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Appendix 4.4.2

TERMINOLOGY, DEFINITION AND CLASSIFICATION OF FOREST PRODUCTS OTHER THAN WOOD

C. Chandrasekharan 1/
FAO Forestry Department

ABSTRACT

The contributions of forest products, particularly of products other than wood, are not adequately valued to reflect their importance. The establishment of appropriate terminology, clear definitions and a system of classification of products and activities can help to improve the situation.

On reviewing the different terms currently in use for economic forest products (goods and services) other than wood, the paper proposes the term non-wood forest products (NWFPs) as appropriate for universal use. The paper proposes a simple definition: "Non-wood forest products include all goods of biological origin, as well as services, derived from forest or any land under similar use, and exclude wood in all its forms". Non-product benefits, influences and work in progress are proposed to be part of, or improvements to, capital forest stock, rather than treating them as part of NWFPs.

The paper calls for an adequate system of classification and statistical compilation for NWFPs, and emphasizes the need for considering the total value of forests in an integrated manner in the System of National Accounts. It also proposes a framework for international classification of NWFPs suitable for adoption and use at the national level. The framework corresponds generally to the Central Product Classification at the aggregate level and is harmonized with other systems. There remains a need to assign an appropriately defined place for forestry, with adequate treatment of NWFPs, in the International Standard Industrial Classification of All Economic Activities (ISIC), probably as a separate annex.

The paper recommends the elaboration, implementation and refinement of a classification system for NWFPs by stages.

INTRODUCTION

The contributions of the forestry sector to the socio-economic domain of human life have been known for ages. These include both wood and non-wood products. Yet their valuation is limited essentially to wood products. It is necessary not only to value the non-wood products of the forests, but also to identify them clearly.

Agenda 21 and Forest Principles adopted at the United Nations Conference on Environment and Development (UNCED), held in Rio de Janeiro in 1992, identified forest products other than wood as an important area requiring increased attention, as a source of environmentally-sound and sustainable development.

As a broad group, the forest products other than wood exhibit a high degree of heterogeneity in terms of their source, production systems, characteristics, and utilization. These products, of both plant and animal origin, fall under a large number of product groups, with each group having considerable variety. In order to understand their scope, boundaries, and linkages, it is necessary to have appropriate terminology, clear definitions of terms, and an adequate system of classification. However, these are lacking for the group of forest products other than wood.

The ISIC divides economic activities into several sectors. According to this classification, activities related to NWFPs are spread over a number of different activity sectors. Because of this, any assessment of the contribution of forest products other than wood, using ISIC as a basis, requires a cross-sectoral approach.

This paper attempts to point out the nature and magnitude of the problem involved in these regards and how they can be addressed.

TERMINOLOGY

Terminology refers to the system of words used to express and delimit definite concepts in different disciplines of study. Here we will confine ourselves to the appropriate term to represent all forest products other than wood. Several terms are seen used in dealing with these products. Scope and coverage of these terms are somewhat different. In some cases, their coverage varies depending on the situation. Others are vague about their scope and coverage. In spite of the differences, they are often used interchangeably.

The following are some of the terms in use:

The term minor forest products/, which has been in use for many years in some countries, assumes timber or wood as the major product. But timber is less important in some countries compared to other forest products, for example gums and resins. Terms based on assumed importance tend to be inconsistent. Since what is minor in one situation may be major in another, the term is not appropriate for universal application.

The terms other forest products and other economic forest products (apart from the vagueness of what is economic or otherwise) suffer similar inconsistencies and inadequacies. Since the main forest product(s) varies from one situation to another, the composition of others also varies.

The term special forest products is also vague about its coverage and scope, as it refers to particularity and can change from situation to situation. Moreover, it does not refer exclusively to products other than wood.

Due to its all-embracing nature, the term non-wood forest benefits, covering marketable and non-marketable as well as measurable and non-measurable benefits, frustrates attempts at a proper definition of its scope and quantification of benefits. Also, forest influences/benefits such as watershed values, environmental conservation, amenity values, etc., cannot be categorized as either wood or non-wood. They are generated by the forest ecosystem as a whole, and not only by wood or non-wood.

In the term non-wood goods and services, the word services is often interpreted to include environmental influences of forests, scenic beauty, heritage values and so on, even though services in the strict sense are products or services produced (e.g. managed grazing).

The terms non-timber forest products and non-wood forest products are comparatively precise and suggestive of their scope. A tendency is however seen often to use the words timber and wood loosely and interchangeably.

It is likely that all these terms will continue to be used in a general way in describing different situations. It is, however, necessary that an appropriate term be decided upon for universal use and for purposes of scientific investigations.

The key words/terms to be considered in this regard are:
 
Forest A plant association predominantly of trees and other woody vegetation.
Wood Stem, branches and roots of plants/trees characterized by lignified, water-conducting, strengthening and storage tissues.
Timber Wood in forms suitable for heavy construction; sawnwood of more than a specified width and thickness; excludes fuelwood, wood for carving, pulp wood, small wood.
Goods Things, articles, objects worth attaining; movable properties; merchandise; wares; services of valve. An economic good is defined as any physical object, natural or man-made, or service rendered, which could command a price in a market.
Services Provision of assistance; act of serving; work done to meet some needs; intangible, non-transferable economic goods, as distinct from physical commodities.
Products Things/substances/articles produced by a process; output of goods and services resulting from the input of resources or factors of production used to produce them.
Benefit Advantage; favourable effect; output; profit. In forestry, includes products and favourable influences.
Non- As a prefix, it is freely used as a short form to mean other than and does not imply lack of importance or other negative connotations.

