Innovations in Forestry Accounting - BOKU · Innovations in Forestry Accounting ... Valuation and...

W O R L D C O N G R E S S 2 0 0 5

B r i s b a n e / A u s t r a l i a

Session 035

Organised by: Univ. Prof. Dr. Hans Jöbstl

Innovations in Forestry Accounting

Integration of Forest Assets and Non-Market Environmental Benefits into Management and National Accounting and Reporting

Papers & Posters

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II

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UF

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Forests in the Balance: Linking Tradition and Technology 8-13 August 2005, Brisbane, Australia

© 2005 Professur für Betriebswirtschaftslehre der Forst- und Holzwirtschaft

Universität für Bodenkultur Gregor Mendel Straße 33 A-1180 Wien, Österreich

Tel.: 0043 / 1 / 47654 - 4420 Fax: 0043 / 1 / 47654 - 4429

E-mail: [email protected]

IUFRO World Congress Brisbane 2005 – Session Accounting 1

Preface

Management of forests - for whatever purposes - requires a variety of in-formation. The central element for providing this information is the accounting system, which fulfils internal as well as external functions. On the one hand, it provides the basis for decisions and internal controlling; on the other hand, it is needed for reporting to external stakeholders and informing about both the economic situation and the social (non-market) services of forestry (public relations). Criteria of sustainability related to the environment are increasingly gaining importance in the reporting process. National accounting is becoming ever more important in the political context. Several organizations are elaborating proposals of proce-dures that aim at standardization, harmonization and, thus, comparability.

Forestry accounting, however, also has major deficiencies: periodic chan-ges in forest assets are not recorded, and other achievements, especially with respect to the environment in a wider sense, are not shown ade-quately, which has as a consequence that results are incorrect or in-sufficient.

Several new approaches and proposals promise to improve the controlling process of an enterprise with regard to forest assets and social benefits, and to allow a more comprehensive reporting and an improved representa-tion of forestry.

A central issue is the integration of non-market products and the so-called green accounting. The emphasis is placed on physical factors, satellite accounts and performance reports that are partially complemented by monetary factors.

These new developments and related topics with a focus on performance measurement and management control were presented and discussed in a session of the XXII IUFRO World Congress 2005 with two state-of-the-art papers and 4 oral and 8 poster presentations.

This volume contains the contributed abstracts and 6 full papers.

Hans Jöbstl


Content

Preface ............................................................................................................................................................................................................................................. 1

Abstracts

Invited Papers

1. Campos-Palacín, P. and Caparrós-Gass, A. Can we use non-market valuation techniques in green national accounting for forests? ..................................................................................................................................................................................................................... 5

2. Goio, I., Gios, G., Notaro, S. and Pollini, C. The development of forest accounting in the province of Trento. ............................................. 5

3. Herbohn, K. International accounting standards – How adequately are forest assets reported in the balance sheet and income statement? .................................................................................. 6

4. Jöbstl, H.A. Forest assets and environmental benefits in management accounting. ............................. 6

5. Lange, G.-M. and Peyron, J.-L. Environmental, social and economic accounting for forestry at national and international levels. ............................................................................................................................................................................................ 7

6. Tzschupke, W. Forestry accounting in German state and municipal forest-enterprises - Recent innovations. ............................................................................................................................................................................................ 7

Posters

1. Camacho, L.D. Valuation and conservation of the Philippine tropical forest: A case study of the Makiling Forest Reserve (MFR), Philippines. .......................................... 8

2. Chas-Amil, M.L., Doldan-Garcia, X.R., Nogueira-Moure, E. and Carballo-Penela, A. Analysis of the integration of environmental and economic accounts for forests. . 8

3. Gundimeda, H. and Atkinson, G. Integrating economic and ecological uses of forest resources into the national accounts – A framework for India. .................................................................................................................. 9

4. Maksymiv, L. Forest resources as a part of natural assets: Approaches to an enlarged concept of indicative figures for national assets. .................................................................................................. 9

5. Maraseni, T.N., Cockfield, G. and Apan, A. Valuing ecosystem services from forests: A multidisciplinary field-based approach. ........................................................................................................................................................................................ 10

6. Terán, J. Implementation of forestry audits in Bolivia: Perspectives of alliance with the certification processes. ........................................................................................................................................................ 10

7. Thoroe, C., Dieter, M. and Rosin, A. Economic accounts for forestry: Results for the Federal Republic of Germany. . 11

8. Thoroe, C., Elsasser, P. and Dieter, M. Economic accounting of carbon sequestration by forests. ...................................................................... 11

4 IUFRO World Congress Brisbane 2005 – Session Accounting

Full Papers

1. Campos-Palacín, P. and Caparrós-Gass, A. Can we use non-market valuation techniques in forests applied green national accounting? ......................................................................................................................................................................................... 13

2. Goio, I., Gios, G. and Pollini, C. The development of forest accounting in the province of Trento (Italy). ....................... 31

3. Herbohn, K. International Accounting Standards: How adequately are forest assets reported in the balance sheet and income statement? .................................................................................... 45

4. Jöbstl, H.A. Forest assets and environmental benefits in management accounting. ............................. 57

5. Maraseni, T.N., Cockfield, G. and Apan, A. Valuing ecosystem services from forests: A multidisciplinary field-based approach. ...................................................................................................................................................................................... 67

6. Tzschupke, W. Forestry accounting in German state and municipal-forest-enterprises - Recent innovations. ............................................................................................................................................................................................ 83

Author Index 91


Abstracts – Invited Papers

Can we use non-market valuation techniques in green national accounting for forests? Campos-Palacín, P. and Caparrós-Gass, A. (Spanish Council for Scientific Research (CSIC), Spain; [email protected]; [email protected]).

Theory on green national accounting has been an important research topic in recent years. Nevertheless, little effort has been put into the practical measurement of exchange values for environmental goods and services to be integrated with commer-cial ones in applied green national accounting. While market values are measured in national accounts using market exchange prices times quantity, environmental valua-tion techniques yield consumer surplus and other non-exchange market values, so an homogeneous aggregation of those values is required. This paper proposes to simulate markets, demand and cost functions, for forest environmental goods and services, at the micro-level, to obtain imputed exchange values that can be aggregated to commer-cial values in a homogeneous manner. The methodology is illustrated by applications to Mediterranean forest using contingent valuation data for free access recreation and landowner’s self-consumption services. In addition, self-employment and grazing resources are estimated as a joint accounting residual value from market data for livestock production.

The development of forest accounting in the province of Trento. Goio, I. (IVALSA - CNR, Italy; [email protected]; [email protected]), Gios, G. (University of Trento, Italy; [email protected]), Notaro, S. (University of Trento, Italy; [email protected]), Pollini, C. (IVALSA - CNR, Italy; claudio.pollini@ ivalsa.cnr.it).

In the increasing scientific debate about sustainable forest management, a crucial role is played by the development of adequate instruments of evaluation and survey. The proposed system of national account (SNA) underestimates the full value of forest resources and does not permit a correct evaluation of the total contribution of forests to economic welfare. The SNA reflects, partially, the consumption of forest natural capital or the costs of loss of forest quality. This is due to the fact that it registers only the value of produced outputs that are traded in the marketplace. The non-market functions provided by forests (recreational, aesthetic, ecological and protective) are definite “non-SNA functions” and are not taken into account. As many studies have demonstrated, forests have a higher value than that connected to production aspects. This paper focuses on results of a tentative accounting system in order to estimate and integrate the benefits of non traded-goods and services provided by forests located in the Province of Trento (northeast Italy). The forests, which cover about 50% of the whole surface, have to be valued.


International accounting standards: How adequately are forest assets reported in the balance sheet and income statement? Herbohn, K. (University of Queensland, Australia; [email protected]).

Australia was the first country to develop a financial accounting standard on self-generating and regenerating assets (SGARAs). The standard AASB 1037 Self-generating and regenerating assets mandates reporting requirements for all non-human living assets, and so its scope includes forests. Companies and state governments that have material holdings of forests must comply with the standard. It has been operative for financial reporting periods ending on or after 30 June 2001 and so presents a unique opportunity to investigate the impact of reporting forests on a balance sheet. A particularly interesting feature of AASB 1037 is that it requires the net market value of forests to be estimated at the end of each reporting period. Changes in the net market values of forest assets are to be recognized as either revenues or expenses in the income statement. An investigation of the impact of AASB 1037 also provides valuable insights into the potential impact of IAS 41 Agriculture that must be complied with as part of international harmonization by Australia and all countries of the European Union from 1 January 2005. This is because the Australian standard and the international standard share many similar requirements.

Forest assets and environmental benefits in management accounting. Jöbstl, H.A. (BOKU-University of Natural Resources and Applied Life Sciences, Vienna; hans.joebstl@ boku.ac.at)

Management of forests takes place in the institutional framework of forest enterprises and requires a variety of information. The core instrument of information supply is the accounting system. It provides the basis for decisions and internal controlling, and it is needed for reporting to external stakeholders on economic and social aspects of the forestry operation. Forestry accounting also has major deficiencies; periodic changes in forest assets are insufficiently recorded, and other achievements, especially with respect to the environment, are not shown adequately. Many approaches have been proposed over time to consider changes in forest assets, but none of them have been accepted in practice. Whereas there are hardly any legal regulations concerning forest asset records in external accounting, it is indispensable for internal accounting to have correct records and examine if targets have been reached. With regard to the environ-mental benefits that cannot actually be assessed with a monetary system, so-called performance reports and sustainability reports that show primarily physical factors are being examined. On a higher level these performance reports are partially comple-mented by monetary factors. An overview on new developments and related topics with a focus on performance measurement and management control shall be presented and discussed in this paper.


Environmental, social and economic accounting for forestry at national and international levels. Lange, G.-M. (Columbia University, USA), Peyron, J.-L. (ENGREF/ INRA and ECOFOR, France; [email protected]; [email protected]).

National accounts are widely used as information sources for political decision-making. However, their central framework often fails in correctly representing forestry. Forest production is not fully represented either regarding wood products or non-wood goods and services. The relationship between the forest sector and the national economy or between the forest sector and the society is not really described, and there is also inconsistency between current accounts and balance sheets. For several years, this situation has been improving through the formalizing of forest accounting in the United Nation’s System of Integrated Environmental and Economic Accounting (SEEA). The concept of production is being extended, new efforts have been made in practical implementation of theoretical approaches, and satellite accounting in forestry has been developed to provide valuation of natural growth and non-wood goods and services. FAO, EUROSTAT, and other agencies have initiated programs to implement forest accounting. Methodology, results, and policy application of forest accounts will be discussed, based on these experiences.

Forestry accounting in German state and municipal forest-enterprises - recent innovations. Tzschupke, W. (University of Applied Sciences (Fachhochschule) Rottenburg a.N., Germany; [email protected]).

Forestry accounting in nearly all German state and community owned forest-enter-prises was, until now, a rather simple single-entry book-keeping based on an account-ing of revenues and expenditures according to the respective budget-plans. For inter-nal purposes, budget-oriented cash accounting was partially transformed into a widely used cost accounting system, whereas a valuation of forest-assets (soils and stands) and of non-market-benefits was not practiced. However the recent implementation of the so-called new public management-techniques within German states and communi-ties initiated remarkable alterations in forestry accounting. The changes are charac-terized by introduction of double-entry bookkeeping, and differentiation between the financial and cost accounting systems, according to five product lines. These are timber production, environmental protection and rehabilitation; environment-oriented education; services for others, and political and administrative tasks. The necessity of a valuation of forest-assets is still a controversial issue. However, it is inevitable for those forest-services that will be transformed into so-called public companies or into companies with a private legal status. This is why the actual discussion is focussed on the search for the most appropriate valuation method.


Abstracts – Posters

Valuation and conservation of the Philippine tropical forest: A case study of the Makiling Forest Reserve (MFR), Philippines. Camacho, L.D. (University of the Philippines Los Banos, Phillipines; [email protected]).

The tropical forests of the Philippines provide a range of tangible and intangible benefits. However, the sustainability of these benefits is not assured due to lack of adequate forest protection. One factor contributing to forest losses and degradation is the absence of appropriate valuation of the multiple functions provided by the forest. In this study, the Total Economic Value of the benefits derived from a typical tropical forest was estimated, using an extensive survey and different valuation techniques. Results show a capitalized total economic value of MFR to be approximately P31.72 billion (US$0.8 billion). The total value of opportunity cost of MFR is estimated at P13,072 million (US$327 million). The results have generated a 2:1 ratio of benefits to opportunity cost of preservation. The study’s findings demonstrate that MFR is a unique and valuable asset worthy of conservation. This fact should encourage the government to change political priorities to protect the forest and mitigate the impacts of intensive use of MFR for agricultural production. It should also raise awareness among farmers to enhance sustainable production of community benefits through collective conservation efforts.

Analysis of the integration of environmental and economic accounts for forests. Chas-Amil, M.L., Doldan-Garcia, X.R., Nogueira-Moure, E., Carballo-Penela, A. (University of Santiago de Compostela, Spain; [email protected]; [email protected]; [email protected]; [email protected]).

Many economists believe that the world's forests are not valued properly in economic terms. Valuation problems exist for many of the diverse goods and services that forests provide. Some of these forest outputs are traded in commercial markets but are undervalued, others are traded in informal markets or are not traded at all and so their economic value is often ignored. It seems clear that even when environmental values are recognized, they may not be measured or used to promote efficient resource management. On the other hand, externalities associated with destructive timber extraction practices are not taken into account. The objective of this paper is to analyze the problems found in the traditional National Account system, and to study the treatment of non-market forest assets in the System of Integrated Environmental and Economic Accounting proposed by the United Nations. Moreover, it describes briefly the recent advances in the European framework for Integrated Environmental and Economic Accounting for Forest (IEEAF).


Integrating economic and ecological uses of forest resources into the national accounts – a framework for India. Gundimeda, H. (Madras School of Economics, India; [email protected]), Atkinson, G. (London School of Economics and Political Science, UK; [email protected]).

Forests have several economic and ecological uses, which go beyond the production boundary of the System of National Accounts (SNA). Most of the time, forests in developing countries are undervalued because they are viewed only for timber to the exclusion of valuable ecological and environmental services that they provide. As a result there is large-scale degradation of forests. In addition, the economic impacts of changes in environmental quality from changes in the natural resource stocks like forests are either not accounted completely or excluded from the national income accounts. This necessitates the need for developing more appropriate indicators to measure the sustainability of forest use in developing countries. One such way can be through incorporating the forest resources into the national accounts and adjust for the depletion of forest resources from the NDP. In this paper an attempt is made to incorporate the timber, non-timber and carbon services provided by the forests in the national accounts using the SEEA framework. Using data for India, the value of depletion of forests in terms of timber, carbon and non-timber forest products has been estimated at 0.70, 0.30 and 0.34% respectively.

Forest resources as a part of natural assets: Approaches to an enlarged concept of indicative figures for national assets. Maksymiv, L. (Ukrainian State University for Forestry and Wood Technology, Ukraine; [email protected]).

This presentation deals with environmental accounting of forest resources as a part of the natural assets demonstrated by the example of the Ukraine. Methodological approaches to integrating natural resources, i.e. non-regenerative (soil) and regenera-tive (forest) resources into the natural capital are examined. In the framework of an enlarged concept of environmental assets, forest dynamics are seen as natural capital. The national accounting system and the State statistical monitoring system are analysed with regard to environmental expenses, and the chances for their harmonisa-tion with international standards are determined on the basis of ecological problems of the Ukrainian forestry, in particular. The scientific results from Ukrainian stake-holders related to forest resources are presented.


Valuing ecosystem services from forests: A multidisciplinary field-based approach. Maraseni, T.N., Cockfield, G., Apan, A. (University of Southern Queensland, Australia; [email protected]).

Land-use regimes vary throughout the world. Within the forest land-use there are several broad management strategies. Diverse views are prevalent about the superio-rity of one forest management strategy over the others. These debates about net bene-fit cannot be solved from the current body of literature as they are mostly concluded by summing market values. Non-market values are usually not taken into account mainly because of the uncertainty of methodology and the difficulty in estimating those values. Consequently, total goods and services from forests are undervalued and their contribution to the national output has been grossly underestimated. As a result, land use decisions are generally biased in favour of land-use options other than forests. This paper analysed major issues on valuation of community forestry, an important forest management strategy in developing countries, and then developed methods for estimating net carbon sequestration amount, option value of biodiversity and onsite soil protection value of community forests after its handover to the designated com-munities.

Implementation of forestry audits in Bolivia: Perspectives of alliance with the cer-tification processes. Terán, J. (Eco.S., Bolivia; [email protected]; jaimet47@ hotmail.com; [email protected]).

Bolivia has begun to implement Forestry Audits within the framework of the New Forest Act. These audits will mandate an evaluation of the forest management in tropical forests, on the basis of criteria and indicators. They will take the structure of standards for voluntary forest certification as an example (CMF). The area to be audited in Bolivia comprises 4 million hectares of forest concessions. This is a great challenge and also a great opportunity to learn lessons. One of the opportunities that may arise is being analyzed; it implies the development of an alliance for collabora-tive certification between the certification institutions and the State. It aims at making it easier for users with low economic capacities (rural communities, social groups on a local level, indigenous communities, private owners) who manage large areas of forests or hold large forest areas with a potential of sustainable production to join and benefit from the results of certification.


Economic accounts for forestry: Results for the Federal Republic of Germany. Thoroe, C., Dieter, M., Rosin, A. (Federal Research Centre for Forestry and Forest Products, Germany; [email protected]).

With the implementation of the European System of Integrated Economic Accounts (ESA) in 1995, the national accounting systems of the member states have been har-monized and based on a standard framework. As part of the ESA, the Economic Accounts for Forestry (EAF) has become a common format as well. The EAF is a satellite account for the purpose of analyzing the production process, and the entre-preneurial income in the forestry sector. The EAF is focused on typical forest-related activities and hence does not take into account activities like consulting and manda-tory activities by state forest agencies or forest management services, hunting, recrea-tion services etc. For Germany and the years 1991 to 2002, the Economic Accounts for Forestry have been calculated. The production value ranges between 2 and 2.7 milliards EUR, more than the half accounting for compensation of employees. Due to methodological concerns and lack of data, the value of timber growth and harvested volume are not included. Arising partly from this, the net operating surplus is negative for most of the investigated years. It indicates that potentially higher revenues due to changes in forest management must be continuously paid with interest on outside capital.

Economic accounting of carbon sequestration by forests. Thoroe, C., Elsasser, P., Dieter, M. (Federal Research Centre for Forestry and Forest Products, Germany; [email protected]).

Forests play a significant role in the global carbon cycle. Until the beginning of the first commitment period of the Kyoto protocol, air was a free good and the removal of carbon from the atmosphere was a non-value service by forests. For the purpose of investigating the possibilities of a monetary valuation of this service within the national accounting system, a pilot study was conducted in Germany. Three different approaches have been identified and the results of a comprehensive literature survey have been applied to physical sequestration. Basically, valuation of carbon sequestra-tion by market prices would be the most adequate valuation approach. However, car-bon markets are still in a nascent stage, so the monetary valuation has to be assisted by other approaches that consider costs due to damage, damage avoidance, emission avoidance, and carbon sequestration. The monetary value of carbon sequestration by forests in Germany is estimated to be between 50 and 500 Mio. EUR/a. Different assumptions concerning the international climate policy account for the greatest variation and a very restrictive policy can cause much higher calculative results.


Full Papers

CAN WE USE NON-MARKET VALUATION TECHNIQUES IN FORESTS APPLIED GREEN NATIONAL ACCOUNTING?1

Pablo Campos-Palacín2 and Alejandro Caparrós-Gass2

Abstract Theory on green national accounting has been an important research topic in recent years. Nevertheless, little effort has been put into the practical measurement of ex-change values for environmental goods and services to be integrated with commercial ones in applied green national accounting. While market values are measured in natio-nal accounts using market exchange prices times quantity, environmental valuation techniques yield consumer surplus and other non-exchange market values, so a homo-geneous aggregation of those values is required. This paper proposes to simulate mar-kets, demand and cost functions, for forest environmental goods and services, at the micro-level, to obtain imputed exchange values that can be aggregated to commercial values in a homogeneous manner. The methodology is illustrated by applications to Mediterranean forests using contingent valuation data for the public free access and owner’s self-consumption of environmental services. In addition, open access grazing resource exchange value is estimated as a joint accounting residual value from market livestock self-employed net value added. Key words: exchange value, environmental services, forest green total income.

1 Introduction There is an ideological perspective amongst many forest owners, experts, conservatio-nists and policy makers that aims government compensation for forest conservation and production improvements on the basis of a “general list of presumable environ-mental benefits provided by forests, without any rigorous of exact identification of these services” (Baptista and Santos, 2005: 52). In addition of the exact services and property rights identifications, to receive government compensations it is necessary “to verify that it is an intentional production of the output associated to a cost non null” (Baptista and Santos, 2005: 52). In this paper we develop a scientific perspective to measure the monetary exchange value of keys forest non market outputs, both pri-vate and public environmental outputs.

