In June I appraised 31 trees that had been cut down via illegal trespass. They were mostly Madrona. The area is a sloped greenbelt in a view corridor and the clearing greatly improved the view for the uphill folks who did the logging. Should the Location % be low, as an undeveloped property, even though it has very high real estate value? I had rated the contribution as 95% because of slope holding capacity, wild life; site 80% and placement 40%, to average 72%. The other side had their expert say the trees were NOT a factor in erosion control because they will stump sprout, and they say the slope is stable. This may end up in court. If I am off, I want to correct it immediately. Thanks for the help.

Reply to post by Tina Cohen, on October 03, 1998 at 20:31:08:

Tina, 80% seems high for Site unless it was a managed/cared for stand of trees as in a park or part of the landscape of a high-value residence, etc. If a dence woods, then a Contribution of 95% is extremely high as the loss of any one tree may not be noticeable. All the trees that would fit in the space of an open grown madrone could have a total of 95-100% if they contributed that much to the property owner. To compensate for the density of the woods and its inherent lack of crown, divide the number gowing in the full tree area into the proper contribution factor and then weight the better or dominant trees higher and the suppressd trees lower. Your Placement value of 40% may also be high as each tree is probaly closer to others, especially the more important ones, than if it was a planned planting with long-term insight.

Did you do a simple reasonableness test such as calculating the tree value you found on a per acre basis? Then find out the difference between a similar quality etc. wooded acre versus a nonwooded acre from a local real estate appraiser or even a good realtor. Unfortunately, wooded lots are becoming no higher due to the houses now being built taking up most of the lot except where minimum lot sizes are over two acres.

I have often beaten an opponent who did not consider woods density and distance form the house by saying in my report: "Why would someone cut down trees worth over $500,000 (or whatever the oponents value/A was) per acre to build a house worth only $250,000 (or whatever the house cost to build)."

Your opponent may have missed the boat if all they mentioned was the erosion factor. You probably would have done more for your client if you used the Cost of Cure Method as you could have added the estimated costs to remove or treat the sprouting stumps, replant and manage until the site is restored, compounding the costs for the years necessary, providing the woods was that important to the use of the property.

There should be good presentations and discussion on the Cost of Cure Method at the ASCA Conference in Napa Valley, October 8 - 10.
Hope you will be attending.
Fred

Reply to post by Tina Cohen, on October 03, 1998 at 20:31:08:

I guess I would echo Fred's concerns here. I have a problem with using methods based on ornamental values to appraise wild trees.

I would ask the question: "Is it reasonable to expect that the offended land owner would go out and purchase new trees at retail nursery prices to replace the damaged ones, had there not been an outside party to blame?"

If that is reasonable, perhaps ornamental pricing is appropriate. If forestry nurseries or simply transplanting nearby saplings offers the most attractive option, then maybe ornamental retail pricing structure is not credible for the appraisal of the loss.

If erosion control is the issue, maybe compare the cost of retaining walls etc. to the value of the trees. If one can build a structure for a whole lot less money than what the trees appraise, perhaps the appraisal is not reasonable.

Best regards,
KWK

Reply to post by Tina Cohen, on October 03, 1998 at 20:31:08:

RE: Location. I have several observations.
1. The principal reason for the appraisal is to estimate the damage or loss, which includes
but is not limited to the “value” of the trees. I would disagree slightly w/KWK and say
that the question is “Is it reasonable to expect that the offended landowner would want or
need to cure the damage?” Stated another way, is the physically measured damage
experienced as damage or loss; would the trees be missed; would the owner experience
negative effects such as erosion? The owner might not have the wherewithall or insurance
to do it themselves, but that does not necessarily mean the damage was less. The
existence of a third party wrongdoer should neither increase or decrease the appraiser’s
estimate (punitive damages are the court’s business).

2. The location factor (3 components) must be understood as economic or functional
depreciation which reduces the cost of a new replacement (a large idealized one in Trunk
Formula) to reflect the actual damage or loss. Many factors such as those suggested by
FJR must be considered, all relative to the experienced loss, not some arbitrary list or
scale. (See “What is the Trunk Formula Method,” Arboricultural Consultant Oct. ‘97.)

3. Reasonableness testing is always a good idea, but experienced loss can be argued to be
a “value in use” which exceeds a reasonable contribution to market value (or “value in
exchange”) of the property.