It is the view of the author that the term non-wood forest products is more specific in its scope, precise and consistent, has greater universal applicability and incorporates components which are better quantifiable. It excludes all products/commodities which retain their characteristics as wood. Within its scope, it will be necessary to include products (apart from those from non-woody plants and non-woody parts of woody plants) derived by processes of chemical extraction and destructive distillation of wood, e.g. sandalwood oil, bio-diesel.

Many of those forest products other than wood are also produced in non-forest land. Considering them as forest products will be anomalous. Therefore, it becomes necessary to identify and classify sources. Accordingly, the adjective forest qualifies the product. Forest products should cover only those originating from forests or obtained from a system of land use which can be included under the general heading of forestry.

DEFINITION

The proper use of terms conveying specific concepts requires that they be defined adequately. Since definitions serve to interpret the scope and coverage of the term, different definitions are likely depending on the purpose for which, or the situation wherein, they have been made. The importance of having a clear, consistent, generally-acceptable and universally-applicable definition particularly for international use and exchange of information cannot be overstated.

The term non-wood forest products is a relatively new term used generally to mean forest products other than wood. This term therefore is not seen defined in the dictionary or glossary of technical terms relevant to forestry (forestry terminology). However, several proposals can be found in reports, proceedings of meetings and so on.

From a legal point of view, forest products are defined in some countries as all those products found in or brought from a forest; and forest is any land classified as such under law. Under this definition, forest products other than wood would include soil, sand and stones (and also water in some cases).

One attempt at defining NWFPs reads as follows: NWFPs can be defined as all goods and services for commercial, industrial and subsistence use, other than wood, derived from forests and their biomass which can be sustainably extracted, i.e. extracted from a forest ecosystem in quantities and ways that do not alter its basic reproductive functions (FAO, 1992). By implication, this definition is concerned with products of plant origin, from natural forests. Also, the use to which the product is put, ways of sustainable extraction and basic reproductive functions are extraneous to product definition.

The Expert Consultation on Non-Wood Forest Products for Asia and the Pacific, held in Bangkok, Thailand in November 1991, adopted a definition applicable to most countries of the region:

The term non-wood forest products implies all renewable and tangible products, other than timber, firewood and charcoal, derived from forests or any land under similar use as well as woody plants. Thus, the products like sand, stones, water, eco-tourism will be excluded. This is a clear statement, but as a product definition it has some problems. Renewability is a management concept and outside the scope of product definition. By confining it to tangible products, or commodities, it excludes produced services such as camping grounds, grazing blocks, hunting/viewing of wildlife, etc. Products from woody plants tend to include horticultural products such as apple and mango. This does not appear rational.

The Regional Expert Consultation on Non-Wood Forest Products for Africa, held in Arusha, Tanzania in October 1993, proposed a definition similar to the one for Asia, but specifically mentioned faunal products:

All vegetal and faunal products (other than wood) derived from forests and other wooded land and trees outside the forests; excluded are industrial round wood, wood used for energy, horticultural and livestock products. Including products from all trees outside forest irrespective of the type of land use may lead to some of the same problems explained earlier. Specific exclusion of industrial round wood only would imply the inclusion of non-industrial round wood used in rural construction, handicrafts, etc.

The Expert Consultation on Non-Wood Forest Products for Latin America and the Caribbean, held in Santiago, Chile, in July 1994, suggested a formulation very similar to the one proposed at the Africa Regional Expert Consultation in Arusha/.

Based on discussions at several levels of the different proposed definitions, a modified version for international use is suggested as follows, to be considered by the Consultation:

Non-wood forest products include all goods of biological origin, as well as services, derived from forest or any land under similar use, and exclude wood in all its forms. This modified version takes the aspects discussed earlier into consideration. Only products of biological origin are included, as it is not rational to consider soil, sand, stones, water, etc., as forest products. Services such as gazing and camping facilities, wilderness trails, viewing and hunting of wild life, etc., as distinct from environmental influences, are included. Benefits such as watershed values, environmental conservation, and protection of biodiversity are forest influences to be considered separately, and mixing them with NWFPs appears inappropriate. Exclusion of wood in all its forms is meant to cover timber, poles, small wood,
small-dimension wood materials, and wood fuel (including fuel wood and charcoal)/.

Forestry sector covers more than the large stretches of forests and includes other woodlands. NWFPs can be derived from lands managed under systems similar to forestry (village wood lots, farm forests, agro-forestry plots), and therefore, the forestry origin of the goods and services should be understood in the proper context and interpreted accordingly.

The existence and adoption of an agreed and acceptable definition of universal applicability (and for international use) should not prevent countries and regions from developing their own definitions to meet their specific needs. Actually, national definitions can be made consistent with an international definition, by indicating where and how their scope has been changed/.

A rational system of classification of NWFPs can help to improve the compatibility of definitions.

CLASSIFICATION

Importance and Scope

The word class refers to a group of things having the same or similar characteristics, and classification refers to assignment to, or arrangement by, hierarchical classes. In arranging by classes, classifications provide a rational system of relationships wherein distinction and coherence between elements are put into shape by a logical structure and ordering, within defined boundaries.

Classifications are essential to help provide data by homogenous categories and to display interconnections between categories. By providing boundaries to classes and avoiding overlaps and inconsistencies, classifications add to the clarity and comparability of information. Classifications are thus important for data gathering and management, scientific investigations, analysis and evaluation of trends and outlook, aggregation and dissemination of information, planning and policy making. By following classification systems, bridges can be built between various statistics even when different units are used.

Product classification, specifically, helps to trace the flow of goods and services through the economic systems from the producers to the eventual users and facilitates systematic analysis of trade to support development. It helps to assess relative importance of the classes of products and indicates substitution possibilities.