Forest is most times a multiple economic property rights, where people’ uses generate on site and off site income effects, both private and public incomes effects. This paper will focus on some on site keys well identified forest environmental goods and services: visitors environmental recreation services, visitors environmental con-servation services, owners self-consumption of private environmental services and conditioned open access grazing resources. Our interest is to incorporate these envi-ronmental outputs in the context of an extended framework of the conventional sys-tem of national accounts (SNA). To do it, two conceptual problems have to be re- 1 This paper has benefited from MEDMONT (QLRT-1999-31031), CREOAK (QLRT-2001-01594) and COAS (6P/02) projects funded by the European Union and the Spanish Agency for International Cooperation. It has also benefited from funding from the regional government Junta de Andalucía and the private firm Belga de los Pinares de El Paular. We thank Paola Ovando and José Luis Oviedo for their helpful comments. The usual disclaimer applies. 2 Tenure Scientists in the Institute of Economics and Geography (IEG) of the Spanish Council for Scientific Research (CSIC), Pinar 25, 28006 Madrid, Spain. [email protected], [email protected]


solved with sound economic theory. The first one is to expand the SNA narrow com-mercial concept of production process to include the environment (Bartelmus, 1998: 269; FAO, 1998: 2-3; Nordhaus and Kokkelenberg, 1999: 5). The second one is to simulate proxy exchange values for environmental services (FAO, 1998: 4; Eurostat, 2002: 45; Campos et al., 2001; Caparrós et al., 2003).

There is a general consensus between national accountants and economists that Hicksian income is the true concept of the economic return from the wealth given by nature, man-made capital, intermediate consumption and labour (Nordhaus and Kokkelenberg, 1999: 35). This is the case too in the European Union when the current system of economic accounts for agriculture and forestry states that “income can be defined as the maximum amount which the beneficiary can consume over a given period without reducing the volume of his/her assets” (Eurostat, 2000: 87).

The Hicksian income recognition by SNA system is not enough and the satellite system of integrated environmental and economic accounts (SEEA) remains un-changed in respect with production function boundaries (United Nations et al., 2003): “The SEEA is a satellite system that is built upon the principles of SNA. The upshot of this is that we cannot expect to find that the propose measures of income are consis-tent with theoretical measures like FLH [Fisher-Lindahl-Hicks]-income” (Heal and Kriström, 2001: 68). Spite of the recent advances on environmental valuation “there is a gap between some of the empirical theory and practice: empirical studies are not always backed up by sound theory” (Heal and Kriström, 2001: 4).

The national accounts data are mainly based on market prices, while studies of the value of for example forest recreation functions usually include the consumer surplus (Eurostat, 2002: 45). Then, a homogenous aggregation requires finding out market-able or exchange values of identified on site environmental benefits.

Extending the SNA to include the forest environmental incomes has “substantial risks of overlapping and double counting with values already included in the national accounts” (Vincent, 1999; Eurostat, 2002: 45). Measuring total Hicksian income re-quires to estimate simultaneously, in the land unit (forest uses) or for a singular eco-nomic activity (e.g.: livestock), the operating income (the so called net value added) and the capital gains. In practice, conventional system of national accounts operates as if real capital gains were cero or implicitly assuming a steady state, in the latter case the conventional system of national accounts (SNA) applies a simplified production account to generate a correct measurement of the total commercial income, despite of these latter are called inappropriately too net value added. For simplifying our argu-ments we assume forest and livestock economic steady stay situations (see the Appendix for a formal development of the extended national system of accounts).

The challenger for greening de SNA is well illustrated in the case of owner’s self-consumption of private environmental services. There were many scientific studies that point out their importance in the forest sector, one of the early ones said: “we argue that it is unrealistic to compute cattle ranch costs and returns simply on the basis of one output – beef. In addition to beef, there are the relatively non quantifiable outputs of farm fundamentalism and conspicuous consumption, as well as possibilities for the monetary outputs of tax shelters and ranch appreciation. These outputs are not competitive but additive. Receiving more of one does not imply receiving less of another. If these additional outputs were included in our evaluation of the costs and returns of cattle ranching, perhaps the prices paid for cattle ranches would appear per-fectly rational. Investors are purchasing both a resource to be use for production pur-poses as well as a resource for personal consumption” (Martin and Jefferies, 1966: 235). The main objective of this paper is to discuss the gap between theory and real forest incomes measurement in the context of an ideal forest sector and national economy


steady state. But extending SNA production boundaries to scarce environment faces with current household total income restriction. This could lead to change the present national general equilibrium relative price structure. Here we assume that simulated markets for forest environmental services will create new forest market equilibrium without changing the present national price structure. This is founded in the idea that the changes are “small enough” (Varian, 1992: 408).

We proceed as follows. In section 2 we present the theoretical foundations for ex-change value measurement of a group of key private and public environmental forest benefits. In section 3 we show and discuss strengths and weaknesses of a selected for-est green accounting results. Section 4 concludes with a summary of the main findings in recent forest green accounting applications.

2 The exchange value theory of environmental benefits in applied green national accounting

It is clear the theoretical and institutional recognition that extending and measuring environmental benefits will show a more accurate picture of real forests contribution to human wellbeing and national income: “The challenge is to utilize non-market values in the forest sector, witch are estimated in the macroeconomic or general equi-librium context of analysis. The value must be consistent and comparable with market values in the large system. Often non market values are estimates of consumer surplus for non market goods and services. It must be kept in mind those prices for market goods are treated as parameters in the policy analysis. If this were not the case, con-sumer surplus would also be included in the value of market goods and services as well. Thus, one important issue to resolve is how to estimate values” (FAO, 1998: 4).

2.1 Shared forest economic property rights It said that capital and income are the two faces of the same coin, what means that forest is considered at the same time a private and a public economic property rights: “property is often called a ‘bundle of sticks’ because it actually is made up of multiple rights. In its most complete form, ownership of property gives its owner the right to derive value from the asset, to exclude others from the using it, and to transfer the asset to others [..], however, property rights may be less complete, allowing an owner to derive only some value from an asset, exclude only some people from using it, or transfer only certain uses for a specified time period” (Anderson and McChesney, 2003: 1).

Land ownership from a legal perspective needs to be extended to real uses rights when economic activities are considered, thus “for economic analysis, only true eco-nomic rights, not nominal legal rights, are relevant” (Eggertsson, 2003: 73). Then, for-est environmental services generate incomes to the legal forest’ owner as well to the open access final users when they pick up the forest environmental goods and services.

2.2 The open access public recreation exchange value In the AAS methodology followed here, the social income measurement is extended to include the open access public environmental services consumption. In principle, nothing distinguishes, from a non-timber product, services like the open access public recreation. Nevertheless, where no real market for the recreational services of forests exists, it is necessary to simulate the market to determine what the price would be if the services were marketable (Caparrós et al., 2003; Campos and Caparrós, 2005;


Campos et al., 2005a, 2005b)3. The SNA does not includes consumer surplus measure-ments (or any other welfare measure) provided by contingent valuation studies (see United Nations et al., 2003: 407). Here we assume that the forest owner can choose one price for the recreational access and that his/her revenues will be given according to demand. Further we assume that the forest-owner will set the price for access to his/her property in order to maximise his/her revenues4. This shows an upper bound for the market revenue of the recreational services provided by the forests (costs still need to be deducted). A lower bound will be given by the costs of the services, assuming that the owner sets the price in order to cover the costs5 with no margin (or with a given ‘standard’ margin). The former option implies a monopolistic solution assuming that no variable costs exist6 and the latter option is a perfect market solution. The real market price would be in between and probably close to the monopoly solution when the simulated market for the forest affected is assumed to be relatively unique in the local are. Thus, we recommend use the value of the monopoly solution for aggregation the recreation value as quasi an exchange value.

The issue of the number of units (visits) consumed remains (Hultkrantz, 1992). The normal procedure consists in multiplying the simulated market price by all the units consumed outside the market; thus, assuming that the setting of a price would not reduce consumption. This assumption is not theoretically acceptable. Nevertheless, establishing a price taking into account the visitors willingness to pay (WTP) would obviously reduce the number of units consumed. Concretely, if the price for the recreational service were set equal to the median of the WTP, then the monopolist solution gives that only 50% of current visitors would be ready to pay it (Caparrós et al., 2003; Campos and Caparrós, 2005).

A similar criterion is supported by the Eurostat Task Force on Forest Environmen-tal and Economic Accounting: “For a service with a cero price, the consumer surplus represents the area under a stated demand curve, and often the valuation studies allow deriving the shape of this demand curve. This can then be used to determine a ‘quasi-market’ value of the service. If the demand curves are linear, it can be shown that the maximum hypothetical ‘quasi-market value’ [price] of output would be 50 % of the consumer surplus. Analyses of the forms of demand curves derived from contingent valuation method (CVM) studies show that they tend to be convex rather than linear, which implies that the ‘quasi-market’ value will be less than 50 % of consumer surplus” (Eurostat, 2002: 48).

2.3 The visitors forest conservation exchange value An income effect value measurement for natural habitat conservation has been recognised by experts: “It should be noted that conservation value, while a social-political choice, require and ecological accounting metric such an ecological price, 3 Trip-expenditures increase question in contingent survey for Cork Oak Natural Park (CONP) (Cádiz, Spain):

[As you know trip-costs have changed in the last decades (i.e. gas prices have gone up and down relatively independently of generalized increases in prices and live costs). Now we are going to ask you to imagine that total expenditures of your visit increase for this reason, even though you realize exactly the same activity you have done (same transport, same food ...)]

If the per person total expenditures of your visit would have been ........ euros ( ….pesetas) more than the quantity you have just calculated, would you still have come today? Please take into account that we are asking you to imagine a real payment and that you could not spend the money in alternative uses.

yes no don´t know 4 Assuming a linear demand function, this maximisation will occur for the median, for the price half of the population is ready to pay. 5 Since costs are assumed to be constant, marginal and average costs are equal 6 The monopolist would maximise his/her benefit and with no variable costs this implies maximisation of the revenues.


properly to value an environment-economy (exchange) transaction” (Friend, 2000: 42). We have included in forest national accounting visitors’ conservation value, although the integration of this value in national accounting is probably arguable, since it is a joint current environmental functions values, option values and passive-use (exis-tence) value. We have included the total value that visitors declared to be ready to pay for this concept to a fund his/her maximum willingness to pay, since under this as-sumption each agent could pay a different amount (Caparrós et al., 2003: 188; Campos et al., 2005a: 327)7. Habitat conservation is a concept that could be estimated, theo-retically, for society as a whole, but due to data limitations, in this paper we have focused solely on visitors.

2.4 The owners’ self-consumption of private environmental services Nowadays in western industrialised economies “land is not only an input into agricultural production but is also an important argument in many individuals’ utility functions. There is a consumptive value associated with ownership of rural land, re-flecting innate desires to own land, live in a rural environment, obtain or maintain the lifestyle of a farmer or rancher, engage in outdoor recreation, get back to nature, and partake of any other real or perceived benefits of rural land ownership. Many inves-tors seek an investment they can touch, feel, experience, and enjoy. They may also expect to be able to sell the land to other investors who have similar feelings for the land” (Pope and Goodwin, 1984: 750). This owner consumptive woodland investment has a long tradition in ranches economics literature. Nevertheless, there have been published a few theoretical studies, after the seminal paper from Martin and Jefferies (1966), on qualitative description and economic theory relative to owner’ self-con-sumption of private environmental services. We quote next some of them:

(a) “A ranch owner is directly or implicitly equating the value of money foregone to him in not selling the ranch to the amount of satisfaction that he obtains through ranch ownership. If the marginal valuation for the ranch in production and consump-tion is greater than the market price for ranches, the ranch owner would indicate that his ranch is presently not for sale; if the contrary is true, then the present ranch owner would indicate that his ranch is for sale at current market prices [..]. In discarding the pure theory of the firm approach to explain the economic behaviour of Arizona cattle ranchers, the ‘satisficing’ concept is found to be a highly useful analytical tool in explaining their socioeconomic behaviour” (Smith and Martin, 1972: 218).

(b) “Consumptive factors and QOL [quality of life] values have influenced the ranch real estate market for years. There were, and continue to be, major policy impli-cations when ranch values exceed the income potential from livestock production. Ranch investment and policy analysis require a great deal more thought than is offered by traditional cost and returns [CAR] studies about the economic value of livestock production. Answers to important policy questions are elusive when it is recognized that ranchers maximize utility not [commercial] profit. We can measure cost, livestock prices, and net returns, and estimate how these economic variables might change under alternative policy scenarios. But we can only guess about what

7 Visitors conservation question in CONP:

[For the following questions we request you do not to take into account the previous hypothetical cases stated].

[As you may know, besides recreational use, the CONP has other environmental functions such as the protection of endangered wildlife and flora].

Q. Would you be willing to contribute economically to create a fund utilised exclusively to preserve this natural area (CONP)?

yes no Q. Which would be your maximum annual contribution every year? (Please, remember that the

CONP is just one of the natural parks you may be interested in preserving).


motivate a person to pay a premium price for a western ranch and to continue in business when alternative investment would yield higher [commercial] economic returns” (Torell et al., 2001: 55).

(c) “The emphasis in this study was therefore to view costs and benefits very much from the perspective of the private woodland owner. In this context, the term ‘non-market benefits’ is inappropriate. Private landowners have the potential to realise financial benefit passively in the form of capitalised asset” (Samuel and Thomas, 1999: 204).

(d) “Hedonic analysis of actual transactions is useful to estimate the value attached to other uses such as private recreational uses, including those related with the exis-tence of wild biota, game, etc.” (Eurostat, 2002: 75).

(e) “Hedonic pricing is based on the idea that the purchase of a forest estate repre-sents the purchase of a bundle of attributes that can no be sold separately: land itself, volume of standing timber of particular species and age composition, and other forest goods and services such as hunting rights and recreational services. Statistical regres-sion analysis of forest estate sales on the attributes of the forest reveals the amount that bare land, timber volume and characteristics and NTFP contribute of the forest value of land. The same method may be applied to wooded land no available for wood supply. It will have a positive value that includes the value of land plus the value of NTFP” (Lange, 2004: 79, Box 7.2).

It is not doubt that, in addition to the open access public environmental services described above, forest private income should also integrate the private environmental services (in a large sense) that the owner of the forest could consume himself, as it was referred in the above literature cited. For these owners’ self-consumption of private environmental services (SCES), unfortunately, market prices are not available. The exchange value of these SCES should be capitalised in the market price of the land, since owners are willing to pay for these private uses when they decide the price to pay for a forest estate. Thus, a hedonic price approach could give us the part of the land price that corresponds to this owners’ self-consumption, as recognise the above cited authors and the Eurostat Forest Task Force (Eurostat, 2002). Nevertheless, this hedonic approach has two main drawbacks, one that applies generally and one that is more particular to forest case study. The general problem is that income measurement is actually a flow value and applying a specific self-consumption discounting rate (or interest rate) to the hedonic measurement of self-consumption capital is nearly an uncertainty subjective election. The particular drawback for applying the hedonic technique to the forest “is the small number of annual transactions” (Lange, 2004: 79, Box 7.2). Therefore, other alternatives valuation techniques could be applied to obtain the owner’ self-consumption capital income, as they are: (i) the additional commercial capital income gained investing the forest immobilised capital value in an alternative asset (lower bound) and (ii) the forest owners’ contingent valuation for estimating the WTP marginal exchange value (upper bound).

It was shows above that there is a general consensus that, in purely financial terms, owners may be able to accept to loosing money by keeping their properties, since they might obtain higher potential capital income in alternative investments. The difference between the capital income generates in an alternative investment and their present forest commercial capital income is what they are actually “paying” for the environ-mental services that they enjoy (Campos and Riera, 1996: 89). Nevertheless, this mar-ket alternative investment opportunity cost is only a lower bound for the price that the market of landowners is ready to pay for this environmental service (SCES). To find the upper bound we could question to the landowners about their maximum willing-ness to pay (WTP) for the private environmental services that they enjoy (we have framed the question in terms of the maximum amount that they were ready to loose


before selling their property)8. This is the upper bound for the marginal market price of these SCES, because if they had found somebody ready to pay more than this amount they would have sold their property9. The real market self-consumption price will be somewhere in between these two bounds. Nevertheless, if the interviewed landowners (a representative sample of the current landowners) are representative of all the landowners-market-agents, the price would be close to the value expressed by them as the maximum WTP level before they are ready to sell theirs forests. Thus, we use the upper limit for aggregation purposes.

2.5 The government consumption expenditures cost criterion Exhange value criterion is not applied in national accounts for valuing public adminis-tration services: “government administration is a non-market service with no identifiable product sold in markets, so it is valued in national accounts at its cost of production” (Lange, 2004: 83). The latter criterion could be theoretically acceptable if there were competitive market for the supply of the public services, that is far to be the case in the government supply of the forest open access public environmental services.

Simulated exchange value and not production cost national accounting criterion could be preferable when the demand of the public service is known. The open access public recreation and conservation services have government own fixed conservation investment output and consumption expenditures cost. The former output does not matter witch will be the valuation criteria, but the latter cost has a stated visitors ex-change value output. It is the reason to incorporate these commercial output and cost into the open access public on site environmental services account to be able to esti-mate the visitors’ environmental services net value added (Campos et al., 2005b).

2.6 The self-employed and open access grazing resource conditioned values Followings the Anderson and McChesney definition of economic property rights, open access grazing resource could be treated as private good, one it is picked up by private animals. It has been point out that current “forest accounts have most often measured the physical quantities and output value of NTFP [non timber forest pro-ducts], but have not always calculated the value-added component of these products and have rarely considered the rent or on site value. For the harvest of NTFP, house-hold labour is often the main input and the distinction between total value added and on site value is highly sensitive to the assumptions made about the opportunity cost of labour” (Lange, 2004: 82).

For most of non market NTFP most authors suggest “to value forest products at the cost of replacing them with close substitutes. For example, grazing of livestock may be valued at the market cost of purchasing an equivalent amount of fodder” (Lange, 2004: 83). By contrast, Campos et al. (2005c) reject independent subjective valuation of grazing resource rent and self-employed values and these authors propose a 8 Contingent valuation question for forests owners’ self-consumption of environmental services: “Con-sider a situation in which you could earn more by investing in other assets of comparable risk and time frame, such as public debt, houses, etc. (already taking into account capital gains from the land, e.g. land price increase). What is the maximum quantity of money you would be willing to give up from your earnings each year per hectare before selling your estate in order to invest in a non-agrarian busi-ness? (in Euros or Pesetas).

Keep in mind that by selling your estate your family and friends give up the exclusive right to enjoy the natural surroundings of your land, and you can no longer pass down this property to future bene-ficiaries. _____________________________ per year per hectare 9 What implies that the forest potential buyer equals the forest owner self-consumption discount rate, other wise, given the same WTP for self-consumption supply and demand, the owner will sell the forest, if his/her discount rate is higher.


conditioned exchange price approach for joint grazing resource rent and household self-employed labour for avoiding misled income theory application. Thus, given an objective market measurement of forest household total income, we could adopt subjective values for non-market grazing resource rent and self-employed cost, but taken into account the trade off between them, and conditioned to forest household total income value remains constant in the accounting year.

The livestock household self-employed net value added (NVAL,SE) from open access livestock activity can be measured objectively considering the follow steady state identity as residual market value10: NVAL,SE = RL,SE + SCL,SE – CEL,SE – LCLE,SE – RMOSC – TLG,SE.

Being, RL,SE: livestock self-employed revenues, SCL,SE: livestock household self-employed self-consumption, CEL,SE: livestock household self-employed equivalent consumption expenditures, LCLE,SE: livestock employee compensations pay by house-hold self-employed livestock keeper, RMOSC: livestock household self-employed own forage unit supplementary consumption and TLG,SE: government taxes on products11.

The above livestock accounting identities steady state permit to say that joint livestock 12 household net value added at market prices (NVAL,SE) is shared by production factors household self-employed cost (LCL,SE) and current consumption of forest open grazing resource rent (GRCC). Given an imputed value for livestock house-hold self-employed wage rate (WL,se) – e.g. euros (€)/working hour (H) –, then the residual exchange value of current grazing resources consumption could be estimated as: GRCC = NVAL,SE – LCL,SE.

The open access grazing resources (GRCC) could have a conditioned positive or negative exchange value pending on imputed livestock household self-employed cost (LCL,SE), but this subjective LCL,SE does not affect the livestock household self-employed total commercial income (NVAL,SE).

3 Selected forests applied green accounting results and discussion

3.1 The open access visitor’s environmental services in forests applied green national accounting

3.1.1 The open access visitor’s recreation Neither the open access public recreation services output nor government expen-ditures are considered in conventional national forest accounts: “The only tourism ser-vices that are directly recorded as such in national accounts are payments such as entrance fees from national parks, licensing fees for hunting, etc. However, entrance and license fees are often no related to the cost of providing the recreation service and cannot be taken as the value of recreation. Moreover, some forest recreation opportu-nities are provide free to the consumer” (Lange, 2004: 84). Here, we show the results of a contingent valuation in the Cork Oak Natural Park (CONP), where demand curve and steady state government production cost were estimated in 2002 (Campos et al., 2005b). 10 The livestock household self-employed income identity is measured by the follow exchange value components: NVAL,SE = FOLS,SE + FCLS,SE + FOLSC,SE + FCLSC,SE – ICLE,SE + FCLEI,SE – LCLE,SE – TL,SE. Being, NVAL,SE: livestock household self-employed net value added at market prices, FOLS,SE: live-stock self-employed final output sales; FCLS,SE: livestock self-employed fixed capital sales, FOLSC,SE: livestock self-employed final output self-consumption, FCLSC,SE: livestock self-employed fixed capital self-consumption, ICLE,SE: livestock self-employed external raw materials and services expenditures, FCLEI,SE: livestock self-employed external fixed capital investment expenditures, LCLE,SE: livestock employees compensation and TL,SE: livestock taxes to the government paid by livestock owner. 11 It is assumed there is not operating and capital subsidies. 12 Current consumption of forest open grazing resource rent (GRCC) it is not included in the livestock intermediate consumption cost.


