Chapter 3: Forest accounts at the regional level and for individual forests

Most forest accounts have been constructed at the national level, yet countries often have separate forests or regions with distinct characteristics that have very different forest economic values. While accounting for the total economic value of forests at the national level is indispensable, forest management also requires a relatively localized or regional approach, which reflects local forest characteristics. In order better to represent regional differences, some forest accounts have been constructed at the regional level or for individual forests.

Chapter 1 identified three levels at which policy formulation and resource management takes place: the macroeconomic (national) level, the sectoral or industry-wide level and the community/regional or production level. This chapter explores the relationship between forest accounting at national as well as regional/forest levels. Two issues are considered: how spatial disaggregation of national accounts to the regional level can improve the policy usefulness of national forest accounts, and how the accounting framework can assist stakeholders at the regional or even local level in forest management.

Case studies from Swaziland and Spain are used to help explore these issues. In Swaziland, national forest accounts were constructed from comprehensive regional accounts defined on the basis of ecological zones and type of forest. In Spain, forest accounts were constructed for a single forest, but were not related to national forest accounts. Finally, a case study of Tanzania’s catchment forest reserves is discussed because it provides a good example of an effort to include forest environmental protection services. These services are one of the major benefits to non‑forestry sectors and are critical in establishing cross-sectoral linkages.

3.1 Spatial disaggregation of national forest accounts

In designing forest policy at the macroeconomic level, an overview of the role of forestry in the economy is needed, which national‑level forest accounts provide. Many of the policy issues discussed in the previous chapter require analysis at the national level. Also, the total dependence of other sectors on forestry services, summed across all regions and forests, can help foresters in their negotiations over national budget priorities and coordination of forestry and non-forestry policies at the national level. National forest accounts provide the basis for designing policy to address international concerns such as participation in carbon markets.

A strong argument can be made, however, for some regional differentiation of the accounts even in addressing sectoral and national‑level policy issues. At the sectoral level, for example, setting priorities for investment in forests and forest management is an issue that requires both the overview of all forests provided by national forest accounts as well as accounts for each region or forest in which investment will take place. At the local level, the best investments for a specific forest can be identified; at the national level, priorities are set among the regions for investment. Decisions may be made only by ranking the socio-economic costs and benefits in each region.

At the national level, the value of forest benefits may constitute a relatively small share of GDP, even when all the non-market benefits are accounted for. However, forest benefits may be very high for some regions within a country, or for specific communities within a region. Even assessments of macroeconomic policies on forestry would benefit from some regional disaggregation of forest accounts. The previous chapter described case studies for the Philippines and Indonesia of the impacts of macroeconomic policies on forestry based on national forest accounts. Both of these countries are vast, with forests and forest utilization that vary significantly from region to region. In order to represent the geographic variation, national forest accounts were disaggregated by geographic and ecological characteristics. The national‑level framework of forest accounts then became a strength rather than a weakness, because it provided a framework for consistent and comprehensive treatment of all land and forests, which in turn allowed aggregation of localized impacts to determine the cumulative impacts for the national economy.

3.2 Regional forest accounts and accounts for individual forests

It is increasingly common to build national forest accounts from accounts for more detailed sub‑national regions or for specific forests. For example, Mbuli (2003) constructed forest accounts for Swaziland based on separate accounts for each of the four major ecological regions. Campos (2000) provides a collection of six case studies of forest accounts compiled for individual forests in Spain, USA and Colombia, and Haripriya (2000) constructed forest accounts for the Indian state of Maharashtra. Other forest accounts, including most of those from developed countries listed in Table 3.1 as well as South Africa, Philippines and others, were constructed from regional accounts, although the regional detail may not be reported in forest accounts.

In this section, two forest accounts are presented as examples of two different approaches to spatial disaggregation. The first is an account for a single forest in Spain, while the second example is the forest accounts for Swaziland disaggregated by ecological region.

3.2.1 Accounts for the Guadarrama silvestris pinewood forest in Spain

Capparós et al. (2001) constructed accounts for a forest in the Guadarrama mountains, which is one of the best areas for commercial Pinus silvestris and also a very popular recreational area because it is only 100 kilometres from Madrid. These compete with additional uses of the forest for livestock grazing and local harvesting of mushrooms, as well as the global benefits from carbon storage and biodiversity conservation. The purpose of this study was to account for the economic value of all uses, and to determine the distribution of forest benefits to different stakeholders.

