4.3 The Economic Impact of the Green Industry
4.4 Economic Benefits of Landscape Plants
4.5 The Economic Impact of Horticultural Crops in Food Systems
4_The-Economic-Benefits-of-Horticulture
The Economic Benefits of Horticulture
Overview
Title image: "Buying Plants" by tbridge is marked with CC BY-NC 2.0.
Did you have an idea for improving this content? We’d love your input.
Introduction
Lesson Objectives
Quantify the economic importance of plants in managed ecosystems and the impact of horticultural crops in food systems.
Give examples of how growing plants benefits people at the home-owner scale.
Explain the economic impact of the larger green industry from an economical and environmental context .
Key Terms
social value - the relative importance that people place on the changes they experience in their lives; some, but not all of this value is captured in market prices
economic value - a measure of the benefit provided by a good or service to an economic agent and is generally measured relative to units of currency
property value - the fair market value of a given area of real estate, though the actual price of the property may be higher or lower
production horticulture - the cultivation of horticultural crops, including nursery plants and fruit and vegetable crops
Introduction
You may be familiar with the phrase “money makes the world go round.” Indeed, modern society relies on the exchange of currency for goods and services, and many decisions are based, at least in part, on financial considerations and economic values. The same is true in horticulture. While it is difficult to assign a dollar value to the many ecosystem benefits we derive from plants, there are ways to quantify various economic impacts of the green industry, landscape plants, and horticultural crops grown for food production.
What is the “Green Industry”?
Excerpt used with permission from “Economic Contributions of the Green Industry in the United States, 2007” by J. Knight & D.L. Ingram, Southern Association of Agricultural Experiment Station Directors. Copyright © SAAESD.
Structure of the Green Industry
The U.S. environmental horticulture industry, also known as the Green Industry, is comprised of wholesale nursery, greenhouse, and turfgrass sod growers; landscape service firms such as architects, designers/builders, contractors, and maintenance firms; retail firms such as garden centers, home centers and mass merchandisers with lawn and garden departments, and marketing intermediaries such as brokers and horticultural distribution centers (re- wholesalers). There is also a substantial allied trade industry that supplies various production inputs to the industry. The structure of the Green industry is illustrated in Figure 9.4.1.
Input Suppliers, often referred to as allied trade firms, are businesses that provide various inputs for ornamental plant production, landscape services, and retail sales. These inputs commonly include agrichemicals, fertilizers, containers, packaging, farm machinery, tools and equipment, propagative materials, and consulting or financial services. The commodities originate from extractive and manufacturing industries such as mining, petroleum, and forestry.
Plant Producers are firms engaged in producing Green Industry products include growers of floriculture crops, nursery crops, and turfgrass sod. Floriculture crops are generally herbaceous plants including bedding plants, potted flowering plants, foliage plants, cut cultivated greens, and cut flowers. Bedding and garden plants consist of young flowering plants (annuals and perennials) and vegetable plants grown in flats, trays, pots, or hanging baskets, usually inside a controlled greenhouse environment, and sold largely for gardens and landscaping. Potted flowering plants are usually sold in pots for indoor use. The major potted flowering plants are poinsettias, orchids, florist chrysanthemums, and finished florist azaleas. Foliage plants are also sold in pots and hanging baskets for indoor and patio use, including larger specimens for office, hotel, and restaurant interiors. Cut flowers are usually sold in bunches or as bouquets with cut foliage. The most popular cut flowers are roses, carnations, gladioli, and chrysanthemums. Leatherleaf ferns are the leading cut foliage. Combining cut flowers and cut greens in bouquets or other flower arrangements is a value-added retail option.
The main market outlets for floriculture crops are florists, garden centers, mass merchandisers, supermarkets, chain stores, discount stores, home improvement centers, hardware stores, landscape contractors, and re-wholesalers. Other retail outlets are farmers markets, flea markets, and street vendors. Since cut flowers are perishable and live floral crops are sensitive to variations in temperature, they usually require cool transportation and storage conditions to preserve and prolong their quality before final sale. The demand for floral crops, especially cut flowers, is highly seasonal. Sales are normally highest from February through May and in the fall. Sales of cut flowers peak during holidays such as Valentine’s Day and Mother’s Day. Poinsettia plants are sold mostly from Thanksgiving to Christmas. Cut flowers and foliage plants, however, are increasingly popular throughout the year as indoor decorations for the home and workplace.
