Tree Value

This is an old circular which is currently in the process of being updated. It describes very clearly how trees grow in grade value as well as volume. It also offers some practical suggestions on how to manage for optimal tree value. A few other states have or had extension publications on tree value growth. This is the best of the bunch, IMO. This version was created from a copy of the original with OCR software. KD

CONSERVATION CIRCULAR

AN EXTENSION PUBLICATION OF THE
DEPARTMENT OF NATURAL RESOURCES
NEW YORK STATE COLLEGE OF AGRICULTURE AND LIFE SCIENCES
A STATUTORY COLLEGE OF THE STATE UNIVERSITY
AT CORNELL UNIVERSITY, ITHACA, NEW YORK

Vol. 19, No. 4
Fall 1981

Robert R. Morrow
Professor of Forestry

TREE VALUE: A BASIS FOR WOODLAND MANAGEMENT

Most people see trees as being valuable to look at, for shade, as homes for songbirds, as habitat for other wildlife, for soil or watershed protection. Some people recognize that trees are also the source of building materials, fine furniture, and a host of other useful things.

But very few people know the dollar value of a tree. In a recent quiz, 65 college students were asked the standing (stumpage) value of a 20-inch diameter, 80-foot tall white ash tree for (a) lumber and (b) fuelwood. Only four students gave reasonable answers. Six students thought the tree was worth more for fuel than for lumber. A later quiz of several members of the faculty showed little improvement.1 Is it any wonder that there is a history of exploitation of both woodlands and their owners by some (not all) timber buyers?

Even those who plan no cutting may be exploited. Most of the better mature trees are eventually harvested, often when the ownership changes. Many harvests occur prior to a property sale or after death of an owner. Such harvests may be rushed, preceded by little planning, with proceeds used to settle debts, taxes, or estates.

Stumpage Value

Woodland trees have two kinds of value. The most commonly used is stumpage value, which is associated with sales of timber or other products. In theory the stumpage value of a timber tree equals the value of lumber that can be sawed out, minus the costs of harvest, transport, and conversion to lumber (including a margin of profit). Since these values and costs vary for each tree, and change with time and location, the actual stumpage value is simply the price paid. The person who has high quality timber, who knows how much it is worth, and who knows how to sell it can obtain a fair stumpage price. Others may obtain much less than their timber is worth. 2

_______________________________
1You may want to test yourself. Write down your two estimates of lumber and fuelwood value; turn to page 5 for the answers.
2There are numerous cases where estimates of volume and value by foresters have resulted in doubling of sales prices over original offers.

Tree Value Conversion Standards

While stumpage values reflect activities of the marketplace, a value that is constant over time is needed to help make woodland management decisions. Is it worthwhile to thin my young stand? Should I harvest to a 14inch diameter limit? When is my stand mature? Answering these questions requires the forest landowner/manager to know how values of his/her trees change as they increase in size--values that exclude the complications caused by inflation or special market prices that reflect current demand trends or location of timber in respect to the mill.3 Such values remain relatively constant for a particular kind of tree of specific size and quality; thus they are called standards.

Joseph Mendel and his coworkers recently published tables of tree value conversion standards for hardwood sawtimber.4 Many northeastern tree species are classified by diameter, merchantable height, and butt log grade. Table 1, adapted from Mendel's work, shows some common examples and contains a brief explanation of the basis of the standards.

Table 1 shows at a glance the great variation in tree value according to size and quality. It also shows that 12-inch or smaller trees are worth little or nothing for timber. Thus most of the value is concentrated in a few of the larger trees--perhaps 50 to 100 per acre in managed stands on good sites, as compared with perhaps 20 or 30 in uncared for stands on the same site. On a poor site, there might be a half dozen or fewer valuable trees per acre.

_________________________
3These are important considerations in the short term, when planning timber sales, as opposed to long-term management considerations.
4Mendel, J.J., DeBald, P.S., Dale, M.E. 1976. Tree value conversion standards for hardwood sawtimber. USDA For. Serv. Res. Paper NE-337. Broomall, PA 19008.

TABLE 1.  TREE VALUE CONVERSION STANDARDSa
 

   

White Ash

Black Cherry

Red Oak

Sugar Maple

Red Maple

Tulip Poplar

 

No.