4. Cost of Cure can do two things: A) recognize and estimate site restoration and other
items in addition to plant value, and B) approach the plant value differently from Trunk
Formula. Both A & B may make the estimate more supportable and less hypothetical than
Trunk Formula, but the appraiser must be careful not to overstate loss. If location
depreciation was required in the TFM, it can be argued to be required in CofC as well.
The appraiser may do this implicitly by using an aggregate amount of plant material
smaller than the damaged material to cure the loss or by using an establishment period
shorter than what would create size for size replacement; but depreciation is what it is. If
the appraiser chooses to use more smaller plants or long establishment periods to reach
size for size replacement, then depreciation should be explicitly considered based on the
same facors that would influence it in TFM.

5. Long compounding periods and/or high interest rates in CofC (or Componded Cost of
Replacement) will probably tend to overstate value and may not be supportable.

Reply to post by Scott Cullen, on October 03, 1998 at 20:31:08:

Scott has added some very nice points here, both valued and appreciated.

I would ask though, how does one quantify "value in use"? In my opinion, for an appraiser to come up with a credible value of damages, one must compare the loss to a measurable commodity of some sort.

I can think of a couple of ways to potentially quantify "value in use", but they are very narrow in scope and do not apply well to many woody plant appraisal situations.

C of C doesn't cut it in our state for loss of a large tree. Our courts (so far) have insisted that the site be "substantially restored to original condition", which has meant that a large tree must be replaced with a large tree, not a bunch of little ones. The trunk formula method has proven to yield more reasonable results when used to measure amenity value.

Looking forward to seeing more dialogue along these lines,
KWK

Reply to post by Kerry, on October 12, 1998 at 14:50:08:

Kerry, assuming that the appraiser is using a depreciated replacement cost approach to value (e.g. trunk formula or replacement cost methods) the quantification exercise is common to "market value" and "value in use," the measurable commodity being the appraised tree. The replacement is supposed to approximate the appraised tree. The idealized replacement is depreciated by Species and Condition ratings as necessary to reflect measureable factors.
The Location rating is functional or economic depreciation. If the definition of value is the contribution of the appraised tree to the "market value" of the property, then the Site factor is applied to idealized replacement cost so as to reflect that contribution. If the definition of value is "value in use" then the Site factor might be higher and the contribution to property value is a moot point. The appraiser or the client or the court has qualified (rather than quantified) the appraised tree as having a particular function or utility or value in use. The appraiser of course must objectively find that the function, use or importance actually exists.
Market value is a value in exchange as recognized by a market of buyers and sellers. It requires the economic characteristics of scarcity, transferability and utility. Value in use is the value to a particular user and may exist even in the absence of a market. It requires only utility. (Dictionary of Real Estate Appraisal 3rd Ed., 1993, (C) Appraisal Institute)
Right now we have very limited tools to quantify the benefits of a tree (a benefits approach to value). ISA'a Quantitree (TM), American Forest's CityGreen (TM), NAA's Large Tree Model and the Forest Service's work in the Chicago and Sacremento studies are examples but are not that applicable in a single tree, appriasal setting. That's why we rely on replacement cost as a surrogate.

Your observations about the courts is very important. The appraiser must work within the constraints of statute, case law and judicial interpretation. I recently testified in CT and the court ruled that Replacment Cost was not an admissable measure of damages (for replaceable size trees, not large ones!) and my testimony was limited to cordwood value only.

I'd be interested to hear opinions about the relative reasonableness and validity of CofC vs TF estimates for large trees. Using compounding -- rather than a number of smaller trees -- in CofC appear analogous to TF in that it extends actual replacement cost to a non-replaceable size tree. I have very strong concerns that compounding over anything but short "establishment" periods will tend to overstate value and has little if any theoretical basis.

Reply to post by Scott Cullen, on October 12, 1998 at 23:09:52:

I guess I am prone to keep things simple. After carefully reading through what you had to say, I'm sure I agree with everything you have said. I share the concern about over-stating tree values, and using compounding over long periods of time.

Others have expressed concern about the trunk formula method, the fact that it is a formula. I guess I have an easier time explaining the trunk formula, why and how it works, etc. than I do explaining compounded costs and projected growth rates.

Reply to post by Kerry, on October 14, 1998 at 21:11:00:

I agree. Notwithstanding the criticisms of trunk formula, the more I have studied it and used it the more convinced I am that it remians a valid and usable appraisal tool. Certainly not the only tool and with certain limitations which should be disclosed by the appraiser, but useful.

