Scott,

Putting aside the metaphysical and philosophical problems for now, I am still not sure your textbook definition of value is sufficient.

"The Present Worth of Future Benefits"?

Dilemma 1 - What the heck is "worth"? Isn't worth just a synonym for value. And if it is, doesn't that make your definition circular recursive?

Dilemma 2 - What is the temporal frame that constitutes the future? Could it be an infinite division of a nanosecond such that, for all practical purposes, it constitutes the present? Then the definition would be "the present worth of present benefits". Which is the same as saying just "worth". Which brings us back to just "value" if "worth" is nothing more than a synonym.

Sorry to throw in a wrench but sometimes the neurons are firing full steam.

I agree with both Lew and Scott - the practicality of an idea and its impact on daily life is what counts but it must have a valid logical and theoretical basis. Too much crap has occurred and continues to occur in both arboriculture and human history in general because people refuse to move out of their comfort zones and examine the primary assumptions.

Reply to post by Kevin-h, on December 02, 1998 at 16:01:01:

Definitions again, Kevin. Let's define value, as we have used it here, to mean a monetary equivalent based on our anthropocentric point of view. Worth in this context (my opinion here) is more of a degree of desireableness, based on the benefits expected.

Here we can begin to creae the division between "value", the money, and "worth", with all the associated benefits (defined further as to whom or to what the benefits derive).

The temporal frame is defined by the assignment, and may become one of the assumptions made in the course of the appraisal process. Indeed, we often assign the value as of the date of inspection. It asumes that the benefits would have continued to accrue, absent the damage.

These are issues only if you wish to push the arguement to the absurd.

Reply to post by Kevin-h, on December 02, 1998 at 16:01:01:

Kevin, it's not 'my' textbook definition. It's the textbooks'. It's accepted by the appraisal industry and the courts. I accept your sincere belief that the industry and the courts are in error. But it is the defintion which seems to apply to appraisers today when they estimate monetary value. If you have a more meaningful definition which is applicable, share it with us.

Given that, I'm not going to get into your dilemma 1. The textbooks use worth to define value and don't consider it circular. Maybe it is something like 'desireableness' or willingness to pay or accept as an equivalent as Russ suggests. In any case if the industry and the courts accept it for now, so do I.

RE: dilemma 2: As Russ suggests, the future may be defined by the assignment, e.g. 'What is one year's climate modification worth?' Or it may be defined by the life of the appraised object (not the 'useful economic life' you're going to whine about, but the full, actual, physical life). E.g. What is the worth of a battery with a life of (x)kwh or energy? Or it might just be the useful economic life. Or it might be the financially material life. You can estimate the present value of a perpetuity by considering only the time period after which additional payments do not add to that present value at a given discount rate.

If any such factor limits the future to a point in time which you might call the present then as you suggest 'the presemt worth of present benefits' would arithmetically equal 'the present worth of future benefits' but they would not become identities.

No dilemma. It's a non-issue.

I think the real dilemma for your neurons is that they want to impose your philosophical concerns for society's beliefs about imperative values on much the more mundane descriptive values that appraisers deal with. These descriptive, appraisal values are anthropocentric by definition. No argument, no apology, no dilemma.

If by examining basic assumptions you mean that human endeavor should somehow become non-anthropocentric, then it's way beyond me.

Reply to post by Scott Cullen, on December 02, 1998 at 16:01:01:

Scott: There has been much discussion of value recently. Some has made sense to me and much as simply confused me. I have wondered just how is this going to help me perform an appraisal.
I spoke with a judge here in Seattle today and asked her opinion of what is value: 'what a willing buyer will pay to a willing seller.' No mention of value, worth, benefits.
That the courts accept the definition of current worth for future benefits as the meaning of value does not discount the reality that most courts act in terms of damages, and the monies necessary to cure the damages. Other judges I have interacted with (on the witness stand) want to know: what was the damage and what will it take to fix it. None have ever queried as to value.
I do not wish to push off VALUE and the understanding of its meaning in appraisal work, but who is the audience and what do they want. The answer to an appraisal may not be value, but the cost to replace or restore what was damaged.

Reply to post by Favero Greenforest, on December 02, 1998 at 22:32:10:

Very important points Favero. Value and Damages are not the same thing. They may, in certain circumstances, be equalities but they are not identities. See my post 11/20 (310) in 'FVvsNV.' I think we got into it somewhere else, but i can't relocate it.

As tree appraisers we have muddied up the difference and I think it's important recognize the difference.