Nursery crops are woody or perennial plants usually grown in containers or in-ground, including ornamental trees and shrubs, fruit and nut trees (for noncommercial use), vines, and ground covers primarily used for landscaping. Trees and shrubs are classified as deciduous or evergreen. Deciduous includes shade, flowering, ornamental, fruit, and nut trees and shrubs, while evergreens include broadleaf and coniferous trees and Christmas trees. The location of nursery production is determined largely by soil, climate, availability of water, accessibility and distance to markets, and cost of land. Each plant species has a hardiness zone that sets the northern geographic latitude for in-ground growth. Trees and shrubs start out as “liners”, undeveloped, but rooted, trees and plants in pots or trays. As seedlings, they are typically protected from intense sunlight or severe weather by shade or temporary cover before transplantation into larger containers or the field for further growth. Sales can occur at any stage depending on the plants’ commercial purpose. Since nursery crops are usually grown in the field or in containers often without covered protection, the choice of crops is based on an area’s natural vegetative species or the crop’s ability to tolerate local climatic conditions. Thus, sales of most nursery crops, except Christmas trees, are more local or regional than floriculture crops, which are less costly to ship to farther markets. Markets for nursery crops include homeowners, developers, public utilities, golf courses, resorts, commercial parks, malls, and government agencies in charge of public parks, and street and highway vegetation. Demand for nursery crops (except Christmas trees) tends to coincide with normal planting seasons in the spring and fall.
Sod farms are specialized nurseries that produce turfgrass varieties that are hardy for their particular region. Once sod leaves the nursery/farm, it usually passes through one or more marketing channels and is eventually used for new residential or commercial developments, for re-landscaping existing developments, for sports turf facilities such as athletic fields and golf courses, or for businesses, schools and roadside uses. Although the customer generally decides the type of sod to purchase, the installer also plays an important role. Both the landscape contractor and sod installer often make the decision from whom to buy and may recommend to the property owner the type of sod to plant.
Wholesale Distributors are an integral part of the Green Industry supply chain. Intermediaries such as brokers and importers facilitate the transactions of domestic and international growers and retailers. Re-wholesalers, often referred to as horticultural distribution centers (HDCs) or landscape distribution centers, are also market facilitators that offer regionally specific mixes of landscape products for immediate pickup or delivery to landscape professionals and have emerged throughout the United States in a variety of forms. There are self-contained HDCs and HDCs that serve as independent profit centers within vertically-integrated grower, landscape contracting, and retail garden center operations. Landscape distribution traces its development back to the produce dealers of the 1940s and 1950s. Following World War II, a sustained building boom fueled an increasing demand for products and services that landscape professionals, retail garden centers, and other horticultural businesses attempted to fulfill. At the same time, rising land values pushed growers farther away from spreading urban and suburban areas. The resulting longer supply lines created difficulties in meeting the expanding needs of the horticulture industry, and spawned development of this new distribution network from the nursery grower to the horticultural customer. The long-distance distribution system infrastructure for plants is still being refined in many parts of the country. An efficient trucking system extends from Florida all along the East coast, featuring regular routes run by independent trucking companies. Some large producers have developed in-house, large-volume delivery systems to service big- box retailers. But cross-country shipments are still difficult because of the long time that plants are held in trucks, lack of back haul opportunities, and the excessive handling that takes place for small orders. Air transportation is being used more frequently, but only for high-value plants such as cut flowers.
Horticultural Service Firms provide landscape design (architectural), installation (construction), and maintenance services. These firms serve a variety of clientele, including residential homeowners, commercial businesses, and municipalities. Some firms in the industry offer a combination of design, installation, and maintenance services (e.g., design-build firms) to appeal to a larger clientele base, however, many businesses gear their services towards specific markets. For instance, some specialize in seeding and fertilizer application in areas along newly constructed highways and installing erosion control devices. Such work is usually contracted from state departments of transportation or from local governments.