Butt Log Grade

Butt Log Grade

Butt Log Grade

DBH

logs

3

2

1

3

2

1

3

2

1

3

2

1

3

2

1

3

2

1

                                       

 12"

1

1

-

-

0

-

-

1

-

-

0

-

-

1

-

-

0

-

-

 14"

1

2

6

-

1

4

-

1

3

-

1

3

-

1

4

-

1

4

-

 

2

6

10

-

2

6

-

2

4

-

1

4

-

2

6

-

2

5

-

 16"

1

4

10

11

3

6

10

2

5

8

2

5

9

2

6

8

2

6

6

 

2

10

16

19

5

10

16

3

7

11

3

7

12

3

8

11

4

 8

10

 18"

1

6

15

17

6

10

15

4

7

11

4

7

13

3

9

12

4

8

9

 

2

15

25

29

9

16

23

6

11

17

5

12

19

5

12

18

7

12

15

 

3

27

32

38

12

19

29

6

13

20

5

15

20

7

13

19

8

13

20

 20"

2

22

 35

40

16

23

33

9

16

25

9

18

27

8

17

26

10

17

22

 

3

38

 46

54

20

29

41

10

20

29

10

22

30

10

18

28

13

19

29

 

4

58

 60

66

24

33

47

10

22

31

10

25

31

13

19

29

15

 20

35

 24"

2

40

64

70

33

44

58

18

30

44

19

36

50

15

29

47

21

31

40

 

3

68

86

96

44

57

76

22

38

55

23

44

58

20

32

56

28

37

54

 

4

100

103

118

53

66

87

23

43

61

25

51

59

25

32

58

32

39

65

 28"

2

163

102

110

56

71

91

27

47

69

32

53

80

21

41

76

34

47

62

 

3

103

136

148

75

92

117

34

59

86

39

69

94

29

47

90

44

57

83

 

4

 151

166

185

 92

 109

139

37

68

97

43

82

99

36

47

97

53

62

102


aAdapted from Mendel, DeBald, and Dale. 1976.

A TVCS is a measure of a tree's worth. It is based on the comparative value of the quantity and quality of expected yield of one-inch lumber, less conversion costs (harvest, transport, mill). It is a standard by which trees of different sizes can be compared, excluding most price effects of inflation and the marketplace. TVCS's can be adjusted to account for price changes between species and grades and for changes in utilization standards, region, and time.

These standards are based on 1972 prices; many timber prices have more than doubled since then, and red oak has increased relatively more than other species.

KD Note: Numbers in bold indicate the values that good quality trees would have had for the given diameters in 1972. Notice that values increase by 200-250% every 2" (every 10 years at 10 rings per radial inch) between 14" and 18". This translates to 7-9% annual rates of value growth, and this is without counting increases in market value. Over the past 20 years, market values for grade hardwood species have increased at 3-5% in real terms, ie, without inflation. Therefore total real value increases have been 10-14% per year for the better grade hardwood trees.

Value as a Basis for Management

Table 2 was developed to help show management needs for the better trees in a stand. It is based on changes in diameter at breast height (DBH), which is 4 1/2 feet above the ground, and typical corresponding changes in merchantable height, volume, grade, and value as the tree continues growth. Table 3 shows that, barring serious defect, grade is largely a function of size of the butt log (i.e., the first 16-foot log above the stump). Based on known relationships between the diameter inside the bark (dib) at the top (16 feet) of the butt log and DBH, the better trees may change from grade 3 to 2 at about 14 inches DBH and to grade 1 at about 17+ inches DBH.

Most tree measurements are made at DBH simply because it is convenient to do so. But DBH alone tells us little about a tree. While DBH doubled (from 12 to 24 inches), the boardfoot (b.f.) volume increased 8 times (from 80 to 630 b.f.) and the value increased about 60 times (from less than $1 to $58).

Also given in Table 2 are fuelwood values, based on the common 1980 stumpage price of $10 per cord. Care must be exercised in comparing the value of trees for timber and fuel because of the different dates. In 1972 there was no fuelwood market and trees were worth nothing for this purpose. On the other hand, sugar maple timber prices in 1980 were over twice those in 1972 for southern New York.

