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Over the past few decades, most countries have come to embrace the notion of sustainable development, popularly expressed by the Brundtland Commission Report, Our Common Future, as ‘…development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’ (World Commission on Environment and Development, 1987). The search for ways to operationalize this notion has focused, in part, on national economic accounts: incorporating the role of the environment and natural capital more fully into the conventional system of national accounts (SNA) through a system of satellite accounts for the environment.

SNA (UN et al., 1993a) is particularly important because it constitutes the primary source of information about the economy and is widely used in all countries for assessment of economic performance, policy analysis and decision-making. However, SNA has had a number of well‑known shortcomings regarding the treatment of the environment.

With regard to forestry, SNA has treated cultivated forests and natural forests quite differently. For cultivated forests, SNA records both production and changes in the forest stock so that the consequences of depletion or re-afforestation are accounted for. For natural forests, however, SNA records only the income from logging, but not changes in natural forest stocks. This can result in quite misleading economic signals about changes in a natural forest: income from over‑exploitation would be recorded as part of GDP, but the corresponding depletion of the forest stocks would not be recorded. Similarly, the benefits from afforestation would not be recorded.

More importantly, both cultivated and natural forests provide non-marketed goods and services that are often not included in national accounts, although they may be critical to rural livelihoods in developing countries. In principle, SNA includes such products, but measurement difficulties have limited implementation in many countries. In addition, many of the non-market services from forests are omitted or wrongly attributed to other sectors of the economy. Forest services provide intermediate inputs to other sectors such as livestock grazing or tourism, but the value of these services is not recognised and, hence, is attributed to the using, rather than the forestry, sector. Ecosystem services such as watershed protection and carbon storage may not be represented at all. Thus the total benefits from sustainable forestry are underestimated, and other sectors of the economy are not fully aware of their dependence on healthy forests.

The 1993 revision of SNA addresses some of these problems, notably by expanding the asset boundary to include a broader range of natural assets such as natural forests. Even with this expanded coverage, significant gaps remain. The system of integrated environmental and economic accounts (SEEA) was developed as a set of satellite accounts to SNA to address these gaps by the statistical offices of the UN together with other international agencies and national statistical offices (UN et al., 2003b).

Within SEEA, forest accounts provide a framework for a) linking forest asset (balance) accounts with flow accounts for timber, non-timber forest products (NTFP) and forest ecosystem services in physical and monetary terms; and b) linking forest asset and flow accounts with SNA. SEEA provides a measure of forest values that is more comprehensive than SNA in two respects. First, SEEA forest accounts include both cultivated and natural forests in the asset accounts. Second, SEEA forest accounts attempt to include all forest goods and services, both market and non-market, in the flow accounts, which is essential for representing cross‑sectoral linkages. A more comprehensive accounting for the role of forests in the national economy and local communities will improve evaluation of the benefits from sustainable forestry.

In terms of some of the data collected, forest accounts overlap considerably with other information systems to promote sustainable forestry, such as national forest resource assessments, FAO forest product reports and various frameworks for forest indicators (such as the criteria and indicators (C&I) approach). The major distinction is the emphasis of SEEA forest accounts on an economic perspective: forest accounts are integrated with national economic accounts, which allows analysis of cross-sectoral impacts. Forest accounts also provide both indicators and a detailed set of statistics for analysis.

This manual is intended to fill a critical gap in forestry accounting literature: 1) how to use forest accounts for policy analysis, notably for the assessment of cross-sectoral policy linkages, and 2) how to address the special issues faced by developing countries in constructing forest accounts. Although SEEA provides the basic conceptual framework for all environmental accounts, including forest accounts, it does not cover any individual resource or environmental service in great detail, nor does it consider the policy applications of the accounts for a particular resource. A number of specialized manuals have been compiled such as the manual for fisheries (FAO, forthcoming) and water (UN-Eurostat, forthcoming), but the UN and its agencies have not yet developed a manual for forests.

Eurostat initiated a pilot programme on forestry accounting in the late 1990s and has published several useful manuals, on which this manual draws. However, the Eurostat manuals and forest accounts are driven by issues that are important to European forests; furthermore, policy applications are not discussed. Hence, there is a need for a manual that clearly demonstrates how forest accounts can contribute to policy and the assessment of cross-sectoral policy linkages, and that addresses the data issues of developing countries.

This manual provides a comprehensive survey of all components of forest accounts that could be constructed, as well as many of their uses. The challenges of implementing forest accounts and utilizing them effectively for policy appear daunting, especially for developing countries short of data and technical expertise. The manual discusses (in Chapters 4 and 8) how to minimize the challenges by, for example, combining forest accounting efforts with national forest resource assessments. But it is also hoped that the manual will help motivate countries to collect the data for forest accounts by demonstrating to stakeholders and practitioners the usefulness of such accounts.

The first part of the manual provides a review of the policy applications of forest accounts, focusing on cross-sectoral linkages and drawing extensively on examples throughout the world, especially developing countries and countries in transition. Chapter 1 provides an overview of environmental accounts, the structure of forest accounts and a discussion of the major policy issues that drive compilation of forest accounting. Although an in-depth, technical description of forest accounts is reserved for Part II of the manual, it is necessary to have a general idea of forest accounts in order to understand the policy applications. Chapter 1 also presents the five issues that have provided the major motivation for the construction of forest accounts throughout the world:

Chapter 2 reviews the policy applications of forest accounts at the national level. It begins with a review of the countries that have constructed forest accounts. The chapter then uses forest accounts from three countries, Sweden, South Africa and Romania, to see how the policy issues identified in Chapter 1 can be addressed. Additional examples are drawn from other countries, such as Swaziland and Spain. The basis for economic modelling with forest accounts is described.

Chapter 3 addresses an issue of growing importance: accounts for individual forests or regions. While national‑level forest accounts are useful for some policy applications, much forest management takes place at the level of the region or individual forest. Furthermore, forest goods and services can vary enormously from one region to another and are not easily generalizable. Because of the site-specific nature of many forest goods and services, national forest accounts are often derived from regional accounts, so it may not present an insurmountable challenge to disaggregate forest accounts by the appropriate geographic characteristics. Regional disaggregation is particularly useful for addressing cross-sectoral linkages and the dependence of rural communities on forests.

Chapter 4 provides guidelines, including worksheets, for using forest accounts as a tool for understanding cross-sectoral policy linkages and building alliances for sustainable forestry. It discusses data challenges, potential data sources, including national forest resource assessments and the institutional requirements for implementing forest accounts. Chapter 4 also discusses some of the actions that could be taken in response to the policy analysis provided by forest accounts. Chapters 2 to 4 make use of a number of sometimes-complex economic tools, such as cost-benefit analysis and economy-wide modelling; it is not possible to pro vide detailed instructions in a manual of this size, so appropriate references that provide such instructions are given.

The second part of the manual provides step-by-step guidance for constructing forest accounts, including the sets of tables to be used, potential data sources and a discussion of experiences of specific countries in implementing the accounts. Chapter 5 introduces the definitions and classifications used for forests accounts. Chapters 6 and 7 provide a detailed technical discussion of the physical and monetary accounts, respectively. These chapters also provide numerical examples of each forest account. Many examples are drawn from the Eurostat pilot programme and the SEEA handbook because these reflect the outcome of an extensive process of testing methodologies for forest accounting and adhere most strictly to the SEEA and SNA framework. Additional examples from developing countries are used to suggest modifications for the needs of these countries. Chapter 7 also provides references for additional information about economic valuation techniques. Chapter 8 discusses data sources and provides a standard set of tables for constructing forest accounts.


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