Landscape design or architectural establishments are primarily engaged in planning and designing the development of land areas for projects, such as parks and other recreational areas, airports, highways, hospitals, schools, land subdivisions, and commercial, industrial, and residential areas. These companies apply knowledge of land use and location of structures to the site design of landscape projects. Landscape contracting or installation establishments are primarily engaged in installing trees, shrubs, plants, lawns, or gardens, and the construction of walkways, retaining walls, decks, fences, ponds, and other similar “hardscape” structures. Specialized installation services such as irrigation systems, water features, night lighting, and Christmas decorations are becoming more prevalent.
Landscape maintenance establishments provide services such as mowing, trimming, leaf or snow removal, tree removal or trimming, mulching, fertilizing, pest control treatments, and other garden or lawncare services to enhance landscape appearance and health. The prime selling points of these service firms are that they have the knowledge to diagnose problems and the equipment to apply chemicals effectively and safely, and eliminate the need for clients to store toxic chemicals on their premises. Besides offering basic services, many maintenance firms also offer customized programs such as lawn aeration, dethatching, resodding or overseeding, and integrated pest management.
Retailers are another point of contact with end consumers of horticultural products, and include independent garden centers, florists, home centers, mass merchants, and other chain stores. Garden centers are establishments primarily engaged in selling trees, shrubs, other plants, seeds, bulbs, mulches, soil conditioners, fertilizers, pesticides, garden tools, and other garden supplies to the general public. These establishments usually sell products purchased from other vendors, but may sell some plants which they grow themselves. Garden center consumer studies indicate that customer loyalty and repeat business result from a convenient store location, plant quality, customer service, and plant selection.
End Users are the final consumers of Green Industry products and services. While the vast majority of nursery products used by end users are purchased from Green Industry businesses, this is not the case for services. A significant amount of lawn and landscape services are performed by the end users themselves. However, these services are only for internal consumption, that is, end users do not maintain any landscape plants or green space other than their own. The list of end users includes airports, cemeteries, churches, commercial general business areas, golf courses, homeowners, municipalities, private recreation areas, public roadways, schools and universities, and utilities. Commercial areas are comprised of restaurants, banks, credit unions, commercial building operators, shopping centers, apartments and condominiums, mobile home sites, hotels and motels, medical and nursing care centers, retirement communities and community centers. City park districts, arboretums and zoos, city streets, and other urban public areas are maintained by municipalities. Public roadways encompass both state and county roadsides and highways.
The Economic Impact of the Green Industry
Excerpts used with permission from "Economic Contributions of the Green Industry in the United States, 2007" by A.W. Hodges, C.R. Hall & M.A. Palma, Southern Association of Agricultural Experiment Station Directors. Copyright © SAAESD.
The environmental horticulture industry, also known as the “Green Industry,” is comprised of a variety of businesses involved in the production, distribution and services associated with ornamental plants, landscape and garden supplies and equipment. Segments of the industry include wholesale nursery, greenhouse and sod growers, landscape architects, contractors and maintenance firms, marketing intermediaries such as brokers, horticultural distribution centers, and re-wholesalers, retail garden centers, home centers and mass merchandisers with lawn and garden departments, and a variety of other retail establishments selling plants and horticultural goods. In addition to these commercial sectors, many state and local governments have significant urban forestry operations for management of parks, botanic gardens, and right-of-ways that are an integral segment of community infrastructure.
Total economic contributions for the United States Green Industry in 2007, including regional economic multiplier effects, were estimated at $175.26 Billion in output (revenue), employment of 1.95 Million fulltime and part-time jobs, labor earnings of $53.16 Billion, and $107.16 Billion in value added [see Table ES-1 in “Dig Deeper”]. Total value added impacts represented 0.76 percent of U.S. Gross Domestic Product in 2007. For the Production and Manufacturing Group, including Nursery and Greenhouse Production and Lawn and Garden Equipment Manufacturing sectors, total output impacts were $52.57 Billion, employment impacts were 469 thousand jobs, earnings impacts were $13.14 Billion, and value added impacts were $32.13 Billion. For the Horticultural Services Group, Landscape Services and Landscape Architectural Services sectors, total output impacts were $92.83 Billion, employment impacts were 1.12 Million jobs, earnings impacts were $30.15 Billion, and value added impacts were $54.52 Billion. For the Wholesale and Retail Trade Group, total output impacts were $29.86 Billion, employment impacts were 358 thousand jobs, earnings impacts were $9.87 Billion, and value added impacts were $20.51 Billion. The largest individual industry sectors in terms of employment and value added impacts were Landscaping Services (1,075,343 jobs, $50.28 Billion), Nursery and Greenhouse Production (436,462 jobs, $27.14 Billion), and Building Materials and Garden Supplies Stores (190,839 jobs, $9.71 Billion). Other industry sectors with employment impacts exceeding 10,000 jobs were Miscellaneous Store Retailers (59,829 jobs), Landscape Architectural Services (48,085 jobs), Lawn and Garden Equipment Manufacturing (32,230 jobs), General Merchandise Stores (39,433 jobs), Merchant Wholesalers of Durable Goods (19,218 jobs), Merchant Wholesalers of Nondurable Goods (15,732 jobs), Food and Beverage Stores (14,074 jobs), and Non-store Retailers (12,170 jobs), as shown in Figure 9.4.2.
