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Tree Economics

Tony Dziepak
February 2003

A major component of economics classes, especially principles classes, is reading and interpreting news articles through the lens of an economist. When readers understand the power of extrinsic economic incentives over intrinsic motivations, they are in a better position to evaluate the consequences of particular actions.

Let's focus on a particular article that appeared in the Washington Post Monday, Feb 10, 2003, "D.C. Tree-Saving Plan Crosses Property Lines." The article reports that the (Washington) D.C. Council passed the Urban Forest Preservation Act of 2002, which essentially includes fines for property owners that cut large trees from their private property.

The intent of the act is to preserve the urban forest canopy in order to improve the urban environment. It is true that shaded pavement reduces the heat island effect and improves air quality. There is no question that development has greatly reduced the tree canopy in the city, and that air quality improvement reduces athsma-related health costs.

However, it is important that the provisions of the bill would provide the correct incentives to effect the intent of the act. Unfortunately, the current provisions would create some perverse incentives for property owners.

The troublesome provision is the "permit" required to cut a large tree. It states that any owner that wants to take out a tree of over 55" trunk circumference would have to pay a fine of $35 per inch of circumference ($1925 minimum). It is troublesome for two primary reasons: it does not consider unintended consequences, and it violates private property rights.

This provides incentive to a property owner to cut down their large trees before the act becomes law. Furthermore, property owners are encouraged to cut small trees before their trunks reach 55" in diameter. The unintended consequence of this bill is an acceleration of the cutting of large trees in the district.

Secondly, the government may not take private property rights away from private properry owners unless they are compensated. If the DC government wished to add this restriction on homeowners, it must compensate all property owners by the fair market value difference in the property value with and without the restriction.

If, in fact, the large trees on private property serves as a public good, improving the climate for all residents, they are essentially saying that the private trees create a positive externality. Therefore, the owners should be compensated. Maybe the District should reimburse the homeowner. Arlington County does this through property tax reduction.

Now, when the homeowner decides to cut their tree, they lose that reduction; thus providing them with the incentive to exercise care to keep that tree alive. In the DC proposal, there is incentive to neglect or sabotage the tree (dead or diseased trees do not require a fine to cut down).


Reference: David Nakamura, "D.C. Tree-Saving Plan Crosses Property Lines" The Washington Post 10 February 2003, B1.

Phil Mendelson, Time to Turn Over a New Leaf in D.C.

Councilmember Patterson's statement

Contacts: Carol Schwartz, DC Council member, chairman of the Committee on Public Works and the Environment William M. Baskin, Jr.

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