Commercial logging is the only market activity in the forest: recreation, hunting and mushroom picking all take place free of charge. Livestock grazing is also mainly a market activity, but there is no charge for grazing in the forest. For most activities, the value may be estimated on the basis of similar products or close substitutes that are marketed. Recreation, carbon storage and biodiversity conservation were estimated using other methods described in Chapter 2. Table 3.1 shows the value of each forest product and the valuation method used. For comparison, the authors estimate the net income from production of forest goods and services and, in the case of logging, the distribution of income between landowners and forest workers. Most other activities have few or no intermediate inputs.

Local beneficiaries are the largest beneficiaries, receiving 46 percent of the value of forest goods and services, followed by regional communities that receive 42 percent. Commercial logging is the single most valuable activity, accounting for 40 percent of forest goods and services, split between landowners (35 percent) and forest workers (5 percent). Additional benefits from livestock grazing, hunting and local mushroom picking account for another 6 percent. Recreational activities, split between mushroom picking and other activities, account for 42 percent of forest benefits and accrue to regional communities, many from nearby Madrid. Global beneficiaries from carbon storage and biodiversity conservation receive 12 percent of net benefits.

Table 3.1: Value of forest goods and services in Guadarrama sylvestris pinewood forest in Spain, 1998

	Net income/benefit		Valuation method
	(euros/ha)	Percent of total	Valuation method
1. Local beneficiaries (47%)
Timber	134	40%	Market value of timber
Landowners	118	35%
Forest workers	16	5%
Grazing of livestock	10	3%	Market rental cost of similar grazing area
Hunting	2	1%	Market value of commercial game meat
Mushroom picking, local	11	3%	Market value of commercial mushrooms
2. Non-local, regional beneficiaries (42%)
Mushroom picking, recreational	9	3%	Market value of commercial mushrooms
Recreation (except mushroom picking)	132	40%	Travel cost method
3. Global beneficiaries: local, regional, international (12%)
Carbon	7	2%	Damage averted method
Biodiversity conservation	33	10%	Contingent valuation method (only of people in the region)
Total value	341	100%

Note: Figures reported per hectare only, not for total area

Values are reported net of intermediate inputs

Figures do not sum to total due to rounding

Source: Adapted from Capparós et al. (2001) Tables 2 and 7

3.2.2 Forest accounting by ecological region in Swaziland

Swaziland’s national forest accounts were constructed as a joint project of the Department of Forestry and the Central Statistics Office from accounts compiled at the regional level utilizing information collected under the Swaziland forest resource assessment (Mbuli, 2003). Regions were classified by the major ecological zones described in Table 3.2. Accounts were also partly reported for 13 major types of vegetation in natural forests, woodlands and bushlands and cultivated forests (Table 3.3). The forest accounts do not fully cross tabulate the two sets of criteria for classification, although they could be compiled in that manner.

Table 3.2: Ecological zones of Swaziland

Ecological zone	Characteristics of ecological zone	% of country	Population in 1999 (millions)
Highveld	Average altitude 1300 metres, Average annual rainfall 1000-1500mm Semi-humid climate with short grassland forest patches	33%	0.29
Middleveld	Average altitude 500 metres, Annual rainfall 600-750mm Tall grassland with scattered trees and shrubs High rates of soil erosion	28%	0.37
Lowveld	Average altitude 200 metres, Annual rainfall 600-750mm Near tropical climate Mixed and acacia savannah	31%	0.21
Lubombo plateau	Average altitude 600 metres Hillside bush and plateau savannah	8%	0.05
Total land area and population		1.7 million hectares	0.92 million people

Source: Mbuli, 2003

Table 3.3: Distribution of forests and woodlands in Swaziland by type of vegetation, 1999

Vegetation types		Area (ha)	% of total
Natural forest		36,556	4.6
	Dense montane highland	10,510	1.3
	Open montane highland	839	0.1
	Riverine forest	25,207	3.2
Natural woodlands		382,261	48.5
	Mixed woodlands, dense	52,971	6.7
	Mixed woodlands, open	116,649	14.8
	Acacia, dense	10,293	1.3
	Acacia, open	168,020	21.3
	Dry acacia woodland, dense	1,482	0.2
	Dry acacia woodland, open	32,846	4.2
Bushland		232,954	29.5
	Dense bushland	55,683	7.1
	Open bushland	177,271	22.5
Cultivated forests		136,662	17.3
	Pine and gum	110,222	14.0
	Wattle	26,440	3.4
Total		788,433	100.0

Source: Adapted from Hassan et al. p. 5, Table 1.

