0410-A2

Total Economic Value of Forest Resources in Turkey

Mustafa F. Türker[1], Atakan Öztürk and Mehmet Pak


Abstract

Forests, like other natural resources, perform a set of functions to meet the needs of people. It is usually impossible to state the monetary value of all the goods and services provided by forest resources. As a research area, this topic is gaining importance rapidly in Turkey as well as in other countries.

A total of the values including direct, indirect, option and existence values of the natural resources is defined as the TEV concept. There are no definite and rigid rules about the components of TEV and therefore, many different approaches have been discussed about this concept.

As a result of this study, the contribution of direct and indirect use values, option values, existence values and negative externalities to the TEV are accounted for as far as possible. The most important share of Turkish forestry TEV is represented by the direct use values including wood and non-wood forest products. The option and existence values remain somewhat vague and difficult to calculate. The share of the forestry sector, which is among the main production sectors in the national economy is only 0.5%; this rate arises mainly from wood forest products, partly from non-wood forest products and very little from hunting and recreation.

In this study, the TEV concept will be reviewed for Turkish forestry, and then the TEV components of forest resources will be presented and discussed as far as possible.


1. Introduction

Forests are renewable and complex ecosystems capable of providing a wide range of environmental, economic, social and cultural benefits. They supply various products and services, which contribute directly to the well being of people and are vital to the economy and the environmental conditions of the country. While essential roles of forests are increasingly recognized by the Turkish society as a whole, their benefits and functions are differently valued amongst people and society segments. Moreover, such valuation continues to modify over time, due to changing needs and expectations of society (Doðru 2001).

The values associated with conventional forest products, such as lumber and pulp and paper, pass directly through markets. On the other hand, many benefits that are derived from forests do not pass through markets, such as hunting, fishing, or bird watching, or the value of the role that forests play in regulating weather patterns. Therefore, it is becoming increasingly important to identify and evaluate these non-market benefits due to the increased pressures on the natural resources, the increased demand for non-market resources, and society’s strong desire to preserve the natural heritage for future generations (Condon 1997).

A total of the values including direct, indirect, option, and existence values of the natural resources is defined as the Total Economic Value (TEV) concept. There are no definite and rigid rules about the components of TEV and therefore, many different approaches have been discussed about this concept. In another word, the items forming the TEV value are classified into main and sub-components.

It is usually impossible to state the monetary value of all goods and services provided by forest resources. However, some serious attempts to put value on the non-market goods and services of environmental resources such as forests have been recognized in the developed and developing countries in the world. The topic as a research area is getting importance rapidly in Turkey as well as in other countries.

In this paper, the coverage of the TEV concept, its components including sub-items was briefly reviewed theoretically. Later, the concept was evaluated from the goods and services provided by forest resources, and lastly, the TEV of Turkish forests was discussed from the forest management point of view.

2. Total Economic Value Approach

2.1. The Definition of Total Economic Value Concept

The economic concept of value has been broadly defined as any net change in the welfare of society. This concept does not restrict environmental values to benefits from the direct use of a resource. For example, the benefits received from environmental resources (such as enjoyment of national parks and clean air) add to an individual’s well-being, as do the benefits obtained from the consumption of goods (such as steel and sawn timber). The benefits that individuals obtain in satisfying altruistic desires that arise from their own moral beliefs also have economic value. From an economic perspective, values can be associated equally with the consumption of goods and services purchased in markets and with the services from environmental amenities for which no payments are made. In this sense, anything from which an individual gains satisfaction is deemed to be of value, so long as the individual is willing to give up scarce resources for it (Anonymous 1996).

After definition mentioned above, it is understood that the TEV concept is sum of the values, which a natural resource will be able to have. This concept was popularized by David Pearce (Perman et al., 1995). As the TEV concept is a sum of values, there are some components of the sum.

2.2. The Components of Total Economic Value

The components forming the TEV can be variously divided into main and sub-groups. One of them and widely accepted is the classification shown in Figure 1. According to this classification, the TEV can be divided into two main components as use and non-use values (Perman et al. 1995; Adamowicz 1995). Some economists accept the option value as third main component in addition to former two main components (Merlo and Briales 2000). In this paper, the classification done as use and non-use values was taken into consideration.