Employment and value added contributions by the Green Industry in 2007 are summarized by state and region and industry group in [see Table ES-2 in “Dig Deeper”]. The largest regions in terms of total employment contributions were the Pacific (358,577 jobs), Southeast (351,489 jobs) and Midwest (335,252 jobs), followed by the Appalachian region (208,391 jobs), Mountain (159,440 jobs), Southcentral (154,270 jobs) and Great Plains (30,038 jobs). The top-ten individual states in terms of employment contributions were California (257,885 jobs), Florida (188,437 jobs), Texas (82,113 jobs), North Carolina (81,770 jobs), Ohio (79,707 jobs), Pennsylvania (75,604 jobs), New Jersey (67,993 jobs), Illinois (67,382 jobs), Georgia (66,042 jobs), and Virginia (58,677 jobs) as shown in Figure 9.4.3. Generally, output and value added contributions in regions and states followed the same ordering as employment. Total value added impacts as a share of Gross State Product ranged from over 1.60 percent to less than 0.04 percent.
Between 2002 and 2007, total horticultural sales increased by 3.5 percent and total output impacts increased by 29.2 percent, or an average annual rate of 5.8 percent over the five year period. The Production and Manufacturing industry group and Horticultural Services group had substantially increased output impacts of 36.8 percent and 44.6 percent, respectively, while the Wholesale and Retail Trade group declined by 9.7 percent during this period. Value Added impacts increased by 22.2 percent, however, labor income impacts declined by 11.2 percent. Direct employment also declined by 2.7 percent but total employment impacts increased by 20.4 percent.
Economic Benefits of Landscape Plants
Excerpts used with permission from “Ecosystem Services of Landscape Plants” by J. Knight & D.L. Ingram, University of Kentucky Cooperative Extension Service. Copyright © University of Kentucky Cooperative Extension.
Cultural and Aesthetic Value
Adding plants to a landscape increases property values. Good tree cover can raise the total sale price by 6 to 9 percent (Morales, Boyce & Favretti, 1976), and the mere presence of trees may add a 3 to 5 percent premium to the sale price of a property (Anderson & Cordell, 1985). Hedges or landscaped walls raises the sales price 4 percent (Des Rosiers et al., 2002). In 2003 interviews with realtor associations advised that “spending 5% of the value of your home on the installation of a quality, low-maintenance landscape increased resale values by 15%, which translates into a 150% return on the landscape investment” (Taylor, 2003). A low-maintenance landscape is an uncrowded, simple landscape design that is not labor intensive. General characteristics include fewer grassy areas, often offset by hardscaping, mulched beds, and locally adapted, hardy perennial plant material. A recent study in Toronto found that “having 10 more trees in a city block, on average, improves health perception in ways comparable to an increase in personal income of $10,000 or being 7 years younger” (Kardan, 2015).
Energy Conservation and Microclimate Regulation
A microclimate is the climate of a small area that is different from the area around it. Microclimates can be very small, as in a protected courtyard near a building. Small areas may be warmer or colder, wetter or drier, or more or less prone to frosts. Landscape plants influence significant factors such as sun exposure and air movement in the formation of microclimates. In addition, trees evaporate substantial amounts of water through their leaves, which can significantly reduce nearby air temperatures.
