The limitations of and biases built into conventional methods of valuing forest resources and forestry development projects has prompted researchers, non-profits, governments and multilateral development agencies to develop alternatives that are more comprehensive and accurate.
A team of researchers from the World Bank, Resources for the Future, Applied Geosolutions and others are developing methods to more accurately estimate and assess forest wealth. Their research project is part and parcel of Improving the Forest Database to Support Sustainable Forest Management. The research team has released three working papers that set out wealth valuation methodologies spanning all the commercial wood, non-wood and ecosystems services forests provide and incorporated them in the database.
Such efforts have taken on greater importance in light of UN climate treaty negotiations, in which REDD+ (Reducing Emissions from Deforestation and Forest Degradation) have figured prominently. According to the UN Framework Convention on Climate Change (UNFCCC), investing in sustainable forestry could yield as much as 1/3 of the greenhouse gas emissions reductions called for in many studies by 2030, Profor highlights in a news release.
Better methods for valuing forest wealth
The World Bank, for instance, has for years published sustainability data that includes indicators such as comprehensive wealth accounts and Adjust Net Savings (ANS), Profor points out. “ANS takes into account investments in human capital, the depletion of natural resources (energy, minerals and forests), and damage from carbon dioxide and air pollution,” the non-profit explains.
ANS and other more holistic, inclusive indicators of sovereign wealth, such as natural capital, incorporate factors unaccounted for in conventional, narrowly focused indicators, such as GDP. “A country could have high GDP growth in the near-term by running down its assets, particularly its natural resources. More comprehensive indicators like ANS provide additional information on whether that economic growth is sustainable in the longer-term,¨ World Bank economist Esther Naikal elaborated.
“Positive ANS indicates an investment in the future—that a nation is accumulating the assets needed to build up its wealth and ensure its economic growth over the longer term. Years of negative ANS, on the other hand, suggests that a country is running down its capital stock and is on an unsustainable growth path.
“For the forest sector, by measuring net forest depletion where we account for a country’s over-harvesting of timber, we can flag countries where net forest depletion is a driving factor behind negative ANS, in order to highlight the need for sustainable policies and resource management.”
Conventional methods of assessing economic/financial project investments omit the value of forest resources for domestic economies, a glaring oversight given they could be as large, or larger, than that for export markets, Profor highlights. The researchers’ new valuation methodologies incorporate new, more comprehensive measures that include updated domestic timber prices and ¨stumpage¨ prices, the prices of standing timber and the right to harvest it.
Valuing non-wood forest ecosystem services
The research team also updated valuation of non-wood forest resources, which relied on older country case studies in which the per-hectare-dollar-benefit for various forest goods and services was calculated. ¨The old methodology did not account for important country-specific factors such as forest type, socio-economic data, population density, or forest accessibility,” Naikal pointed out.
In sharp contrast, the new methodologies attempt to value and predict values for all forest ecosystem services, including recreation, hunting and fishing; non-wood forest products; water services; and habitat/species protection by combining more current local data and more recent estimates from the research literature.
Using the new methodologies, the research team determined that global non-wood forest wealth is 2.7 times greater than previously estimated. Higher values for water and recreation services were cited as important contributors to the higher valuations, which varied between countries.
“Now we have value estimates for countries that lack this kind of information about their forests,” Naikal stated. “In World Bank work, this data could be particularly useful for countries with forest-dependent communities or countries facing rising trends in deforestation. More and more, this overall wealth accounting approach and data are being incorporated into the World Bank’s Systematic Country Diagnostics, which could then inform decision-making.”
*Image credits: 1), 3) Profor; 2) UN REDD+