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II. Tree Value Conversion Standards for Hardwood Sawtimber

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II. Tree Value Conversion Standards for Hardwood Sawtimber II. Tree Value Conversion Standards for Hardwood Sawtimber by Joseph J. Mendel Paul S. DeBald and Martin E. Dale USDA FOREST SERVICE RESEARCH PAPER HE-337 FOREST SERVICE, U. S. DEPARTMENT OF AGRICULTURE NORTH EASTERN FOREST EXPERIMENT STATION 6816 MARKET STREET, UPPER DARBY, PA. 19082 F. BRYAN CLARK, STATkON DIRECTOR HIS fS OSE of a series of papers designed to help the forester T estimate the value of timber stands. We call these papers SETS- Stand E'r7altlation Tc)oI\. The first three papmi are being p~~b'iished concrirrentty, They are: SETS 1, AX I\DI\'IGY41,-TREE 4PPROATII TO X14RIYC STAVD EtrALV- ATTONS (CSD-4 Forest- Sert ice Research Paper NE-3361. which describes a metl~odfor rrsirlg indivicirral tree values to make stand evalrrations. SETS IT. TREEVALUE COW ERSIOV STAYDARDS FOR I-IARD'~\~OODSAW- TIX.IRER (VSDil. Forest Service Research Paper XE-337),which provides values for individual \awtimber trees. SETS 111, CO%~POSITE\OLT_'ZfE AYD \, ZLCE TjRLES FOR IIARDXXvr;OOD PULP\TrOOD I 'C'SDA Forest Ser'r~iceResearch Paper YE-3381, which pro- vides values for irrdit7idual grotving-stock trees. The Authors JOSEPH J. JIENDEL, principal economist, received his bachelor of science degree in forestry from the University of hlichigan in 1941, and his master's degree and Ph.D. in agricultural economics from Ohio State 'Ciniversity in 1963 and 1965 respectively. He also studied at the Uni- versity of Iliisconsin and the U~iiversity of Cincinnati. He joined the Yorthcastern Forest Experiment Station in 1946, worki~~gon forest surveys, and in 1952 transferred to the IVashington OEee of the Forest Service as a photo-interpretation specialist in the Division of Forest Eco- nomics. After 6 years in Tvt'asllington he accepted a positiot~as research forester with the Central States Forest Experiment Station at Columbus, Ohio, and in 1966 transferred to the Northeastern Station, where he is now serving as a specialist in forest ecoriomics, PACL S. DeUALD is a research forester with the Sortheastern Forest Experiment Station's economics project in Delaware, Ohio. A grtiduzite of the Pennsylvania State t'rii.versity, he began his Forest Sert7ice career in 1959. Before taking his presexit assignment, he served on the forcst survey stalls of the Lake States and Centr,zl States Stations. At preserlt he is specializing in forest tree and stand evaluations, LIARTIN E. DALE joined the Forest Service in 1957 and specialized in forest n~anagementand silviculture research at Berea, Kentucky. In 1943, he received a Ph.D. degree in forest biometry from Iowa State t-nii~ersity, and sirtee 1970 has been assigned to the Xortheastern Forest Experinlent Station's reseirrch unit on timber measurement and marlagernent plallning at Delaware, Ohio. Currently, be is specializing in studies of growth and )vield of marlaged upland oak. MAXUSCRIPTRECEIVED FOR PUBLICATION 20 FEBRUARY1975 SETS: Stand Evaluation Tools II. Tree Value Conversion Standards for Hardwood Sawtimber Contents INTRODUCTION ......................................... 1 TREE VALUE CONVERSION STANDARDS .................. 1 What they are ......................................... 1 How they were calculated ............................... 1 How TVCS's differ from stumpage values ................... 3 Adapting TVCS to local conditions ........................ 3 How to use TVCS ..................................... 4 SUMMARY ............................................... 4 REFERENCES ................................... ........ 5 APPENDIX A ............................................. 6 Regression coeficien ts .................................. 6 Tree quality index values and tree value conversion standards .................................. 7 Conversion costs ........................................55 Composite board foot volume table ........................56 APPENDIX B ............................................. 51 Computer program and documentation .................... 57 FOREWORD In the past it has been customary to base estimates of probable profits from the management of lands for the future production of timber in the United States u on the increase of the timber in quantiv. Everyone familiar with the Pumber business knows, however, that the lumber which comes out of large trees is worth more per thousand feet than that which comes from small trees, because the large trees turn out a higher proportion of the choice grades. It is apparent that estimates of profits through careful forest management should take into account this factor of quality increase; but, in the absence of an accurate determina- tion of what this quality increase is, it has hitherto been impossible to do more than state in general terns the fact that such an increase wollld take place and that its effect would be to make the profit from deferred operations greater than that actually shown by the figures indicating the future yield to be ex ected. -~dwarB~.Braniff in the 1904 Yearbook of Agriculture ABSTRACT Tree quatity index