Reply to post by Scott Cullen, on October 15, 1998 at 00:43:31:

Hi Scott,
Welcome to THE BOARD. You have already added your wisdom, and we look forward to more.
Very treely,
Lew

Reply to post by Scott Cullen, on October 12, 1998 at 23:09:52:

The issue of location,and how to best use the Trunk formula method seems to be always controversial. In Canada, there are many court cases where the high values derived by stratightforward application of the TF approach have been thrown out by the courts, or arbitrarily reduced by the judge, on the basis that the derived value is far too high and bears no relation to the overall value of the property. The courts have made it very clear that complete restoration to the conditions existing prior to damage taking place, is not not an acceptable option. Restoration that will permit recreation of a tree or stand of trees that can eventually develop back to a reasonable approximation of what has ben lost, is acceptable.

I have recently used a modified cost of cure approach, in which I took the number of stems lost (in this case birch in a woodland setting), called for a 2 for 1 replacement of new plants (standard around here) and then factored in the cost to clean up the mess, install safety fence, and purchase and install the new plants. The total cost was derived by summing on site costs, and compounding the plant material costs at prime plus 4% (standard for a loan) over a 15 year period, which was the time I felt would be required to re-establish a reasonably dense cover of young birch forest on the slopes damaged. The case was settled out of court so I do not know if it would have been acceped, but it seemed to me to be a reasonale approach that better reflected the site realities. I did run through the TF approach, and it gave me a huge number - to be realistic I would have had to discount location and other factors to very low percentages, though perhaps that too might have been realistic, but I was not comfortable
with it.

How do other folks approach these problems?


Julian Dunster
Bowen Island, BC Canada

Reply to post by Julian Dunster, on October 14, 1998 at 21:11:00:

We're going a long way from Tina's initial Location inquiry, but a consideration of location and how benefits are experienced is inherent in each appraisal exercise. If not in assignment of a depreciation factor, then in selection of a method or technique and in making judgments and assumptions.

Using multiple methods allows the appraiser to double check and compare results. In Julien's example, to see what ratings would put TF in line with his Compounded CofC.

I am increasingly inclined to believe that it is not the appraiser's job to come up with a single "right" opinion of value. Though that is sometimes imposed on us and generally taken on voluntarily. The purpose of appraisal is to be an aid to decision makers. The purpose of expert testimony is to aid the court in understanding fact. There are thing we can say with reasonable certainty (e.g. the appraised tree was big and the practical replacement was little; the practical replacement will cost X; the big appraised tree is probably worth Y>X) and sometings we can estimate with less certainty (e.g. Y=?). Maybe what we should really do is provide a range of possibilities including both the certainties and the uncertainties and allow the decision makers to determine fact, i.e. value. We might of course offer an opinion on the most reasonable point given certain facts and assumptions.

As to Julien's prime + 4% for 15 years my (incomplete) research suggests that high interest rates (assuming prime=5%, 9% is high)and more than a few years compounding may be hard to justify when the result is suppposed to represent complete restoration (size for size or whatever). I suppose the exercise might be or seem reasonable if the result represents less than full restoration. Did your TF by comparison represent full restoration? I'm reluctant to use compounding (or any technique)which does not have a firm theoretical foundation even if the inputs make the comparative results seem reasonable.

Reply to post by Scott Cullen, on October 17, 1998 at 09:32:27:

I use trunk formula less than I used to, but it still is a necessary tool. It's not because I think it comes in too high, but because it is hard to explain and justify. Sometimes when I compare TF with C of C or compounding, I find that the TF is more reasonable. I have also changed my thinking, and agree with Scott that there is nothing wrong with submitting a report of several appraisal methods. Also, just one factor,such as location, does not effect the total appraisal by very much.
Verytreelylew

Reply to post by Kerry, on October 14, 1998 at 21:11:00:

Kerry, one thing to keep in mind is that TF is a compounding method. It takes the basic 'per square inch' price of a small tree and then compounds it by the growth factor of the tree itself. There is no guesswork as to the right 'inflation factor' or interest rate to apply. The tree's growth rate has decided that for you.

Russ

Reply to post by lewbloch, on October 17, 1998 at 10:09:51:

Hi Lew. I'm not so sure Location alone makes little difference. Assume two 100% Species trees, same size and condition. Same high %neighborhood. Say they're both in the middle of the lawn. Owner A wants and appreciates the tree. It would get high Placement and Contribution ratings. Owner B wants to build a tennis court right where the tree is. Placement and Contribution 0%! Big difference.
Or less extreme, one tree is in center of lawn and featured and the other is at the far end of the four acre lot blocked from view by two acres of other trees.

