The Economics of Everyday Things - 118. Urban Trees

Episode Date: December 15, 2025

Trees are more than decoration — they’re living economic assets, with measurable costs and benefits for cities and neighborhoods. Zachary Crockett takes a walk on the shady side of the street. SOURCES:Geoffrey Donovan, owner of Ash & Elm Consulting.Jana Dilley, urban forester for the city of Seattle.Kathleen Wolf, social scientist, former researcher at the University of Washington. RESOURCES:"Extreme Heat Is Worse For Low-Income, Nonwhite Americans, A New Study Shows," by Deepa Shivaram (NPR, 2021)."US Urban Forest Statistics, Values, and Projections," by David Nowak and Eric Greenfield (Journal of Forestry, 2018)."The role of trees in urban stormwater management," by Adam Berland, Sheri Shiflett, William Shuster, Ahjond Garmestani, Haynes Goddard, Dustin Herrmann, and Matthew Hopton (Landscape and Urban Planning, 2017)."Urban trees and the risk of poor birth outcomes," by Geoffrey Donovan, Yvonne Michael, David Butry, Amy Sullivan, and John Chase (Health & Place, 2011)."Calculating the Green in Green: What's an Urban Tree Worth?," by Gail Wells (Science Findings, 2010)."The Effect of Trees on Crime in Portland, Oregon," by Geoffrey Donovan and Jeffrey Prestemon (Environment and Behavior, 2010). EXTRAS:i-Tree Tools. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

In Jeffrey Donovan's neighborhood, in Portland, Oregon, there's a beautiful pagoda tree. It's around 50 years old, and it towers above the homes on the street. There was a little seedling brought home from Richard Nixon's inauguration, and it's been planted opposite my house that's one tiny sapling that somebody probably carried home on a plane with them. They put it in the ground, and 50 years later, it's providing this kaleidoscope of benefits. It's just magical. It's one of more than four million trees in Portland's urban landscape. They're beautiful to look at, but they're also a valuable resource.

What do I see when I look at a tree? Well, I still see it as a beautiful thing. You know, I'm still technically human. But I also see something that people are willing to spend a lot of money on to plant and maintain. Donovan is the owner of Ash and Elm, a tree consultancy. Before that, he spent 25 years working as an economist for the U.S. Forest Service. What I'm trying to do is quantify the benefits of urban trees.

There's the classic dilemma in economics. You know, if you can't count it, it doesn't count. What I'm trying to do is count it. So when a city government is deciding on its budget, it's not just thinking about roads and things like that. It also thinks about the benefits that trees provide. When you start doing cost-benefit analysis on trees, it becomes laughable.

The benefits to the city are so much higher, often orders of magnitude higher than the costs. For the Freakonomics Radio Network, this is the economics of everyday things. I'm Zachary Crockett. Today, urban trees. There are an estimated 5.5 billion trees in cities across the U.S. They line commercial corridors, parks, busy intersections, and residential streets. And they come in all shapes, sizes, and spaces. species, maples, sweet gums, palms, furs, and pines.

Trees really are part of the infrastructure of a city. That's Jana Dilley. She's an urban forester for the city of Seattle, working under Seattle Public Utilities. She's one of many people who work together to plant new trees in the city each year. In Seattle, it's not just Seattle Public Utilities. There are eight other departments that also work on trees. The Parks Department takes care of trees and parks property. The Department of Transportation takes care of trees along streets.

We are really one big family when it comes to maintaining an urban forest. Every city has its own system for deciding where to plant trees on its streets. Sometimes it's up to city officials. Other times, there's collaboration with local forestry nonprofits and advocacy groups. But the process often begins with a review of the kids. canopy cover, an aerial analysis that shows the percent of the city that is covered in trees. Some cities, like Atlanta, have over 50 percent tree coverage. Others, like Phoenix, have less than 10 percent. At 33 percent, Seattle is right around average. But this data only tells people like

Dilley so much. To really understand the city's need for trees, she has to look at neighborhood level data, specifically to do with exposure and heat. So in Seattle, we asked volunteers to go around the city at a set time and day and take temperature readings from a number of different places. And when you map those temperature readings out, it shows us where in the city it's hottest and where it's coolest. In Seattle, we found at least a 17-degree temperature difference between the hottest and coolest areas. We know that planting trees to Reduce heat is important because high heat events have a big impact on human health, damage to roads, infrastructure, power outages, lower quality of life, increased drought,

increased water use, and stress on wildlife populations. Poor neighborhoods are often most in need of new trees. As we designed cities over the past hundred years, we made a lot of choices about where we placed roads and how we built homes. and the redlining and racism that came with it shaped not just the homes and the roads, but where we left space for trees. Communities of color are more likely to live in hotter neighborhoods with fewer trees. So it creates an urgency for cities to plant trees with an environmental justice lens.