tables are presented for 12 important hardwood species of the oak-hickory forest. From these, tree value conversion standards are developed for each species, log grade, merchantable height, and diameter at breast height. The method of calculating tree value con- version standards and adapting them to different conditions is explained. A computer program for calculating tree values for different lumber values and conversion costs is included, Figure t. -- Calculafion of free value conversion sfandards LUMBER-GRADE-RECOVERY TABLE; PRICE REPORTS FOR A 5-YEAR PERIOD PRICE RELATIVES SAMPLE-TREE DATA: REGRESSION D.B.H., MERCHANTABLE LENGTH, LOG GRADES; B1 (D.B.H.) + TREE-TAPER TABLE B2 (MERCH. LENGTH) TREE QUALITY INDEX BASE PRICE 4/4 NO. IC LUMBER/M MULTIPLY GROSS LUMBER VALUE/M CONVERSION COSTS CURVED BY D.B.H. ) SUBTRACT TREE VOLUME/ 1,000 ] MULTIPLY TREE VALUE CONVERSION STANDARDS INTRODUCTION conversion standards included in this publi- cation. We also define the circumstances in N RECENT YEARS the USDA Forest which those standards fit. I Service has published a series of papers In general, the inputs were regional, and that deal with the rates of value increase for the resulting standards may be applied re- most of the important hardwood species (see gionally. But local differences may occur References). An important part of these com- within a region, and changes may take place putations is a system for generating indi- throughout a region over a period of time. vidual values for sawtimber trees. The system Thus you may want to develop local value and the values both have a lot of potential standards of your own or adjust our regional uses for evaluating timber stands and their ones. development. And so, in this paper we: a) describe fully the value system, b) present How They Were Calculated a set of samtimber tree values, c) show how We used the quality index (Q.I.) approach the values can be applied, and d) describe a to calculating tree value conversion standards computer program for generating tree vol- (He?*riefc1956). This approach was a series umes and tree value conversion standards. of index values to calculate the net value of In doing so, our aim is to provide researchers the 4/4 lumber that can be sawed from the and practitioners with a means for making tree's logs. The process is shown in figure 1. rigorous timber evaluations. We developed Q.I.'s for individual logs, by To further that aim, we are publishing species, log grade, and log diameter, using concurrently two other papers - COMPOSITE the formula : VOLUME AND VALUE TABLES FOR HARDWOOD Log Q.I.=( rjc FAS x P.R.p,zs) + PULPWOOD and AN INDIVIDUAL-TREE APPROACH ( % SELx P.R.sE1,) TO MAKING STAND EVALUATIONS. These three + (rjt #lCxP.R.$lc) + . papers combined make a useful set of work- + (Cjo #3BxP.It.lf'3U). ing tools. The percentages are the proportion of a TREE VALUE log's lumber that would meet the specifica- tions for each lumber grade. We obtained CONVERSION STANDARDS. this information by hand-curving data from HARDWOODLUMBER GRADES FOR STANDARD What They Are LUMBER (Vazcghn et at. 1966). Tree value conversion standards (TVCS) The P.R.'s are price relatives or price in- are a measure of a tree's worth in dollars, dexes that express the price of each lumber based on the quantity and quality of its ex- grade as a proportion of that of No. 1 Corn- pected yield of 4 '4 (1-inch) lumber. They mon (table 1) . The price relatives given here are standards, not in the sense that they are are based on the average prices of 4/4 plain- fixed and absolute values, but in the sense sawed No. 1 Comnlon lumber of each species that they are criteria for gaging tree value over the 5-year period 1964 through 1968, within a given frame~vorkof circumstances. f.0.b. mills in the Johnson City, Tennessee In the following section we describe the area, as reported in HARDWOODMARKET RE- system that we used to generate the tree value PORT (Lemskg 2964-68). Table I. - Lumber Price relafives Lumber Grade 2C Species FAS SEL SAPS IC 2.4. 2B 3A 3B iq'hite ash Beech BIack cherry Elm Hickory Red maple Sugar maple Black oak& Chestnut oaks Red oak White oak Yellow-poplar Prices for chestnut oak and black oak were not available. Because lumber of these species is intermixed with white oak and red oak respectively, prices of the latter species were used to calculate the price relatives. We developed tree &.I.%for a sample of relative stability in the economy. Prices since trees, using the formula : that time have been distorted by inflation and recession. Tree &.I.= ( $L of tree volume in 1st log We then converted gross tree values per x Q-Io~st log) thousand to net tree values per thousand by ( 70 of tree volume in 2nd log x Q.I.and log) + subtracting conversion cost - the cost of Cjc +. + ( of tree volume in nth log x converting standing timber into 4/4 lumber. Q.I.rtth log) It includes the costs of labor and materials The percentage of tree volume in each log used in felling and bucking the trees, skid- is based on a tree volume table, which pro- ding and loading, other logging costs, trans- vides the volume of each log in a tree of given portation, and milling.
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