Use Values: The benefit obtained by individual by directly using the natural resource is defined as use value. In another word, the use values are values related to the forms of activity and (time and money) expenses. The values associated to the outdoors recreation are use values, which are given as example (Adamowicz 1995). In this case, it is seen that the use values from the main components of TEV are arisen from the physically use of environmental resources such as visiting a national park and recreational fishing. In addition, the benefits obtained from productive activities such as agriculture, forestry and fishing are also considered as use values.

Figure 1: The Components of Total Economic value

Use benefits also comprise benefits unaccompanied by market exchanges or explicit activities. For example, people may derive use benefit simply from experiencing a place without directly participating in any explicit activities (Anonymous, 1996a). In this case, the use values are also divided into three sub-components as direct, indirect and option values.

Direct Use Values: The most important component of use values is direct use values. These values result from current use of the resource, including consumptive uses such as hunting and fishing, nonconsumptive uses such as hiking, camping, boating and nature photography (Fausold et al. 1996).

From the forestry perspective, the economic value of wood based forest products such as timber and fuelwood, non-wood forest products such as cork, resin, mushrooms, decorative plants and medicine plants and other services such as hunting, grazing recreation (Merlo and Briales 2000), biodiversity and economic security (Perman et al. 1995) are accepted under the direct use values.

Indirect Use Values: Indirect use values are the benefits indirectly obtained by using the environmental resources. For example, indirect uses of environmental resources such as reading books related to the natural resource or watching television programmes about wildlife (Fausold et al. 1996). These are indirect use values for the people, but the direct use values for the producers.

Soil conservation, avalanche prevention, flood prevention, balancing microclimate, landscape quality, water quality and purification, biodiversity, conservation of the local ecosystem functions of forest resources are considered under this category (Merlo and Briales 2000).

Option Values: There are a number of different interpretations of this concept, which was founded by Weisbroad in 1964 and this concept relates to the preservation of unique natural assets. The option value is estimated for a resource that will be possibly spoiled at any time in the future. The value of benefit obtained by individuals from that resource is option value of natural resource in question (Kula 1994).

The values of being personal future recreation and environmental interests, potential source of energy and raw materials, potential unknown source of biodiversity, medicine and plants etc., potential use of unused landscape resources of forest resources are considered under this category (Merlo and Briales 2000).

Non - Use Values: Non-use values are emphasized as the values estimated for the natural resources although they are not used in fact. In this scope, the non-use values are divided into two categories as existence and bequest values.

Existence Values: Existence value is that placed on a natural resource amenity, even though individuals may never use or visit it; however, it is important for them to know that the amenity will continue to exist (Condon and Adamowicz 1998; Klemperer 1996). As seen, existence value is arisen from the willingness to pay for the assurance of getting benefit from the satisfaction because of consumption or being existing of the natural resource.

The functions of forest resources such as biodiversity, landscape (Merlo and Briales 2000, Perman et al. 1995), environmental conditions e.g. related to carbon storage, affecting other species, respect for the right or welfare of non-human beings including the forest ecosystem (Merlo and Briales 2000) are considered under this category.

Bequest Values: Bequest value, which is one another component of non-use values, is defined as the willingness to pay to preserve some resource for future generation (Klemperer 1996). The concept produces a willingness to pay at present point in time in order to ensure that certain values are maintained and made available to future individuals. If these individuals are immediate descendants then the respondents would be fairly confident at guessing the nature of the beneficiaries’ preferences. However, it would not be too difficult to make reasonably accurate guesses about the preferences of distant generations on the basic issues such as clean air, clean water, maintenance of natural wonders, soil fertility, etc. (Kula 1994).

In the bequest value context of forest resource, landscape, recreation, energy and raw material availability, biodiversity, environmental conditions e.g. related to carbon storage, affecting future generations may be considered (Merlo and Briales 2000).

3. Towards the Total Economic Value of Turkish Forests

The value of annual outputs obtained from Turkish forests were estimated by using some different methods (Bann and Clemens 2001; Türker et al. 2002)[2], and these values can be summarized according to the components of TEV in Table 1

According to Table 2, and with the limitations, the contributions of direct and indirect use values, option values, existence values to the positive TEV components of Turkish forests are 74.6 %, 14.8 %, 10.5 %, and 0.1% respectively. In this case, the biggest share in the positive TEV components of Turkish forest resources is direct use values including WFPs, NWFPs, grazing, hunting and recreation and the second one is indirect use values (carbon storage). The option and existence values constitute only 10.6 % of TEV. This is due to the fact that not all components of these values have been properly calculated.