Reply to post by Russ Carlson, on October 15, 1998 at 00:43:31:

I don't think so Russ. Compounding is an exercise in which an initial amount A is multiplied by 1.x%, the result is multiplied by 1.x% and so on for a period of years=n. Expressed as A(1.x%) to the power of n. It's an exponential exersize, a geometric series. By contrast TF multiplies $/sq.in. by (appraised sq.in - replacement sq.in.) and adds the result to replacement $. Simple or arithmetic multiplication, not compound or exponential. Trunk area may be increasing geometrically, but not necessarily at a uniform rate over the age period. In some sense the tree might be compounding its size, but the appaiser is not compounding in the TF exercise. The literature is fairly clear that the implicit tree growth rates (compounding if you will) bear little relationship to typical financial rates (tree rate is lower). Results of compounding at the respective rates will tend to diverge over time.

Reply to post by Tina Cohen, on October 03, 1998 at 20:31:08:

Tina, did you think you'd spawn such a dialogue?

Reply to post by Scott Cullen, on October 19, 1998 at 18:29:31:

My dear Scott,
You do raise a valid point, but the odds of having a 100% tree species, and 2 trees, one at 0% and one at 100% seems like a long shot. I don't remember ever giving 100% to "anybody", and 0 probably should not have an appraisal done anyway. My point was that the condition rating alone in the TF method USUALLY will not have a large impact on the final number. I stand corected!
very treely,
lew

Reply to post by Scott Cullen, on October 19, 1998 at 18:56:59:

CLARIFIED MATH RE: MY 10/19. Intention was a rate greater than 100%. Sould be expressed as A(1+x%)to the power of n.

Reply to post by lewbloch, on October 19, 1998 at 22:30:13:

Hi Lew. We mut be logged on at the same time, your response was not there a minute ago. I think your usual or normal observation is probably right. An actual example of a wide range of Location ratings, all other things being equal, is appraising trees on development sites. Nelda suggested this situation to me. If the trees are appraised at the Highest and Best Use of the site (i.e. developed) they would have high ratings and this might restrict the developer's activities in certain jurisdictions. Appraising at current use may not be appropriate if evaluating the developed use. The answer: the trees to remain and contribute to the development have high Site and appropriate Contribution ratings. Similar trees which must be removed to accomodate development Contribute 0% and so have no value. And you're right, that threshold determination would eliminate the need for further appraisal, they'd just be listed at $0.

Reply to post by Scott Cullen, on October 20, 1998 at 18:04:58:

Wrong, Scott. Rather than zero, the unwanted tree would have a negative value. the cost to remove and haul away....Maybe! I like the idea of appraising trees on a site to be developed and posting the value on each tree for all (especially the bulldozer guys) to see and ponder....Damage it? You bought it!
very treely,
Lew

Reply to post by lewbloch, on October 20, 1998 at 18:16:52:

In the case of evaluating a development whether a tee to be removed is an interesting question Lew. Assuming the developer is valuing the trees because the governing agency wants a $figure for the trees (maybe if they are very valuable development is out, or off site replacement is required -- you have that under MD Forest Conservation Act I think -- , or penalties are established) the positive $ if any may be all that matters. The developer's cost for land development is already being figured and the individual tree might not be an incremental cost. But, maybe doing a survey for the (enlightened) developer the appraiser could specify positive values and zero values and individual removal costs (or negative values) to assist the developer in planning the project and selecting house/roadway/utility positions and trees to be saved or removed.

As to penalties, I've done it more than once. Tabled values for all protected trees are part of specs and contractors are on notice: you damage it without a change order allowing you to anf you pay! Onec for developer/owner; once for municipality.

Reply to post by Scott Cullen, on October 19, 1998 at 18:56:59:

We're on the same page, just reading different paragraphs, Scott. The tree is compounding its growth expontientially, but at variable rates determined by natural factors. This is why I said that the tree determines the rate. It is beyond the scope or ability of the appraiser to set that factor when using TF. I'm taking about the basic concept, not the strict application of formulae (TF or compounding). If we are to understand the philosophies of valuation and the use of the various methods, we must be clear on what the methods actually represent.

