1 88 FOREST VALUATION 



180. Stumpage Values for Different Species in Mixed Stands. 

 In a mixed stand containing two or more species, the sale 

 value of the products of these species usually differs considerably. 

 Often only one valuable species will be removed from a mixed 

 stand. As values increase, other species become profitable, and 

 finally, all may be taken. 



At a point just before the inferior species become sufficiently 

 valuable to be logged, the operator is under the necessity of con- 

 structing his transportation system, and incurring his entire 

 cost for equipment and overhead expenses, in order to log a 

 portion of the stand, thus moving a smaller volume of lumber, 

 at relatively greater expense per unit. 



Assuming that the total costs, including depreciation, amount 

 to $12 per thousand board feet, and the most valuable species 

 is worth $20, the margin for profit and stumpage is $8. A 

 species worth but $12 on the market could apparently not be 

 marketed at all. But there is very little additional investment 

 involved in logging this second species. By doing so, the total 

 average cost of logging may be reduced, by lessening the trans- 

 portation expense per unit, the average of overhead charges, 

 and the depreciation, to $10 per thousand feet for the entire 

 operation. This adds a profit of $2 to the more valuable species, 

 and leaves a margin of $2 for the inferior one, for profit and 

 stumpage. 



But such a cost distribution is unfair to the inferior species, 

 since the operation does not depend on its presence and the 

 capital expenditures must be incurred without its inclusion. 

 It has been suggested that the more valuable species or group 

 be made to bear both the entire cost of depreciation, which 

 represents the capital expenditures, and the overhead charges. 

 The inferior group is left to bear merely its proportion of oper- 

 ating costs. This plan is rather crude where there are several 

 species, all of different values. 



The following method is quoted verbatim from the Manual 

 of Stumpage Appraisals, U. S. Forest Service, November, 1914. 

 This plan offers an equitable solution of the problem. 



" The most satisfactory method is to pro-rate the gross annual 