Swaziland has a large commercial forestry sector with cultivated forests and significant non‑market use of forest products from natural forests, mainly by rural households. Forestry companies provided information for the commercial sector. Information for the non-market sector was obtained largely from Swaziland’s forest resource assessment carried out by the Department of Forestry (DANCED, 1999, 2000). Under FRA and a subsequent survey of household utilization of forest products, a survey of 119 rural households collected information about the volume and prices of forest products used in each ecological zone. Although most products are collected for own use, there is a substantial informal market in forest products as well. These uses are not included in national accounts.

From the survey, per capita resource use was calculated for each ecological zone and applied to the total rural population in that zone. Surveys of urban population, which accounted for 23 percent of the population in 1999, were not carried out. For forest accounts it was assumed that their per capita use of firewood was half that of the rural population; the use of other forest products in relation to rural use is much lower, ranging from 2 percent for craft wood to 28 percent for timber for home construction.

The value of commercial timber, the only economic contribution of forests reported in national economic accounts, is emlangeni (E) 40.4 million in 1999 (euro 6.2 million), while the value from natural forests to local communities of non-market timber and NTFP is more than four times as great, E 170.4 (euro 26.2 million) (Table 3.4). Estimated tourism benefits are extremely low, but additional benefits from carbon storage in commercial plantation forests are substantial, more than twice the value of commercial logging.

The most important non-market forest product item in each region is timber, accounting for over 90 percent of the total value of forest products. The Swaziland accounts further disaggregate this product into firewood and the construction of homes, fences and cattle enclosures. Firewood accounts for most wood use in all regions, but the relative importance of each wood product varies by region. Thatch and weaving grasses are next in importance in all regions except Lubombo, where livestock grazing is more important. Unfortunately, in order to calculate benefits per hectare of forest, the study did not cross‑tabulate forest benefits by region and forest cover.

Table 3.4: Production of forest goods and services in Swaziland by ecological zone, 1999 (million emlangeni)

	Cultivated forests (mainly highveld)	Natural forests and woodlands					Total
	Cultivated forests (mainly highveld)	High-veld	Middle- veld	Low-veld	Lubombo	Sub-total	Total
1. Commercial timber	40.7						40.7
2. Forest products for own-use, mainly non-market Timber Edible plants Medicines Thatch, weaving grass Livestock grazing Sub-total		56.9 0.4 0.1 3.1 1.5 62.0	44.3 0.2 0.4 3.0 1.6 49.6	38.1 0.5 0.1 2.7 1.1 42.6	15.7 0.1 0.0 0.1 0.3 16.2	155.0 1.2 0.7 9.0 4.6 170.4	155.0 1.2 0.7 9.0 4.6 170.4
3. International tourism						0.1	0.1
4. Carbon storage	91.3	Carbon values for natural forests and woodlands not distributed by ecological region				7.9	99.2
Total							310.4
GDP, 1999 Forest values omitted from GDP Forest products for own use (except livestock)* Carbon storage Sub-total							8,410.0 165.8 99.2 264.0

*Assumes virtually the entire production value of non-market forest goods is value-added (labour cost), so the production value and contribution to GDP are the same. (See discussion in Chapter 2).

Note: The currency of Swaziland, the emlangeni, is equivalent to the South African rand and was worth 0.154 euros in 1999.

Source: Adapted from Hassan, Mbuli and Dlamini, 2002, p.40, Table 11, and author’s calculations.

Local, foreign and global beneficiaries of forest goods and services

The forest benefits in Swaziland’s accounts may be divided largely into local benefits and foreign/global benefits, as described in Chapter 4. Local benefits accrue from employment in the commercial forest and tourism industries and from harvest of forest products for own use. Profits from commercial logging accrue to foreign owners and carbon storage benefits the global community. There is no estimate in the forest accounts of forest services such as watershed protection, which would benefit regional, non-local communities.