Once specific sites for trees are identified, it's not as simple as just plunking down any tree. We need to think about the right tree species. that's going to fit in that site and survive in the location. And another thing we think about is how many trees of any particular variety are planted in the city? Because we don't want to overplant any one kind of tree. If your city is planted with a wide variety of species, it is more resilient to pests and diseases. So it's kind of like diversifying your stock portfolio. You don't want to put all your chips on one tree.

That's right. When a new tree is planted, it's important to think long-term. The tree, like the world around it, changes considerably over time. How tall and wide is that tree going to be, and is there going to be space for it in 20 years? Another important question is climate change. We're planting trees that we think will survive in the climate 50 years from now. We need to think about proximity to power lines and other electrical issues. infrastructure. We need to think about other human needs, such as roads, sidewalks, buildings, solar panels.

After all of these considerations are cleared, it's time to plant the trees. And that can introduce a whole new set of issues. Many people think about trees and cities. It's like, oh, you just go to Home Depot or someplace and you buy a tree and you put it in the ground. Well, planting trees and cities is really complex. Kathleen Wolfe is a social scientist and was a researcher at the University of Washington School of Environmental and Forest Sciences for 28 years. She's also been involved in urban tree plantings in Seattle. And she says the process comes with a lot of headaches. The city will cut the sidewalk to create the space to plant the trees. And then once you remove that paving, you find horrible

fill, rock, rubble, bricks, all sorts of stuff that people used before just to fill that. Then you have to think about soils. The soils are horrible. They have to think about water, infrastructure to make sure that the trees are watered routinely. So who pays for trees on public city streets? Typically, cities will cover some of the costs because many of them are pursuing additional canopy goals. Janadilly says funding can also come from broader government. government budgets and environmental organizations. Any and all funding is welcome, because planting trees can be quite expensive in a city like Seattle. So the Department of Transportation in Seattle, when they planted a tree, I believe that cost them about

$1,500 to $1,500 per tree. And that's on the higher end because there are a lot of complications that come in planting along the street. And we're also trying to plant trees there that are larger at the time we plant them and more resilient to the harsh environment along the side of a road. In the Parks Department, when we plant on Parks Land, that is cheaper because we're planting smaller trees that don't take as much site prep work. But the cost of planting the trees is relatively small compared to the cost of maintaining them.

All those trees that live for over 100 years need to be budgeted for long term. Their roots can cause millions of dollars' worth of damage to sidewalks, introducing liability issues for the city. And the older they get, the more costs they incur above ground, too. If you think of a tree along the street and say that tree as at the end of its life, and it's got some decay and some risk factors, and we need to take that tree out.

That may cost us quite a bit because we may need to close some lanes of traffic. We may need to bring in some special equipment. We may need to have special staff that can climb the tree to cut branches. We may need to work around power infrastructure and make sure that we're being safe there. If we're planting a tree underneath power lines, that's too tall. and eventually grows up and reaches those power lines. Now we have to spend a lot of money coming out constantly to prune that tree back away from the lines

so that we're not causing fires. Altogether, the city of Seattle spends more than $20 million a year to plant and maintain its urban canopy. But not all urban trees are the responsibility of city government. In some places, the cost of maintaining sidewalk trees in residential neighborhoods falls on homeowners. Owners are also responsible. for trees on their property, like those in backyards, although they sometimes get some help.

One thing we do in Seattle, where about two-thirds of our urban forest is residential and privately owned, is that we have a residential tree planting program called Trees for Neighborhoods, where we plant 1,000 trees per year with residents in high heat and low canopy neighborhoods. So if you think about trees as an economic asset, what makes them worth all these costs? How do you measure the return on investment of city greenery? That's coming up. Most of the infrastructure in a city can be justified in economic terms. If you're building a bridge, you can track revenue from tolls.

But urban trees aren't so straightforward. It's pretty easy to look at a nice leafy tree and see that it has aesthetic value. But how do you assess the environmental, behavioral, and health benefits that tree provides. In my case, I have an economist toolbox. As a natural resource economist, Jeffrey Donovan has spent most of his career trying to answer this question. I'm trying to put a market value on the benefits of urban trees,

and those values can be from the intuitive to the less intuitive. One way to think about the value of a tree is to measure its impact on real estate prices. Back in the summer of 2007, Donovan and his team went around East Portland and collected data on nearly 3,500 trees in front of single-family homes that sold in the previous 10 months. They noted the details of each property, square footage, number of bedrooms and bathrooms, zip codes, and then they used a framework called hedonic pricing. It's a way to break down the value of a commodity, like a house, into individual attributes.