Nature and details of classification are decided by considerations influencing its rational structure and relationship with other systems. In designing a product classification, it is necessary to consider one or more of the following: source and nature of raw materials; intermediate products; production systems and technology; primary products; nature of goods and services; end uses and contribution to economy.

Details and scope of classification are enhanced by adopting a multi-digit coding system. Coding criteria are based on the relationship of the categories, divisions, groups and specific headings involved, where successive digits of the code represent hierarchical relationship. For example, the products nutmeg and mace are classified under three major international systems of classification as follows:

1. Harmonized Commodity Description and Coding System (1987)
09  Coffee, tea, mate and spices
0908 Nutmeg,mace and cardamons
090810  Nutmeg
090820  Mace
Note: The last (sixth) digit can be used to indicate specific quality/type/source of the product

2. Standard International Trade Classification Rev. 3 (1986)
food and live animals
07  coffee, tea, cocoa, spices and manufactures thereof
075  Spices
0752  spices, except pepper and pimenta
07525  nutmeg, mace and cardamoms

Note: Additional digit(s) can be added to desegregate the products under the specific heading.

3. Provisional Central Product Classification, 1991
agriculture, forestry and fishery products
01 products of agriculture, horticulture and market gardening
016  beverage and spice crops
0162
(01620) 
spices whether or not processed

Note: Additional digit(s) can be used to specify spices and their types.

In an interdependent world where exchanges in the form of trade and technology transfer are common, standardized international classifications are essential to promote such exchanges as well as to facilitate inter-country comparisons and analysis of comparable information. Such international classifications of universal applicability provide a flexible framework and structure for collecting, collating and aggregating statistical information. These can serve the purpose of countries with modifications as necessary. Countries can add digits to the code for country-specific use or gather/provide information only at the aggregated digit levels as appropriate or possible. It is also possible to add new items specific to some countries, using unallocated numbers at appropriate digit levels.

Existing International Systems

In order to understand how an international classification for NWFPs can be developed and harmonized with the existing systems of other relevant international classifications, we may briefly review the following:

International Standard Industrial Classification of All Economic Activities (ISIC)

The ISIC defines an industry as the set of all production units engaged primarily in the same or similar kinds of productive economic activity. Such an activity is characterized by an input of resources, a production process and an output of products.

The ISIC consists of 17 tabulation categories/, 60 divisions, 159 groups and 292 classes, each of them with specified scope and coverage. The classes of activities under ISIC represent the industry of origin (i.e. the activity leading to the production) of products classified elsewhere. In this regard, it is harmonized with the commodity description and coding system so that the activity and the resulting product can be related.

Statistical classification reflects compromises between theoretical principles and practical considerations, and it is difficult to meet all the needs for aggregated data, by simple aggregation through various levels of ISIC. It has therefore included annexes covering cross-classification of industries. This helps an international understanding about the combination of activity categories that could be regarded as representing a particular sector. ISIC Rev. 3, 1990, has included annexes dealing with activities related to two sectors, namely energy and tourism. The list of annexes is open-ended and more can be added in the future.

Since ISIC includes all economic activities, its four-digit coding/ allows only broad classes. The classes of activity which have (or could include) forestry components (related to wood and NWFPs and services) are the following:
 
0111  Growing of cereals and other crops n.e.c.;
0112  Growing of vegetables, horticultural specialities and nursery products;
0113  Growing of fruits, nuts, beverage and spice crops;
0122  Other animal farming; production of animal products, n.e.c.;
0150  Hunting, trapping and game propagation, including related service activities;
0200  Forestry, logging and related service activities;
1511  Production, processing and preserving of meat and meat products;
1513  Processing and preserving of fruits and vegetables;
1514  Manufacture of vegetables and animal oils and fats;
1549  Manufacture of other food products, n.e.c.;
1820  Dressing and dying of fur; manufacture of articles of fur;
1911  Tanning and dressing of leather;
All classes under division 20 Manufacture of wood and of products of wood and cork; manufacture of articles of straw and plaiting materials;
All classes under division 21  Manufacture of paper and paper products;
2423  Manufacture of pharmaceuticals, medicinal chemicals and botanical products;
2429  Manufacture of other chemical products, n.e.c.;
2519  Manufacture of other rubber products;
3699  Other manufacturing, n.e.c.;
9249  Other recreational activities;
9309  Other service activities, n.e.c.

The explanatory notes on the classification indicate what are included under each class of activity, as well as exclusions.

It is difficult to clearly recognize NWFP-related activities in the classification and they mostly fall under the residual classes, i.e. others or those not elsewhere classified/specified. Even the division (02) related to forestry has only one activity which is a "catch all" for forestry, logging and related services activities.

Once a classification for NWFPs is developed, it will be possible to relate them to the relevant activity classes.

Standard International Trade Classification (SITC)

The SITC is a classification made according to physical properties of the product, duly considering the materials from which the product is made and also the stage of fabrication and industrial origin. The main purposes of SITC are to help international comparison of product situation, provide greater comparability in foreign trade and provide a basis for systematic analysis of world trade. Thus, only commodities entering external merchandise trade are included. In SITC, Rev. 3, the products are classified into ten sections/, 67 divisions, 261 groups and 1,033 sub-groups. Seven hundred twenty sub-groups are further divided into 2,805 items, providing 3,118 basic sub-groups. All products are provided as precise a definition as possible.