Appraisal is by (textbook, let's accept it for the moment) definition concerned with estimating VALUE, what something is worth. That may be indicated by what a willing seller will accept and a willing buyer will pay. That is 'value in exchange.' It may be indicated by replacement cost (which may be made up of many willingness to pay/accept exercises: the nurseryman for the tree, the trucker to move it, the excavator to dig the hole, Russ to plant it, Lew to water it, etc.) Replacement cost may be less than market or exchange value or it might be more (remember the whole discussion about 'must it be reasonable?') It may be indicated by an explicit consideration of the benefits. 'I would have gotten $10 a day in extra business because of that tree over the 10 remaining years of my lease. I want the present value of that, I don't care what the market value or replacement cost are!' These are different APPROACHES TO VALUE, and if there is ever aggreement on value we might get into that more deeply.

Tree appraisers are often asked to estimate DAMAGES in lieu of or in addition to estimating value. The distinction may not be clear to appraiser, client or court but it should be. An example: Your brand new $20K car is stolen and completely wrecked. In the process of stealing it your lawn was destroyed, a fender was smashed on your other car, a gate post was knocked down and the lawn sprinkler was run over. You lost 3 days billable income dealing with all this and had to pay the appraiser.

The court orders the convicted thief to make resitution.

The Value of the car is $20K. All the other things are additional Damages. Additional Damages + car Value = Total Damages, say $30K. All those other items might have a 'value' estimated by specific apprasiers or they might just be repair cost estimates, but the Value of the car remains $20K not the total $30K.

Different courts (judges, statutes, regs, whatever) allow different definitions of value, different approaches to value and different measures of damage(s).

So, the appraiser must have an understanding of A) the most basic definition of value (current worth of future benefits), B)the more specific definitions of value (e.g. value in exchange, value in use, etc., C) the ways to approach and indicate value and D)the difference between value and damage, in order to be able to properly be able to undertake a particular assignment with particular constraints, definitions and facts.

An appraiser who focuses only on replacement cost will ignore market value. An appraiser who focuses only on market value may ignore what it really requires to restore lost benefits.

It all comes back to defining the assignment and having the range of skills to handle the range of defined assignments. Applying a standard definition and standard methodology to all assignments doesn't cut it. As you said "but who is the audience and what do they want."

Scott

Reply to post by Scott Cullen, on December 02, 1998 at 16:01:01:

Scott,
Who said anything about anthropocentrism? I specifically stated that I was putting aside that issue at the beginning of the last post.

The questions I had posed in my last post where framed within an anthropocentric paradigm. In my opinion, value must include present and future benefits. It also must be clearly defined as to the scope of beneficiaries and the framework within which the preference ranking is conducted. Value is ultimately a preference ranking and is inversely proportional to abundance levels. The term "worth" is useless in the definition, as it is synonymous with "value". Whether the courts accept it or not is irrelevant to the accuracy of the definition.

You originally posted an open-ended question, "What is Value?" with what I assumed to be the goal of generating creative debate and discussion. Now you have chosen to dogmatically defer to the legally accepted definition within the real estate appraisal field. Case closed, fade to black, "god said it, I believe it, that settles it". Perhaps it would have been more efficient to just post the textbook definition from the start and forgo debate if the conclusion was preordained.

Your last post was starting to degenerate into an ad hominem attack. Next time don't stay up too late and don't take honest open disagreement so seriously.

Reply to post by Russ Carlson, on December 02, 1998 at 16:01:01:

Russ,

Thanks for attempting to define "worth". I think you understand the limitations of the "present worth of future benefits" definition. The temporal frame problem was not intended to be absurd but instead to highlight that the definition fails to recognise the value of "present" benefits. I apologise for pushing beyond the confines of traditional thought on your site, but heh, a little cerebral expansion never hurt anyone (unless of course you cross the Church, State, or ruling Oligarchy).

Reply to post by Kevin-H, on December 02, 1998 at 16:44:12:

Kevin this is a combined response to your 12/3 posts to Russ and to me.

Maybe there's only a semantic difference here not a substantive one. I don't understand "the limitations of the 'present worth of future benefits' definition" or how it "fails to recognise the value of 'present' benefits."

Something (an object, a system, an idea, whatever) has worth/value to individuals or society because of the benefits that are anticipated (the benefits that were already experienced are gone, the worth/value they created is gone). I understand future benefits, in this context, to include all those that have not already been experienced, from the date (or moment or instant) of appraisal forward to the extent defined by the appraisal problem. That would include the benefits being experienced in something called the 'present.'

If the appraisal problem requires a consideration of only present benefits then the defined future period will be very small (an instant, a moment, a day, a year, whatever the model calls for). But it will still have a duration. It may present something of a paradox to say that the present has a duration, but if that is not allowed then it is so fleeting as to be unexperienceable and there can't be any benefits. Material (in the sense the accountants use it) benefits are the key.

If you understand some other difference, please explain.

