If you have ever noticed around Costa Rica many trees with the trunk painted white and wondered why someone would go to the trouble; there may be a good reason. The white painted bottom is rarely a decorative statement or an attempt to make the tree more aesthetically pleasing. It is, however, a practice that can potentially save the life of the tree.

This practice is common in Costa Rica and Latin America, but almost impossible to get straight answer as to why.
Trees can benefit from a coating of white paint when recent landscaping has entailed the removal of a larger tree that once provided shade for another, or the excessive removal of branches has left a tree barren and its trunk exposed to the sun's rays.
Sunscald
The bark of trees is just as susceptible to sun damage as is human skin. Too much hot sun directed onto a tree trunk day after day may not leave behind a sun burn but it will cause damage to the bark that will become noticeable over time. Sunscald is denoted by bark that cracks and falls off, or simply changes colour. Wrapping the tree with a specially designed trunk cover or painting the tree trunk can prevent sun damage.
Bores
A tree borer is an insect that tunnels underneath the bark of a tree and cause severe damage to the underlying layers of the tree. Adult tree boring insects will even lay eggs under the bark; leaving larva to chomp away at the phloem (nutrient-transporting layer) of the tree.
According to the University of California, a large infestation of tree borers feeding on a single tree can result in damage that can only be rectified by heavy pruning or removal of the tree. Tree boring insects often seek out trees with the weakest outer protection, so painting trees that are susceptible to sunscald can prevent bark damage and keep tree borers at bay.
Animal Damage
Painting the trunks of trees is also helpful in deterring furry, four-legged vermin. There are some wild animals that feast on tree bark, causing severe damage to the trees that become their daily lunch. According to the University of Vermont, adding a small amount of repellent to the white paint can prevent hungry animals from gnawing on tree bark.
Misconceptions
Contrary to popular belief, you do not need to use white paint to protect a tree trunk. In fact, any light-color paint can be used. What is important, though, is the type of paint used. Latex based paint that is used to paint the interior of your home is sufficient, but if you want to be "green" use paint that has an organic base. Never use an exterior paint because it contains fungicides that can harm the tree.
Road Safety
Some roadside trees are painted with reflective paint to enhance visibility to drivers. This is purely a road safety measure.
Article taken from insidecostarica.com