You're trying to decompose that house price into its constituent part. So let's say a house cost $500,000. You're trying to say, well, you know, how much does each bedroom contribute to that house price, each bathroom? How much does the size of the house contribute? You know, each square foot. How much does that make the house price go up? I found the value of urban trees quite high because it's an aggregate measure of all the values that urban trees provide. Donovan found that a single tree in front of a home

raised that home sale price by more than $7,000. Moreover, that same tree increased the value of adjacent homes within a 100-foot radius by a combined sum of around $13,000. You have a tree outside somebody's home. They're 100% responsible for maintaining that tree, for planting it, for pruning it, but two-thirds of those benefits spill over for free.

to their neighbors. And economics call that a positive externality. That's not the only positive externality. If something increases the sales price of a home, it's going to increase property tax revenues, right? Because property tax revenues are a function of sales price. In that same study, Donovan estimated that Portland Street Trees were increasing property tax revenues

to the tune of $15.3 million. About five times more than the homeowners spent annually on maintaining them. It was an indication that urban trees paid for themselves many times over. I've talked to city councils about this and they get very interested when you mention that finding. If you were advocating for the city to spend things on libraries, on education and whatever it may be, it's not often that you can make a credible argument that the investment is self-financing. But Donovan says that real estate value and property tax revenue are just one small part of a tree's benefits. In Sacramento, he found that the shade provided by certain

street trees reduced a home's electric bill by an average of around $25 during the summer months. And in a separate study, he also looked into less intuitive behavioral benefits. You may be familiar with the broken windows hypothesis. It's a hypothesis in criminology, and it suggests that neighborhoods with signs of disorder, so broken windows, graffiti, garbage, they send a subliminal signal to a criminal that if they were to commit a crime, they're less likely to be seen,

they're less likely to be caught. Trees, particularly mature trees, send the opposite signal. We found if house-side street trees, that was always associated with reduced crime. Kathleen Wolfe, the environmental researcher at the University of Washington, found that stores in retail districts have similar behavioral benefits.

We evaluated how shoppers responded to trees and business districts in several cities in the U.S. People judge that the merchants in the places having a tree streetscape were more knowledgeable and would be more pleasant. We also learned shoppers claim they would be willing to pay 9 to 12% more for equivalent goods and services in those places having a nicer canopy. Then there are the environmental benefits that trees provide, things like air pollution removal, carbon sequestration, lower energy costs, lower emissions,

and reduction of stormwater rum-off. The intercept water, that means you have perhaps less water moving into your stormwater drain system in a city. That's a cost savings because you don't have to up. upgrade the pipes and drains that are needed to collect that water. Air quality, trees intercept micro-particles. And if you reduce the amount of particles, a city is not paying as much potential fines for not meeting air quality standards.

The U.S. Forest Service has a suite of tools called I-Tree that aims to place a value on these environmental benefits. You can even use it to estimate the total value of the benefits of a single tree. I punched in the details of a mature sweetgum tree in front of my mom's house in California. It's the kind that has those little spiky balls. According to I-Tree, it'll provide around $150 worth of value in stormwater mitigation, $200 in air pollution removal, and $300 in energy savings, over 20 years. Across an entire city, this can add up.

Again, here's Jana Dilley, the urban forester who works with the city of Seattle. Seattle last did a complete study of this type in 2012, thus the data is little old, but still illustrative. The carbon storage benefits of Seattle's trees were worth over $11 million. We know that our urban forest removes about 725 metric tons of pollution from the environment every year at a value of $5.6 million. And we know that the reduced energy use that comes from the presence of trees saves Seattle about six million dollars a year. A 2018 report from the USDA placed the total environmental benefits of America's urban forests at $18 billion a year. But the most significant benefits urban trees provide are related to health. They clean the air we breathe, they clean the water

around us. They keep us cool and hot days. They reduce stress. We know that being among trees helps us focus and learn better. There have been studies that have linked living among healthy mature trees to healthy birth weights for newborn babies and reductions in heart attacks. These benefits can be hard to conceptualize on a daily basis, but they're most visible when trees are taken away. One case study that always comes up when you talk to tree researchers is that of the Emerald Ashbore, an invasive pest that killed more than 100 million trees in the eastern

and Midwestern states. Jeffrey Donovan has studied the impact of that tree loss on human health. The Emerald Ashbora, you can accuse it of many things, but not big a tree. You know, it's going to kill the trees in rich neighborhoods, poor neighborhoods, white neighborhoods, they don't care. And although that loss of trees is tragic, it's statistically a gift. Donovan looked at data in 15 states and found that the loss of trees contributed to an additional 22,000 respiratory and cardiovascular-related deaths compared to non-affected areas.

In the wake of all these trees dying, people died too. Despite all of these benefits, the latest data shows that urban tree cover is in decline at a rate of about 36 million trees per year. Many cities are expanding to accommodate growing populations, and developers often see old trees as a waste of valuable land. But Jeffrey Donovan says it's hard to find a greener investment. Carbon sequestration, reduced cooling costs, increased house price, increased public health, improved crime, reduce stormwater runoff, all those benefits certainly fire outweigh any costs you might have.

So all things consider the ROI on a tree is pretty damn good. Yeah, it's preposterous. For the economics of everyday things, I'm Zachary Crackett. This episode was produced by me and Sarah Lilly and mixed by Jeremy Johnston. We had help from Dalvin Abilaji. Is the hedonic and hedonic pricing a reference to some kind of pleasure? Sadly no. Applying hedonic models has never made me particularly giddy.

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