TABLE 2.  TYPICAL CHANGE IN SIZE AND VALUE WITH GROWTH OF A SUGAR MAPLE
 


DBH

No. 16-ft.LOGS

VOL.-board feet International Rule


GRADE

TIMBER VALUE
(TVCS)a


FUEL VALUE b

10"

1.4

45

3

0

1

12"

1.7

80

3

1-

2

14"

2.0

135

2-3

3

3

16"

2.3

200

2

8

5

18"

2.6

290

1-2

17

7

20"

2.8

390

1

29

9

24"

3.0

630

1

58

13

28"

3.0

880

1

94

17

 

aFrom Mendel, DeBald, and Dale. 1976. (1972 prices)
b Based on stumpage price of $10 per standard cord (1980 price)

 

TABLE 3.  HARDWOOD GRADES FOR 16-FOOT BUTT LOGSa
 

   

Grade 1

 

Grade 2

Grade 3

Top dibb

20+"

16-19"

13-15"

11+"

8+"

           

Clear cuttingsc

         

   Length, min., ft.

3

5

7

3

2

   Number, max.

 

2

 

3

-

   Yield, % of length

 

80

 

65

50

Sweep cull, max. %

 

15

 

30

50

Total cull, max. %

 

40

 

50

50

 

aAdapted from Gilbert. Northeastern FES Stat. Paper 114. 1959; and Ostrander's guide to hardwood log grading.       Northeastern FES. 1965.
bDiameter inside bark at top of butt log (a6' above stump).
cClear cuttings are based on the poorest of the best 3 faces (sides) of the log (or the second poorest face). A clear cutting is a portion of a face free of defects, extending the width of the face.

These data permit a general analysis of management considerations based on the following size classes of hardwoods:

a. 4-10 inches. Hardwood trees of this size are worth nothing, except for fuelwood, but this size class is most in need of thinning. Valuable, 20-inch trees do not just occur; they are the result of thinning young stands, good sites, or a combination of both. Thus this growth period is one of investment for the future--selection of the best stands and sites, and thinning them. The demand for fuelwood is a most welcome stimulus for thinning potentially valuable stands.

b. 10-14 inches. Hardwoods in this size class have marginal value for timber; i.e., they are changing from negative (costs of harvest and milling exceed timber value) to positive values. The rate of value increase is high, especially for thinned trees on good sites.

c. 14-20 inches . Hardwoods of this class may double in value for each 2 Inches of diameter growth because (1) grade improves with size and (2) volume increases as growth in diameter, height, and sometimes form class continues. At a growth rate of 10 rings per inch, it takes only 10 years to increase two inches in diameter and double in value. This is a real growth rate of 7 percent a year, since inflation is excluded.5 Although 14 to 20-inch trees are merchantable (have positive values), they usually are not financially mature.6 Except for crowded or unhealthy trees, they should not be harvested during this prime growth period.

d. 20-24 inches . Although there is little change in height or butt log grade, the entire tree grows greatly in volume and quality. Dollar growth continues to accelerate, but rate of value growth may decline to half or less. If growth slows to 15 or 20 rings per inch, as is common, the trees may be financially mature and ready for harvest.

e. 24-28 Inches . Tree value growth is reversed from the situation at 12-14 inches. Instead of little value and high growth rates, there are high values with small growth rates. Even though dollar values continue upward, the value growth rate is too slow to justify keeping the trees as an investment.

Thus, knowledge of tree value at various size classes is not only critical for selling timber, it is imperative as a guideline for sound management of woodlands. The wise woodland owner will consider tree value in his/her woodland management decisions.

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5 A money market certificate of 16 percent is not necessarily a better investment. If the inflation rate is 11 percent, the real growth rate of the certificate is only 5 percent. In addition, current Federal tax laws favor timber Investments.
6 A tree is financially mature when its rate of value growth falls below an acceptable rate of return. The acceptable rate of return is usually determined by alternative Investment opportunities.

___________________________
Answer to quiz:

A tall, 20-inch white ash likely would have a grade 1 butt log and a merchantable height of at least 3 logs. Thus its stumpage value for lumber was $54 in 1972 (from table 1). The 1980 equivalent was about $125.

The tree would contain about a cord of wood. Although fuelwood may cost $100 a cord (cut, split, and delivered), the stumpage value is commonly only $10 a cord. Thus the tree currently would be worth about $10 as fuelwood, or only 8 percent of its value as lumber.

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