SITC, Rev. 3, follows a five-digit coding. To illustrate:
 
Section  Food and live animals
Division  05  Vegetables and fruit
Group  057  Fruit and nuts (not including oil nuts)
Sub-group  0577  Edible nuts, fresh or dried
Basic item  05772  Brazil nuts
  05775  Hazel nuts
  05776  Walnuts
  05777  Chestnuts
  05779  Edible nuts, fresh or dried, n.e.s., whether or not shelled or peeled

The basic headings can be further divided by providing additional digits as desired for meeting specific needs of the countries. For example, there are a number of edible nuts of forest origin which are not specifically mentioned (e.g. gnali nuts from Canarium spp.). It is possible for countries to add a sixth digit to 05779 to include such edible nuts.

The classification also allows for adding new items at various digit levels. It is also to be noted that one out of ten sections (section 9) deals with commodities and transactions not classified elsewhere in SITC.

Since the classification covers only internationally-traded commodities and is dealt with under a five-digit system (compared to the four-digit system for ISIC), it is quite detailed. SITC provides a number of specific headings relevant to NWFPs and covers:

Live plants and parts of plants; live animals/birds; seed materials for sowing, bulbs, tubers; flowers and foliage; wild meat, eggs and fish; wild vegetables, mushrooms, truffles; fresh or provisionally-preserved fruits; other edible parts of plants; edible nuts; oil seeds and nuts; syrups and sugars; honey; beverages; spices, flavourings; gums, balata, gutta percha, chicle and other natural gums; resins and related products; materials used for perfumery, pharmacy/medicine, insecticides, fungicides; fodder and feeds; cork and cork products; natural fibres; animal hair; cocoons and raw silk; yarn and ropes; non-wood ligno-cellulosic raw materials; pulp/hand made paper; bio fuels, excluding fuelwood; bio-fertilizers; plaiting materials, bamboo, rattan (including non-wood construction materials); hides, skins and furs; mats, felts, hats, bags, baskets; non-wood furniture; stuffing, brooms, brushes; other products of (wild) plant and animal origin; feathers, plumes, horns, ivory; oils, fats and waxes of plant and animal origin; organic acids and chemicals; rosin, turpentine and derivatives; dying, tanning and colouring materials; lac and lac products; saponiferous substances; essential oils and odoriferous substances; camphor; medicinal and pharmaceutical products. SITC, Rev. 3 is harmonized with other international classification systems and is fully correlated with the harmonized commodity description and coding system.

Harmonized Commodity Description and Coding System (HS)

The HS, issued by the Customs Co-operation Council, is the revised and extended version of its previous classification, Customs Co-operation Council Nomenclature (CCCN). CCCN was a four-digit system containing only 1,011 headings. HS has 21 sections/, divided into two-digit groups or chapters, 1,241 four-digit headings and 5,019 six-digit headings. The system representing the separate categories of goods corresponds well to SITC Rev. 3, and the industrial origins of goods. Also, the higher number of digits in the HS codes makes it capable of providing more details.

All the SITC headings relevant to NWFPs are covered in HS, and some are further subdivided at the sixth digit level.

Other Trade Classifications

Apart from SITC and HS, there are regional/national classification systems which are more elaborate, namely:
 
 
 
CN Combined Nomenclature. An eight-digit classification system of the European Union which is based on the six-digit HS, with two additional digits for more detailed subdivision.
HATUSA Harmonized System Tariff USA. A ten-digit classification system of USA which is based on the six-digit HS, with four additional digits.

Provisional Central Product Classification (CPC)

The CPC constitutes a complete product classification, covering transportable and non-transportable goods/, services/ and assets. CPC includes categories and codes for all products that can be the object of a domestic or international transaction or that can be entered into stocks. In other words, it includes not only products that are an output of economic activity (i.e. goods and services/), but also non-produced assets, including tangible assets such as land, and intangible assets arising from legal contracts such as patents and copyrights/. It takes into consideration the linkage that exists between activities and their outputs at a broad level of aggregation. Any thing that is an object of transaction is covered in CPC.

In developing CPC, consideration has been given to raw or base material involved, stage of production and degree of processing, physical properties, related economic activities and the purpose or intended use of the product. In this regard, categories of goods in CPC are defined in such a way that each consists of one or more complete HS six-digit category/. These serve as building blocks for the part dealing with transportable goods/. Also, each class of CPC consists of goods or services that are predominantly provided in one class of ISIC/. Furthermore, the basic categories of economic supply and use as specified in the System of National Accounts (SNA), has also been taken into account in defining CPC classes.

The five-digit coding system of CPC is hierarchical (and decimal), consisting of sections (identified by the first digit), divisions (identified by the first and second digit), groups (identified by the first three digits), classes (identified by the first four digits), and sub-classes (identified by all the five digits taken together). The CPC has ten sections/, 69 divisions, 293 groups, 1,050 classes and 1,811 sub-classes. Of the total number of 1,811 sub-classes, 1,136 are transportable goods (with 1,022 sub-classes accounting for manufactured products) and 675 are non-transportable goods and services.

The main purpose of CPC is to provide a general framework of comprehensive coverage for international comparison of data in respect of all products, regarding production, intermediate and final use, capital formation and trade.

The CPC serves as a guideline for product-type classification for specific areas or sub-areas of economy (e.g. forestry; NWFPs) and presenting product statistics at different levels of aggregation.

System of National Accounts (SNA)

SNA is prepared under the auspices and joint responsibility of five organisations: Commission of the European Communities Eurostat; International Monetary Fund; Organization for Economic Co-operation and Development; United Nations and the World Bank. It is a system of macro-economic accounts intended for use of both national and international statistical agencies, and it reinforces the central role of national accounts in economic statistics. It provides an accounting framework within which economic data can be compiled and presented for economic analysis, decision-taking and policy-making.

