As the title implies, our purpose in this paper is to place the existing ideas on and techniques for valuation of forests in the context of the decisions faced by public policy makers, managers, and administrators dealing with use of forests. These decisions are made in political and administrative contexts; and a number of constraints and complexities are introduced which challenge the ability of managers to apply conventional economic analysis approaches.
In response to the limitations of traditional valuation approaches for the valuation of forest goods and services, economists have developed new techniques. While, some of them are quite exciting in theory, they also are difficult and often expensive and time consuming to apply in practice. They raise a number of issues for the practitioner.
Most of the practical issues in valuation relate to (1) a lack of data on the physical/biological relationships (and inputs and outputs) on which values have to be placed, and (2) the problems that arise because different interested groups in the forest have different value perspectives. Thus, most of the issues relate to measurement problems and the difficulties involved in designing broadly accepted tradeoff criteria for making decisions among alternate values.
There has been much recent interest in finding out what the value of tropical forests might be, and also much confusion. This is hardly surprising, given the complexity of the issue and the practical problems in the way of establishing such values. This publication is intended to help clarify what can and cannot be done. It does not deal with the mechanics of applying valuation methodologies, as these are well set out in several existing publications. Rather it provides guidance as to which approaches and methods might be usable, and in what circumstances.
Generally, the private forestry sector is interested only in values reflected in market prices for market-traded goods and services. Thus, the discussion that follows the nonmarket outputs - which are the difficult ones to value - will be mainly of interest to public sector decision makers.
A final point: this paper deals with issues and guidelines related to valuation of forest goods and services. The broader question of use of such values in assessments of the economic efficiency of forestry activities, e.g., applications of cost-benefit analysis, are dealt with in a companion document, FAO Forestry Paper 106 (Gregersen and Contreras 1992).
H. M. GREGERSEN
J.E.M. ARNOLD
A. L. LUNDGREN
A.
CONTRERAS-HERMOSILLA
