Not algae. Not fungus.

Instead, the green stuff is moss, the other colors are lichens. None are damaging your tree in any way.

You have quite the colorful garden growing on your apple tree!

The bright green in the second picture and probably the dark green with little russet fruiting bodies in the first appear to be moss. The rest--pale green, dull light green, yellow-green, orange-gold, as well as the dusty white splotches, appear to be a variety of lichens.

Lichens are associations of two or three distinct organisms (fungus, algae, and sometimes cyanobacteria) living in varying degrees of cooperation. They come in many sizes, shapes and colors. In general neither lichens nor mosses are thought to threaten the health of trees on which they live.

I also live in northern California, at about 1500 feet in the Sierra foothills. Our area is sprinkled with black oak and several varieties of scrub and live oak. When cold weather comes and humidity rises, mosses and lichens suddenly become visible on all these trees. The more moisture we get, the more noticeable (and colorful!) the lichens become. Toward the end of a really wet season, the things are literally hanging off of the branches, like Spanish moss in the South. The one I marvel at most has long curly tendrils of bright glowing chartreuse.

When the season changes again and things begin to dry, so do the lichens. Their seasonal extensions break, blow off, or dry up, and all but disappear--until the next rainy season.
The oak trees never seem to mind.

It's dark out right now, so I don't know whether or not we have lichens on our apple tree, but I wouldn't be surprised or worried if I saw them there. Scraping them off could very well injure a tree, allowing entry to a number of truly harmful organisms.

The URL below may help allay your concerns. If you are still worried, you could call your local agricultural extension and make an inquiry.

Sweetcicely

Here is a link that might be useful: Lichen information

Thanks sweetcicely and jean001! I followed the link and googled "lichen" to learn a bit more about them. Now I am somewhat relieved :) although some articles suggested that lichens grow on dead branches which tells you that you should care for your tree more - that makes me sad! When I moved into this house last year, I started to add organic matter to the soil and am hoping that would help the trees to be healthier.
Sweetcicely, you are totally right about the moisture; we just had a few days of rain here and the lichens caught my eyes right after the rain!

The articles that tell you that lichens grow on dead wood and that means you should care for your trees better are writeen by people that have no idea what they are talking about and should be be avoided at all costs. Lichens grow on every tree I have ever seen where the bark allows some dust from the air to accumulate so the lichens can root. That has nothing to do with how you care for your tree. While I have not been to Northern California, yet, I have been to Oregon, Idaho, Washington, and Utah and have seen liches growing on trees in those areas as well as most everywhere else I have been. Many years ago my scoutmaster told us that if we got lost in the woods we could find out way out because "moss" (actually lichens) grew on the north side of trees. Today I know that they grow all around the tree, although even during fairly dry weather you may well see that green growth on the north side of the tree where it is sheltered from the sun more than any other side of the tree.

While there are some misleading lichen articles on the web, as kimmsr said, there is also a wealth of dependable information. One must consider the source of any information. The Berkeley article, below, confirms the information of the first article, which I found to be very informative and readable.

Lichens can and do grow on many surfaces. We see them commonly on live trees and on rocks, but they also can live on "dead" wood and soil--last winter, I even found a little bit growing at the edge of the trunk on my car!

To clear up a possible misconception, newbie's wonderful pictures show Both lichens and mosses. Mosses and lichens are two different kinds of growths. Either can grow on any side of a tree. The fuzzy green tiny-leaved stuff "famous" for growing on the north sides of trees is moss and is not the same as lichen.

The following urls may be of interest:
http://en.wikipedia.org/wiki/Moss

http://www.bbg.org/gar2/topics/botany/repro_bryophytes.html

Sweetcicely

Here is a link that might be useful: Lichens - UC Berkeley

Thanks kimmsr and Sweetcicely! I can sleep tonight not worrying about my apple tree or me mistreating it. :)

Now that I can tell between moss and lichen, I can attest to "moss grow on the north side" theory since the green ones you see in the image grow exclusively on the north side of this particular apple tree!