The SNA provides a coherent, consistent and integrated set of macro-economic accounts, balance sheets and tables based on internationally-agreed concepts, definitions, classifications and accounting rules. All the other systems discussed earlier feed into SNA. It is thus harmonized with related statistical systems.

The SNA covers all aspects of economy. Central framework of SNA contains detailed supply and use tables that record how supplies of different kinds of goods and services originate and how these supplies are allocated between various intermediate and final users. It defines aggregate actual production and final consumption. It also compiles an integrated set of price and volume indices for flows of goods and services, gross value added and GDP.

The SNA provides separate sets of tables to record changes in, and re-evaluation of, assets. It provides a satellite framework for environmental accounting to assess interactions of environment and economy. It delineates transactors of economy, defines boundaries of products and assets and provides detailed explanatory notes, definitions, steps and guidelines to make assessments and calculations.

Of the different aspects of national accounts covered in SNA, this paper will look into production, capital stock and environmental accounting.

Production

Within the framework of SNA, no distinction is made between production of goods and services. Production covers non-factor service, remunerations to the production factors, merchandise products (involving stock of materials) and non-merchandise products, i.e. services. Incomes are generated continuously by production and it is the basis for national income. Definition of production specifies production boundary.

Production is understood as a physical process carried out by institutional units that use labour and assets to transform inputs of goods and services into outputs of other goods and services. The outputs of goods and services are products. The institutions entering into production-related transactions are financial corporations, non-financial corporations, government units, non-profit institutions serving households and, households. The defined boundary of production determines the amount of value added, included in GDP. Often, production boundary problems arise due to the difficulty in recognizing/recording certain increase in value as resulting from production, e.g. natural growth increment of wild, uncultivated forests, which involves no direct input. A purely natural process, without any human involvement and direction is not considered as production in the economic sense. Production of services for final consumption within the same household is also outside the production boundary.

Product classification of SNA is harmonized with international product classifications either by using their categories or by referring to them. In SNA, all goods and services produced and used are treated under ten categories of activities, nearly identical with CPC: agriculture, forestry and fishery products; ores and minerals; electricity, gas and water; manufacturing; construction work and construction, land; trade services, restaurant and hotel services; transport, storage and communication services; business services; community, social and personal services, excluding public administration; and public administration.

The goods and services account of SNA traces the transactions of products through the economy from their original producers to their users. The different types of outputs from varied types of production units (capital goods, intermediate goods, consumption goods; market, own-account and non-market productions of goods and services) are all linked and brought together in SNA in a single accounting unit. Some types of productions may extend over months or years (e.g. growing of forest produce); they are treated in the accounts as work in progress, i.e. output which is not sufficiently processed to be in the from ready for the market. Value of production within a unit, industry, sector and economy is thus represented by value of sales, value of other uses plus changes in inventories, including additions to work in progress, suitably aggregated. Non-market goods and services (i.e. those provided to individual households, free or at prices which are not economically significant) often do not get accounted. However, non-monetary transactions involved can be valued at market price for similar goods or by proxy measures.

Capital/Accumulation Accounts

These are concerned with values of assets owned by institutional owners or sectors (and their liabilities) at a particular point in time. These provide a measure of wealth of the nation.

Assets are entities over which rights are exercised and benefits derived by owners. According to this definition, some of the environmental benefits/services (such as scenic beauty) cannot qualify as economic assets, even though some others can be included. Assets are mainly of two kinds: financial assets and non-financial assets. Non-financial assets include those which are produced (i.e. came into existence through production process) and those which are non-produced (e.g. land, forests). Different kinds of benefits may be derived from different kinds of assets (e.g. use, income, stored value).

The accumulation account provides the balance sheet of asset position. Previous balance of asset stock plus assets created/discovered minus assets used/lost provides the new asset position. Within this concept, it is possible to bring in changes in the quality (value) and quantity of natural resources stock, such as of forests.

Most assets consist of financial claims; this makes valuation easier. While ownership is easily established over some natural resources such as forest, topsoil, surface water in lakes, rivers and reservoirs, etc., valuation of these assets is difficult because of lack of information. Once these resources become a factor of economic production (of goods and/or services), information flow on them will improve (e.g. new items of NWFPs).

Environmental Account

Environmental account is developed as a satellite system. Satellite accounts and related analysis are special constructs, which are semi-integrated with the central framework of SNA. They serve special needs such as: to make apparent and to describe in more depth aspects that are hidden in the accounts dealt with in the central framework; to deal with specific requirements when they conflict with concepts of the central framework or overburden it; to elaborate complementary elements. This approach is resorted to because of the difficulty in enlarging the production boundary by incorporating some of the environmental benefits which are not quantifiable.

Satellite accounts or systems generally stress the need to expand the analytical capacity of national accounting for selected areas of concern in a flexible manner. It helps to provide additional information on particular social concerns, and helps use of complementary or alternative concepts when needed to introduce additional dimensions to the conceptual framework.

The latest (1993) SNA brought in environmental accounting in a satellite accounting framework, i.e. the System of Environmental Economic Account (SEEA). This makes it possible to deal in a compatible manner with economic and environmental concerns, and thus to make operational the concepts of sustainable growth and development.

The most important difference in SEEA as compared with SNA, is the extension of the asset boundary. The SEEA does not distinguish between national assets that are economic assets and those that are not, focusing on environmental impacts irrespective of particular institutional arrangements of ownership and control.

Many costs and capital items of accounting for natural resources are identified separately in the classification and accounts dealing with stocks and other volume change of assets. These facilitate the use of SEEA as a point of departure for environmental accounting.