Scott

Reply to post by Scott Cullen, on December 03, 1998 at 09:57:22:

Interesting how this aspect of the discussion has come full circle. We seem to be back to the point posed by Julian- that benefits may be considered that are beyond monetary value. This is what is comprised as "worth" in the broad sense. Worth being the sum of perceived benefits, and value being the monetary (estimated or assigned) equivalent.

Reply to post by Favero Greenforest, on December 02, 1998 at 22:32:10:

Excellent, Favereo! >>> but
who is the audience and what do they want. The answer to an appraisal may not be value, but the cost to replace or restore what was damaged.<<<

This is what we talked about at the Academy so much. Define the assignment first, and thoroughly. If you don't understand the assignment, you can't provide the correct solution. What are the courts actually seeking? They usually want to know what it will cost to restore the damage, to make whole the injured party. If you focus on the assignment, you will know how to proceed.

Reply to post by Russ Carlson, on December 03, 1998 at 02:33:51:

Russ
What if the assignment falls outside the limits of due care. If the court is seeking a solution which is contrary to our industry standard, The Guide, what is the best course:
1) tell the court what they really want based on based on industry standards,
2) give the court what it seeks, or
3) decline for ethical reasons.

Reply to post by Favero, on December 03, 1998 at 19:43:26:

Tough question. Option 3, refuse the job, is always an option. Who is your client, and what are your obligations to the client? If you are sitting next to the judge, you are probably working with or for an attorney. So technically, the court is not your client, although you have submit to the court's demands. If you are working with a sharp attorney, he/she will help you figure out what you need to prepare, and how to address the situation. Some will be willing to try to educate the court, others will not.

Saying that "this is the way we all do it" is not good enough. Just because our industry considers the Guide the main source of methods, that does not mean it is recognized as such by the courts, and does not mean these methods will be accepted in all cases. That is why this discussion is so important- we all need to understand the basis for what we are doing, the better to defend it.

When the court refuses a measure of value and imposes a particular method (board-foot value, cordwood, etc.) you either go along or try to defend why that method is not appropriate. Again, follow counsel's advice on this. You might present both sets of figures, and explain why one is better.

Reply to post by Favero, on December 03, 1998 at 19:43:26:

Favero,

The 8th Edition may sometimes be regarded as THE standard, but it is not. The Guide itself as well industry literature are clear: The Guide is only a guide.

ASCA SPP 4.1(C) is also clear: "Members shall base conclusions, opinions and recommendations on Adequate and Appropriate [as defined] methodologyy (analyses, investigations, tests and other procedures). This sub-section should not be construed to require the use of any particular or proprietary methodology. Members rely on their Professional [as defined] judgment in slecting Adequate and Appropriate methodology."

Due Care would preclude you from forcing a square peg assignment into a round hole Guide. It would not preclude you from using other Adequate and Appropriate methodology, as long as it is within your range of Competence. (My opinion).

Scott

Reply to post by Russ Carlson, on December 03, 1998 at 11:16:35:

I'm not sure of that Russ. You could assign 'worth' a defintion of the sum of perceived benefits and 'value' a definition of monetary benefits, but I'm not sure that's what is intended in the definition I've offered.

(I'm still researching Kevin's question about worth).

I think 'worth' as it is intended here means the monetary value or equivilant of the benefits as perceived. There may be physically measurable functions which are physically perceived but not ascribed any monetary value, so they create no worth. They may even be perceived as beneficial functions but have no monetary worth. "That warm sunshine feels good, it's nice we don't have to pay for it." (Ignoring that Feb. trip to the islands for the moment.)

Semantics aside it is true that the range of physically measureable functions may not all have monetary value.

Reply to post by Scott Cullen, on December 03, 1998 at 19:27:57:

I'll agree with that explanation- it follows what I was trying to point out: >>"...means the monetary value or equivilant of the benefits as perceived. ...... They may even be perceived as beneficial functions but have no monetary worth." << "Worth" can be seen the sum of the values, then, not just the monetary.

Reply to post by Russ Carlson, on December 05, 1998 at 07:14:48:

I'm still not sure Russ. I think your equating beneficial functions and worth and I think I'm distinguishing them.

In common usage, the things we like and enjoy (like sunshine or trees or houses or food or whatever) are things that we value and they have worth. In our specific appraisal usage I think of worth and value as limited to the monetary equivilant we ascribe to some of those things.

In a recent post to Julian I think I suggested that we describe the physical functions or roles, the things we can observe and measure, as just that: physical characteristics. We might even ascribe importance to them: "The function of these decay fungi is important in recycling nutrients in the forest ecosystem," or whatever. As appraisers we look to different facts to determine if objects or systems also have monetary worth or value and it seems less confusing to me if we reserve the words 'worth' and 'value' for the monetary stuff.

Scott