Current CONP visitors state a median value for a recreation visit of 22 €, that is equi-valent to a final output of 5.12 €/ha, when half of current visits (½V = 0.24 visits/ha) are taken into account. This quasi exchange value for recreation final output is con-fronted with government consumption expenditures (CEG) and government employee labour cost (LCGE) as the only production cost considered for the supply of the free recreation services. In the CONP the recreation CEG accounts 2.60 €/ha and the LCGE 3.64 €/ha. The public free recreation service generate a net value added of 2.52 €/ha and, as residual value, a negative net operating margin of –1.12 €/ha.

3.1.2 The visitor conservation value The conservation value was measured in CONP by a contingent valuation question. The numbers of visitors that state they have willingness to pay (WTP) one specific amount of money per year basis time their WTP give a mean exchange value of 30 €/visitor and year, and this amount is equivalent of 5.8 €/ha exchange value of conservation final output. In the CONP the conservation CEG accounts 0.17 €/ha and the LCGE 1.22 €/ha. The CONP visitors conservation service generate a net value added of 5.63 €/ha and, as residual value, a positive net operating margin of 4.41 €/ha.

3.1.3 The visitor’s environmental services in applied green national accounting Campos et al. (2005b) measures the open access public consumption of recreation and conservation environmental services from forest applied green national accounting. There are two final outputs. The commercial one reflects the government forest inter-nal investment (FOII) that, what is expected in the steady state, it matches the value of internal fixed capital consumption (FCCI), that is 2.03 €/ha. The CONP current visi-tors environmental output (FOES) offers the aggregated recreation and conservation quasi total services final output of 11 €/ha. The Cork Oak Natural Park (Cádiz, Spain) visitors FOES incur in a government consumption equivalent expenditures (CEG,ES) of in 2.8 €/ha. Thus, the open access public environmental services generate a net value added (NVAES) of 8.2 €/ha. This total income from visitor’s environmental services is nowadays appropriated by government employee compensation (60 %) and the visi-tors as net operating margin (40 %). In addition, the visitors obtain a consumer sur-plus given by the difference between their WTP and the final output for the half of the current visitors with higher WTP.

The national accounting government production cost (CEG,ES) criterion rule for valuing the visitors environmental output, beyond its lack of theoretical fundaments, in the CONP case underestimates 67 % the total income measured by de AAS proxy exchange value criterion.

3.2 The owners’ self-consumption of private environmental services In contrast with the early recognition of private environmental services on the market price of land, few and recent studies have measure their contribution to the owner’ utility function (Kallio, 1999)13, the quasi exchange value output (Campos and Mariscal, 2003; Campos and Martínez, 2004) and the forestland price (Standiford and Howitt, 1992; Samuel and Thomas, 1999; Campos and Martínez, 2004).

The Spanish dehesa and Portuguese montado owner’s self-consumption of private environmental services were measured, as the lower limit, by Campos and Riera (1996). It was assumed a real private total profitability rate (pp) of alternative invest-ment of 3.6 %. For a sample of 15 dehesa and montado estates was estimated a real private commercial profitability rate (pc) of 3.0 %, given a residual minimum value of

13 Kallio (1999) estimates owners’ WTP for self-consumption of private environmental goods and ser-vices as a flow, although in terms of utility


private environmental profitability rate (pe) of 0.6 % (Campos and Riera, 1996: 56, Table 2): pe = pp – pc = 3.6 % – 3.0 % = 0.6 %. Government livestock subsidies ex-plain 44 % and owner’s self-consumption 17 % of pp, respectively. In other words, these subsidies and self-consumption private environmental services contribute with a minimum of 61 % of total dehesa and montado real private total profitability rate.

The upper bound of Scotch pine forest (Spanish high mountain of Central System) owner’s self-consumption of private environmental services was measured in 2002 by a forest owner contingent valuation survey (Campos and Martínez, 2004). Private landowners of forest properties in the Central System are willing to waive annual commercial earnings of up 141 €/ha rather than selling their properties. This waiver of commercial earnings is justified by mushroom harvesting, recreational enjoyment and welfare through conservation of the habitat that landowners would relinquish if they sold their property. The sample of 21 forests properties has an average asset value of environmental services (LE) of 2,580 €/ha, as stated by landowners. The estimated forestland capital value of the owners’ self-consumption environmental services (LE) represents 43.2% of the total estimated forestland market price (LT) of average sample property, which is 5,975 €/ha (Campos and Martínez, 2004: 81).

3.3 The grazing resource rent in applied green national accounting The value of grazing resource rent is currently incorporated implicitly in national ac-counts in the agricultural sector, although it would be more appropriate to include it as an intermediate production in the forestry sector (Vincent, 1999). Grazing resources rent has been valued using market prices for renting pastures (Rodríguez et al., 2004: 89, Table 1; Campos et al., 2005a) or using market prices for what it is supposed to be a close substitute, as it has been assumed for commercial hay or barley surrogate goods (Skånberg, 2001: 51; Daly-Hassen and Ben-Mansoura, 2005: 114; Ellatifi, 2005: 77; Mendes, 2005: 343). Because these authors do not follow the central natio-nal accounting exchange value criterion, they offer forests aggregated output value that misled income theory.

3.3.1 The grazing resource commercial rent in Spanish dehesa Livestock activity is an important subsidised business in the European Union. In fact, the grazing resource market price captures partially this government subsidy. For ex-ample in Monfragüe’s dehesa there is a positive grazing resource rent, while livestock income with employee labour cost leads to generate a negative capital income at mar-ket prices. When livestock government subsidies are considered, and this is the real case for dehesa’s owner, livestock capital income at factor cost become positive (Campos et al., 2001; Rodríguez et al., 2004).

In Spanish dehesa we have founded a real market price for a grazing rented forage unit (FU) that it is about 50% cheaper than the same FU obtained from commercial barley at farm gate (Rodríguez et. al., 2004: 89).

3.3.2 The open access grazing resource conditioned rent In Sweden, “the Sami people have a historical [open access] right to feed reindeer with lichen. That means that no market price on lichen, i.e. of the forage right, exists. The alternative to lichen forage [GRCC] is to feed the reindeer with hay, [..]. A reindeer consumes 1,25 kg of lichen a day, [..]. To feed the [..] reindeer [with] hay cost approximately Euro 1½ a day per reindeer in 1999, which give the annual lichen [grazed] production a value of Euro Mill. 84” (Skånberg, 2001: 51). Skånberg assumption to equals de FUs of commercial hay and grazing resource in Sweden has high risk to overvalue the former FU.


It is preferable the local real and objective measurement of reindeer household self-employed net value added (NVAR,SE) that could generate a conditioned subjective lichen unitary price. Skånberg substitute hay price criterion represents subjective lichen price of 1.20 €/kg. At this lichen price, how much will the self-employed reindeer keeper wage rate (WL,SE) be? Because NVAR,SE is an objective market value, and being NVAR,SE = LCR,SE + GRCC, the latter lichen grazed value can not be higher than NVAR,SE, but this upper limit could be reached only if the LCR,SE imputed value is cero. Given a steady state objective value for NVAR,SE, the open access simulated GRCC exchange value will be from cero value to a lower value than NVAR,SE.

In Tunisia cork oak agroforesty system in Iteimia area, we have found that Daly-Hassen and Ben-Mansoura (2005: 112, Table 7.4) equals values criterion for commer-cial barley and open grazing resource FUs overvalue the former FU a 115 % against the conditioned grazing resource value estimated, when a self-employed wage rate (WL,SE) of 50 % of forestry employee wage rate (WF,E) is assumed (Campos et al., 2005c). Thus, Campos et al. (2005c) estimate a self-employed livestock net value added (NVAL,SE) of 119.6 €/ha of utilized agroforestry land (UAL). We found a nega-tive value for Iteimia GRCC

14 when WL,SE is 70 % higher than Iteimia WF,E15. Con-

sidering that Iteimia livestock breeding employs usually women and children, Campos et al. (2005c) assume a WL,SE equals to 0.19 €/H for these self-employed livestock keepers. This assumption gives a Iteimia local current grazing resource consumption (GRCC) simulated forage unit exchange value of 0.06 €/FU. This value corresponds to a WL,SE of 50 % of WF,E. If we operate opposite, and we assume the forage unit market price substitute –e.g. a market barley price of 0.15 €/FU (Daly-Hassen and Ben-Mansoura, 2005: 114)– for valuing subjectively the Iteimia grazing resource, then the residual wage rate obtained for WL,SE will be 0.07 €/H. The latter value represents only the 20 % of WF,E. Even adopted a cero value for Iteimia open GRCC –that is, assuming LCL,SE = NVAL,SE– the WL,SE remains 70 % of WF,E.

In Portugal most forestland is private ownership and there is a private market for grazing resource16. Mendes (2005: 343) does not use the Portuguese market price for grazing resource rent, and, without a theoretical justification, he applies the price of barley as a “surrogate price” (Mendes, 2005: 343). What is here difficult to justify is why the author rejects the market price for the grazing resource forage unit (FU) and he prefers to impute the commercial price of barley as a “surrogate price” for GRCC measurement. The latter we have demonstrate in Mediterranean forests is far to be a close substitute of grazing resources in terms of exchange value (Rodríguez et al., 2004; Campos et al., 2005a, 2005b).

We have show that most forest accounts grazing resource valuation literature fails from a sound economic theory perspective, when it is applied the forage unit market substitute (e.g barley or hay unit price) for open or private grazing resource consump-tion. It is misleading too to adopt forestry employee compensation local wage rate as marginal opportunity cost of self-employed labour. AAS methodology gives a com-plete and extended framework to avoid double counting and unrestricted subjective valuation criteria on related self-employed livestock total income and open or private own grazing resource consumption. 14 Given the 2002 our Iteimia livestock total fodder consumption estimation and the commercial fodder supplemented in the stable, we calculate a residual amount of current livestock grazing resources con-sumption (GRCC) of 650.4 FU/ha of grazed land (GL) or 566.2 FU/ha of utilized agroforestry land (UAL). 15 Iteimia (2002 data) forestry activity employee wage rate (WF,E) equals: 0.50 DT/HE (i.e. 4 DT per working day –8 working hours per day– or 3 €/day) or 0.37 €/HE. Currency exchange value (2002 data): 1 € equals 1.34 DT (Tunisian Central Bank, 2005 and Bank of Spain, 2005). 16 In Portugal livestock keeper receive government subsidies that could be higher value than the market price of grazing resources. This is the case too for Spain.


4 Conclusions First of all, it appears not to be enough reason to argue that scientific controversies avoid to implements new regulation and application of forest applied green national accounting. Of course, to measure forest total economic value will be perhaps an impossible task, but there are nowadays developed agroforestry accounts systems and non market valuation techniques with higher sound theory than the present non ex-change value government services production cost criterion applied by the SNA.

Our AAS methodology has been developed to improve the SNA applications and to adding on site environmental incomes. The central commercial production boundary must to continue offering a commercial net value added and the extension of income measurement to non market good and services could supply environmental income indicator, but integrated in an unique national accounting system, otherwise the risk is very high of missing outputs and cost, making double counting and adopting arbitrary valuation criteria.

This paper proposes and develops new green accounting approach to estimate ex-change values for on site forest private owners’ and visitors’ environmental consump-tions. The open access visitors’ recreation and habitat conservation have been meas-ure by several contingent questionnaires in Spanish dehesa and Scotch pine timber forest in mountain Central System. We argue that accepting the visitors stated median time half of real current annual visits gives a proxy exchange value recreation of free access visitors to the forest.

Our most innovative and theoretically robust measurement is the forest owners’ self-consumption of private environmental services. If private capital income and asset values are the two faces of the same coin, here being the forestland asset a capitalised market value of owner future capital income, there is not cause to miss it from the central frame of the SNA. We believe that our contingent questionnaire ap-proach gives an accurate theoretical and operative result to understand why forests are valued so much in the market if commercial profitability rate is so low. Mediterranean forests and other forests in industrialised countries (U.S.A, Spain, Portugal, U.K., Fin-land, etc.) become a joint low commercial profitability investment and a luxury pri-vate environmental services self-consumption investment, pending on owners’ and potential buyers’ preferences.

From a forest applied green national accounting perspective the challenger is to estimate exchange value for well identified forest environmental goods and services. Some environmental values are intermediate outputs incorporated in other forest final goods, e.g.: potential open access or private grazing resource rent is included in live-stock net value added. This permit to estimate the grazing resource rent conditioned to a given self-employed cost and the rest of factor of production. This joint grazing resource and household self-employed objective measurement avoid subjective – some times arbitrary – grazing resource imputed value. Iteimia cork oak agroforestry case study shows that when it is assumed surrogate barley price for valuing grazing resource, this latter value overvalue 115 % the presumable value of grazing resource, conditioned to a self-employed wage rate equals 50 % of the forestry employee wage rate.

A last issue reaming that could weak our recommendations for incorporating in-pute exchange values from contingent valuation techniques to built green national accounting with sound theory. We have assumed changes ‘small enough’, if simulated market were implemented, to retain the present national economy price structure. Here we have not a total accurate solution. To off set this weak, it must take account that the SNA has different but of great significant weak, e.g. income from government services equals the civil servant employee compensations, and that is not enough mo-tive to reject, at all, the SNA.


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APPENDIX: AAS and ESA total incomes steady state comparison

In this appendix we show a complete measurement theory of the forest total Hicksian income on the basis of an agroforestry accounting system (AAS) that were developed by the Environmental Economic Group (EEG) at Institute of Economics and Geo-graphy (IEG) of Spanish Council for Scientific Research (CSIC). For a detailed analysis of the differences and coincidences of the AAS and EAA/EAF see Campos (2000), Capar-rós et al. (2003), Campos and Caparrós (2005), Campos et al. (2005d) and Rodríguez et al. (2005). The AAS generates the net value added from the production account and the capital gains from the capital balance accounts. The AAS will be compared with the European Union Economic System of Accounts (ESA) applied to agriculture and forestry (EAA/EAF) (Eurostat, 1996 and 2000).

A.1 AAS and ESA incomes comparison A.1.1 Total output and cost Total output (TO) at market prices (quantities time market price) include: intermediate output (IO), internal final investment (FOII), sales from final outputs (FOS), self-con-sumption of final outputs (FOSC), and stock of final outputs of production in progress (FOPP): TO = IO + FOII + FOS + FOSC + FOPP. It is assumed there is not final stock of finished goods in the accounting period or employee compensation in final forest products.

Total cost (TC) include: intermediate consumption (IC), labour cost (LC) and fixed capital consumption (FCC): TC = IC + LC + FCC. IC is classified as raw materials (RM) and services (SS). These have been classified in internal (intermediate output and production in progress used) and external intermediate consumption: IC = RM + SS = IO + PPU + RME + SSE. LC is composed by employees labour cost (LCE) and self-employed labour cost (LCSE): LC = LCE + LCSE. FCC is classified too in internal and external: FCC = FCCI + FCCE.

A.1.2 AAS and ESA private incomes comparison The objective of this section is to exemplify the usefulness of AAS versus ESA – the European System of Accounts (ESA) is the national accounts applied in the European Union and the Economic Accounts for Agriculture and Forestry (EAA/EAF) is the satellite accounting system applied by Eurostat on the basis of ESA (Eurostat, 1996, 2000) – in comparing, on uniform basis, the forest private incomes measurement at market prices. The identities presented here show that the AAS versus ESA forest private total income comparison are the same – however, this is only true for the aggregated NVAESA, since current applications at national level are incomplete for


different reasons. The conventional EAF private net value added at market prices actually measured (NVAEAF) undervalues the real commercial income generate in the forests, shrublands and grasslands by the aggregated values of grazing (GRFSG) and hunting (HFSG) rents that they are implicitly included in the agriculture and livestock net value added (NVAEAA), except that the AAS system incorporates the value of self-consumption of private environmental services (FOSC,E):

TIAAS,P = TCIAAS,P + FOSC,E = NVAESA + FOSC,E. The AAS private total commercial income (TCIAAS,P) and the ESA commercial net value added at market prices (NVAESA) we show they have the same values.

We said in the introduction section we have assumed hypothetical forest and live-stock steady state. As we shall show below, this entails that there are not capital gains other than those arising from the effect of discounting production in progress, and then the AAS versus ESA incomes comparison can be made using complete system of accounts or only the ESA simplified production account. Under steady state assump-tions, the simplified production account avoids to consider natural growth (GNG), production in progress used (PPU) and capital balances (Caparrós et. al., 2003). It has been proved that in the steady state production in progress revaluation (PPR) equals the values of production in progress used (PPU) minus gross natural growth (GNG):

PPR = PPU – GNG. This steady state makes possible to estimate private total Hicksian commercial income (TCIAAS,P) as the sum of AAS commercial net value added at market prices (NVAAAS) plus production in progress revaluation (PPR):

TCIAAS,P = NVAAAS,P + PPR, TCIAAS,P = TOESA + GNG – ICESA – PPU – FCC + PPU – GNG, TCIAAS,P = TOESA – ICESA – FCC = NVAESA.

Being NVAESA: ESA commercial net value added at market prices, TOESA: ESA total output, ICESA: ESA intermediate consumption, and FCC: fixed capital consumption.

A.1.3 AAS and ESA social incomes comparison Here in site forest AAS social total income (TIAAS,S) extends private total income at market prices (TIAAS,P) to the open access environmental goods and services con-sumed by visitors –e.g.: recreation and conservation values– and governmental expen-ditures. That is, social total income aggregates the different incomes generated by in-dividual uses irrespective of the in site recipient, who may be the forest landowner, workers, recreational visitors and others. Thus:

TIAAS,S = NVAESA + FOSC,E +FOOA,E + LCG – CEG = NVAAAS,S. Where, FOOA,E: open access to pick up forest environmental (non market) goods and services (e.g.: free mushrooms collected, the public visitors recreation output, the visi-tors conservation value, etc.), LCG: government forest employees compensations, CEG): forest government consumption expenditures and NVAAAS,S: AAS social net value added at market prices.

It has been showed that when forest steady state is considered, then the environ-mental extended simplified production account give a net value added that it matches the forest total sustainable income (Caparrós et al., 2003).

The main AAS social income differences with the ESA system is that neither owner’s self-consumption nor open access visitor’s environmental services, govern-ment employee compensation and intermediate government expenditures are taken into account in the presently applied ESA framework for forest account.


A.2 Self-employed net value added measurement The net value added from total self-employed activities (NVAT,SE) can be measured objectively considering the follow assumptions: physical and economic steady states –it can be proved that the following identities will match: FCGI = FCC + FCS + FCSC, and FCCE = FCEGI – and non opportunity costs for own tools and fixed capital. In addition, there is not residual value or self-consumption for external fixed capital investment and self-employed do not have property rights on final stocks of woody vegetation growth outputs:

NVAT,SE = TOT,SE – ICT,SE – FCCT,SE, TOT,SE = IOT,SE + FOII,SE + FOS,SE + FOSC,SE + FOTPP,SE, ICT,SE = ICI,SE + ICE,SE + PPTU,SE, FCCSE = FCCI,SE + FCCE,SE, FOII,SE = FCCI,SE + FCIIS,SE + FCSC,SE, FCCE,SE = FCEI,SE, FOTPP,SE = PPTU,SE, NVAT,SE = LCSE + LCE,SE + NOMT,SE, NOMT,SE = GRCC + RRF,SE + TG,SE, LCSE = FOS,SE + FCS,SE + FOSC,SE + FCSC,SE – CESE – LCE,SE – GRCC – RRF,SE – TG,SE.

Self-employed revenues (RSE) at market prices (quantities time market price) include sales from final outputs (FOS,SE) and residual fixed capital (FCS,SE):

RSE = FOS,SE + FCS,SE. Self-consumption by self-employed family (SCSE) from final outputs (FOSC,SE) and fixed capital (FCSC,SE) are valued at theirs correspondent imputed market prices:

SCSE = FOSC,SE + FCSC,SE. Self-employed equivalent consumption expenditures (CESE), when steady state is assumed, include external intermediate consumption (ICE,SE) and external fixed capi-tal consumption (FCCE,SE) in the accounting period. The latter equals the external fixed capital investment (FCEI,SE) at replacement cost. This is the reason to include the FCEI,SE in the cost of the consumption expenditures:

CESE = ICE,SE + FCCE,SE = ICE,SE + FCEI,SE. The GRCC are the resources rents appropriated by self-employed families for using the open access land. The RRF,SE value represents the resource rents paid to the forest owner by self-employed family. The TG,SE value will be the taxes on products –it is assumed that there is not net of operating subsidies– paid by the self-employed family to the government.

Thus, taking into account all the above assumptions, the NVAT,SE is estimated objectively as residual exchange value of the items self-employed revenues (RSE), self-consumption (SCSE) and consumer expenditures (CESE):

NVAT,SE = RSE + SCSE – CESE, NVAT,SE = LCSE + LCE,SE + GRCC + RRF,SE + TG,SE, NVAT,SE = LCSE + LCE,SE + GRCC + RRF,SE + TG,SE,

The net value added that can be appropriated by self-employed from all forest activities (NVASE) is the NVAT,SE minus the self-employed payments to the employee (LCE,SE), forest owner (RRF,SE) and taxes on products (TG,SE):

NVASE = NVAT,SE – LCE,SE – RRF,SE – TG,SE, NVASE = LCSE + GRCC.