Some of the feasible approaches in environmental accounting are the following:

Natural resources account in physical terms measures changes in area, volume or other physical quantities. Wherever applicable and feasible, it may also include changes in environmental quality of natural assets in proxy measures.

Environmental account in monetary terms, generally measures the expenditure for addressing environmental problems. It may also include some sort of environmental adjustments developed, imputing values for depletion/degradation and enhancement/expansion of related natural resources.

Welfare measures and similar approaches attempt to develop environmental sustainability standards and assess impacts of environmental changes on social well-being. The environmental services provided free and the damage borne can be considered as transfers by and to nature. However, in these cases, imputed values have different economic significance compared to monetary values.

Linkages

As we have seen, the systems of international classifications and national accounts are strongly interrelated. These help to put one sector/sub-sector of the national and international economy into perspective vis-à-vis the other sectors. To get the correct perspective, therefore, it is necessary that each sector and sub-sector obtains adequate and comparable coverage reflecting their real comparative significance.

The discussion of the different systems of classification and its linkage to SNA highlights the importance of adopting a comprehensive classification (and accounting) system for forestry, including NWFPs, in order to be able to claim its due importance in the scheme of national and world economy. The discussion also touched upon the benefits of internationalization of statistical concerns.

However, it may be understood that a national-level classification need not necessarily be identical with the international classification. National governments can adopt a classification with such modifications as may be necessary to meet national requirements within the international framework.

The fact that priorities and capabilities, and immediate data needs, may vary from country to country does not justify construction of different systems. In cases where countries are so constrained, it would be preferable to start with a reduced set of accounts or aggregated accounts. It is however incumbent to adopt standard definitions. Internationally-comparable statistics cannot be realized unless standardization is applied to both definitions and classification (of transactions as well as transactors).

Towards a Better International Classification

Past efforts to develop a classification and statistical system for NWFPs have proven insufficient, and attempts to develop an international system for compiling statistical information on NWFPs have mostly failed. The Forestry Department of FAO attempted to collect and publish statistical information related to production and trade of other forest products (forest products other than wood) in the Yearbook of Forest Products during 1954 to 1971. It covered only a limited number of products: raw cork; bark and other materials for tanning; bamboo; materials for plaiting; natural rubber, balata, gutta-percha; oil seeds, oil nut, oil kernels; vegetable oils and waxes. After 17 years, the effort was abandoned in 1971 due to the difficulty of obtaining adequate information to provide a reasonable picture of the NWFPs sector.

The Need

A number of countries use various local classifications. These are, in most cases, listing of products historically included under Minor Forest Products (MFP) in those countries and often use different undefined terms. While one classification lists berries and wild fruits, forest botanicals, flavourings, medicinals and pharmaceuticals, weaving and dying materials, cork and bark, and Christmas trees, others list edible products, ornamental materials, palm sugar, honey and wax, exudates, oils and extractives. Yet others list food products, nuts, oil seeds, medicinal plants, bamboo, and animal products. The items included are not linked hierarchically with clear product boundaries. They are mostly listed on the basis of local importance. Thus, these classifications in most cases serve the limited local purposes such as administrative reporting or identifying products for specific purposes.

In most cases, they lack the consistency required to be aggregated or compared for such purposes as trade analysis, provision of market information, investigating export potential, conducting outlook studies and planning for product development. Because of this, these products rarely feature in official statistics or national accounts, thus wrongly suggesting a relatively low contribution of forests to GDP and national welfare.

The reasons leading to the situation are several:

NWFPs in the formal sector often get reported under other sectors, (e.g. agriculture, horticulture, manufacturing) in the absence of a relevant classification and accounting structure. Services such as grazing in forest land are not, in most cases, reported at all. Consequently, we have only limited knowledge about their productivity, development potential, and role in supporting sustainable development. In spite of their NWFP potential, forests which are not important from the point of view of wood production are often perceived wrongly as of no real value and soon converted into alternative land uses leading to deforestation and related environmental costs.

While NWFP-related activities have not received the attention they deserve, other formal sectors like manufacturing and mining get fully reported. Due to this imbalance in reporting, these formal sectors have been accorded more than their real proportional importance in statistical analysis (and development funding). Within the forestry sector, wood products receive a reasonably elaborate treatment under national and international statistical systems. As a result, they tend to be considered as much more important than other products and benefits, often undeservedly (especially because their cost in terms of resource depletion and degradation is not considered in most cases), perpetuating the minor status of NWFPs. Hence the functional need for a better classification of these products.

Recently, there have been attempts at various levels to develop or improve classification of NWFPs. Most of them, however, call for further modifications and refinements. An international classification framework facilitated by broadening experience and expertise in the general area of product classification can greatly help in that regard.

While it may remain difficult to obtain relevant quantitative information on NWFPs (and other benefits), there have been improvements in the systems of product classification and national accounting, as already noted. The systems, as they have evolved, provide considerable flexibility for incorporating estimated or imputed values. Methodologies are being developed and improved continuously through research and trials for estimating values of goods and services for which no market information exists. Additional information can be generated on other benefits/influences through satellite analysis without affecting the consistency of product classification. Therefore, it is time to review the situation and initiate feasible improvements to avoid distortion of relative roles and priorities.

Improvements in the classification and accounting of NWFPs have to take place within an improved system for forestry as a whole. While the focus of this paper is NWFPs, it is to be underlined that it is artificial to treat NWFPs in isolation since forest benefits, wood and non-wood goods and services, are inextricably linked. Forest influences and many intangible benefits (for example conservation of bio-diversity) cannot be classified either with (or as part of) wood or non-wood products.

