In its 1997 report to the Commission on Sustainable Development, the Intergovernmental Panel on Forests indicates that sustainable forest management may be inhibited by an undervaluation of forest goods and services. This undervaluation occurs because many of the goods and service provided by forests are not traded in markets. Without markets to signal scarcity and channel investment, it is unclear that there is sufficient investment in forest conservation and management. In particular, a number of economists and conservationists have argued that the United Nations System of National Accounts (SNA) systematically understates the contribution of natural resources. More importantly, critics of the SNA suggest that because it only partially counts natural resource systems such as forests as capital, the system of accounts inherently favour economic activities that produce traded goods even if they deplete a country’s natural resources.
To examine this question and suggest remedies, the Policy and Planning Division of the FAO Forestry Department, under the responsibility of Yves C. Dubé, Forestry Officer (Planning), and in consultation with other FAO Technical Departments in particular the Economic and Social Department (Pratap Narain, Statistics Division), commissioned a paper by Jeffrey Vincent and John Hartwick in 1997, to review country experiences and identify a conceptual framework to better account for forest resources benefits. Four country case studies (Brazil, Chile, Philippines and Zimbabwe) were also commissioned, two of them having been sponsored by the World Bank through the Danish Trust Fund on Environmentally and Socially Sustainable Development. Two expert meetings (June 1997 and February 1998) recommended to use the input from Vincent/Hartwick's report to adopt standards and procedures of the System of National Accounts (SNA) and its proposed extension, the Integrated System of Environmental and Economic Accounting (SEEA), as the generally accepted accounting framework by most countries. Based on this, FAO decided to prepare a report on the status and current efforts with regard to economic and environmental accounting for forestry. This was done through the FAO Academic and Research Institutions Partnership Programme (David Jackson, U. of Montana) and in close collaboration with UN Statistics Division (Alessandra Alfieri), Eurostat (Gérard Gie) and the World Bank Environmental Economics and Indicators Unit (John Dixon/Michael Linddal).
The report is intended to inform on challenges, opportunities and limitations of incorporating forest resources in SNA. It is hoped that it will be reviewed by a wide and diverse audience with a view to improving its contents and helping identify the next most important steps to maintain and increase forestry investment to achieve sustainable forest management.
Lennart Ljungman, Director
Policy and Planning Division