Market sizing trees donated

Market sizing
New answer on Nov 27, 2019
2 Answers
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Anonymous A asked on Nov 26, 2019

Hi, I recently got a market sizing question that was quite hard to structure, the case question was, "your client is an online platform that allows people to donate money to plant a tree on a monthly subscription basis, how many trees can be donated in a given year in the U.S", how would you structure it?

Thanks

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Udayan
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replied on Nov 27, 2019
Top rated McKinsey coach with many offers /Ex McKinsey EM in New York /6 years McKinsey recruiting experience/Real cases

The question has a bit of a disconnect. The amount of money given to grow trees does not have to correlate to the number of trees that can be planted.

To answer the question on number of trees that can be donated, here is an alternative approach

  1. Value donated to plant trees cannot exceed value of all charitable donations in the US
  2. Total charitable donations (personal) can be a % of GDP. So assuming GDP of 20 Trillion, let's say 1% of GDP is donated to charitable causes - that is ~200Bn dollars a year
  3. Next we can say that of that, causes related to the environment make up ~5% - 10% or so (most donations are to religious organizations), have some sort of a rationale for that
  4. At 10% this is roughly $20Bn a year
  5. Of that people donating specifically to plant trees would be a very small sliver - again 1%-5% is not an unreasonable number when you are competing with things such as national parks, WWF, PETA etc.
  6. So that gives is ~500M per year. Divide that by the cost of planting a tree - maybe $25 seems reasonable - giving us 20M trees a year potentially.
  7. Of course this does not mean you can plant 20M trees, but the question asked for number of trees donated not planted
  8. Also this assumes you get 100% of all the donated money whereas in reality you will get a very small fraction of it

Hope this helps,

Udayan

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Philipp replied on Nov 26, 2019

Into 4 parts:

  1. Inhabitants of the US
  2. Share of people that donate
  3. Average donation
  4. Costs to plant a tree
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Udayan

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