Distribution of local forest benefits by region

The Swaziland regional accounts have been used so far only to construct a national picture of the forestry sector. The socio-economic role of forestry in livelihoods in different regions has not been analyzed yet. But the use of the regional surveys and the systematic construction of national accounts from regional surveys provide some insight into the dependence of rural households on forests. The average per capita benefit of local communities from non-market forest products is E 185, but this ranges a great deal among different regions, from a high of E 324 in Lubombo to a low of E 134 in the middleveld.

Figure 3.1: Distribution of forest benefits by region in Swaziland, 1999

Source: Calculated from data in Mbuli, 2003.

Further understanding of the dependence of households on forests is provided by information about which household members have responsibility for gathering forest products (Table 3.5) and proximity to forest resources (Table 3.6). The responsibility for collection of forest products falls largely on women and children, a result of the traditional division of labour as well as fewer employment opportunities for women in rural areas. Men primarily collect wood used for construction purposes. Many households find forest resources close at hand, but close proximity to forest resources varies greatly by region: only 14 percent of households in Lubombo region compared to 57 percent in the highveld region.

Table 3.5: Responsibility for collection of NTFP by gender and region in Swaziland, 1999 (in percent)

	Highveld	Middleveld	Lowveld	Lubombo	Average
Wife	39	22	27	24	28.9
Wife and children	13	34	23	29	25.4
Children	14	10	20	0	11.2
Husband	17	9	14	12	13.1
Husband and children	17	10	9	29	16.3
Men as hired labour	0	6.4	5.9	5.9	4.6
Men as community project	0	1.8	0	0	0.5
Total	100	100	100	100	100

Source: Adapted from Hassan et al. 2002, p. 63, and Mbuli, 2003, Table 1.3, p. 67.

Table 3.6: Distance to forest product source by ecological region in Swaziland, 1999

(percent of households)

	Highveld	Middleveld	Lowveld	Lubombo	Average
Very near	57%	31%	42%	14%	40%
2-3 hours	27%	39%	26%	43%	31%
3-5 hours	0%	6%	11%	14%	7%
Whole day	17%	24%	21%	29%	22%
Total	100%	100%	100%	100%	100%

Source: Adapted from Mbuli, 2003, Table 4.5, p. 68.

3.2.3 Accounting for forest environmental services in the catchment forest reserves of Tanzania

Forest accounts for roughly 40 percent of Tanzania’s land area and, in recent years, national forest policy has shifted from central control of forests to multi-stakeholder management, including participation by local communities under a joint forest management programme. It emphasizes sustainable forest management that takes into account macroeconomic policies and the participation of the private sector and other stakeholders. In support of joint forest management, the Ministry of Natural Resources and Tourism recently undertook an assess ment of the total economic value of its catchment forest reserves (CFRs), forests set aside exclusively for watershed protection (Ministry of Natural Resources and Tourism, 2003).

The intended primary beneficiaries of CFRs are usually not local communities, but downstream users: downstream households, agriculture, fisheries, tourism and hydroelectric power. People worldwide benefit from carbon storage and biodiversity protection. But although extraction of forest resources is prohibited by law, forest products are harvested regularly by both local communities and, to a limited degree, commercial operators from outside the local community. While CFRs represent only 4 percent of total forested land in Tanzania, the conflict over forest use is most severe because these are the only forests explicitly gazetted for their non-consumptive functions. The challenge for CFR management is to assess the trade-offs between consumptive and non-consumptive uses of forests to determine a balance between these two objectives, and to find a mechanism for the downstream beneficiaries to pay for the services they receive or otherwise contribute financially towards forest management.

An assessment of the forest catchment protection services is particularly important for these forests. Although not a forest accounting exercise, the researchers discussed the need for forest accounting and the relationship between this study and forest accounts. Extensive fieldwork and surveys of the goods and services provided by CFRs were carried out in four regions of Tanzania, accounting for almost half of CFR land area. Although CFRs were originally established to protect water supply and soils, little is known about the quantitative links between forestland conversion, forest health and the quantity and quality of water flows. Furthermore, CFRs include various forest types and terrains throughout Tanzania, so it is likely that the protection services of specific CFRs differ significantly from region to region.