TF takes a basic dollar figure ($/sq. in.) and applies it to the growth of the tree. That growth, in square inches (or other units of measure) is determined solely by the environment of the tree, and it is geometric, based on growth rates. It often varies over time (as do own financial rates, but for different reasons). So in concept, I still hold that the TF is a form of compounding, strictly speaking.

Now, what figure should be used for the basic ($/sq. in.) price? Wholesale? Retail? Something else? I maintain that only the wholsale cost of production of the tree should be used. Costs to install a tree in the landscape are accounted for in the Replacement Cost part of the TF, and should not be applied to the greater area of the damaged tree.

Russ

Reply to post by Russ Carlson, on October 19, 1998 at 23:07:41:

The key to the entire tree appraisal topic is what you've just said: We must understand the concept of value and the reasoning of each method, what each is intended to represent. Well said Russ.

Using trunk area in sq.in. or canopy volume or shade area any increase in size can be expressed geometrically. If height or branch spread were used any increase would be arithmetic. In TF we are using the area of the appraised tree as it differs from the replacement tree. While a geometric relationship exists and we could "back into" it and create a compounding formula, we don't. We use the absolute difference.

I understand TF to hqave been developed to extrapolate or extend today's replacement cost for a replaceable size to the practically non-replaceaable appraised tree. We calculate a unit cost and apply it to the absolute difference. Growth rate (absolute difference/time) is not considered. We don't care if it took 50 years or 100 years. If we were compounding we would be very concerned about the time factor, it's the essence of a compounding or Future Value exercise. So, while geometric growth was involved in the appraised tree's history and will be involved in the replacement tree's future, it is not an explicit part of our analysis. We are arithmetically hypothesizing a replacement cost for a non-replaceable tree.

With that understanding, I would suggest that the unit cost that is calculated should be applied to the entire absolute difference (until the upper end of the range when Adjusted Trunk Area kicks in). The exercise is intended to represent the replaqcement cost of the appraised tree which = replacement+absolute difference in size. The cost selected should represent the cost that would be incurred by the tree owner. A homeowner does not have the skill or equipment to transport and plant a tree even if he/she knows where to purchase one; installed cost applies. A large landowner with onsite crews, maybe even an onsite nursery would incur a lesser cost, maybe wholesale + some crew time at cost. Damage to B&B inventory in a garden center would be at B&B wholesale, maybe + some administrative costs or lost business opportunity.

TF is best understood as a Depreciated Replacement Cost approach to value. Cost approaches are representative of production rather than exchange. Production in this sense means building something new: buying components, transporting to site & assembling into finished product (as in building a house rather than buying existing). The large tree fits this model. More than wholesale purchase is required: it must be transported, planted and cared for all requiring equipment and expertise, and the inherent over4head and profit. The underlying assumption is that replacement cost = value because it restores benefits inherent in the appraised object. Depreciation is applied to adjust for any overstatement or representation of benefits in the new idealized replacement as compared to the original appraised tree. All this is done as of the date of appraised value. There is no computation for the passage of time as there would be in Compounded Cost of Replacement or Cost of Cure with compounding.

I think we agree that the aim of both TF and CCR or CofC is to estimate value for a larger than replaceable tree. I think it is confusing to characterize TF as a "compounding" method because of growth processes which are only implicitly considered.

Whew! Should we start a new thread Russ?

Reply to post by Scott Cullen, on October 21, 1998 at 20:30:39:

>> Should we start a new thread?

Nah, this is just getting fun!

As you indicated at the end of your post, the inflation in TF is IMplicit. It is an inherent part of the growth of the tree. I consider it a compounding method only in theory. A 20 inch tree (all other factors being equal) will have the same value whether it is 50 years old or 100 years. My point is that the rate of inflation (growth) is higher for the younger tree. We DO NOT have to be concerned with either the growth rate or the age, though, since that is the impmlicit part of the equation. We need only determine the XC area.

CCR and TF are realy quite similar, in that they take the original cost of a replacement plant and extrapolate it over time. TF uses the size of the tree, which (implicitly) includes age and growth rate. Compounded Cost of Replacement requires us to apply those factors. In both cases, we need to determine whether installation costs and service should be included.

