Assessing Fire Damages in Southwest. 415 



(a) Determine as near as possible the length of time within 

 which the timber upon the burned area could have been sold. In 

 deciding upon this figure it will be necessary to depend upon the 

 reconnaissance maps of the Forest and upon the judgment of 

 the Supervisor. A minimum figure within the nearest five years 

 should be used. For example: If the timber is at present in- 

 accessible but there is some possibility that the country will open 

 up in the future, it would be justifiable to say that the timber will 

 not be sold for 15 years at least, perhaps not that soon, and use 

 15 years as the basis. 



(b) Find the rise in stumpage value, from the accompanying 

 table,* for the period above decided upon, and add this to the 

 present stumpage value. Then multiply the volume destroyed by 

 the increased stumpage price to find the value of the timber at 

 the time when it would have been sold. The present stumpage 

 price will vary on each part of each Forest, according to quality 

 of timber and logging conditions. This basis can generally be 

 determined from reconnaissance maps. 



(c) Discount the value thus obtained for the period decided 

 upon under (b) to the present by multiplying by the proper 

 factor from a discount table. This will give the true future 

 value, discounted to the present at 5%, compound interest, 

 a conservative rate of interest. Since this result takes into con- 

 sideration a minimum rate of stumpage, and a reasonable time 

 within which it could be sold, it represents more nearly the actual 

 present value of the timber. 



Example: 1,500 M. of merchantable timber destroyed; 15 

 years is minimum time before a sale is possible; 7S% '^^ rise of 

 stumpage in 15 years; $2.00 per M. is present value of stumpage 

 on that part of Forest burned over; hence $2.00X1,500 M.= 

 $3,000, present stumpage value of timber destroyed ; $3.50 per M; 

 = value of stumpage in 15 years; to discount $5,250, 15 years to 

 the present at 5% we multiply by .481; $5,25oX.48i=$2,525.25 

 is the present (or expectation) value of the timber destroyed. 



From the above it will be seen that, even though we allow for 

 a rise in stumpage of 75%, the present value of timber which can- 

 not be cut for 15 years, found by the above method, is consider- 

 ably below the present stumpage value. 



*See page 413. 



