The model in this appendix differs from that in Appendix 3 in just one way: standing forests yield direct benefits to citizens, in the form of nonmarket forest amenities. The benefits are B(L), and their value emerges from the utility function,
U(C,B(L)).
In monetary terms, the value of the benefits is [UB/UC]B(L). Hence, the value of forestland as a provider of the amenities is
[UB/UC]BLL,
where BL is the benefit from a marginal hectare of forestland.
As discussed in Chapter 2, the introduction of these direct benefits from the standing forest leads to a new "Forestland" row and column in the national accounting matrix in Table 2. Table 6 is the same as Table 2, except with more analytical detail. Both tables omit internal detail to highlight entries in the new row and column. The "Forestland" row is blank except for the entry in the household column, which represents direct benefits to households of standing forests having a value of [UB/UC]BLL. This becomes a new entry in both GDP and NDP. [UB/UC]BLL is forest rent (there are no costs of forest maintenance) paid by beneficiaries (consumers) for the flow of services accruing to them from the forestland.
The corresponding "Forestland" column also has only one entry, again in the household row, namely [UB/UC]BLL. This is rent payments accruing to owners of forested land, namely households. [UB/UC]BL is rent per hectare.
Thus green NDP (the household row sum) is augmented by the net value of services from forestland, and green net national income (the household column sum) is augmented by the land rent being generated by the forested land. The accounts have a new primary input, namely land in forests, and a net value of services from this capital good. Value-added in the economy includes new capital services, [UB/UC]BLL.
