Trees also improve water retention, capture carbon from the atmosphere, provide habitat for various animal species, limit soil erosion, control winds, and also provide shade. These are intangible benefits that have not yet been recognized in our pricing calculation. The true value of a tree, therefore, must encompass its lifetime contribution, taking into account its heritage – which is denoted by the age, rarity and size of the tree.

A Supreme Court bench led by former Chief Justice of India SA Bobde, as he heard a plea against the cutting down of trees 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 rapid estimation method to put the annual economic value of a tree to ₹74,500 taking into account its oxygen supply to ₹45000, bio-fertilizer at ₹20,000, and other micronutrients, etc. The report finds that the economic value of a heritage tree, with a lifespan of over 100 years, exceeds ₹1 crore. However, this was not accepted by the government of West Bengal, which argued that such a high value for trees would block development projects and limit economic growth. As a result, in March 2021, the Supreme Court was forced to form another seven-member committee to reconsider this assessment and suggest appropriate guidelines.

We have to integrate several goals to make such an economic valuation, and this has to be done for each individual tree according to the benefits it provides. Trees in urban settings, for example, create green public spaces, improve local air quality, reduce heat and provide us with an aesthetic environment, in addition to having a positive impact on urban groundwater. In rural areas, trees support agricultural production by controlling erosion, provide shade and shelter, and replenish soil while supplementing agricultural activities.

Trees outside forests, such as those that are the subject of urban forestry, avenue planting and agroforestry projects, can also help India meet its Nationally Determined Contribution (INDC) targets to land use. horizon 2030 consisting of sequestering 2.5 to 3 billion tonnes of CO2 equivalent. In addition, several sustainable development goals (SDGs), such as 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 these co-benefits must also be taken into account when trees are cut for development projects.

We need to value the trees on their own, as opposed to the forests. Many efforts have been made on the latter. 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 such as mining and building roads and railways, on based on the findings of a 2000 study on the economic value of state forests.

Under a Supreme Court order, the adoption of the net present value (NPV) of a forest – a project investment decision tool that uses a discount parameter to calculate the present value of flows future benefits, net of accrued costs – has been applied across the country. for decisions on the diversion of forests for non-forest purposes, and this NPV has been 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 the Environment, Forests and Climate Change to ₹5.65- ₹55.55 lakh per hectare. However, this has not yet taken effect.

Although many such scientific studies have been conducted to estimate the value of natural forests in India, we lack documentation on valuing trees outside forest areas. According to a 2012 Urban Tree Ecosystem Services Assessment review, the assessment of trees is limited by data availability, with the available analysis focusing on only one or two significant benefits. Additionally, these studies were conducted in isolation, rather than comparing all of the benefits across a range of species, cities, and climatic zones.

The first step in evaluating the benefits of trees would be to map the different species and their associated locations. This must be coupled with an appraisal calculation to capture the total economic value of a tree. The result can be used to analyze the costs of action (versus inaction) when it comes to clearing development projects that require tree cutting.

In this regard, it is relevant to mention the Tree Benefit Calculator, which is based on the i-Tree Street Tree Assessment Tool which estimates the benefits of individual trees located by the street in the United States. . Such a tool in the Indian context would be beneficial for decision making and long term policy formulation given the speed with which India is urbanizing.

The current Supreme Court order that takes into account the various intangible benefits of trees is a laudable step in the right direction. The introduction of an incentive-based mechanism for those engaged in planting and protecting trees outside forest areas must be the next step.

Asi Guha, project associate at WRI India Center for Economics, contributed to this article.

Madhu Verma and Elphin Tom Joe are respectively Chief Economist and Project Associate at the Economics Center, WRI India. These are the personal opinions of the authors