All the items required to estimate the net value added appropriated by self-employed (NVASE) are real or imputed market value. When some forest uses are free for self-employed, the total income appropriated by self-employed could include the current grazing resource consumption exchange vale (GRCC), if this exists, in addition of the self-employed compensation (LCSE).


THE DEVELOPMENT OF FOREST ACCOUNTING IN THE PROVINCE OF TRENTO (ITALY)1

Ilaria Goio2, Geremia Gios3 and Claudio Pollini4

Abstract In the increasing scientific debate about sustainable forest management, a crucial role is played by the development of adequate instruments of evaluation and survey. The proposed system of national account (SNA) underestimates the full value of forest resources and does not permit a correct evaluation of the total contribution of forests to economic welfare. The SNA reflects, partially, the consumption of forest natural capital or the costs of loss of forest quality. This is due to the fact that it registers only the value of produced outputs that are traded in the marketplace. The non-market functions provided by forests (recreational, aesthetic, ecological and protective) are definite “non-SNA functions” and are not taken into account. As many studies have demonstrated, forests have a higher value than that connected to production aspects. This paper focuses on results of a tentative accounting system in order to estimate and integrate the benefits of non traded-goods and services provided by forests located in the Province of Trento (northeast Italy). The forests, which cover about 50% of the whole surface, have to be valued. Keywords: national accounting, green accounting, market functions valuation, non-market functions valuation.

1 Introduction The aim of this paper is to present the results obtained when comparing different tech-niques used in estimating the benefits produced by forests. The evaluation was carried out on forests in the Autonomous Province of Trento (Italy). However, we feel that the considerations to be drawn from this research may be valid generally and could lead to a re-examination of the way in which the benefits produced by forests are evaluated. With this aim in mind, we firstly report the values derived from the appli-cation of standard national accounting procedures and those obtained by the methodo-logies put forward in the ambits of national green accounting, Secondly, we report the estimates relating to other benefits that forests produce, but which at present are not usually considered in the course of standard national accounting practice.

The paper is divided into four main parts. The first consists of an analysis of the evaluation methods used for the forestry sector in standard national accounting proce-dures, with the results obtained when these were applied in the areas examined.

The second part briefly describes the methodologies used and the results obtained by green accounting, in determining the potential value of timber products from the same forests. The third part presents the results of an evaluation of certain benefits not considered in either standard national accounting or green accounting. In the final part, these results are compared and some proposals are advanced towards achieving a more complete evaluation of all the benefits produced by forests.

1 This paper is the results of authors’ common reflections. However the single paragraphs have been written as following: Claudio Pollini wrote 1 e 5.4; Ilaria Goio wrote 2, 3.1, 3.2, 3.3, 4; Geremia Gios wrote 5, 5.1, 5.2, 5.3. 2 Corresponding author, researcher at IVALSA-CNR, San Michele all’Adige, Trento, Italy Foundation for Scientific Research Projects, PAT, [email protected] 3 Full professor of Environmental Economics, Department of Economics, University of Trento, Via Inama, 5, 38100 Trento (Italy), [email protected] 4 Researcher at IVALSA-CNR, San Michele all’Adige, Italy, [email protected]


2 The multi-functionality of forest resources It is important to remember that a forest is at the same time both a productive factor and a product. From here arises the fundamental distinction between timber capital (the mass of standing trees) and the timber produced. The first simply indicates the number of standing trees that together make up the forest and since this is a resource that is renewable over time, the size of the timber capital may increase or decrease due to natural events or human activity. Whereas, the timber produced is the main, if not the only, product to be extracted from forests and consequently constitutes the primary element in the traditional productive function of forestland.

However, those studying forest economy have long realised that the productive function is only one (and perhaps not even the most important) of the functions performed by forests, which are in reality multifunctional. Indeed, alongside their productive function, we can also recognise their protective function (soil conservation and protection, watercourse protection, avalanche prevention…..), their landscape and recreational function (hunting, excursions ….) and their ecological function (protec-tion of biodiversity, carbon cycle …). So forests do not only produce timber and non-timber goods, but also “intangible (Wibe, 1995)” services, “creating multiple (econo-mic, social and environmental) benefits for society (Price et al., 2003)”. It goes with-out saying that on one hand the importance of these various functions “is strictly linked to the socio-economic and environmental context of which the forest is a part (Mammuccini, 2004)”, and on the other “the integration of the various functions is not always without conflict (Janse and Ottitsch, 2005). For such reasons it would appear essential to obtain an economic evaluation of the different functions if the forest itself is to be used efficiently.

3 Forests in national accounting

3.1 Standard national accounting: definitions and limits National economic accounting was introduced during and immediately after the second world war, driven by the work of Keynes. Attention was mainly turned to ascertaining short term information concerning aggregate supply and demand for eco-nomic goods.

The “System of National Accounts” established in 1953 (SNA 1953), followed by SNA 1968, was used until the beginning of the nineties. This system, containing parts that were difficult to interpret and others that were outdated by the events of history, was re-examined by the United Nations. This led to the revised SNA of 1993, due to be updated by the end of 2008. The SNA is then adapted by different countries, which may introduce minimal modifications. In the European Union, for instance, reference is made to the ESA “European System of Integrated Economic Accounts”. The ESA mirrors the SNA almost completely, differing only in certain marginal aspects in order to facilitate its use within the European Union.

Though useful, the national accounts system did not, indeed still does not, lack criticism and over the last ten years attempts have been made to introduce corrections and additions. The weak points of the SNA are particularly evident in relation to envi-ronmental assets.

As Pesso (2000) stressed, “national accounting systems only partially reflect the consumption of natural capital or the cost of the loss of environmental quality, so the value of the environment is not clearly visible in the composition and depreciation of a nation’s capital”. In effect, if we consider the short term and analyse the production of marketable goods alone, then any collateral effects can be seen as external and without cost (Sammarco, 1993)”. On the contrary, in the medium to long term such


effects have a negative effect on the production system itself, undermining its capacity to generate wealth and consequently social well-being. The cause of this should be sought in the very nature of environmental assets: “the environment is not only a set of capital resources to be taken into consideration when calculating the consumption power of the economic system of the moment (Musu and Siniscalco, 1993)”, it is far more. Using the environment also determines negative external factors that deteriorate and impoverish it, such as pollution or the overexploitation of land for productive purposes. Consequently, if a national accounting system purports to weigh up well-being and changes in the quality of life, as well as income and its growth, then it will necessarily have to evaluate the sum of these effects. “Every economic accounting system that does not include the environment, ignores a dimension of crucial importance to the functioning of the economic system itself and to the well-being of humanity (UN et al., 2003).

To put it in a nutshell, for the “World Conservation Union” (www.iunc.org), “the national accounting system fails to evaluate: a) environmental costs i.e. the cost of prevention and protection against environmental deterioration; b) non-market goods and services; c) the consumption and depreciation of natural capital”. It should be stressed that, on the contrary, information about the environment must, or rather should, increasingly influence economic policy decision-making because this cannot be exempted from a consideration of the environmental effects of economic activities, because of: - “the increasing population, with the quantity and quality of production necessary to satisfy its requirements, which gives the environment the growing importance of an economic asset in limited supply, - the effects of deterioration in environmental quality on social well-being, - the lack of markets that allow for the rationalisation of demand for environmental services through the price system (Beltratti, 1993)”. Over the past decade, various alternative or complementary accounting systems known as green environmental accounting have been introduced in an attempt to remedy the limits of national accounting in identifying and consequently measuring environment associated phenomena, and to supply public decision makers with a useful, appro-priate and above all complete support to analysing and planning.

3.2 Forests in standard national accounting The criticisms of standard national accounting made in the previous paragraph can be clarified and justified further if attention and enquiry is focused on a specific type of natural resource: forests.

In standard accounting, forests are not considered as a single entity. They appear as two distinct elements that are evaluated separately: • land • biological goods. The SNA 1993 defines land as “the ground, including the covering soil and any asso-ciated surface waters, over which ownership rights are enforced”. On one hand this definition embraces all improvements, of a certain entity, undertaken not merely for conservation purposes, that cannot be separated from the land. On the other hand it excludes areas with buildings and other facilities, cultivated areas, trees animals, non-cultivated biological resources and underground resources (including watercourses). As far as economical exploitation is concerned, it is subdivided as follows (UN, 1993): 1. cultivated land, in other words forest land on which a forestry activity (silviculture) is carried out geared towards timber production;


2. other land, i.e. forest land where no forestry activity (silviculture) is undertaken, though there may be natural growth. This land is considered “non-economic activity”. In the first case (cultivated land), standing timber trees are defined as “productive activity” and their added value, corresponding to timber growth, is included in the GNP only when the timber is harvested. (Eurostat, 1999). Biological goods on forest land consist of the trees, fauna and other forest flora (UN, 1993). Biological goods are also subdivided into (UN, 1993): • Cultivated: meaning animals and plants whose natural growth, equal to increase in value, or regeneration, is under the direct control, responsibility and management of an institutional entity. These are “productive property assets”. • Non-cultivated: animals and plants that produce wealth over which property rights have been established although their natural growth or regeneration is not under direct control, responsibility and management of an institutional unit. These are classified under the item “non-productive property assets”. From what has been said we can see that the information about forests deducible from standard national accounting is essentially limited to those forest resources that are exchanged on the market or that are object of market transactions and that therefore produce economic benefit and are associated with ownership rights (Battellini et al., 1996; Eurostat, 1999; Doldan and Chas, 2002)5. We are therefore dealing with “re-sources belonging to forestry companies that place unprocessed forestry products on the market. Consequently all our forestry heritage that is not controlled and managed for economic purposes by any of the institutional sectors and is not utilised for production purposes, is excluded from the realms of national economic accounting (Battellini et al., 1996)”. The same situation is witnessed by Chopra et al. (2001), who says that inaccessible natural assets and those not managed, do not contribute to the current economic activities of a country.

Another important aspect of forests is associated with their multi-functionality. Standard national accounting makes a net distinction between productive functions and other functions performed by forests (protective, aesthetic-recreational, ecological).

These latter functions are defined as non-SNA functions (Eurostat, 1999). By using this expression Eurostat (1999) stresses that functions other than productive ones are not registered or taken into count by the national accounting system. This remains true although various studies have demonstrated that the non-productive functions of forests may even be of higher value than their strictly productive functions (Mattson and Li, 1994; Scarpa, 1998) and despite the fact that they contribute directly or in-directly to the well-being of the entire community. These functions are not counted in standard accounting because they are not included in what is defined as the “produc-tion boundary” of the SNA (Haripriya, 2001), when referring to the total range of eco-nomic sectors. According to the SNA 1993, the “production boundary” includes all production actually destined for the market, whether for sale or barter, all goods and services provided free to individual households or collectively to the community by governments unit, all goods produced for own final use, own-account production of housing services by owner occupiers and services produced by employing paid domestic staff (UN, 2001). We should remember that the term “production” usually indicates an activity, carried out under the responsibility, control and management of an institutional unit, that uses inputs of labour, capital and goods and services to produce outputs of other goods and services (UN, 2001). 5 The natural asset boundary in the System is determined, in compliance with the general definition of an economic asset, by whether the assets are subject to effective ownership and are capable of bringing economic benefits to their owners, given the existing technology, knowledge, economic opportunities, available resources and set of relative prices. Environmental assets over which ownership rights have not or cannot be established such as open seas or air, are excluded (UN, 1993)”.


It follows that, in our opinion, the SNA 1993 incompletely reflects the consequences of a reduction or increase in forestry value on the economy of a nation and take into consideration only the productive function.

3.3 The production value of a forest according to the SNA In this paragraph we report the results achieved by applying the methodology set out in the SNA. The data shown refer to the average figures6 for 2002/2003.

As we have already seen, the value of the productive function of a forest equals the value of production utilised. Therefore this value must be identified with reference both to timber products and to non-timber products. Apropos we note that: • The value of timber products utilised can be obtained by multiplying timber actu-ally cut by the corresponding price (stumpage price). The values are shown in the following table.

Table 1: The value of timber products Industrial round wood Firewood

Year Total used (m3)

Average price (€/m3) Value Total

used (q) Average

price (€/q) Value Total value

2002/2003 295,281.50 46.39 13,698,108.79 951,113 2.15 2,044,892.95 15,743,001.74 Source: Author’s elaboration.

• Non-timber products to be evaluated in the forests of Trento are: o non-wood products (from trees): chestnuts and hazelnuts; o non-wood products (from plants): strawberries, raspberries and bilberries; o mushrooms and truffles; o game, hunted in the forest7. Average values, obtained by multiplying quantity by respective price, for 2002/2003

are summarised in Table 2.

Table 2: Value of non-timber products YEAR PRODUCT 2002/2003

Non-wood products (from trees) 418,633.05 Non-wood products (from plants) 104,016.98 Mushrooms and truffles 7,652,829.92 Game 1,663,082.50

Total 9,838,562.45

Source: Author’s elaboration.

The total value of forest production according to the SNA system is summarised in the following table. 6 The decision to present average figures for a two year period enabled us to limit annual variations. Annual variations may be the consequence of extreme weather conditions that lead to the use of trees felled by storms and such like. 7 Since data supplied both by the Fauna Office and by the Trento Provincial Hunting Association con-cern the whole province, for the purposes of this analysis attention has been focused on the following area: 1) ungulates: percentage of forest over total productive area minus area under apple and pear pro-duction: 2002 69%, 2003 69%; 2) chamois and grouse: forest area above 1000m (about 240,000) hectares over total area above 1000m (373,996 hectares): 64%; 3) species not subject to hunting quotas: percentage of forest area over total productive area: 2002 67.5%, 2003 67.5%.


Table 3: National accounting: value of the productive function of the forests

Year Value of timber products

Value of non-timber products

Total value

2002/2003 15,743,001.74 9,838,562.45 25,581,564.19 Source: Author’s elaboration.

4 National green accounting National green accounting (Battellini et al., 1996; Cairns, 2001; Krieger, 2001; Kris-tröm and Skånberg, 2001; Doldan and Chas, 2002) takes the value of potential pro-duction into consideration as well as the value of used production, this means it considers variations in the stock of timber and game8. The basic idea is very simple: variations in the stock resources constitute a saving or consumption (depending on whether it is a positive or negative variation) which must be taken into consideration. In the case of products mentioned previously, such variations concern the timber mass and the quantity of game.

For the timber mass, it is necessary to identify the current increment rate (separated into building timber and firewood) not used and therefore contributing to increase the timber capital available. As some authors suggest (Merlo and Ruol, 1994) a conserva-tive 50% of the current timber price can be applied to this quantity.

Table 4: Total potential production value of timber products

Year Potential production value(industrial round wood) (€)

Potential production value(firewood) (€)

Total potential production value (€)

2002/2003 15,418,056.33 1,367,379.20 16,785,435.53 Source: Author’s elaboration.

For game, variations in the quantity of game at the beginning and end of the period must be assessed9. A conservative 50% of the value of single heads of game is applied to these quantities in a similar way to that undertaken for the mass of timber.

Table 5: The potential value of hunting 2002/2003

Roe deer - 2,339.00 Red deer 46,299.00 Mouflon 4,055.00 Chamois 8,304.00 Total 56,319.00


The value of the productive function of the forest in national green accounting is shown in Table 6.

Table 6: Green accounting: value of the productive function of the forest

Year Value of used production (€)

Value of potential production (resource stock variation) (€)

Potential value of hunting (resource stock variation) (€)

Total value

2002/2003 25,581,564.19 16,785,435.53 56,319.00 42,423,318.72 Source: Author’s elaboration.

8 National “green” accounting seeks to remedy some of the main incongruences of the SNA in relation to the evaluation of environmental goods (Eisner, 1988; Repetto et al., 1989; Hartwick, 1990; Bartel-mus and van Tongeren, 1994; Hamilton and Ernst, 1996). 9 In the case under analysis this quantity was estimated only for non-migratory species for which hunt-ing quotas are fixed. No reliable information is available for migratory species or non-migratory spe-cies not subject to hunting quotas.


So, in the case under analysis, taking account of the variations in resource stock and therefore of “savings” leads to values that are almost double those obtainable when applying standard SNA.

5 Estimating the other forest functions Recognising the multi-functionality of forests means understanding that their value depends on a wide variety of factors and that these factors must be evaluated. Al-though quantifying the productive function does not present significant problems, the same cannot be said of the other benefits produced by forests: their so-called non-market functions. These are referred to in this way because, in presenting the charac-teristics of public goods i.e. of goods for collective consumption that can neither be excluded nor made competitive, they are not exchanged on the market. Since such benefits are not susceptible to appropriation and do not have a market, it clearly follows that they do not have a price. These are therefore benefits of value to society, but for which there is no market where such values can find expression (Zhongmin et al., 2003). So, in order to attribute forests with their “true and complete” value we must identify evaluation methodologies that enable these functions to be estimated. “Economic evaluation is one of the tools that can be used to attribute quantitative values to goods and services produced by natural resources (Seenprachawong, 2003)”. Similarly, Merlo (1986) stresses that the evaluation of a forest’s public services is the central issue for any rational definition of the use of environmental resources. In literature on the subject “numerous methods exist for measuring the economic value of non-market functions (Wibe, 1995)”.

Some authors make an initial distinction between “demand based methods (Bate-man and Turner, 1993)” and “price based methods (Merlo, 1991)”, the latter modelled on traditional estimate 10 . These can further be “divided into direct and indirect methods (Signorello, 1986; Oates, 1992)” Direct methods estimate the value of the environmental good by constructing so-called hypothetic or contingent markets, in other words using consumer preferences expressed in terms of willingness to pay or willingness to receive compensation. On the contrary, indirect methods, “otherwise known as market parallel, estimate the demand for an environmental good by implic-itly deducing it from consumers’ willingness to pay for another type of good (Silvestri, 2003). It follows that uncertainty about methodology, lack of basic infor-mation, and incomplete awareness of the utility flows produced by forests, introduce margins of ambiguity and error into such estimates.

Briefly outlined below are the methodology used and results obtained, in the case under examination, when estimating the various functions mentioned.

5.1 Landscape value As for rural landscape (Novelli, 2005; Cicia and Scarpa, 1999; Dillman and Bergstrom, 1997) we believe that the benefits of forest landscape can be traced to three compo-nents: scenic (or landscape) value, recreational value and nostalgic (or evocative) value.

“Scenic value, i.e. the value of benefits produced by observing certain typologies of landscape, and recreational value, i.e. value deriving from the possibility of carry-ing out tourist-recreational activities in environmental contests of quality, require direct use of the good. On the contrary, nostalgic (or evocative) value “derives from the desire that a landscape attributed with aesthetic functions should exist, and from knowing that its associated traditions, culture and lifestyles continue to exist through its conservation (Novelli, 2005). This value was not considered for the purposes of the project in question, so only benefits in terms of scenic and recreational value have been evaluated. 10 Their main limit is that they only take partial account of the forest’s social value (Merlo, 1986).


The landscape-recreational value of forests concerns two different aspects: game and the forest as such. Since all the necessary information was not available for game in general, only the landscape-recreational value for hunters was considered. For this category of people this value can be estimated as equal to hunting value, from which the value of carcasses and trophies already valued in the productive function must be subtracted.

The hunting value can be defined as “an economic quantification of the satisfaction felt by hunters when hunting various wild species (Zeni, 2002)”11. It was estimated at € 5,743,580.62. If we subtract the productive element (€ 1,663,082.50) we obtain a landscape-recreational value for game, for hunters alone, of € 4,080,498.12. As men-tioned previously, this is only a partial value in that we can hypothesise that game also holds landscape-recreational value for non-hunters. However, on one hand the value deriving from the presence of animals in the forest may also be considered a part of the landscape-recreational value of the forest itself and on the other, since adequately reliable information was not available for non-hunters, we preferred to adopt a more cautious line and leave out this particular component.

For the landscape-recreational value of the forest as such, we must firstly possess realistic estimates of the number of visits made, on average, per hectare of forested area in a year, how long ago the last visit was made and how long it lasted. In our case, a quantity evaluation model for tourist-recreational pressure on the forest resources in the province of Trento was built up from a sample survey (Scrinzi et al.,1995) conducted in the nineties. This information was integrated with the results of a contingent valuation survey, conducted in 2002 in the forests of Trento (Bettiol, 2004; Notaro et al., 2005), which enabled visitor willingness to pay (WTP) to be estimated.

On the basis of this information it was possible to calculate the landscape-recrea-tional value of the Trento forests, which was valued at € 11,164,453/year (Bettiol, 2004). This means that the average value per hectare is € 40.47/year.

This is a lower value than that suggested by other authors for forests in the Italian Alps, so here too we can talk of a conservative estimate. For example, a value of € 55/hectare was estimated for Piemonte (Paletto, 2002), whereas in the case of Friuli Venezia Giulia (Marangon et al., 2001) values of € 159/hectare were estimated. The difference in value is not surprising considering the difference in methodologies used and the diversity of the forests in question (Notaro et al., 2005). The difference in estimates for neighbouring areas and the lack of agreement between academics as to the most appropriate methodologies and on their limits for estimation purposes, does not, in our opinion, invalidate the estimates. Of course, adjustments are always possi-ble but the estimated size range of the sums in play is in itself extremely important for the purposes of planning suitable intervention in economic policy.

The overall landscape-recreational function of the forest can therefore be estimated as follows:

Table 7: Landscape-recreational value

Year Landscape-recreational function of the forest (€)

Hunting value12 (€)

Total value (€)

2002/2003 11,164,453 4,080,498 15,244,951 Source: Author’s elaboration.