Forest accounts should consider forest influences/intangible benefits, wood products and NWFPs as separate components of an integrated whole. These, together with valuation of forest resources stock would provide a more realistic and meaningful representation of the value of the forest sector. In this regard, classification of products (including services) can be developed within the framework of CPC/SITC Rev. 3/HS and benefits can be incorporated through the system of satellite accounts within the framework of SNA. Already a comprehensive system exists for wood products even though deficiencies can be seen in their reporting, indicating the need for increased attention in the collection of statistical information.

Satellite Analysis

While quantitative increases in the area under forests (e.g. man-made forests) can easily be measured as asset increase or work in progress, quality improvements to the capital stock through conservation in the form of improved amenity values, watershed values, water quality, soil stability, environmental quality, conservation of bio-diversity, forest and wildlife-related recreational experiences, etc., are difficult to measure. These can be taken into account only through a system of satellite analysis, as they involve non-consumptive uses and un-priced values. Often, these benefits are enjoyed by a community at little or no cost.

An increasing number of efforts have attempted to improve and make use of economic techniques to value the changes in these environmental contributions and assets; and different techniques are being tried in different situations, depending on specifics. These non-market evaluations are carried out using methods such as replacement cost, shadow prices, surrogate market, compensation, sample questionnaire surveys, travel cost/travel time valuation, participant observation and field investigations, hedonic pricing, and contingent valuation (of willingness to pay or bear loss). These methods do, however, overlap. Some of these approaches, for successful application, involve research to arrive at approximate values, e.g. on cost involved in watershed improvement to value the damages adverted. These have opened new ways of providing some form of measure or orders of magnitude to previously unmeasurable benefits. They have helped to improve the system of valuation for decision-making.

Three methods, more often applied with some success, to value forest and wildlife-related recreational experiences are: travel cost method, hedonic pricing method and contingent valuation method/.

These methods consider consumers surplus and seek to place a value on the benefits derived from a public good or denied when the public good is no longer available/.

The valuation methods for determining economic use values, with due corrections for biases, can be applied successfully and there are important opportunities to use some of these methodologies even though not yet applied extensively. But methods for estimation of non-use values (e.g. option values) are virtually non-existent.

A Classification Scheme for NWFPs

In spite of the integrated nature of wood and NWFPs and services, it is advisable and necessary to have a sufficiently detailed sub-system for NWFPs. As indicated elsewhere, wood products are fairly well covered in the existing systems, but not NWFPs.

A general tentative classification scheme for NWFPs is given in Annex 1. In classifying NWFPs, consideration has been given to: the group of organisms from which products originate; specific parts of plants/animals providing the products; manner of collection or harvest; properties of products and predominant intermediate or end uses/ in industry and trade. Highly processed consumer goods (such as golf balls, cosmetic products, confectionary) in which NWFPs form an essential but not a dominant component are excluded as they are covered under manufacturing.

The classification has full harmony and correspondence with the existing international classification, particularly the CPC. It has included tangible/storable/transportable goods and non-tangible/non-storable/non-transportable services, realizing that there may still be several borderline cases. It also has taken into consideration the several regional and local classifications.

The tentative classification scheme is to be considered as a framework and needs to be refined into a more elaborate and realistic system for use at international and national levels by improving and expanding it in the future to encompass a broader range of specifics. Of course, the level of detail required for purposes of international comparison is generally less than what is needed for national analyses. It should be pointed out that refinement and harmonization of the existing functional classifications such as SITC, HS, and CPC took several years (in fact, decades).

Appropriate Treatment in ISIC

While several classifications exist, as already seen, none of them brings out adequately the importance of forest products, and particularly, of NWFPs. The main purpose of this paper is to highlight this deficiency and to indicate the crucial need for developing an appropriate product classification.

In this regard, it is also essential that a properly defined place is found for forestry activities (with appropriate treatment of activities related to NWFPs) in the ISIC, reflecting the linkages between products and activities. For example, in ISIC, all tourism-related activities are brought together as an annex. Probably such an approach would be feasible also for forestry.

NWFPs Statistics

Since an important purpose of classification is to compile statistical information, and a statistical system hardly exists for NWFPs, development of this will have to be approached in stages, starting with those products for which statistical information will be comparatively easy to collect, e.g. bamboo, rattan, gum arabic. In this regard, several situations could be encountered:

The cost involved in establishing an elaborate statistical system for NWFPs may well be beyond the capacity of many countries; this also makes it necessary to adopt a phase-by-phase approach.

Even though it is possible to identify, count, weigh and measure NWFPs, and there have been improvements in this direction, lack or inadequacy of institutions and arrangements still present serious problems. It is necessary also to decide on the correct measures to be adopted for different products. A most difficult part is where the products are to be assigned a monetary value, based on shares of NWFPs going to the households (including subsistence non-market use) and to the market. There is surely need to give more attention to continuous improvement of the methods and systems.

CONCLUSION

Definition, classification and a system of accounting are crucial in providing valid statistics for assessing the real significance and comparative roles of sectors and sub-sectors of the economy, for making realistic projections of sectoral outlook, and for planning sectoral developments. The intention here is to underline the need for these in respect of NWFPs.

This paper does not pretend to present an authoritative definition or a definitive classification for NWFPs. Its purpose is to facilitate discussion and elicit views and suggestions in that regard. It also seeks to promote and encourage national and international initiatives to collect and disseminate statistical information on NWFPs.