Table 1 shows that direct use values represent 74.6% of the positive TEV components, from which most distinguished components are WFPs (42.0%), traditional NWFPs (8.0%), grazing (21.0%), hunting (3.4%) and recreation (0.2%). Carbon storage, as an important indirect use value, is about 14.8% of the positive TEV. The share of option value in the positive TEV components (pharmaceuticals) is 10.5%, while existence values constitute only 0.1 % from the positive TEV components.

Table 1: Forest Values by TEV Categories

TEV Components

Category

Type of Outputs

Value (US $) per year

%

Direct Use Values

WFPs

Timber

435,030,000

42,0

Firewood

14,785,000


NWFPs

Resin

1,898,000

8,0

Mushrooms

11,482,000


Medicinal and aromatic plants

8,642,000


Truffles

495


Styrax (Liquidambar oil)

56,000


Sticks and twigs

22,000


Bay leaves

9,253,000


Carob (fruit)

6,000


Chestnuts

262,000


Pine kernels

7,172,000


Snow drop, Cyclamen and other bulbous plants

1,087,000


Thymus -Oreganium

13,237,000


Other NWFPs

32,927,000


Grazing

Grazing

225,000,000

21,0

Hunting

Hunting

35,948,500

3,4

Recreation

Recreation

2,000,000

0,2

Indirect Use Values


Carbon storage

158,400,000

14,8

Option Value


Pharmaceuticals

112,500,000

10,5

Non Use Values


Existence value (to conserve biodiversity)

1,380,000

0,1

Positive TEV Components

1,071,087,995

100.0

Negative Externalities


Erosion

-125,000,000

72,0


Risk of damage by forest fires

- 8,607,537

5,0


Illicit fuelwood

- 40,000,000

23,0

Negative TEV Components

-173,607,537

100.0

NET TOTAL ECONOMIC VALUE OF TURKISH FORESTS

897,480,458


Source: Türker et al. 2002

On the other hand, the shares of erosion, forest fires and illicit fuelwood consumption[3] in the negative TEV components, which are the negative externalities of Turkish forest resources, are 72.0%, 5.0 %, and 23.0% respectively. In this case, the biggest share in the negative TEV components of Turkish forest resources is erosion and the second one is illicit fuelwood consumption.

4. Results and Discussion

From the calculations undertaken for each TEV component, it turns out that the positive TEV component of Turkish forests is around US$ 1,071,087,995 (Table 1). This figure should be considered as a minimum estimate due to the fact that the values of many externalities assumed lower bounds being based on conservative assumptions (Bann and Clemens 2001). In addition, other public goods and services supplied by forests such as watershed management, soil conservation, avalanche prevention, water quality and purification, landscape and therapy were calculated at only local level and not included. It results that the share of WFPs in the positive TEV components of Turkish forest resources reach 42.0%, and this reinforce the previous idea of the wood based forest management approach. In other words, the values of positive externalities provided by the forest resources such as grazing, carbon storage and pharmaceuticals, which have a 58% impact on the positive TEV components, have not adequately been known by the forest managers, policy makers and strategists as well as rural people benefiting of most WFPs and partly NWFPs from forests.

In Turkish forestry, the estimated value of the negative externalities is about US$ 173,607,537 and this figure reduces the TEV from US$ 1,071,087,995 to US$ 897,480,458. The reducing impact proportion of the negative externalities calculated at the minimum level on the TEV is about 16.2%.

The share of forestry sector, which is among the main production sectors in the national economy and accounts for only 0.5% (Çakýr 1984; Türker 1999) this rate arises mainly from WFPs, partly from NWFPs and very little from hunting and recreation. On the other hand, these items (WFPs with 42.0%, NWFPs with 8.0%, hunting with 3.4% and recreation with 0.2%), which are totally reflected into national balance sheets, make up for 53.6% of total TEV of forestry sector. On the other hand, 46.4% of the TEV are not reflected into the national balance sheets and are represented by: grazing (21.0%), carbon storage (14.8%), and pharmaceuticals (10.5%). This confirms the fact that the share of forestry sector in the national economy is lower than its real proportion.