11 This value is derived from the annual costs met by hunters: gun licence, insurance, guns, cartridges, clothing, hunting licence etc. To obtain the overall value, costs met by individual hunters must be multiplied by the total number of hunters in the province of Trento. 12 Net of the productive value in hunting.


For the case in question, we wish to draw particular attention to the fact that the value of the landscape-recreational function of the Trento forests is only marginally inferior to the estimated value of timber production.

5.2 The carbon-fixing value of the Trento forests Although we have long been aware of the capacity of forests to act as huge carbon sinks for carbon fixing, only at the world environment and development conference held in Rio de Janeiro in 1992 was it officially recognised for the first time. Subse-quently the Kyoto protocol (1997), and its ratification by an adequate number of countries, has increased the importance of forests as regulators of the carbon cycle. In a recent work (La Notte and Paletto, 2002) the overall carbon-fixing value of the high forests of Trento13 was calculated at € 3,672,177. This was calculated considering the value of a tonne of carbon as € 19.9014. We can therefore deem that, considering the value of annual increase in deciduous forests, the overall carbon-fixing utility flow from the forests of Trento is € 4,362,546 corresponding to a yearly average of € 12.6 per hectare/year.

5.3 Hydro-geological protection function We have long been aware of the role of forests, particularly on mountain slopes, in re-gulating water flow, and forest legislation in alpine countries has long included measures aiming to safeguard the soil and land protection role of such forests. In spite of this there is no consensus of opinion about criteria and appropriate methods to use when evaluating in monetary terms the benefits afforded by the hydro-geological protection function performed by such forests. For some authors (Pettenella and Baiguera, 1997), the best criteria is the cost of a water system able to guarantee simi-lar degrees of protection to that guaranteed by the forest. For others (Marangon and Gottardo, 2001) it is more appropriate to consider the cost of planting and maintaining a meadow in efficient condition, in place of the forest. We know that a meadow is efficient as far as regards hydro-geological protection, though less so than a forest. However, by using suitable coefficients it is possible to reach a sufficiently reliable estimate.

Because the necessary information is more easily available, for the purposes of this research we opted for the methodology recently suggested by Marangon and Gottardo (2001) for the forests of Friuli. Since the importance of the hydro-geological function differs greatly according to the degree of slope of the land covered by the forest, we firstly divided the entire forested area in the province of Trento into different incline groups. The result can be seen in the following table.

Table 8: Autonomous province of Trento: incline groups

Incline groups Area in ha (2003) from 0° to 10° 7,646.04 from 10° to 20° 66,331.37 from 20° to 30° 122,233.45 from 30° to 45° 112,266.12 over 45° 36,815.95

Total 345,292.94

Source: Servizio Foreste, Provincia Autonoma di Trento

13 Constituting 78% of the forested area 14 This is also a conservative value, lower than that suggested by other authors for Italian alpine forests (Cesaro and Pettenella, 1994; Marangon and Gottardo, 2001).


Secondly, we estimated the planting and upkeep costs for a meadow in each incline group, net of any potentially obtainable products. Finally, we applied a coefficient to account for the different degrees of efficiency in hydro-geological protection afforded by a meadow or a forest.

As Marangon and Gottardo (2001) indicate, the resulting formula for calculating the value of the hydro-geological protection function (Bid) for each incline group is the following:

Bid = (Ca + Co * r) * CNm * S Where: Ca = planting cost Co = annual mowing cost r = interest rate: 1% CNm = reduction coefficient to account for different degrees of hydro-geological efficiency S = surface area

As for the other functions, we opted for extremely conservative evaluations allowing ourselves to ignore the value of hydro-geological protection benefits from forests with an incline of less than 10° (18%). The values reached for the other groups are shown in Table 9.

Table 9: Cost of substitute meadow

Incline group Cost of substitute meadow (€)

from 10° to 20° 165 from 20° to 30° 182 from 30° to 45° 245 over 45° 340


Obviously these are very approximate values, but they are still useful in giving some idea of the degree of hydro-geological benefit produced by forests. In this case too it seems appropriate to underline how the adoption of a conservative criterion has lead to similar values than those suggested by other authors (Marangon and Gottardo, 2001) for forests in other Alpine areas.

On the basis of the information reported, the overall value of the hydro-geological protection function performed by the forests of Trento proves to be € 73,244,000. Therefore, on average, the value of hydro-geological protection benefits is 212.19 euros/hectare, as we said, similar to those proposed by Marangon and Gottardo (2001) for the forests of Friuli.

6 Some final considerations Summing up what we have said so far, the value of benefits produced each year by the forests in Trento is shown in the following table.

Table 10: Benefits produced by the forests of Trento

Item Overall value Value per hectare

Percentage of total %

Production value, as in standard national accounting (timber products only)

25,581,564 (15,743,001)

74.35 18.91

Added production value, as in national green accounting (timber products only)

16,841,754 (16,785,435)

48.79 12.45

Landscape-recreational value 15,244,951 44.15 11.27 Carbon fixing value 4,362,546 12.6 3.22 Hydro-geological protection value 73,244,000 212.19 54.15

TOTAL 135,274,815 392.08 100.00 Source: Author’s elaboration.


On examining Table 10, we can see that estimates obtained by current national ac-counting methodology considerable underestimate the role of forests. This leads not only to the adoption of inappropriate economic policy measures, but also to mistaken valuations of the importance of the various functions performed by forests. Looking at alpine forests we often think of the timber they produce, but the estimates reported here, despite all the caution of approximation, enable us to affirm that, in reality, timber is one of the least important products supplied by forests. At the same time, timber production is practically the only source of income that enables efficient forest upkeep, also in view of the production of other benefits. In fact, contrary to what we are lead to believe, alpine forests are not natural forests, but they are the result of human intervention on the natural ecosystem.

This transformation of the “natural” has not had catastrophic ecological consequen-ces because, in order to survive, mountain farmers have had to adapt strictly to local ecological peculiarities. In this way a balance has been created that only continuous human intervention is able to maintain. Clearly such intervention must answer to pre-cise principles defined by the close-to-nature silviculture and at present included in current trends towards sustainability.

Finally it should be stressed that the list of forest functions mentioned in this paper is not exhaustive. Neither the function of biodiversity nor of air purification has been considered and it was not possible to evaluate existence values or those associated with maintaining cultural values.

The silviculture aspect of forest management in Trento which has, for decades, been modelled on naturalistic methods of silviculture, is very advanced. However, without a precise evaluation of the benefits produced by forests, in a period when cultivation of the forest is becoming less economically viable consequent to the drastic drop in timber prices, we believe that the forest system may enter a serious crisis. Such a crisis would have consequences not only for communities living in the neighbourhood of the forest, but also for all those who enjoy the positive externality of the forest. In conclusion, we hold for this reason that enquiries aiming to evaluate the various benefits afforded by the forestry sector should be intensified. Indeed, only if reliable information is available about such benefits, will it be possible to define effective action targeted at long term upkeep of the balance between nature and human inter-vention that has characterised alpine forests for centuries.

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INTERNATIONAL ACCOUNTING STANDARDS: HOW ADEQUATELY ARE FOREST ASSETS REPORTED IN

THE BALANCE SHEET AND INCOME STATEMENT? Kathleen Herbohn1

Abstract Australia was the first country to develop a financial accounting standard on self-generating and regenerating assets (SGARAs). The standard AASB 1037 Self-generat-ing and regenerating assets mandates reporting requirements for all non-human living assets, and so its scope includes forests. Companies and state governments that have material holdings of forests must comply with the standard. It has been operative for financial reporting periods ending on or after 30 June 2001 and so presents a unique opportunity to investigate the impact of reporting forests on a balance sheet. A particularly interesting feature of AASB 1037 is that it requires the net market value of forests to be estimated at the end of each reporting period. Changes in the net mar-ket values of forest assets are to be recognized as either revenues or expenses in the income statement. An investigation of the impact of AASB 1037 also provides valu-able insights into the potential impact of IAS 41 Agriculture that must be complied with as part of international harmonization by Australia and all countries of the Euro-pean Union from 1 January 2005. This is because the Australian standard and the international standard share many similar requirements.

1. Introduction In many countries, accounting for agricultural activities has traditionally received little attention from accounting researchers, practitioners and regulators. Instead, pro-nouncements on agricultural accounting have been developed in an ad hoc fashion on a country-by-country basis. In North America, the Canadian Institute of Chartered Accountants (CICA, 1986), and the American Institute of Certified Public Account-ants (AIPCA, 1985, 1987) developed guidelines on income measurement and other agricultural reporting issues. Both AICPA (1985) and CICA (1986) advocate historical cost as an appropriate asset measurement basis except in rare circumstances where realizable value may be considered as an alternative. In Europe, the Farm Account-ancy Data Network (FADN) established by the European Commission in 1965 has been developing general procedures and detailed guidelines for farm accounting. Argiles and Slof (2001) note that FADN has produced a very structured body of data collection rules and procedures to produce aggregated reports that are similar to a balance sheet and an income statement. Another European initiative is the French ‘Plan Comptable Ge ne ral Agricole’ (PCGA) that from 1986 developed standards relating to particular agricultural assets and transactions. However, possibly one of the most comprehensive agricultural accounting frameworks has been developed in Australia with the issue of the accounting standard AASB 1037 ‘Self-Generating and Regenerat-ing Assets’. It has been operative since June 2001.

Recently, the release of International Accounting Standard (IAS) 41 ‘Agriculture’ by the International Accounting Standards Board (IASB) changed agricultural account-ing from a domestic issue dealt with by individual countries to a global issue. As part

1 Lecturer in Financial Accounting, School of Business, The University of Queensland, St Lucia Qld 4072, Australia, [email protected]


of international harmonization, International Financial Reporting Standards (IFRS) are to be adopted by all listed companies within the European Union from January 2005, regulators in Australia require international standards for the statutory accounts of all domestic companies from January 2005 and New Zealand has indicated that it will follow suit in 2007. A survey by Deloitte and Touche (2003) suggests that more than 90 countries will either require or permit IFRS for listed companied by 2005.

Interestingly, IAS 41 has met with a mixed reaction from accountants and reporting entities. For example, it has been criticized for being too academic and for introduc-ing inappropriate measurement methods for biological assets. In light of the response to IAS 41 and the likely wide-spread adoption of IAS 41, this paper explores the poten-tial impact of the international standard on reporting entities. Of particular interest is the impact of IAS 41 on organisations with material holdings of forest assets.2 Prior studies have considered the potential impacts of IAS 41 on agricultural entities operat-ing in EU countries and Francophone countries (e.g. Argile s and Slof, 2001; Elad, 2004). However, the current paper provides additional, more detailed practical in-sights from the Australian experience. This is possible because accounting for biologi-cal assets and in particular forest assets has been undertaken by Australian reporting entities for the last four years in accordance with AASB 1037 ‘Self-Generating and Re-generating Assets’. Since the requirements of AASB 1037 are very similar to IAS 41 to all intents and purposes Australia has been a test case for IAS 41.

There are two parts to this investigation. First, the concerns with IAS 41 and AASB 1037 that have been raised by constituents are outlined. Particular attention is paid to the concerns of forest holders. These concerns inform a second stage of investigation, a review of the financial statements of Australian public companies and Government Departments with material holdings of forest assets. The review spans the first four years of compliance with AASB 1037 and seeks to identify the impact of compliance. This will provide insights into the implications of IAS 41 for entities with forests assets.

The remainder of the paper is structured as follows. Section 2 provides an over-view of the requirements of IAS 41 and highlights the potential concerns raised regard-ing the requirements of IAS 41 and the Australian equivalent, AASB 1037. The results of the financial statement review are discussed in section 4 and concluding comments follow.

2. A global standard on agricultural accounting Under IAS 41, biological assets relating to agricultural activity are to be measured at fair value3 less estimated point-of-sale costs on initial recognition, and at each report-ing date. Gains or losses on initial recognition and from a change in fair value of a biological asset are to be included in profit or loss for the period in which they arise. In addition, a gain or loss on initial recognition of agricultural produce harvested from a biological asset less point-of-sale costs is to be included in profit or loss for the period in which it arises.

Alternate valuation methods are permitted under IAS 41 if an active market does not exist for a biological asset. Fair value can be determined with reference to the 2 The scope of this paper is limited to forest assets. However, it should be noted that the scope of IAS 41 is broader. It applies to activities directed toward the management by an enterprise of the biological transformation of biological assets for sale, into agricultural produce or into additional biological assets. 3 Fair value is the amount for which an asset could be exchanged, or a liability settled, between know-ledgable, willing parties in an arm’s length transaction.


most recent market transaction price, market prices for similar assets, sector bench-marks, or the present value of expected net cash flows. In circumstances where there is little biological transformation, or the impact of biological transformation on price is not expected to be material, cost can be used to approximate fair value.

Generally, the requirements of IAS 41 and the Australian accounting standard AASB 1037 are the same. Thus, the Australian reporting experiences can be used to inform discussion of the consequences of IAS 41.4

2.1 Concerns with the general approach of IAS 41 Parallels can be drawn between the Australian experiences and the situation that now faces reporting entities in countries committed to the adoption of International Finan-cial Reporting Standards. In Australia, the requirements of AASB 1037 represented a significant departure from the then existing accounting practices of Australian report-ing entities. Prior to AASB 1037 a variety of measurement methods were used for bio-logical assets, the most common being historical cost (Herbohn, Herbohn and Peterson 1998; Darling and Godfrey, 2001). Further, it was not common practice to recognise unrealized gains or losses as revenue prior to the point-of-sale. At the time, the Australian standards governing revaluations of property, plant and equipment per-mitted capital adjustments for revaluation increments – usually to an asset revaluation reserve – while revaluation decrements were recognized as expenses and included in the measurement of income.

Similarly, compliance with the requirements of IAS 41 regarding the use of fair value and recognition of unrealized gains or losses will produce significant changes to the ways in which reporting entities in the agricultural sectors of Europe, Africa and Asia measure biological assets and income. Historical cost is the most common measurement method for agricultural assets within the European Union (Argiles and Slof, 2001). Also, a persuasive case has been made that the requirements of IAS 41 are not theoretically or practically compatible with the accounting models in Francophone countries (Elad, 2004).

The significant changes to existing practice that did occur in Australia with AASB 1037 and that will occur with IAS 41 have sparked considerable debate. There are two main issues of concern – the measurement of biological assets at fair value and the recognition of changes in fair value of biological assets (unrealized gains or losses) as part of income at each reporting date. Each is discussed in turn.

Fair Value Advocates of fair value argue that it is easier for financial report users to understand, particularly when there are active and liquid markets for the biological assets in question. Further, fair value is considered to be more relevant, and to more faithfully represent the reality of biological transformation. In contrast, opponents have focused on the practical difficulties with valuing biological assets for which there are no active and liquid markets. In these cases ascertaining fair values may prove to be excessively costly, particularly in developing countries (Elad, 2004). Also, the subjectivity in esti-mates of fair value reduces the reliability of reported information and provides scope for manipulation (Herbohn, 2005). Additionally, there are practical difficulties in valuing biological assets separately from related assets such as the land on which they

4 There are some differences between AASB 1037 and IAS 41, but they are not relevant to this study. The differences include a narrower scope of IAS 41, accounting for some biological assets under lease, inclusion of a rebuttable assumption in IAS 41 in relation to the reliable measurement of the fair value of biological assets, and the inclusion of specific requirements in IAS 41 relating to government grants.


are located. A study of the application of AASB 1037 by seven Australian companies in the wine-making industry by Booth and Walker (2003) was highly critical on this point:

‘The application of AASB 1037 provides little guidance to the commercial perform-ance of winemakers. The valuation of grapevines essentially requires the valuation of a segment of a business (vineyards) from which is deducted the value of asso-ciated infrastructure … this creates a reporting maze which is more likely to con-fuse than inform’ (Booth and Walker, 2003: 52).

In summary, the general conclusion that critics have reached is that the approach of IAS 41 is too academic and not focused on the practicalities of reporting on biological assets. This leads to the production of potentially misleading information. Also, little attention has been paid to the problems of accounting for biological assets at fair value in developing countries.

Unrealized Gains or Losses Possibly the most criticized requirement of IAS 41, and AASB 1037 is the inclusion of unrealized gains or losses arising changes in the fair value of biological assets meas-ured at reporting date in income. Proponents argue it reflects the efforts of manage-ments’ stewardship of the biological assets over the period, somewhat similar to the ‘percentage-of-completion’ revenue recognition method for long-term construction contracts (Elad, 2004). However, critics maintain that there is too much uncertainty re-garding the ultimate realization of the revenue. This is particularly the case for biolo-gical assets with longer production cycles such as forests and grape vines used to pro-duce fortified wines. The recognition of profits that are not realized for several years may also lead to unrealistic expectations of distributable profits amongst shareholders, in turn creating pressure for entities to declare and pay dividends for which no funds are available. Additionally, recognition of unrealized gains or losses increases the volatility of reported income. A review of four years of reporting on agricultural assets by Australian companies found that the coefficient of variation5 calculated for the gains or losses reported for biological assets was high (79.1%).

2.2 Concerns for holders of biological timber assets The scope of IAS 41 is broad, covering biological assets such as forests, as well as livestock, horticultural assets and grapevines. A similarly broad scope of AASB 1037 led to concerns expressed by Australian reporting entities that the standard was more appropriate to biological assets with long production cycles such as forests rather than shorter-cycle assets such as consumable crops. On this basis more support for the requirements of IAS 41 and AASB 1037 could be expected from holders of timber assets. To some extent this was the case in Australia. Content analysis of submissions made on the draft of AASB 10376 indicated that in contrast with uniform opposition from holders of grapevines, crops and orchards, eight out of 10 submissions from forest holders signaled either qualified or total support to the standard. (A more de-tailed discussion can be found in Herbohn (2005)). The positive support was however, concentrated amongst managers from public sector organizations with timber assets –

5 The coefficient of variation is equal to the standard deviation of gains or losses divided by mean gains or losses for the four-year period investigated (Levine et al., 2002). 6 The draft of AASB 1037 took the form of Exposure Draft No. 83 ‘Self-Generating and Regenerating Assets’. The exposure draft was open for public comment and the submissions are made available to the general public.


that is, State and Territory government departments.7 The managers’ only concern was the subjectivity of fair value estimates8 in the absence of active markets for im-mature plantations. As one manager commented:

‘In the absence of an active and liquid market from which to determine a market value for a plantation, entities are more or less able to choose whatever valuation method they consider appropriate. Thus the proposed standard’s failure to ade-quately address the issue of valuation will result in a variety of valuation methods continuing to be used to value forestry assets’ (Australian Accounting Research Foundation, 1997: 96).

The remaining two negative submissions on the draft of AASB 1037 were from public companies – North Forest Products Ltd and Amcor Ltd. Unsurprisingly, the two companies were concerned with the measurement of biological assets at fair value and the recognition of unrealized gains or losses. The following extract from the sub-mission of North Forest Products illustrates their position:

‘Suggesting that all movements in valuation are booked to the profit and loss. This would be unacceptable for a number of reasons, but predominantly due to the volatility arising from subjective economic assumptions [exchange rates, discount rates and future sales prices]. Profit or loss booked to profit and loss is unrealized. This implies that dividends are available for distribution may need to be paid well in advance of any cash flows obtainable from the harvest of the forest’ (Australian Accounting Research Foundation, 1997: 65).

In summary, the initial reactions of Australian reporting entities, particularly govern-ment departments, with material holdings of timber assets to AASB 1037 suggest that the requirements of IAS 41 are less problematic than for other biological assets. The issues raised by managers from public companies centred on the inclusion of unreal-ized gains or losses in income, while the availability of measurement choices concerned managers from public sector organizations.

To provide further insights into the potential impacts of IAS 41 the financial state-ments prepared by reporting entities over the four-year period since first compliance with AASB 1037 are reviewed in the following section.

3. Financial statement review The financial statements of entities reporting on their timber assets in accordance with AASB 1037 ‘Self-Generating and Regenerating Assets’ are reviewed over the four-year period since compliance. The purpose of the review is to identify the effects of compliance, with a focus on the two main areas of criticisms with IAS 41 and AASB 1037: • The income statement effect of including unrealized gains or losses from changes in the fair value of forest assets and the fair value of agricultural produce harvested less point-of-sale costs. • The valuation methods applied to timber assets and any associated disclosures.

7 Australian government departments are required to prepare general purpose financial reports (balance sheet, income statement, cash flows statement) in conformity with Australian accounting standards. 8 AASB 1037 required biological assets (referred to as self-generating and regenerating assets) to be valued at net market value. This was defined as the amount that could be expected from the disposal of the biological asset in the ordinary course of business. There is little practical difference between net market value and fair value as required by IAS 41. Thus, the term fair value is used throughout this paper to minimise confusion in terminology.


3.1 Sample of reporting entities The sample comprised all list public companies and State and Territory Government Agencies and Departments9 that had material holdings of timber assets. To be in-cluded in the study, annual reports for the these public and private sector reporting en-tities must be available from one of the following sources – their web site, Aspect Huntley DatAnalysis, the Australian Stock Exchange, Connect 4, or IRESS for the time period under investigation. A final sample of eight public companies and five State and Territory Government Departments were included in the sample.

The time period considered was 30 June 2000 until 30 June 2004. The lower end of the sample time period was selected because this was the initial operative date for AASB 1037. Although this date was subsequently extended to reporting periods ending on or after 30 June 2001, there was the possibility that companies may have elected early compliance with the requirements of the standard.

