The economic contributions of forests

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Many direct economic contributions of forests are well documented, particularly the value of wood energy and solid wood and fibre products. An estimated three billion people depend on fuelwood as their main source of household energy, consuming more than one-half of the world's wood production. In many urban areas of developing countries, families may spend 20 to 30 percent of their income on fuelwood and charcoal. In 1992, global wood consumption included 1.87 billion m of fuelwood and 1.6 billion m of industrial roundwood (see Figure 10).


Gene pool Forests contain a diversity of species and habitats. They provide the gene pool that can protect commercial plant strains against pests and changing conditions of climate and soil and provide the raw material for breeding higher-yielding strains. The wild relatives of avocado, banana, cashew, cacao, cinnamon, coconut, coffee, grapefruit, lemon, paprika, oil palm, rubber and vanilla - the exports of which were worth more than $20 billion in 1991 - are found in tropical forests.
Water Some 40 percent of developing country farmers depend on forested watersheds for water to irrigate crops and to water livestock. In India, forests provide water regulation and flood control valued at $72 billion per year. In most countries of Europe and in the United States, Japan and Australia, more than 20 percent of the forest area is regarded as important for the protection and conservation of water supply.
Watershed Forests keep soil from eroding into rivers. Siltation of reservoirs costs the world economy about $6 billion per year in lost hydroelectricity and irrigation water.
Fisheries Forests protect fisheries in rivers, lakes, estuaries and coastal waters. Three-fourths of fish sold in the markets of Manaus, Brazil, are nurtured in seasonally flooded varzea forests, where they feed on fruits and plants. The viability of 112 stocks of salmon and other fish in the Pacific Northwest (North America) depends on natural, old-growth forests; the region's salmon fishery is a $1 billion industry.
Climate Forests stabilize climate. Tropical deforestation releases the greenhouse gases, carbondioxide (CO2), methane (CH,) and nitrous oxide (NO.). Replacing the carbon storage function of all tropical forests would cost an estimated $3.7 trillion - equal to the gross national product of Japan.
Recreation Forests serve people directly for recreation. The United States Forest Service calculates that, in eight of its nine administrative regions, the recreation, fish, wildlife and other non-extractive benefits of national forests are more valuable than timber, grazing, mining and other benefits. In most countries of Europe and in Australia more than half the area of public forests is regarded as important in providing recreational services.

Sources: Table 2 in A.T. Durning. 1994. Saving the forests: what will it take?
Worldwatch Paper 117. Washington, DC, Worldwatch Institute; and ECE/FAO.
1993. Forest resources and the temperate zones. The UN-ECTAO 1990 forest resource assessment Vol. 11. Benefits and functions of the forest New York, UN.

Table 10: Economic value of Swedish forests

  SKr billion Percentage of GDP
Stumpage value of wood 8.0 0.9
Value of manufactured products 90.0 10.0
Forests and habitat 0.3 ...
Forests as virgin environment 0.1 ...
Recreation and services 0.7 ...
Hunting 1.6 ...
Non-wood crops: berries 0.8 ...
mushrooms 0.5 ...
Total 4.0 0.4
Imputed value of CO2 sequestration 8.0 0.9

Source: T. Jones and S. Wibe. 1992. Forests: market and intervention failures - five case studies. London, Earthscan.

The total value of fuelwood and wood-based forest products is estimated to be more than $400 billion. Wood for industrial uses accounts for 75 percent. No comparable global estimate is available for non-wood services and benefits of forests, but some country estimates do exist. An FAO study of non-wood forest product use in Greece, Italy, Morocco, Spain, Tunisia and the coastal zones of France and Algeria indicate that Mediterranean trade in cork, resin, mastic gum, honey, mushrooms, wild fruit and wild game, added to the value of trees used in livestock production, had an estimated value of more than $1 billion in 1992, with a development potential of up to $5 billion per year.

Table 10 shows that the estimated value of non-wood goods and services from Sweden's forests is 50 percent of the wood value but only 5 percent of the value of the products manufactured with wood. Box 17 assembles a variety of non-wood forest values (estimated by different methods for different purposes).

Table 11: Production of forest products, 1992

Product World Developed countries Developing countries

(million m)

Roundwood 3477 1433 2044
- Fuelwood 1873 244 1629
- Industrial      
roundwood 1603 1188 415
Sawnwood 450 343 107
Wood-based panels 122 92 30


Paper 245 200 45

Global per caput consumption of forest products has increased by nearly 1 percent per year over the past three decades. Between 1961 and 1991, the value of global wood consumption more than doubled in real terms, growing by an average of 2.7 percent per year.

During the same period, global roundwood production increased by 75 percent, fuelwood nearly doubled and industrial roundwood increased by 50 percent. Among processed products, sawnwood increased by 20 percent, wood panels by 600 percent and paper by 350 percent. The 1992 production volume is presented in Table 11. Three countries, Canada, the Russian Federation and the United States, account for more than one-half of all the world's industrial roundwood production.

Figure 11: Composition of biofuels in energy supply of selected countries; Source: FAO

These substantial increases in the volume of wood-based products have been achieved with a relatively small increase in industrial roundwood production. This is explained by improved efficiency in sawnwood and plywood production, the recovery of wood residues for the manufacture of other wood-based panels and in paper manufacture, and increased recycling of used paper in paper manufacture. In addition, wood residues make important contributions as a fuel source, improving energy efficiency in many wood industries.

Table 12: Fuelwood in world energy consumption

Region Share of fuelwood in energy consumption
1970 1980 1990


World 5.1 5.2 5.0
Developed countries 1.0 1.1 0.9
Developing countries 24.0 19.0 15.0
Africa 67.0 56.0 58.0
Latin America 20.0 15.0 15.0
Asia 19.0 16.0 11.0

Source: FAO.

The developed countries consume most of the world's sawnwood and wood-based panels (300 ml per 1000 people per year for housing and furniture) and paper (150 tonnes per 1000 people per year for communications, packaging and hygiene). Average annual developing country consumption of sawnwood and wood-based panels is 30 ml per 1000 people and consumption of paper is 12 tonnes per 1000 people.

In developing countries, 80 percent of wood is consumed as fuel. Fuelwood accounts for 58 percent of energy use in Africa, 15 percent in Latin America and 11 percent in Asia (see Table 12). In more than 40 countries and in many of the least-developed countries, wood is the source of more than 70 percent of national energy consumption. Wood supplies the basic energy needs in communities where people lack access to or cannot afford alternative fuels; where wood supply is scarce, twigs and leaves may be used. Figure 11 compares the role of fuelwood in national energy supply for Bangladesh, Ethiopia and India; and fuelwood use in urban households in Burkina Faso, China, Haiti and Zambia.

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