CAN TREES BE DEPRECIATED LIKE (MECHANICAL) PLANT? A DEPRECIATED REPLACEMENT COST SOLUTION TO THE ADJUSTED TRUNK FORMULA ANOMALY IN CTLA'S TRUNK FORMULA METHOD

摘要

A tree cannot be depreciated like mechanical plant, because as a living organism, it will grow and increase in amenity value for most of its life. In appraisal terms though, the rate of return on a tree's increasing replacement cost will depreciate over time, as that nominal value disproportionately accelerates away from fair value. At issue, is the rectification of an accounting problem within the Council of Tree & Landscape Appraisers (CTLA) methods (making allowance for all changes in real value over time), rather than the undeniable value of aging trees. The full ecological and cultural value of ancient trees may be better considered under an alternative income approach to value, since their benefits may be partly unique and irreplaceable. Nonetheless, CTLA methods (which may be better suited to more regular urban forestry applications) will continue to provide a robust indication of their general worth. With regard to the Trunk Formula Method (TFM) of amenity tree valuation, this paper proposes an alternative procedure to that of the Adjusted Trunk Area Formula (ATAF) in consideration of large trees (>750mm stem diameter) and their replacement costs and end values. The ATAF seeks to regulate the accelerating cost of replacing larger diameter trees, by applying a quadratic equation to their area increments. The proposed alternative will be more consistent with appraisal standards: adjustments are no longer made to the cost metric, but are instead encompassed within the depreciation process by assessing the comparative age of a tree, as well as its current condition. Such a broader definition of an asset's physical deterioration is in keeping with standard appraisal practice.