3.2 Income statement effects of compliance with AASB 1037 Details of the total impact of AASB 1037 on profit or loss for companies that have ma-terial holdings of timber assets are provided in Table 1. The total gain or loss for tim-ber assets included in income in accordance with AASB 1037 is expressed as a percent-age of the net profits reported in that year. This variable is calculated in the year of compliance with AASB 1037 and for each of the three years subsequent to compliance. The total gain is equal to the change in fair value of timber assets measured at balance date plus the fair value of agricultural produce extracted.

Table 1: Income statement effects of compliance with AASB 1037 for Australian reporting en-tities with material holdings of timber assets (2000-2004)

Panel A: Income statement impact for four years since compliance with AASB 1037 Gain or loss from timber assets included in income for the year expressed as a percentage of net profit1

Public companies (n=8)

State and territory govern-ment departments (n=5)2

Year of compliance Mean 14.9% 43.7% Median 8.5% 58.0% One year after compliance Mean 24.5% 75.5% Median 11.3% 79.9% Two years after compliance Mean 40.5% 54.5% Median 20.0% 44.5% Three years after compliance Mean 27.5% 22.1% Median 15.0% 24.3% Panel B: Coefficient of variation for four years since first compliance with AASB 1037

Public companies (n=8)

State and territory govern-ment departments (n=5)

Coefficient of variation [(σ /⎯X) x 100] 91.4% 253.5% 1. Change in fair value of timber asset measured at balance date plus the fair value of agricultural produce extracted. 2. There are six states and two territories in Australia. Each state or territory government has a department with

responsibility for managing the natural resources of the state or territory. In most cases these natural resources comprise timber plantations and native forests managed for commercial timber production. Three government departments were not included in the review. Biological assets were not reported in the financial statements of one state department and one territory department, while the financial records of another territory department were destroyed in a natural disaster (bush fire).

9 There are six states and two territories in Australia. Each state or territory government has a depart-ment with responsibility for managing the natural resources of the state or territory. In most cases these natural resources comprise timber plantations and native forests managed for commercial timber pro-duction.


From panel A of Table 1, the mean timber asset gain reported by public companies accounted for 14.9 per cent of reported net profit in the year of compliance, 24.5 per cent in the year after compliance, 40.5 per cent two years after compliance, and 27.5 per cent three years after compliance. In contrast, the median proportion of net profit represented by the timber asset gain in each year is 8.5 per cent, 11.3 per cent, 20.0 per cent and 15.0 per cent respectively. The differences between the two measures of central tendency are due to large individual results reported by companies. For example, Auspine Ltd reported a gain on timber of A$18.48m and a net profit of A$22.54m in the year after compliance, and a gain on timber of A$19.03m and net profit of A$13.12m two years after compliance. Also, two years after compliance Willmott Forests Ltd reported a timber gain of A$0.960m and a net profit A$0.981m, while Forest Enterprise Australia reported a gain of A$0.356m in the context of a net profit of A$0.361m three years after compliance.

For State and Territory Government Departments, on average the income state-ment impacts reported in Table 1 have been greater relative to the impacts for public companies. The mean timber asset gain is larger for the Departments than public com-panies in all years of compliance with AASB 1037 except for the last year, while the median is greater in all years. For example, the median timber gains reported by De-partments was equal to 58.0% of net profit in the year of compliance (8.5% for com-panies), 79.9% one year after compliance (11.3% for companies), 44.5% two years after compliance (20.0% for companies) and 24.3% three years after compliance (15.0% for companies).

In summary, it seems that accounting for timber assets in accordance with AASB 1037, on average, has had a significant impact on the reported net profit of listed com-panies and an even greater impact on the operating result of State and Territory Government Departments in the three years since compliance. This result persists after outliers are taken into account by focusing on median gains.

Panel B of Table 1 reports a coefficient of variation for companies and government departments. This statistic provides an insight into the volatility of the timber gain or loss reported by each company and government department over the four-year win-dow since initial compliance with AASB 1037.10 For public companies, the coeffi-cient was equal to 91.4 per cent and it was 253.5 per cent for government depart-ments. Prima facie, this provides evidence to support arguments made by reporting entities that there is increased variability of reported profits due to compliance with AASB 1037. This volatility is greater for government departments than for public com-panies in the period considered. This result must be treated with some caution how-ever because of the small sample size.

3.3 Measurement of timber assets at fair value The most recent financial statement for each company and department in the sample was reviewed to identify how timber assets were measured and the extent of asso-ciated disclosures. Of particular interest are the disclosures made if the fair values of timber assets are based on amounts other than market prices observed in active and liquid markets. They include the method of determining the market values, any signi-ficant assumptions in determining the net market values, and whether the net market values have been determined in accordance with a Directors’ valuation, or an Inde-pendent valuation with the name of the valuer provided if this is the case. Unlike IAS 41, AASB 1037 also ‘encouraged’ entities to report information on the sensitivities of the carrying amounts of timber assets to changes in the underlying assumptions (para. 7.1.4). The results are reported in Table 2. 10 The coefficient of variation is equal to the standard deviation divided by the arithmetic mean multiplied by 100 (Levine et al., 2002).


Table 2: Valuation methods used to estimate the fair value of timber assets in accordance with AASB 1037 by Australian for Australian reporting entities with material holdings of timber assets (2000-2004)

Net market value based on amounts other than market prices observed in active and liquid markets

Net Market

Value Net present value

Net realisable value1

Insurance value Unspecified

Private sector 1 5 1 1 Public sector2 3 2

Total 1 8 2 1 1

1. Net realisable valued is based upon standing volumes and current prices less the direct cost of disposing of the timber. Estimates of the standing volume of timber are made using growth simulation models.

2. There are six states and two territories in Australia. Each state or territory government has a department with responsibility for managing the natural resources of the state or territory. In most cases these natural resources comprise timber plantations and native forests managed for commercial timber production. Three government departments were not included in the review. Biological assets were not reported in the financial statements of one state department and one territory department, while the financial records of another territory department were destroyed in a natural disaster (bush fire).

Only one company valued timber assets at fair value observed in active and liquid markets. PaperlinX Ltd valued standing timber at current market values and made the following disclosures in its 2001 Financial Report.

Note 1(17) Standing Timber ‘.. whereby standing timber is valued at net market value..’ Note 14 Standing Timber At Valuation ‘Standing timber greater than 10 years of age is valued at the market price of esti-mated recoverable wood volume net of harvesting and delivery costs.’

The majority of the reporting entities (i.e. 12 out of 13) valued timber assets at fair values based on amounts other than market prices observed in active and liquid mar-kets. There were three measurement methods used. First, eight out of 13 companies used a discounted cash flow methodology. All of these companies reported a Direc-tors’ valuation of net present value. Second, two government departments estimated fair value as the net realizable value of timber assets. This was based upon standing volumes and current prices less the direct cost of disposing of the timber. Estimates of the standing volume of timber were made using growth simulation models, with growth estimates periodically adjusted for differences with actual growth rates. For example, the following explanation was provided in the 2004 Financial Report of the govern-ment department Forestry South Australia:

‘Note 2.4 Forestry Accounting The volume of growing timber is estimated using a model that simulates forest growth…The model uses sample inventory data as the base line from which to start growth simulations. Inventory data are continuously being collected from sample inventory plots with the complete forest estate being covered in about five yearly intervals.’

Third, the insured value of timber assets has been used by the company Great Southern Plantations since 2001.

Although one company reported that timber assets were valued at fair value, there was no disclosure of the method used to determine fair value. For example, it was noted in the 2002 Financial Report of Yates Ltd that:

‘where there exists an active and liquid market for certain self-generating and regenerating assets, they are measured at net market value at each reporting date’ (note 1(r), p. 18).


In note 13 (p. 26) ‘Self-Generating and Regenerating Assets’, plantation timber valued at A$612,000 was disclosed at fair value with only the following explanation: ‘(a) net market value has been determined on the basis of Directors’ valuation’.

There was not consistency in the disclosure of any significant assumptions neces-sary to determine fair values. Most entities tended toward brief, uninformative disclosures. There were however, three companies – Auspine Ltd, Willmott Forests Ltd and Timbercorp Ltd – and two government departments – Queensland Depart-ment of Primary Industries and Forestry Tasmania – that made significant attempts to disclose information relevant to the determination of fair value of timber assets. The information provided included discount rates, detailed information on productive lives of timber assets, their location, and size. Of the sample of 13 reporting entities, only two companies and one government department provided the recommended informa-tion on the sensitivities of the carrying amounts of timber assets to changes in under-lying assumptions. Willmott Forests, Timbercorp and Queensland Department of Pri-mary Industries disclosed the impact of varying discount rates, future costs and mar-ket prices on the reported fair values of their holdings of standing timber.

4. Discussion and concluding comments Key areas of concern that have been raised with IAS 41 relate to the measurement of biological assets at fair value and the inclusion of unrealized gains or losses from measuring these assets at fair value in income. The similarities between the require-ments of IAS 41 and the Australian standard AASB 1037 allow Australian experiences to be used to assess the significance of potential issues with IAS 41. To this end, this paper reports the results of a review of the financial statements of a sample of Austra-lian companies and government departments that reported timber assets in compliance with the requirements of AASB 1037.

There is not likely to be an active and liquid market for timber assets. Thus, it was not surprising that the review revealed variability in the methods used to determine the fair value. The methods used included net present values, insured amounts of the timber assets, and net realizable values. It appears that Directors’ valuations were used – that is, internal valuations without input from external, independent valuers. In addition, the disclosure of significant assumptions necessary to determine net market values was cursory in most cases.

These results bear out concerns that the determination of fair value for timber assets is likely to be subjective which creates the potential for manipulation. This is particularly so since the supporting disclosures of important assumptions on average at least in Australia, are not particularly informative. Also, the choices available to reporting entities in estimating fair value result in a diversity of methods between entities. The irony is that international harmonization of accounting standards may, in the case of IAS 41, actually decrease comparability between reporting entities because of the judgment necessary to estimate fair values of timber assets in the absence of active and liquid markets. The Australian experiences also clearly highlight that a certain level of sophistication of internal management information systems is neces-sary. For example, growth models were used by companies and departments to esti-mate the standing volume of timber for input into an estimate of net realizable value. As pointed out by Elad (2004) this has the potential to cause implementation bottle-necks in developing countries.

The review highlighted that recognition of gains from timber assets resulting from changes in fair value and harvest of agricultural produce had a significant impact on the income statements of companies and government departments. Over the four-year period since first compliance with AASB 1037, the median timber gain expressed as a


percentage of reported profits for companies ranged from 8.5 per cent in the year of compliance to 15 per cent three years after compliance. In some years, individual companies reported annual timber gains that were larger than the reported net profit for the period. The impact has been greater for government departments. The median timber gain expressed as a percentage of net profit ranged from 44.5 per cent to 79.9 per cent in individual years.

An interesting area for future research would be to investigate the economic conse-quences of including unrealized gains as part of income. Of particular interest would be whether the inflation of income with unrealized gains creates unrealistic expecta-tions regarding the payment of dividends by companies. Alternatively, has this ac-counting practice assisted managers from government departments in meeting per-formance targets set by funding bodies?

There has also been increased volatility introduced into net profit by the timber gains recognized in accordance with AASB 1037 over the four-year window investi-gated. The coefficient of variation for the timber gains over the four years was high for public companies (91.4%) and for government departments (253.5%). This result bears out concerns that constituents had raised about AASB 1037 when it was in draft form (Herbohn and Herbohn, 1999; Herbohn, 2005). The fair values of the biological assets tend to be volatile because they can be impacted by volatility in world commo-dity prices, changes in government policy, and natural events such as rain, hail, in-sects, drought, flooding and disease. It follows that unrealized gains or losses from changes in fair value of biological assets at each reporting date are also going to be volatile. The necessity for the increased volatility introduced by IAS 41 and AASB 1037 has been criticized because it is likely to mislead report users. An alternate view is that including unrealized timber gains or losses in reported profits provides more relevant and timely information to users of financial reports. The communication of changes in fair values of timber assets each reporting period provides users with more timely information that is relevant to assess their investment and the efforts of management over the period. Further, it can be argued that the volatility that is introduced into income merely reflects the inherent risk of an investment in the agricultural sector.

In summary, the issue of how to account for biological assets and in particular forest assets is not easy. In fact, the standard IAS 41 has attracted some scathing criticisms:

‘Overall, the IASC’s project on agriculture appears to have portrayed a dubious triumph of theory of pragmatism’ (Elad, 2004: 638).

International Accounting Standard 41 is without a doubt an ambitious and far-reach-ing standard. Its scope is broad, with applicability to many different types of biological assets located in a wide range of industries. Further, it seeks to introduce significant changes to existing agricultural practices. Australia has in effect been a test case for IAS 41 and provides four years of reporting under this regime. Based on these expe-riences, it can be said that there is subjectivity in the measurement of fair value, on average significant unrealized gains are included in annual net profit and there is in-creased volatility in income due to these gains. However, an important question that has been buried in the debate on IAS 41 is whether this reporting regime in fact re-flects the nature of investment in the agricultural sector and, in the context of this paper, timber assets? Additionally, while measurement at fair value and the recogni-tion of changes in fair value as gains or losses represents a change to existing agricul-tural accounting practice, it is consistent with the general direction of International Financial Reporting Standards. As Whittington (2005) notes, ‘... changes in fair values are becoming increasingly a feature of IFRS and financial reporting practice generally (Whittington, 2005: 146).


References Argiles, J. and Slof, E. (2001) New Opportunities for Farm Accounting. European Account-

ing Review 10(2):361-383. Booth, P. and Walker, R. (2003) Valuation of SGARAs in the Wine Industry: Time for Sober

Reflection. Australian Accounting Review 13(3):52-60. Deloitte and Touche (2003) Use of IFRS for Reporting by Domestic Listed Companies by

Country. www.iasplus.com. Dowling, K. and Godfrey, J. (2001) AASB 1037 Sows the Seeds of Change: A Survey of

SGARA Measurement Methods. Australian Accounting Review 11(1):45-51. Elad, C. (2004) Fair Value Accounting in the Agricultural Sector: Some Implications for

International Accounting Harmonization. European Accounting Review 31(4):621-641. Herbohn, K.F. (2005) Accounting for SGARAs: A Stock Take of Accounting Practice Before

Compliance with AASB 141 ‘Agriculture’. Working Paper, School of Business, The Uni-versity of Queensland, pp. 1-25.

Herbohn, K.F., and Herbohn, J.L. (1999) Accounting for Forests in Social, Economic and Political Contexts. Accounting Forum 23(4):408-440.

Herbohn, K.F., Herbohn, J.L., and Peterson, R. (1998) Accounting for Forestry Assets: Current and Future Directions. Australian Accounting Review 8(1):54-66.

Levine, D.M., Stephan, D., Krehbiel, T.C. and Berenson, M.L. (2002) Statistics for Managers using Microsoft Excel, Prentice Hall: Upper Saddle River, NJ.

Whittington, G. (2005) The Adoption of International Accounting Standards in the European Union. European Accounting Review 14(1):127-153.


FOREST ASSETS AND ENVIRONMENTAL BENEFITS IN MANAGEMENT ACCOUNTING

Hans A. Jöbstl1

Abstract Management of forests takes place in the institutional framework of forest enterprises and requires a variety of information. The core instrument of information supply is the accounting system. It provides the basis for decisions and internal controlling, and it is needed for reporting to external stakeholders on economic and social aspects of the forestry operation. Forestry accounting also has major deficiencies; periodic changes in forest assets are insufficiently recorded, and other achievements, especially with respect to the environment, are not shown adequately. Many approaches have been proposed over time to consider changes in forest assets, but none of them have been accepted in practice. Whereas there are hardly any legal regulations concerning forest asset records in external accounting, it is indispensable for internal accounting to have correct records and examine if targets have been reached. With regard to the environ-mental benefits that cannot actually be assessed with a monetary system, so-called performance reports and sustainability reports that show primarily physical factors are being examined. On a higher level these performance reports are partially comple-mented by monetary factors. An overview on new developments and related topics with a focus on performance measurement and management control shall be presented and discussed in this paper. Keywords: forest accountancy, sustainability control, performance measurement, for-est assets, management accounting

Introduction Forest management takes place in the institutional framework of forest enterprises and requires a variety of information.

The core instrument of information supply is the accounting system, which fulfills external as well as internal functions. Its primary task is to represent the relevant eco-nomic reality (states and flows, goods, services, money) correctly and completely. On the one hand, it provides the basis for decisions and internal controlling; on the other hand, it is needed for reporting to external stakeholders and informing about both the economic situation and the social (non-market) services of forestry (public relations); it provides the basis for taxation, etc.

Criteria of sustainability related to the environment are increasingly gaining impor-tance in the reporting process.

Branches of management accounting Accounting is a comprehensive system comprising financial, cost and management accounting – the latter has been recently expanded to include social and environ-mental accounting.

Financial accounting is compulsory and regulated by law in the case of larger firms according to their legal status. Usually smaller business units do not have any sophisticated or methodical accounting, while medium-sized ones often keep formal records of receipts and payments, that are not well suited for management purposes. Financial accounting of the larger estates is on the whole well developed in many European countries. 1 Professor of business administration in the forest sector, BOKU - University of Natural Resources and Applied Life Sciences, Vienna, Gregor Mendel Straße 33, 1180 Vienna, Austria, [email protected]


Accounting

Financial Accounting Social Accounting EnvironmentalAccountingCost Accounting

Cost AccountingCost-type AccountingCost-centre AccountingCost-unit AccountingJob-order CostingProcess CostingBudgetingStandard CostingSupplementary Calculations

Key Figures, Internal Statistics

Social Reports Social Balance SheetAchievement Reports Human Resource AccountingCorporate Social AuditSocial Indicator Systems Statement of Net-Value AddedIncome Distribution Statement

Eco-AccountingEco-Balance SheetsLife Cycle Analysis Eco-AuditEnvironmental Reporting Eco-CostingEnvironmental Impact Analysis Natural Capital AccountingAccounting for Public Benefits

Double-entry Book-keepingBalance SheetIncome Statement

Parliamentary AccountingSingle-entry Book-keepingCash AccountingCash Flow AccountSupplementary Books


Management Accounting

Accounting

Financial Accounting Social Accounting EnvironmentalAccountingCost Accounting

AccountingAccounting

Financial AccountingFinancial Accounting Social AccountingSocial Accounting EnvironmentalAccounting

EnvironmentalAccountingCost AccountingCost Accounting

Cost AccountingCost-type AccountingCost-centre AccountingCost-unit AccountingJob-order CostingProcess CostingBudgetingStandard CostingSupplementary Calculations


Social Reports Social Balance SheetAchievement Reports Human Resource AccountingCorporate Social AuditSocial Indicator Systems Statement of Net-Value AddedIncome Distribution Statement

Eco-AccountingEco-Balance SheetsLife Cycle Analysis Eco-AuditEnvironmental Reporting Eco-CostingEnvironmental Impact Analysis Natural Capital AccountingAccounting for Public Benefits

Double-entry Book-keepingBalance SheetIncome Statement

Parliamentary AccountingSingle-entry Book-keepingCash AccountingCash Flow AccountSupplementary Books


Management Accounting

Figure 1: Components of extended management accounting (Jöbstl and Hogg, 1998)

Cost accounting is well developed in many larger enterprises and delivers many indi-vidual data on profitability in certain fields.

Management accounting comprises all accounting activities aimed at providing data relevant for management purposes. Its core element is cost accounting.

Recent developments in accounting There were several activities in the development of forestry accounting in the past fifty years.

On the national level, especially for specific types of enterprises (private, state-owned, small-sized, etc.): Proposals for financial and cost accounting, establishing of forest accountancy data networks, benchmarking and interfirm comparisons.

On the international level e.g. the • IASB (International Accounting Standards Board): IFRS (International Financial

Reporting Standards) (IAS Plus, 2005), mainly in the field of financial accounting for listed companies, see paper K. Herbohn (2005). • IUFRO (International Union of Forest Research Organizations): Proposals and re-commendations of accounts frameworks (IUFRO, 1966), cost center accounting, forest assets valuation (at the end of the 50-ies). Cost accounting, forest assets valuation, forest performance accounting; environmental accounting; studies on the situation of forest accounting worldwide (in the 1990-ies). In Austria, the proposed approaches for cost centre accounting, expense distribution sheet etc. are widely used.

The Austrian forestry accounting data network, for instance, has provided an abundance of data from financial and cost accounting of forest enterprises for 40 years, but their shortcoming is the lack of non consideration of the changes in forest assets. As a first step, the so-called adjustment to the allowable cut has been practically introduced.

Shortcomings of forestry accounting Consequently, main shortcomings of forestry accounting are: • neglecting or incorrectly registering any changes in growing stock. • not or inadequately representing other achievements, especially with respect to the


environment in a wider sense, which have as a consequence that results shown by ac-counting are to a certain extent incomplete or wrong.

Main concern of forestry accounting is in any case the specific element of forestry: the forest, the forest stands, the forest assets and forest performances. All other as-pects belong to general accounting.

There is an ethic commitment of the forest owner to sustainability (long-term planning and acting) which means also to monitor the management and its long term results, and there is an obligation of the forest manager to report to the stakeholders.

Therefore the accounting system has to be improved by integrating changes in forest assets and enlarged by including social and environmental aspects.

An enlarged accounting-system should also comprise social accounting that aims at extending traditional accounting by considering qualitative aspects such as quality of living and welfare, and environmental accounting. The main problem is (e)valuation • Many approaches have been proposed over time to evaluate forest assets and to

consider changes in forest assets, but none of them has been accepted in practice so far. Currently, there are several new and promising approaches to solve these problems. • Whereas there are hardly any legal regulations concerning forest asset records in external accounting, it is indispensable for internal accounting to have correct records of forest assets and to examine if targets have been reached. • With regard to the non-market or environmental benefits that cannot actually be as-sessed with a monetary system, so-called performance reports that show primarily physical factors are being examined.