To value the water protection service, the report relied on the ‘best guess’ of experts of the impact on water services if CFRs were completely removed. Their best guess was that loss of CFRs would reduce water provided to domestic users and agriculture by 30 percent, freshwater fish catch by 50 percent and hydroelectric power by 15 percent in each region. The value of these services was estimated using two different approaches (see chapter 7 for discussion of these approaches):

Market price plus partial replacement cost approach

the price charged for water (for irrigated crops) or the estimated net value of water as an input for the production of goods (for fish, electricity)

the hypothetical cost of developing alternative (groundwater) sources of water for livestock and domestic use to replace water provided by CFRs

no estimate was available for the potential costs of flooding.

Damage prevention approach: the cost of dams and water control infrastructure needed to prevent floods during the rainy seasons and to ensure the flow of water during at least part of the dry seasons.

The first approach yielded an annual value of services of US$ 11.3 million, while the second approach yielded a much lower value, US$ 5.4 million (Table 3.7). In their final assessment, the authors used the lower estimate of the value of water services. However, the first approach demonstrates the relative importance of water services to different sectors: electricity production is the greatest beneficiary, followed by domestic and livestock use of water (these two uses were not differentiated in the report).

For soil stabilization services, the ‘best guess’ that experts could provide was that loss of CFRs would result in loss of 1 cm of topsoil on tilled areas downslope from the forests, reducing crop yields. It is assumed that the value of this service is at least equal to the higher yields possible with intact CFRs. The value of soil stabilization services was estimated at US $1.87 million. Together, the water and soil services of CFRs account for 21 percent of total forest values (using Method 2 for water services); carbon storage accounts for another 15 percent of forest values (Table 3.8).

Table 3.7: Annual value of water services provided by conservation forest reserves in four regions of Tanzania, 2001 (thousands of US$)

Method 1: Market price plus partial replacement cost
	Irrigation	32
	Domestic + livestock	3,218
	Electricity	7,720
	Fisheries	290
	Total	11,259
Method 2: Damage prevention
	Infrastructure to control water flows	5,410

Source: Author’s calculations based on figures from MNRT, 2003.

Table 3.8: Annual value of goods and services provided by conservation forest reserves in four regions of Tanzania, 2001 (thousands of US$)

Logging		3%
Forest goods used by rural households		22%
	Wood and wood products	17%
	NTFP	5%
Agriculture: fodder/livestock grazing		37%
Services to non-forestry sectors		39%
Tourism		3%
Environmental services
	Water supply protection services	16%
	Soil stabilization services	5%
	Carbon storage	15%
Total		100%

Source: Author’s calculations based on figures from MNRT, 2003.

The report acknowledges that the estimates of environmental protection services are very crude but their study is important for demonstrating the quantitative links between forest health and production in non-forestry sectors. They have probably erred on the side of underestimating forest ecosystem values, choosing the most conservative assumptions in their valuations. There are many studies of this nature, often done in the context of cost-benefit analyses or for the development of forest management plans. The shortcoming of this valuation approach is that it does not say what would happen for marginal changes in CFRs, i.e. if only part of CFRs were converted to other uses. The economic impact of marginal changes cannot be reliably estimated from these forest values because most ecosystem functions do not exhibit a linear relationship with the area of forest cover and are often subject to critical thresholds.

3.3 Challenges for regional and local forest accounting

These case studies are fairly typical examples of forest accounting at the regional or forest level. How useful are they for addressing regional or local forest management issues?

3.3.1 Distribution of forest benefits and trade-offs among competing forest users

All three case studies identify market and non-market forest values, providing stakeholders with a more comprehensive picture of the economic benefits from sustainable forest management and what stands to be lost from deforestation. The accounts also identify the beneficiaries of forest services, which is very useful in identifying obstacles to sustainable forestry. When major benefits do not accrue to land owners/users, the incentive for sustainable forestry declines, even though the social benefits from sustainable forestry may outweigh the benefits from land use conversion. By identifying forest beneficiaries, forest accounts provide a basis for negotiations over payments for environmental services, an issue especially important for the Tanzanian case study.

Like national forest accounts, the non-market forest benefits that are easiest and most often incorporated in regional or forest-level accounts are