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  1. /Chief, Non-Wood Products and Energy Branch, Forest Products Division, Forestry Department, FAO, Rome.
  2. /As far as the author is aware, only Minor Forest Products (MFP), among the terms mentioned, has a definition authorized by the Joint FAO/IUFRO Committee on Forestry Bibliography and Terminology. Having defined major forest products as timber and fuelwood, MFP is defined as all others, including leaves, fruit, grass, fungi, resins, gums, animal parts, e.g. hides and horn andin in some regions more important than any other product ? water; also soil, gravel, stone and other minerals on forest land.
  3. /In Spanish it reads: "Todos los productos vegetales y animales y servicios derivados de los Bosques y Otras Tierras Forestadas y de Arboles Fuera del Bosque excluyendo la madera rolliza industrial, la madera para energía y los productos hortícolas y animales domésticos".
  4. /Charcoal being a product of incomplete combustion is treated along with fuelwood. Details of production and trade in charcoal are also currently being reported under forest (wood) products. Liquid fuel of forest origin in the form of alcohol and bio-diesel will fall under non-wood products.
  5. /Apart from defining the encompassing term non-wood forest products, it is also necessary to define and/or provide notes on the component items of products. In most cases, these do exist under the different systems of product/commodity classification.
  6. /The 17 tabulation categories are: agriculture, hunting and forestry; fishing; mining and quarrying; manufacturing; electricity, gas and water supply; construction; wholesale and retail trade including repairs; hotels and restaurants; transport, storage and communications; financial intermediation; real estate, renting and business activities; public administration and defence; education; health and social work; other community, social and personal service activities; private households with employed persons; and extra-territorial organizations and bodies.
  7. /First two digits represent the division, third digit the group and fourth the class.
  8. /The sections are based on broad economic categories: 0: food and live animals; 1: beverages and tobacco; 2: crude materials, inedible, except fuels; 3: mineral fuels, lubricants and related materials; 4: animal and vegetable oils, fats and waxes; 5: chemicals and related products, n.e.s.; 6: cork and wood manufactures (excluding furniture); 7: machinery and transport equipment; 8: miscellaneous manufactured articles; 9: commodities and transactions not classified elsewhere in SITC.
  9. /The 21 sections are: (1) Live animals; animal products; (2) vegetable products; (3) animal or vegetable fats and oil and their cleavage products; prepared edible fats; animal or vegetable waxes; (4) prepared food stuffs; beverages, spirits and vinegar; tobacco and manufactured tobacco substitutes; (5) mineral products; (6) products of the chemical or allied industries; (7) plastics and articles thereof; rubber and articles thereof; (8) raw hides and skins, leather, fur skins and articles thereof; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut); (9) wood and articles of wood; wood charcoal; cork and articles of cork; manufactures of straw, of esparto or of other plaiting materials, basket ware and wicker ware; (10) pulp of wood or of other fibrous cellulosic materials; waste and scrap of paper or paper board; paper and paper board and articles thereof; (11) textiles and textile articles; (12) foot ware, headgear, umbrellas, sun umbrellas, walking sticks, seat sticks, whips, riding-crops and parts thereof; prepared feathers and articles made thereof; artificial flowers; articles of human hair; (13) articles of stone, plaster, cement, asbestos, mica and similar materials; ceramic products; glass and glass ware; (14) natural or cultured pears, precious or semi-precious stones, precious metals, metals clad with precious metals and articles thereof; imitation jewellery, coin; (15) base metals and articles of base metal; (16) machinery and mechanical appliances, appliances, electric equipment, parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such article; (17) vehicles, aircrafts, vessels and associated transport equipment; (18) optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; clocks and watches; musical instruments; parts and accessories thereof; (19) arms and ammunition; parts and accessories thereof; (20) miscellaneous manufactured articles; (21) works of art, collectors pieces and antiques.
  10. /Goods are physical objects for which a demand exists, over which ownership rights can be established, whose ownership can be transferred.
  11. /Services are not separate entities over which ownership rights can be established; cannot be traded separately from their production; mostly confined to activities that are capable of being carried out by one unit for the benefit of another (e.g. insurance, advisory services).
  12. /CPC contains a description and classification of services/outputs of heterogenous service industries (e.g. recreational and cultural services, hotel services), incorporating specific services as well as those comprising a bundle of goods and services.
  13. /Although the non-processed assets are not regarded as products in the System of National Accounts (SNA), CPC considers it useful to include them because there is substantial national and international trade in them, and many users are interested in such data.
  14. /Also for transportable goods, all five-digit items of SITC are equal to, or a part of, a single CPC sub-class.
  15. /Since HS deals only with transportable goods, no correspondence exists between the two systems for thereminder of CPC.
  16. /Since ISIC is based on industrial origin, it is difficult to have one to one correspondence between ISIC and CPC.
  17. /The sections are: 0: Agriculture, forestry and fishery products; 1: Ores and minerals, electricity, gas and water; 2: Food products, beverages, tobacco, textiles, apparel and leather products; 3: Other transportable goods, except metal products, machinery and equipment; 4: Metal products, machinery and equipment; 5: Construction work and constructions; land; 6: Trade services, hotel and restaurant services; 7: Transport, storage and communications services; 8: Business services, agricultural, mining, and manufacturing services; 9: Community, social and personal services
  18. /Travel cost method is an indirect approach to estimate the implicit price the recreationists are willing to pay to the site attributes. This method does not include the public benefits from preservation of resource quality. Hedonic function considers quality differences and demand for goods/properties and services based on the characteristics of their surroundings. Contingent valuation method uses a survey approach to elicit consumers maximum willingness to pay for the benefit (or accept compensation for loss of it).
  19. /These methods can also be used to estimate value of the non-market use and transactions of fuelwood and NWFP such as medicinal plants and edible forest products.
  20. /Specifically in respect of those which have several uses
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