Shading by plants can greatly increase human comfort in a given area. Effects of shade from a plant in a microclimate varies because the angle of the sun changes throughout the day as well as throughout the season (Figure 9.4.4). Seasonality may also influence the direction and speed of prevailing winds. For example, winds in the lower Midwest come predominately from the southwest during hot summer months and from the northwest during cold winter months.
In addition to providing shade, deciduous trees and shrubs provide a unique tool in microclimate regulation: by losing their leaves in winter—though the remaining trunk and branches block 30 to 40 percent of sunlight—sunlight will penetrate and warm the air and ground beneath (Figure 9.4.5). In the summer months, their leaves provide shade and reduce the temperature of objects and the air below the canopy (Figure 9.4.6). In contrast, evergreens will consistently provide shade (blocking 80–90% of sunlight) and function as windbreaks throughout the year, and small evergreen shrubs placed a few feet from the home provide a gap of insulating air, protecting the home from heat loss due to wind.
Because landscape plants impact the air temperature and flow around them, the placement of landscape plants in relation to climate-controlled buildings can have a profound impact on energy savings. Evergreens used for winter windbreaks reduce infiltration of cold air into buildings by up to 50 percent (Sparling, 2007). A study in 2003 showed that over a summer, suburbs with trees were, on average, 4 to 6 degrees cooler than suburbs without trees and that tree groves were 9 degrees cooler than open terrain, on average. (McPherson, 2011).
Schoolyards, typical built environments, are hot places. They are often covered by the three hottest materials found in the urban environment: asphalt pavement, steel or tar and chip roofs, and mowed turf. They tend to retain heat and act as heat islands. A case study in Waterloo, Ontario, revealed that the surface temperature of schoolyards was reduced by more than 40 degrees and air temperature was reduced by almost 20 degrees when properly placed trees shaded the surfaces and cooled the space through evapotranspiration (Moogk-Soulis, 2011). A single, properly watered tree can evaporate-transpire 40 gallons of water in a day, offsetting the heat equivalent to that produced by one hundred 100-watt lamps burning eight hours a day (Rosenfeld, 1997).
More than making the outdoor environment comfortable, regulating the microclimate around buildings can result in energy savings from climate control within those buildings (Figure 9.4.7). The Los Angeles Million Trees Initiative is expected to save more than $117 million in electricity costs over 35 years (McPherson, 2011). In 2002, it was calculated that 57.8 cents was saved per square meter of tree canopy cover in urban environments per year (Brack, 2002).
Noise Attenuation/Reduction
Screens and hedges provide noise reduction, especially in urban areas where noise is easily reverberated from hard surfaces such as pavements or buildings. Plants are more effective at absorbing high-frequency sounds, which are bothersome to human ears, than they are at absorbing low-frequency sounds (Fare & Clatterbuck, 1998). Plants can also reflect noise and direct the sound waves much like objects in a stream of water will reflect or redirect the flow of water. The nature of sound wave absorption and reflection depends upon the density, size, leaf surface area, and overall architecture of the plant. More dense plants with larger leaves reflect and absorb more noise than plants with less dense foliage.
Combinations of a mounded area covered with low-growing plants, medium-sized plants, and larger plants located close to the source of the noise can provide the most noise abatement. Any one of these elements can reduce noise in the built environment but are most effective when used in combination (Figure 9.4.8).
Continuing the example from the end of Unit 9, Lesson 3, if planted in 2015, after 20 years of age, a single, healthy red maple placed 25 feet from the southwest corner of a climate-controlled structure will save $143 dollars in winter heating costs and reduce summer cooling costs by $210 in the state of Kentucky (Figure 9.4.9).
The Economic Impact of Horticultural Crops in Food Systems
Horticulture is the study of crops that require intense and constant care, from planting through delivery to the consumer. Horticultural crops are more than plants grown for ornamental landscapes. In fact, many specialty food crops are categorized as horticultural crops. Vegetables and fruits must be handled with care to prevent bruising or damage. These crops have high water content and a short shelf life when compared to other agricultural crops like wheat and soybeans. While horticultural crops grow on only a fraction of U.S. agricultural lands, they represent nearly 40 percent of U.S. agricultural crop production. They diversify and enhance human diets and improve our living environment and personal well-being.