The valuation of forest assets The valuation of forest assets faces a number of practical problems, e.g. • method of evaluation, • forest survey (costs, accuracy), • prices of products and input factors, • forecasting of future development and results. Principally, the value of any asset is the discounted present value of the economic be-nefits it will generate in future years.

The approaches can e.g. be roughly classified into • balance sheet (inventory, …) and • calculatory approaches.

From the viewpoint of periodic performance assessment one can differentiate between • approaches with and without monetary valuation • approaches with and without valuation of forest assets.

Several new approaches and proposals promise to improve the controlling process of an enterprise with regard to forest assets and social benefits, and set a focus on performance measurement and management control.

Another central issue is the integration of non-market products and the so-called green accounting. The emphasis is placed on physical factors, satellite accounts and performance reports that are partially complemented by monetary factors. Following we put the focus on performance measurement (i.e. considering changes in forest assets and including non-market benefits (NMB)).


Approaches for periodical performance assessment considering changes in forest assets As already mentioned balance sheet and calculatory approaches are applicable.

Balance approaches try to quantify changes in forest assets like balance sheet or profit and loss account. They are known from public forest enterprises in Great Britain, New Zealand etc. Recently, scientists from Central Europe also deal with attempting to fully integrate forest assets into financial accounting.

The approach of a German research group (Borchers, 2000) has been developed on the basis of IAS (International Accounting Standards) and the local commercial law. Forest assets appear as “growing stock” in the balance sheet, but not their periodical changes as revenue/expenses in the income statement.

A similar study was recently presented for Scandinavian forest enterprises (Penttin-nen et al., 2004). Joint-stock companies that are publicly quoted are to show forest as-sets in their balance sheets. Enterprises run by state and provincial governments also strive at this goal.

Managem ent & Tim e

Perform ance M easurem ent

w ith valuation of the forest asset

w ithout valuation of the forest asset

Cost value Replacem entcost value

Liquidation/Market value

Expectation value

Grow th m ethod

Allow able cutm ethod

Externalities

N on-m arket benefitvaluation

Figure 2: Principle methods for performance evaluation in forestry

Figure 3: Classification of methods for integrating forest assets (Jöbstl and Karisch, 2001)

Forest assets accounting methods

with monetary valuation performance analysiswithout mon. valuation

natural balancesplan-actual-comparisons

with forest assets valuation Without forest assetsvaluation

allowable cut calculationincrement methods

plan-actual-comparisonsCost capitalisation

inventory comparison

inventoryupdating

cutting valuecutting and cost value

cutting and expectation valuecompany net present value

market value

valuation scale(monetary, natural)

Forest assetsvaluation

Time horizon, relation toinventory

Classification


In principle, we recommend not to load financial accounts with this information but to use the notes for more or less detailed descriptions.

Here it turns out that calculatory approaches can be handled more easily; they set a framework and out of this framework individual or all parts can be implemented and performance accounting can, thus, be improved step by step.

For smaller forest enterprises, however, it is in any case more reasonable to opt for calculatory approaches that avoid the evaluation of assets.

A calculatory approach to improved periodical performance assessment In the following, the outline of a calculatory approach for the periodical performance assessment shall be presented that considers changes in forest assets, avoids the prob-lem of forest assets valuation, and integrates environmental services.

Generally introduced in Central European forest enterprises is the so called allowable cut based calculation. The allowable cut is used instead of annual increment as a measure and benchmark of the sustainable production potential.

Deviations between allowable and actual cut are considered to be an expression of changes in the value of growing stock.

But, this calculation is solely a step towards the right direction, which has to be im-proved by other means, for reasons of: • problematic derivation of allowable cut (e.g. average of different formula subjective) • recalculation on the total felling quantity - disregarding tree species, quality, log-ging site etc. • lacking consideration of the execution of silvicultural operations • proof of changes only in relation to the management plan (allowable cut) In order to improve this calculation, a calculatory approach for a better periodic per-formance assessment was developed by Jöbstl (e.g. 2000b, 2000c) – starting from balance sheet and income statement.

A model for improving the economic performance account by avoiding an assess-ment of forest assets could look as follows (Figure 4):

Balance sheet Income statement Assets Liabilities and Equitiy Revenues

Expenditures Profit of the year Profit of the year

Expense distribution sheetCost centres Envir.

Exp.

Cost summaryPerformance value

Improved short term performance accountingDetailled AC calculationSilvicultural measuresState of young stands, damagesHuntingIntegration of non market services

Medium-term performance analysis

Evaluation of long term effects

Catalogue of environmentally and socially relevant characteristics

allowable cut calculation

Forest state and changesPeriod analysis

Figure 4: Calculatory approach to improved periodical performance assessment


Starting from the profit and loss and the cost centre accounts with adjustment to allowable cut, further steps are taken to analyze the silvicultural measures (planned and actual), assess in detail the deviations of actual harvest from the allowable cut, record and assess other aspects such as damage, and describe non-market services.

Finally, a medium-term analysis of success is carried out together with the next for-est inventory.

Short-term performance accounting Short-term performance accounting comprises advancing from the allowable cut method the assessment of the following components: • Deviation of allowable from actual cut sub-divided into tree species, assortments, logging sites, etc. • Deviation of planned and actual silvicultural measures • Changes in the state of young stands and tending areas • Damages by calamities and game • Maintenance of forest roads and buildings • Effects of allowable cut on forest assets • Loss of timber production due to hunting, recreation, etc.

Medium-term performance analysis In combination with the forest inventory a comparison of the states of the forest (actual state to - actual state t1) and further analysis can be carried out.

The process concept for medium-term performance analysis is essentially based on the fundamental ideas of an actual-actual- and a target-actual-comparison as well as an analysis of deviations and causes. It comprises the following components (Jöbstl, 1996):

Comparison of two consecutive inventories (Actual – Actual; Target – Actual) Analysis of the past medium-term planning period – period analysis (control of

plan execution and analysis of financial results) Medium-term plan assessment and long-term development preview (forecast-

ing)

Forest inventory Forest inventory

CONTROL

Input, OutputCONSUMPTION, PRODUCTS, (STOCK),

COSTS, REVENUES, (FINANCE)

MeasuresFOREST CROPPING, RESTOCKING,

CULTIVATION, PROTECTION

EXECUTION

MID-TERM PLAN FORESTTARGET

LONG-TERM PREVIEW

CharactersStructure of age Structure of growing

stockComposition of speciesSite classesRestocking (area)State of cultivationDamages

FORESTACTUAL

CharactersStructure of age

Composition of speciesSite classesRestocking (area)State of cultivationDamages

FORESTACTUAL

State of forestat t + p

State of forestat t

begin of planning period

Lapse of time

(PERIOD OF PLANNING AND EXECUTION (p))

AccountingPermanent random sampling

Structure of growingstock

Figure 5: Medium-term performance analysis concept outline


Preconditions for this approach are a purpose-oriented design of the forest inventory, derived from a carefully created evaluation model, and the determination of the requi-rements to be covered by book-keeping (recording of physical and financial quantities).

The results of the analyses are a catalogue of physical and monetary characteristics of the forest state and the periodic results (absolute, relative and differential figures). Their combination allows an assessment of the value-creating effects of the expired period. As far as possible and reasonable, the physical data will be complemented by monetary values. This approach is supported by a set of calculation and development simulation models.

Short-term performance accounting: Future perspective (Jöbstl and Karisch, 2001) A possible future solution for the continuous internal control of forest assets changes has been developed by Karisch (2003) – a forest stand data base with annual updating of forest inventory data.

Combined with plan-actual comparisons for harvesting and tending, simulation of forest stand development as well as monetary valuations the annual observation of forest assets development should be enabled.

Environmental accounting Whereas on the international level, several guidelines/proposals to adjust the national accounts in order to provide data on the real social costs and benefits of forestry for society were provided (SNA, SEEA, EEAF) (see paper Lange and Peyron, 2005) there are only few proposals for the enterprise level in forestry, namely:

Merlo's step-wise approach to enterprise environmental accounting (Merlo, 1996; Merlo and Jöbstl, 1999) Merlo’s approach to environmental accounting on the enterprise level in forestry and agriculture starts with conventional financial statements: balance sheet, profit and loss account of the forest enterprise following conventional accounting principles. It separates environmental/recreational activities from conventional ones, outlines near market values as perceived by the entrepreneurs (changes in growing stock, risks due to natural hazards, …) and aims at incorporating non-market benefits and costs (exter-nalities), or, at least, providing a framework for their incorporation as far as they can be shown in monetary terms, or by other means.

Steps or

levels Items included in the financial statement

Accounting objectives

Type of profit and loss

1 Financial receipts and expenditures

Private Financial profit and loss

2

Financial receipts and expenditures

separated according to ordinary and environmental

activities

Private with separation of ordinary and

environmental activities

Financial profit and loss separate between ordinary

and environmental activities

3

Incorporation of non- monetary costs and benefits concerning the enterprise alone

(hidden values)

Private with consideration of

hidden (environmental)

costs and benefits

Financial profit and loss plus non-monetary private

profit and loss

4

Incorporation of non-monetary costs and benefits concerning

the society as a whole

Public

Social profit –

welfare

Table 1: Merlo's step-wise approach to enterprise environmental accounting


Jöbstl’s improved short-term performance accounting (Merlo and Jöbstl, 1999; Jöbstl, 2000c) This approach is similar to step 1-3 of Merlo's approach, but works without monetary evaluation of NMB and IS-services. However a quantitative and qualitative description of environmentally relevant facilities and services of the forest holding is proposed to be presented in a separate sheet (headers in Table 2):

Table 2: Catalogue of environmentally and socially relevant characteristics

• General characteristics of forest assets • Forest roads and buildings • Management activities in current period • Marketable non-timber production and services • Protection, recreation and welfare activities and facilities • Employment • Negative external effects

Sustainability reporting Several publicly owned enterprises, e.g. the Austrian federal forest estate, are con-cerned with the elaboration and publication of so called "Environmental Performance Reports", that have been expanded in recent time to Sustainability Reports, including different aspects of SFM.

Results and conclusions Finally, it has to be admitted that the traditional accounting system is not even able to provide sufficient information for the Sustainable Timber Yield Management and that adequate further developments with regard to forest resources are needed.

The profit & loss and management performance figures shown by financial ac-counting are incorrect or misleading, therefore useless for assessing sustainability.

While financial accounting does hardly contribute to forest management, a well developed cost accounting system, however, is an important aid to • continually supervise and control the costs; • examine efficiency in individual areas, project and processes; • supervise the processes and results by comparing actual and target values and inter-firm comparisons; • guiding management … and, consequently, guaranteeing sustainability.

Thus, it serves to support the achievement of the sustainability goals but not to measure sustainability, because cost accounting does not consider the changes in forest assets either and does, therefore, not permit a correct performance and profit and loss accounting.

The traditional accounting system cannot contribute to the new major challenges of SFM such as recording other forest services apart from providing information about expenses, costs and direct revenues.

Therefore, it needs to be complemented by new approaches. • For forest assets valuation, balance approaches und calculatory approaches are under discussion. • Whereas balance approaches are primarily discussed for enterprises quoted on the stock exchange, for joint stock companies and for state-owned enterprises, smaller enterprises should consider calculatory approaches. • Forest assets and non-market services are ideally described in annexes without bur-dening the accounts.


Only very few enterprises try to determine the changes in forest assets, most enterprises do not consider this important or interesting, partly because it is expensive and complicated, and partly because they do not want to know about the facts.

Nevertheless, further efforts are necessary, since the provision of information about the state of the forest, forest services and economic outcomes relevant for sustainabil-ity is the manager’s duty, whereas the stakeholder needs to go and get the information.

Calculatory methods and sustainability reports are most likely the solutions in the future.

Literature Borchers, J. (2000) Überlegungen zur Einbindung des aufstockenden Holzes in den Jahresab-

schluss von Forstbetrieben vor dem Hintergrund des Paradigmenwechsels internationaler Bilanzierungskonventionen. In: Jöbstl, H. (ed.), pp. 37-42.

Herbohn, K. (2005) International accounting standards: How adequately are forest assets reported in the balance sheet and income statement? In: Innes, et al. (eds.), 298.

Innes, J.L., Edwards, I.K. and Wilford, D.J. (2005, eds.): Forests in the Balance: Linking Tradition and Technology, XXII. IUFRO World Congress, 8.-13. August 2005, Brisbane, Australia. International Forestry Review 7(5), 414 p.

IAS Plus (2005) IFRS. http://www.iasplus.de/standards/standards.php

IUFRO (1966) Kontenrahmen für Forstbetriebe. Accounting Systems for Forestry Enterprises. Plans comptables pour entreprises forestières. Munich, 116 p.

Jöbstl, H. (1996) Medium-Term Performance Analysis in Forest Enterprises - A Calculatory Approach. The Finnish Journal of Business Economics 45(1):65-77.

Jöbstl, H. (ed.) (2000a) Waldvermögensbewertung - Forstliche Erfolgsrechnung. FOWI-Berichte, 15, Eigenverlag, Universität für Bodenkultur Wien, 178 p.

Jöbstl, H. (2000b) Grundprobleme der Waldvermögensbewertung und forstlichen Erfolgs-rechnung.. In: Jöbstl, H. (ed.), pp. 7-17.

Jöbstl, H. (2000c) Verbesserte Erfolgsrechnung unter Einbeziehung der Waldvermögensände-rungen und der Umweltleistungen der Forstbetriebe. In: Jöbstl, H. (ed.), pp. 157-171.

Jöbstl, H.A. and Hogg, J.N. (1998) On the State of Forestry Accounting in Some European Countries. Actes et Communications, No. 17, INRA, Paris, pp. 17-40.

Jöbstl, H. and Karisch G. (2001) Waldvermögensbewertung für Zwecke der forstlichen Er-folgsrechnung. Forst und Holz 56(23/24):770-776.

Karisch G. (2003) Berücksichtigung des Waldvermögens im forstlichen Rechnungswesen. FOWI-Berichte 16. Eigenverlag Universität für Bodenkultur, Wien, 200 p.

Lange, G.-M. and Peyron, J.-L. (2005) Environmental, social and economic accounting for forestry at national and international levels. In: Innes, et al. (eds.), 299.

Merlo, M. (1996) Non-Market environmental values in forest management accounting. The Finnish Journal of Business Economics 45(1):29-47.

Merlo, M. and Jöbstl, H. (1999) Incorporating non-market outputs into the accounting systems of publicly and privately-owned forest enterprises: an operative stepwise approach. In: Roper C.S. and A. Park (eds.), The Living Forest - Non-Market Benefits of Forestry. Proceedings of an International Symposium on the Non-market Benefits of Forests, Edinburgh, 24-28 June 1996, The Stationery Office, London, pp. 341-372.

Penttinen, M., Latukka, A., Meriläinen, H. and Salminen, O. (2004) IAS fair value and forest evaluation on farm forestry. In: Pajuoja, H. and Karppinen, H. (eds.), Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, Vantaa, Finland, 12th - 15th May, 2004. Scandinavian Forest Economics 40:67-80.


VALUING ECOSYSTEM SERVICES FROM FORESTS: A MULTIDISCIPLINARY FIELD-BASED APPROACH

Tek Narayan Maraseni1, Geoff Cockfield2 and Armando Apan3

Abstract Land-use regimes vary throughout the world. Within the forest land-use there are several broad management strategies. Diverse views are prevalent about the superior-ity of one forest management strategy over the others. These debates about net benefit cannot be solved from the current body of literature as they are mostly concluded by summing market values. Non-market values are usually not taken into account mainly because of the uncertainty of methodology and the difficulty in estimating those values. Consequently, total goods and services from forests are undervalued and their contribution to the national output has been grossly underestimated. As a result, land use decisions are generally biased in favour of land-use options other than forests. This paper analysed major issues on valuation of community forestry, an important forest management strategy in developing countries, and then developed methods for estimating net carbon sequestration amount, option value of biodiversity and onsite soil protection value of community forests after its handover to the designated com-munities. Key words: carbon sequestration, biodiversity, soil protection, community forestry

1. Introduction Several forest management strategies including increasing protected areas, involve-ment of armed forces and establishment of new funds have been tried over the past decades to overcome the problem of deforestation (White and Martin, 2002). How-ever, community forestry (CF) seems well suited to reducing resource degradation while improving rural livelihoods (Jodha, 1990; Dev et al., 2003; Malla et al., 2003). It is most popular in developing countries where at least 22 percent of the forests is community reserved or owned by communities compared to only three percent in developed countries (White and Martin, 2002). Around 32 percent of the total forest area of Benin and Cameroon, 37 percent of Burkina Faso, 46 percent of Zimbabwe, 90 percent of Congo (Potters et al., 2003), 18.42 percent in India (Government of India, 2002) and more than 18 percent in Nepal (CFDP, 2003) are under community management system. On current trends community forestry will be the dominant for-est management strategy in developing countries (Maraseni et al., 2005).

There is widespread concern about the deforestation in tropical areas. Forest land continues to be cleared for soybean in Brazil, for oil palm in Indonesia and Malaysia (Filho, 2004) and for agriculture and pastureland in Australia (University of New South Wales, 1999). The massive shift in land use paradigms is mainly due to poor recognition of non-market values of forest arising from uncertainty of methodology and difficulty in calculations (Khanal, 2001; Maharjan, 2001; Karki, 2002; Pandit, 2002) and the consequent inability to develop appropriate incentives or payments to 1 Research Fellow, Australian Centre for Sustainable Catchments, University of Southern Queensland (USQ), Toowoomba, 4350, Australia, [email protected] 2 Deputy Dean, Faculty of Business, USQ, Toowoomba, 4350, Australia, [email protected] 3 Associate Professor, Geospatial Information & Remote Sensing, USQ, Toowoomba, 4350, Australia, [email protected] Acknowledgement: This paper is extracted from PhD thesis. We would like to extend our special thank to the IUFRO World Congress for accepting this paper to present in the Congress. We would like to thank the Faculty of Business, University of Southern Queensland for the financial support of the research.


reflect non-market values. The emerging consensus is that ‘without paying for eco-system services, protection of forest is very difficult’. Several Bilateral, Regional and Multilateral Environmental Agreements including Kyoto Protocol and Convention on Biological Diversity show some recognition of this problem. Developing methodo-logies for non market values is important to develop payment regimes for regional and global environmental services thereby preventing the forest from being converted to non forest land.

Some mechanisms to pay for environmental services are in practice, for example, the Bush Tender Initiative and the Environmental Service Scheme in Australia (Cacho et al., 2003), National Forestry Finance Fund in Costa Rica (Zuniga, 2003) and an Emission-Biodiversity Exchange Project for the 21st Century (EBEX21) in New Zea-land (Carswell et al., 2003). Due to different context and management strategies, these mechanisms as such are hard to apply in community forestry. In particular, these approaches rely on an individual having clear title to a designated area of land.

Nepal is a pioneering country in community forestry in the South Asian Region (Khanal, 2001; Maharjan, 2001; Karki, 2002; Pandit, 2002). Because of community forestry’s increasing popularity it has been the mainstream of forest policy and programs since 1978, and Nepal plans to handover around 61 percent of its total forest to the communities (Chapagai et al., 1999). Community forests are not only important for the livelihood of Nepalese people but also are equally important for carbon sequestration, biodiversity conservation and soil protection (Maraseni et al., 2005). At a national level, comparing the 1994 level to the 1960 level, the degraded environ-ment recuperated, deforestation rate decreased (from 2.1 to 0.5 percent), mean stem volume of trees increased from 85 m³/ha to 131 m³/ha and the number of stems per hectare increased from 313 to 408. This is mainly because of community forestry programs (MFSC, 2003).

By examining relevant literatures and using the primary author’s own extensive field experiences, this study developed methods for estimating net carbon sequestra-tion amount, option value of biodiversity and onsite soil protection value of forest after its handover to communities. The study is organized as follows: Section two ana-lyses literatures and presents some vital issues in valuation in community forestry. Section three presents methodologies for the estimation of net carbon sequestration amounts, option value of biodiversity and onsite soil protection values of community forest. Finally, Section four presents the key conclusion of the study. Earlier we had planned this methodology to test in the field before presenting in the World Forestry Congress but because of Maoist problem in Nepal we have deferred the idea until the problem is settled down.

2. Issues in the valuation of community forest This Section is divided into several Sub-Sections and major issues are discussed in each Sub-Section. Some minor technical issues are noted and the major methodolo-gical issues are considered more fully.

2.1 Issues in the estimation of biomass of harvested wood One technical issue is that in Nepal, government and community forests are using the Quarter Girth (Hoppus) formula for the estimation of volume of harvested products. This formula assumes the value of pie (π) as 4 not 3.14. Therefore, it underestimates the volume of trees by 21.46 percent. For example, for a 5m long and 1m diameter log, Huber’s formula (Volume= π x Diameter2 x length/4) estimates 3.9267m3 whereas Quarter Girth formula (Volume = Girth x Girth x length/16) estimates 3.0842m³, around 21.46 percent less than Huber’s estimate. Since biomass is the product of vol-


ume and density, underestimation of volume also underestimates the biomass. There-fore, to avoid this miscalculation, Smalian, Huber and Newton formula could be applied depending upon the availability of small end, mid end and large end diameter. These formula assumed the value of pie (π) as 3.14 not 4.