Here's an exercise I ran through:
A 20 inch tree, 50 years old. Taken as 100% condition, 100% location, 100% species (for simplicity). Basic price is $22/sq. in. (wholesale cost). $250 wholesale cost for replacement (4"), 3x markup. TF value is $7328.04. Compounded Cost of $250 over 50 years needs a rate of 4.680 to yield the same value. $750 compounded for 50 years needs only 2.405% to give same results. The point is that by using installation costs instead of wholesale costs, the values tend to be greatly inflated, and very quickly become unrealistic. The growth of our money (interest rates) is not the same as the growth rates of the trees. We just need to decide which is more appropriate to a given case.

Reply to post by Russ Carlson, on October 21, 1998 at 21:13:29:

Russ. we need to be careful in the use of terms. Common, interchangeable meanings get confusing and in fact become meaningless in technical analyses like this. INFLATION may commonly mean growth or an increase in size (like what happes to a balloon) but in this context should be limited to "an erosion of the purchasing power of money." (Appraisal Institute, 1993. Dictionary of Real Estate Appraisal, p.181; McGraw Hill Encyclopedia of Economics, pp. 530-543; The Fortune Encyclopedia of Economics, pp 211-216; The Fitzroy Dearborn Encyclopedia of Banking and Finance) Inflation can be expressed as an annual percentage rate or as a current price in relation to an earlier base, e.g. Consumer Price Index. Annual % changes in CPI approximate inflation. (Dictionary of Real Estate Appraisal, p. 63; Handbook of US Labor Statistics, pp.237-255; Scott Derks, 1994, The Value of a Dollar 1860-1989; John Case, 1981, Understanding Inflation).

Compounding is a mathematical exercise that is employed when calculating the effects of inflation over time, but expressing inflation is not as you suggest in your 4/10 Compounded Cost Musings why we employ compounding in CCR.

Yes, CCR and TF are similar in that they start with cost of a replacement plant. TF extrapolates that cost over units of size to hypothesize the replacement cost of a non-replaceable plant for which, by definition, we do not have actual replacement cost data (if we did we'd use them rather than the formula). CCR, by contrast, does NOT attempt to estimate replacement cost for the larger plant. In researching sources back to 1901 I've found no suggestion that it is intended to. I have found several references calling it Invesment Value or Capital Gain. The language of the 8th Edition supports this. The appraiser is to select an interest rate which the tree owner might have earned on an alternative investment of the replacement cost. The result is the amount of money that the owner would have accumulated (assuming reinvestment of all interest, in effect a zero coupon bond) at the end of the specified period. It is really an (alternative) income approach to value, not a replacement cost approach to value. It happens to use original replacement cost as an available datum.

Note that the rate on an alternative investment is a NOMINAL INTEREST RATE, i.e. "the price of money." (Too many sources to mention, check any forest economics, accounting, finance or economics textbook; or Julien's DicNatResMgmt p.178) It is not an INFLATION RATE. Expected inflation is a component of the nominal interest rate: inflation rate
An enitrely separate line of inquiry is whether this accumulated value (Future Value - FV - of the investment) is a reasonable or reliable indication of value of the appraised tree. The literature gives no real theoretical support and my research thus far suggests it does NOT, at least at high interest rates or over more than brief compounding periods.

As to your exercise it's clear that a 3x markup will result in a higher replacement cost. If it represents what the owner would have to pay, then it should be higher. If the rating factors are not all 100% (i.e. depreciation is required) then the adjustments will need to be greater than if wholesale was used to reach the same appraised value. They key is that the cost estimated should represent what the owner would need to pay to replace the lost benefits. Remember that TF is a depreciated replacement cost approach to value.

Just as clearly, using the 3x figure as the initial amount in CCR the result will compound to an unrealistic number more quickly. The problem is we do not know from other sources what the realistic level is. If we use TF result and manipulate the INTEREST RATE and growth period to match it, then it's a self serving exercise which does not really describe anything. Just by starting with a lower number and coming up with a result which seems more reasonable does not make it more representative of anything. That's why I'm unconvinced that CCR is meaningful for anything but the limited time periods discussed in 8th edition (in which case it might still be a cost approach, with short term interest being characterized as "production soft costs"). I will be compiling my research on this and the weight of evidence from many varied sources is that it's unsupported.

Among the arguments: compounding today's replacement cost yields future value FV of the replacement that is, n years in the future. We are asked to believe that it = present value PV of the appraised tree which requires a shift of the time scale. To not shift the time scale we would need to compound replacement cost n years in the past to today. In that case FV of the initial would be PV because today is the present. Either way the result only=value if it represents the PV of the remaining future benefits in the appraised tree.