Vegetable and Pulse Crops
Excerpt from "Vegetables & Pulses" by the USDA Economic Research Service is in the Public Domain
The U.S. vegetables and pulses sector comprises hundreds of independent markets within the food-marketing system. During 2017 – 19, U.S. farm cash receipts from the sale of vegetables and pulses (including potatoes and mushrooms) averaged $19.4 billion, which was 10 percent of U.S. crop cash receipts. This amount was generated on less than 2 percent of all U.S. harvested acreage. Annual per capita availability—a proxy for consumption—of vegetables and pulses over the same period averaged 404 pounds, which was down 4 percent from a decade earlier.
Fruit and Tree Nut Crops
Excerpt from "Fruit & Tree Nuts" by the USDA Economic Research Service is in the Public Domain
The U.S. fruit and tree nuts industry consists of a wide array of crops and products annually generating, on average, over $25 billion in farm cash receipts. Produced on less than 2 percent of U.S. agricultural cropland, farm cash receipts from this sector account for about 7 percent of the total receipts for all agricultural commodities and around 13 percent for all crops. Foreign markets serve as outlets for less than 20 percent of overall U.S. fruit and tree nuts supplies, while nearly half of the available supplies for domestic consumption come from imports.
Dig Deeper
"A Ten-Year Review of the Southeast U.S. Green Industry, Part I: Labor and Firm Characteristics" by Rihn, A.L., Fulcher, A. & Khachatryan, H, University of Tennessee Extension. Copyright © University of Tennessee Extension.
“Economic Contributions of the Green Industry in the United States in 2018” by Hall, C.R.; Hodges, A.W.; Khachatryan, H & Palma, M.A., Journal of Environmental Horticulture 38(3):73–79. Copyright © 2020 Horticultural Research Institute.
Attribution and References
Attribution
Excerpts used with permission from “Economic Contributions of the Green Industry in the United States, 2007” by A.W. Hodges, C.R. Hall & M.A. Palma, Southern Association of Agricultural Experiment Station Directors. Copyright © SAAESD.
Excerpts used with permission from “Ecosystem Services of Landscape Plants” by J. Knight & D.L. Ingram, University of Kentucky Cooperative Extension Service. Copyright © University of Kentucky Cooperative Extension.
Title image: "Buying Plants" by tbridge is marked with CC BY-NC 2.0.
References
Anderson, L.M., & Cordell, H.K. (1985). Residential property values improved by landscaping with trees. Southern Journal of Applied Forestry 9.3: 162-166.
Brack, C.L. (2002). Pollution mitigation and carbon sequestration by an urban forest. Environmental Pollution (1987), 116: S195–S200. https://doi.org/10.1016/S0269-7491(01)00251-2
De Rosiers, F., Marius, T., Yan, K., & Paul, V. (2002). Landscaping and House Values: An Empirical Investigation. The Journal of Real Estate Research, 23(1/2), 139–162. https://doi.org/10.1080/10835547.2002.12091072
Fare, D.C. & Clatterbuck, W.K. (1998). SP517 Evergreen Trees for Screens and Hedges in the Landscape. The University of Tennessee Agricultural Extension Service.
Kardan, O., Gozdyra, P., Misic, B., Moola, F., Palmer, L.J., Paus, T., & Berman, M.G. (2015). Neighborhood greenspace and health in a large urban center. Scientific Reports, 5(1), 11610–11610. https://doi.org/10.1038/srep11610
McPherson, G., Simpson, J.R., Peper, P.J., Maco, S.E. & Xiao, Q. (2005). Municipal forest benefits and costs in five US cities. Journal of Forestry 103(8): 411-416.
Moogk-Soulis, C. (2011). Schoolyard heat islands: A case study in Waterloo, Ontario. Technical Aids Consulting Services. http://www.moogk-soulis. com/wp-content/uploads/2011/05/ Moogk-Soulis.pdf
Morales, D., Boyce, B.N. & Favretti, R.J. (1976). The contribution of trees to residential property value: Manchester, Connecticut. Valuation 23(2): 27-43.
Rosenfeld, A.H., Romm, J. J., Akbari, H., & Lloyd, A. C. (1997). Painting the town white - and green. MIT’s Technology Review, 100(2), 52.
Sparling, B., Bucknell, D. & Moore, T. (2007). Literature review of documented health and environmental benefits derived from ornamental horticulture products.
Taylor, C. (2003). Fertile Ground. Smart Money, March 2003.