managers would surely envy, according to a new report from TD Economics.
In a bid to bring together economics and the environment, TD Economics examines the value of the urban tree canopy, and concludes that the benefits and cost savings they produce easily outweighs the investment in maintenance.
“Using the City of Toronto’s urban forest as an example, we demonstrate how an investment in urban forests is an investment in the overall economic and environmental well-being of urban society,” the report says.
In its report, TD estimates the replacement value of Toronto’s urban forest at $7 billion, or approximately $700 per tree; which is what it would cost to remove the existing trees and replant trees of a similar age and size.
Moreover, it says that the existing tree population generates about $80 million worth of environmental benefits per year, which works out to about $8 per tree. “The cost savings produced by our urban forests make it clear that keeping the green on our streets, keeps the green in our wallets,” the report says.
This estimated savings is comprised of about $54 million due to the rainwater trees absorb, reducing the strain on the city’s water processing infrastructure; $19 million in reduced air pollution; $6.4 million in energy saving due to the shade they provide; $1.2 million in carbon sequestration; and, $0.6 million in reduced emissions due to climate moderation.
The estimates don’t include some of the more intangible benefits of trees, it notes. “Many of the benefits that are important to communities – aesthetic values, recreational spaces, community importance – are difficult to quantify and are not included in our valuation,” the report says, adding that it, therefore, understates the true value of an urban forest.
Nevertheless, just looking at the direct environmental benefits and cost savings that are attributable to trees, the report concludes that Toronto’s trees return between $1.35 and $3.20 for every dollar spent on annual maintenance. “Maintaining the health of our existing urban forests is the best way to secure larger trees, grow the value of our natural capital and ensure they continue to provide environmental benefits,” the report concludes. “Maintaining the health of our urban forests is the best way to protect the value of our green investment.”