In conclusion, the following issues can be stated regarding this issue that is aiming to determine the externalities and its TEV in forestry;

- Firstly, it will be exposed the real share of forests as an important natural resource, in the national economy;

- Secondly, more monetary support needed for investments regarding the improvement of forest resource will be allocated to forestry sector;

- Lastly, a good strategy and policy regarding the effectiveness of forest resources will be determined from the sustainable development point of view.

5. References

Adamowicz, V., 1995. Alternative Valuation Techniques: A Comparison and Movement to A Synthesis. (Editors) K:G.Willis and J.T. Corkindale, Environmental Valuation: New Perspectives, CAB International.

Adamowicz, W.L, 1992. Non-timber values in Canadian Forest: An Assessment of Uses, Techniques and Data Availability. Project Report 92-02. Department of Rural Economy, University of Alberta. (Cited by Condon 199?).

Anonymous, 1996. A Handbook of Environmental Evaluation. Department of the Environment, Sport and Territories: URL:http://www.erin.gov.au/portfolio/esd/handbook Acces Date: 15.05.2001

Bann C., Clemens, M., 2001. Turkey Forest Sector Review-Global Environmental Overlays Program Final Report (in Turkish) - April 1999, Ýksir Publisher Ltd., Ankara.

Çakýr M., 1984. The Importance of Forestry Sector in the National Income, Forest Engineers Association Publications No: 9, Ankara, 1984 (in Turkish).

Condon, B., 1997. The economic valuation of The Non-Timber Forest resources in Newfoundland, Condon-Indicators of sustainable Development Workshop, Canadian Forest Service.

Condon, B.S., Adamowicz, W.L., 1998. A Comparative Analysis of Use and Non-Use Value Estimation: A Case Study in Newfoundland, Newfoundland and Labrador Region - Information Report N-X-297, printed in Canada.

Doðru, M., 2001. Planning and Management of Forest Resources In Turkey (Draft), Assistance For The Preparation of a National Programme for Turkey.

Fausold, C.J., Lilieholm, R.J., 1996. The Economic Value of Open Space, Land Lines, 8 (5).

Karluk, S.R., 1995. The Economics of Turkey: Historical Developments and Structural Change, Beta Publisher, 3rd Edition, Istanbul (in Turkish).

Klemperer, W.D., 1996. Forest Resource Economics and Finance, McGraw-Hill Series in Forest Resources, International Editions, printed in Singapure.

Kula, E., 1994. Economics of Natural resources, the Environment and Policies. Second Edition, Chapman and Hall, London.

Merlo, M., Briales, E., 2000. Public Goods and Externalities linked to Mediterranean Forests: Economic Nature and Policy, Land Use Policy 17, 197 - 208.

Perman, R., Ma, Y., McGilvary, J., 1995. Natural Resource and Environmental Economics, Longman Publisher, UK.

TÜRKER M. F., 1999. The Determination of The Importance of The Forestry Sector in National Economy Using Input- Output Analysis, Tr. Journal of Agriculture and Forestry, 23 (1999), Supplemental. Issues 1, 229-237, TÜBÝTAK, (in Turkish).

Türker, M.F., Pak, M., Öztürk, A., 2002. Anatolian Peninsula: Turkey, (Editör) M.Merlo ve L. Croitoru, Mediterranean Forests and People: the Total Value, Padua University Press, Contagra.


[1] Professor, Karadeniz Technical University, Faculty of Forestry, Department of Forest Engineering, Division of Forest Economics, 61080 - Trabzon, Turkey. Email: mft@ktu.edu.tr
[2] See these two reports for detailed information about the methods used for calculation of TEV components. Because of the word limitations, the detailed information can not be given in this paper.
[3] Illicit fuelwood consumption was accepted as a negative externality of forest resources by the World Bank Report and MEDFOREX Project Authority. When the forests are used by forest villagers for the illicit fuelwood consumption, the villagers can provide much less benefit than possible benefits of the forests. Because, the forests supply many other benefits for people, wildlife, biodiversity and so on. If the forests are not used for the illicit fuelwood consumption, it can be provided much higher benefit from the forests.