This tradition of using Quarter Girth formula has technical and administrative has-sles too. In 1993, the main author was working as a government forest officer in the southern border of Nepal. A businessman imported logs from Malaysia, where Quar-ter Girth formula was not in use. They paid the custom as per Malaysian measure-ments. While giving the permission for sawing the author followed Nepalese rules for measurement of the logs. As a result, the volume of log reduced by 21.5 percent. It created a big technical issue and also incurred big transaction costs. Again, an admin-istrative problem started when measured volume of sawn timber (V = length x breadth x width) came around 110 percent. This was because of the administrative under-standing that the volume of sawn timber should be around 70-80 percent if the log is in good condition.

2.2 Issues in the estimation of carbon retention in harvested forest products The carbon sequestration rates of forests at the global and national levels are well re-searched but are poorly understood at a community level. Most studies are not empiri-cal and have used different models, based on varying assumptions; consequently, the results are not consistent (Haripriya, 2003). For example, the Intergovernmental Panel on Climate Change (IPCC) uses a default approach and assumes that all harvested pro-ducts emit carbon immediately after harvesting into the atmosphere. In fact, carbon may lock up in ranges of products, especially those who has long decay period (Hari-priya, 2003). Locking carbon in wood products that has long decay period is a better option than locking carbon in the standing biomass that misses the opportunity of sequestrating carbon in the newly grown plantation (Jaakko Poyry, 2000). Depending on time period the forest products can retain carbon, they are classified into four dif-ferent categories: very short (1 yr), short (3 years), medium (12 yrs) and long (30 yrs) (Haripriya, 2003).

Since most of the studies are of national or global level they have not considered household level pattern of forest products consumption. There are at least two issues that need to be analysed to undertake more accurate local estimations. First, at the community level, people use forest products as timbers, logs, poles, furniture etc. for some years and then use them for other purposes (such as for pole, fuel wood etc) when they become useless for those particular purposes. For each forest product, except fuel wood, we have to calculate carbon retention for the main uses then recal-culate again and again for subsequent uses until it ends up as fuel wood. Second, Shorea robusta in Nepal (major timber species in lowland communities) is highly durable wood so its life span is at least around 300 years. Even for pine species, which is the main timber species in hill communities, the life span is not less than 100 years, this is because of smoke (from fuel wood burning) which acts as a natural preser-vative. Therefore, taking single value of life span for the same uses (e.g., for timbers) regardless of species is quite unreasonable. In addition, species specific values are highly recommended for the estimation of life span of each type of forest products.

2.3 Issues in the Estimation of Soil Carbon Since the very beginning of this type of research, two methods (Walky and Black (W&B) and Combustion methods) of soil organic carbon (SOC) determination have been used. Some researcher claimed that the W&B method of wet oxidation, which uses potassium dichromate (K2Cr2O7) as an oxidising agent, is not capable of measur-ing the total SOC but only that part which is easily oxidisable (e.g., Rayment, 1992;


Arrouays et al., 2001). Others claim that the combustion method overestimates the carbon as it also burns the other material including organic matter (Rayment, 1992; Frogbroook and Oliver, 2001). There are scientific grounds for each of these conclu-sions. Currently, a more accurate method, Laboratory Equipment Corporation (LECO) combustion furnace model developed by St Joseph, Michigan, USA, is widely used throughout the world. In Australia, in order to make comparison more realistic, a number of conversion factors (1.07 to 1.34) for total soil organic carbon are developed to allow conversion of data generated in various analytical laboratories over a wide time span to values equivalent to LECO combustion values (Skjemstad et al., 2000), although the LECO method is costly and rarely available in developing countries such as Nepal.

In soils, there are two forms of carbon; organic and inorganic. Available literatures have mainly focused on organic carbon but because of the improved forest cover (due to community forests), soil erosion may be decreased, thereby, inorganic soil com-pound may not be exposed to the rain and sun. Thus, because of the hindrance of hydration and thermochemical reactions, emission of CO2 from inorganic compounds may be reduced. Further, erosion processes (detachment and transport) also expose the carbon to the atmosphere (Lal, 2001). Since carbon sequestration (CS) is the increase in carbon stocks other than in the atmosphere (IPPC, 2000) these functions of forests also come under CS. Therefore, while estimating the net carbon sequestration rates of forests soil, we should consider both organic and inorganic carbon.

2.4 Issues in the Valuation of Biodiversity Valuing biodiversity is the most challenging task and what economic studies normally measure is the economic value of 'biological resources' rather than biodiversity (Pearce and Moran, 1994; Bann, 1998; Nunes and Bergh, 2001). Biodiversity is the ‘whole of life on earth’ whereas biological resources are simply those components of biodiver-sity which maintain current and potential human use (Pearce and Moran, 1994). Con-tingent valuation (CV) approaches are perhaps the most promising approach for the valuation of biodiversity (Nunes and Bergh, 2001), however, it has not been attempted in developing countries (Jakobsson and Dragun, 1996; Bann, 1998). This method has suffered from several methodological issues and criticisms (Hanemann, 1994; Portney, 1994; Jakobsson and Dragun, 1996; Gowdy, 1997; Nunes and Bergh, 2001). Recently one criticism has been emerging; whether the respondents respond to questions as ‘consumer or citizen’ (Jakobsson and Dragun, 1996). If so, it is not rational to com-pare ‘citizen’ willingness to pay (WTP) value with ‘consumer’ value. Some of the concerns about the CV method could be overcome by following a comprehensive set of guidelines of the National Oceanic and Atmospheric Administration (NOAA) Panel (Hanemann, 1994; Portney, 1994; Jakobsson and Dragun, 1996; Gowdy, 1997) which is also accepted by the US legal system and World Bank (Hanemann, 1994).

The current studies on comparison of biodiversity are based only on species richness and estimation of different index values. These analyses do not reveal how closely these species are interrelated, an important feature of ecosystems. Further, there is virtually no research on the impact of community forestry (CF) on ecosystem level of biodiversity. In the case of CF, the original chunk of forest (ecosystem) is often divided into small patches during the course of handover to the different user groups. Since each user group has its own choices of species for their particular purposes, the management strategy of one user group may be different from those of nearby user groups. Thus, even if the species richness may be the same (by planting one and removing another) in both communities, it has a greater impact at the eco-system level. The impact is more critical if keystone species of original ecosystem are lost during the course of management and species manipulation.


There is also a big knowledge gap in the estimation of the bequest value of biodiver-sity. Though bequest value is categorised as non-use value, it is really a special case of option value as it represents the value (to current users) of being able to bequeath the forest to future generations (Pearce and Turner, 1990; Davies and Richards, 1999). It is not like existence values which are certainly fuzzy values (Pearce and Turner, 1990) and which accrue mainly to people who do not use the forest, and may never see it except in books (Davies and Richards, 1999). If the bequest is for immediate descendents, preferences will be higher than for future generations in general (Pearce and Turner, 1990). In the communities of developing countries (like Nepal, India, etc.), where people are more religious and believe in incarnation and saving much for future generations, forest users may have significant amount of willingness to pay to bequeath the forest to their children and grandchildren.

Finally, the option value of medicinal benefit of plants estimated so far (e.g. by Pearce and Puroshothaman, 1992; Pearce and Moran, 1994) are highly speculative as this value typically lies in undiscovered species of unknown uses (Bann, 1998). Major criticism surrounds estimations of the ex-ante values to products that have not been identified (Gregersen et al., 1995; Bann, 1998) and even if we like to apply this concept in developing worlds, those parameters are not available (EEP, 2003).

2.5 Issues in the Estimation of Onsite Soil Protection Value Protection of soil inside the forest is important in several ways. It reduces flooding and siltation problems in the downstream area. The protected nutrients can be utilised by plants and thereby maintain strength of the ecosystem. Therefore, we also need to find the onsite soil protection value of forest. However, it is poorly researched and whatever has been done, even in the developed countries, is generally related to off-site or downstream benefits and costs rather than onsite effects (Davies and Richards, 1999). There is then the problem of accuracy in measurements of the nutrients in soils. While comparing 16 phosphorus extraction methods practiced in Europe, Ney-roud and Lischer (2003) found different results. Also, a large variability was observed in the results obtained by laboratories using the same method, highlighting the impor-tance of using identical lab procedures in any comparison.

Finally, there is the issue of the form of the nutrients. In soil, macronutrients are found in different forms. For example, nitrogen may be in organic form (immobilised) or inorganic form (mineralised in NH4

+, NO3-, NO2

- forms) or in de-nitrated form (trapped in air space). Similarly, phosphorus may be in extractable, available or non available forms, and Ca, Mg, and K may be in the exchangeable and non exchange-able form. Since each nutrient has its own cycle, one form of nutrient may convert to another form once conditions are suitable. While estimating the soil protection value with the help of nutrient analysis we must estimate the total amount of each nutrient rather than estimating the available or exchangeable forms; otherwise we may under-estimate the soil protection value. The problem is that most of the current research is focussed only on available or exchangeable or extractable forms of nutrients because their major focus is on the agricultural sector, where these forms are most important. This leads to incomplete ‘accounting’.

3. Proposed methods for evaluating net benefits from community forests Under this Section we present the methods for the estimation of net carbon sequestra-tion amount, option value of biodiversity and onsite soil protection value of commu-nity forests. On top of that, a format of estimating bequest value of biodiversity using contingent valuation method is presented in Annex-1.


3.1 Net carbon sequestration rate of community forests 3.1.1 Estimation of net carbon stock in soil In order to cover the varieties of forests and soil types, the sample plots could be designed along the elevation gradient. The randomization and probabilistic sampling should be followed as it is considered better than purposive sampling to reduce human biases. Number of sample plots in a community forest depends on its size and varia-tion in terms of forest and soil types. Five samples could be taken in each sampling plot (25m x 25m), four at a regular interval of 900 and one at the centre, by digging a hole in the ground to a depth of 30 cm. The soil could be sieved using two mm sieve, and stones and roots should be separated and their masses should be taken. Stone volume could be determined using a specific gravity of 2.65 mg/m³. The volume occupied by the fine (<2 mm) material of each horizon should be quantified by sub-tracting stone volume from total sampled volume. Soil samples taken under the same dominant species and similar elevation gradation should be mixed-up homogeneously and final composite soil samples of 200 gm should be prepared. The oven dry mass of soil should be determined using an oven at 1040C. Then, using oven dry weight and volume of soil, the bulk density (BD) of soil could be determined. Alternatively, disturb soil method (Tan, 1996) could be followed for the estimation of Bulk Density. For the estimation of soil carbon, the best available methods in the respective country that could account both organic and inorganic carbon could be used. Then the amount of carbon (C in gm/m²) could be estimated (Garten, 2002) as follows:

D x S x BC = where, B is the bulk density of soil (kg dry soil/m³), S is the soil carbon concentration (gm carbon per kg dry soil) and D is the depth of the soil sample taken in meter (D = 0.3 m)

The foundation members of community forest could be consulted to know the pre-vious condition of community forests and to identify the reference sites in the same locality. Then, the same sampling methodology could be applied for reference samples (pair sample). The carbon content of reference sites could be deducted from the carbon content of current forest soil to get the net carbon stock in soil because of the community forest.

3.1.2 Estimation of total carbon stock in standing biomass, coarse debris, stumps and surface litter

Standing biomass: For the inventory, the whole area of community forest could be divided into different strata based on their forest types and regeneration conditions, and stratified random sampling (SRS) could be carried out. Based on the homogeneity of forest strata, and national and international guidelines for the desired precision, sampling intensity could be fixed. It is better to use circular plots rather than rectan-gular and square sample plots for the minimisation of edge effects. Higher the slope lower will be the horizontal length for a given slope length. Therefore, slope correc-tion, especially in hilly area, while laying out sample plot is highly recommended. Otherwise even in the identical forest, the estimated biomass in the sloppy area would be lower than the flat area.

For the estimation of biomass, it is better to use allometric equations or local bio-mass table prepared for that species and for that community. Applying general bio-mass table could be detrimental especially in the country of highly variable topo-graphic and edaphic sites like Nepal. If the biomass estimated as above is not oven dry biomass, it could be estimated with the adjustment of moisture content. For example, if the biomass calculated as above method is at 12 percent moisture content (usually given in the biomass/volume table) the oven dry biomass could be estimated


by dividing the total biomass by 1.12. The above ground biomass of the standing stock could be converted into total biomass (both above and underground) multiplying by certain factor which depends on climatic zone (for detail see Haripriya, 2000). Then, the total carbon in forest standing biomass could be estimated by using a conversion factor of 0.5 for biomass (IPCC, 1996; Haripriya, 2001).

Coarse wood (CW): In cases of community forest, there are fewer chances of hav-ing coarse wood, stump and leaf litter because of frequent collecting by users. Dia-meter of coarse wood (>25 mm diameter) found in each sample plot should be meas-ured. The volume of each piece could be determined by using Newton’s formula (if able to measure both ends and middle diameters of CW), Smalian’s formula (if able to measure only both end diameters) and Huber’s formula (if able to measure only at mid diameter).

Two samples of each debris type could be cut by pruning saw for density and carbon analysis. The oven dry weight of wood should be taken by putting in an oven for 24 hours only at 65-750C as higher temperature causes pyrolysis and decomposi-tion of organic compound and volatilization of vegetable oils. Once the volume of coarse wood is known it should be multiplied by density to get the biomass. But the total biomass should be adjusted with the degree of deterioration of woods. The total biomass (t/ha) could then be converted into the total carbon mass (t/ha) by adjusting dry weight mass, carbon percentage and expansion factor for sampling area.

Stumps: Stumps are considered as coarse wood debris (McKenzie et al., 2000, 2002). However, for the simplicity of explanation, it is better to put in different headings. The biomass of stump could be determined with the help of age of stump (time after harvest) and its volume by applying carbon retention formula (Row and Phelps, 1990; Haripriya, 2003). The age of stumps in community forest could be determined by consultation with elder people of community. In many cases stumps would be much older or they might caught by fire so the age could not be established. In such cases we could do as follows.

Diameters of all stumps found in the sample plot should be measured at two places; at the ground level (DGH) and at the top of the stump (DTH). Total heights of all stumps and their deteriorating conditions should be recorded. Two samples of each stump type should be cut by pruning saw for density and carbon analysis. The above ground volume of each stump should then be estimated using Smalian formula. The percent lost should be deducted to get net aboveground volume of stump. The biomass of stump should be estimated by multiplying density and net volume of the stump.

Below ground biomass of stump could be difficult to determine as there is no methodology developed so far. For this, we could determine the tapering factor of each stump with the help of diameters {diameters at ground height (DGH) and top height (DTH)} and height of the stump, which, in turn could be used to estimate the diameter at breast height (DBH) of stump as follows:

130 x H

DTHDGHDGHDBH −−=

For example, if the diameters of stump at ground and top height are 40 cm and 30 cm and the height of stump is 100 cm then the tapering and diameter at breast height become 10 cm/100 cm and 27 cm, respectively.

While estimating the DBH from this method it is assumed that the tapering factor between the two diameters also applied up to the breast height (130cm). With the dia-meter at breast height known we could apply the allometric formula or biomass table of that species to get above ground gross biomass. As we have no any alternatives, we could assume that the percentage loss of stump would be equally applicable to the percentage loss of above ground biomass and below ground biomass. On the basis of this assumption, we could estimate the net above ground biomass. Then, the net root


biomass of stump could be determined by applying an appropriate root shoot ratio of that particular eco-climatic zone (see Haripriya, 2000).

Leaf-litter: The amount of leaf litter (2-25 mm) in the forests could be determined with the help of a regression equation prepared for that locality, with the above ground biomass as independent variable and litter amount as a dependent variable (Mohns et al., 1988). More precisely, it could be estimated by making a five meter radius circular plot at the central point of soil/biomass sample plot. The sample plot then could be divided into three parts on the basis of light, medium and heavy litter content types. The fraction of area of each litter content type could be estimated. In each litter content type four quadrants of 50cm x 50cm could be selected randomly and a steel frame of that size could be laid over the plot. All surface litter within the steel frame should be collected and weighed in the field with the help of calibrated spring balance and bucket. The fresh weight of surface litter per ha could be calculated as follows.

∑= 10,000 x x WiAi(kg/ha)ht Fresh weig

where ‘A’ is the fraction of area (in percentage) and ‘W’ is fresh weight (from four quadrants) of surface litter (in kg) of a given surface litter content type (i). If there are more than one sample plot, then the average of all sample plots should be taken for the estimation of fresh weight (kg/ha). One sample could be prepared and transferred to the lab for estimation of dry weight and carbon content. The fresh weight could then be converted to dry weight using conversion factor (by multiplying fresh weight with dry weight and fresh weight ratio) and per ha carbon content could be estimated by simply multiplying dry weight with percent of carbon content by weight.

ratiofresh wt dry wt x (kg/ha)fresh wt (kg/ha) Dry weight = dry weightby percent carbon x (kg/ha) dry weight(kg/ha)content Carbon =

3.1.3 Estimation of carbon retention in forest products Community records could be used to estimate the annual harvesting rates and the end use of the products. If records are not available, a detailed household survey could be carried out. Users may not recall the amount of forest products harvested and used for different purpose in different years since the handover of forest to them. Therefore, if the household size is the same, the harvested amount and their different uses could be assumed to be the same in each year as current year. If the household size is different it could be estimated on the basis of current and past proportions of household size. The life span of those particular end-uses and their subsequent uses could be identi-fied by organising a teashop meeting. Even for a given use (for example, for timber) the life span of each species should be considered separately as each species could have different life span. With the help of life span and end uses and their subsequent uses, the amount of carbon retention in the harvested products since the initiation of community forestry could be determined by using the formula given by Row and Phelps (1990) as follows.

T Ceb1adn)(proportioretention Carbon

−+−=

where, ‘a’, ‘b’ and ‘d’ are unit less quantities. ‘C’ is the decay rate which varies with ecoclimatic zone, species used, condition of uses and end uses (which determines half life period) and ‘T’ is the age (time) of pools and products in year (see Haripriya, 2003).

3.1.4 Net carbon sequestration rate of community forests The amount of carbon in the forest (including coarse wood, stumps and standing trees) before community forest (M) could be taken from the operational plan of


community forest while the soil carbon (N) could be estimated from the soil analysis of reference sites (pair sites). If the community had not inventoried the forest before handover or if they have lost the records, imagery or aerial photograph can be used for the estimation of before handover biomass. If that is not possible, select the reference site (that had similar forest biomass before handover) with the consultation of elder people of the communities and apply the same method of biomass estimation as discussed above. However, it is not recommended unless there is any alternative, be-cause of accuracy reasons. The current amount of carbon stock in the forest biomass (J) and in soil (K) and total carbon retention in harvested biomass (L) since the initia-tion of community forest could be estimated as above. Then, the net carbon sequestra-tion rate of CF could be estimated as follows:

NMLKJionsequestratcarbon Net −−++=

(yr)Forest Fommunity of AgeNMLKJion/yrsequestratcarbon Net −−++

=

3.2 Valuation of biodiversity Many investigators agree that the species richness is one of the main indicators of biodiversity. Species richness increases from pole to equator (Weber et al., 2004) and decreases with elevation (Kikawa and Williams, 1971; Gentry, 1988; Patterson et al., 1998 and Wolda, 1987 cited in Bhattarai and Vetaas, 2003). Considering this, in the community forests, the transect lines for the estimation of species richness could best be made along the elevation gradient. Many studies suggested the plot size of 0.1 ha for biogeographical comparison of species richness (Whittakar, 1963, 1996 and Wood-well, 1969 cited in Bhattarai and Vetaas, 2003). Since we are interested in the com-munity forests and usually they are small in size and cover limited elevation range a smaller plot size could be used (for e.g., 0.05 ha). As there will be several sample plots in a community forest in the small elevation range, it may be possible to docu-ment all the available species in the community forest.

The name and number of the individual species could be recorded with the help of local experts (local dendrologist). There may not be species recording system prior to handover of community forest. Therefore, a workshop could be organized to ‘recall’ the name of species occurred prior to handover of community forests. Simpson’s and Shannon’s diversity indices and their equitabilities could be calculated which not only show the species richness but also the evenness among the different species. Similarly, Sorensen’s index could be used to reveal the relative dissimilarity in diversity between any pair of communities under study and to know whether there is a similar-ity of diversity between the exterior and interior sample plots of the same community forest (see biodiversity related books for the calculation of indices).

3.2.1 Option value of biodiversity Option value is the value for possibility of using species in the future. Loosing species means loosing its potential use values too. For the option value of biodiversity, the formula given by Pearce and Puroshothaman (1992), and Pearce and Moran (1994) could be modified. We could find the number of species in-/decreases (NR) in past years because of community forest and current number of medicinal plants out of total plants by organising a workshop, which gives probability of successful medicinal plant (P) lost/achieved. As these medicinal plants are used locally, the royalty rate and coefficient of rent captured by community is 100 percent (R =1 and A = 1). The average value of medicinal plant (Vi/n) is the value perceived by users that could be found while finding the medicinal use value (substitute method) of plant through household


survey. Then, the option value of biodiversity conservation could be calculated using the following formula where ‘H’ represents the area of community forest in ha.

HVi/nA x x R x P x NR land/haty biodiversi of valueMedicinal =

3.2.2 Estimation of bequest value of biodiversity Bequest value of biodiversity refers to the value of leaving current biodiversity for the coming generation. For the estimation of this value, contingent valuation method (CVM) could be used. In every step of CVM, the guidelines of National Oceanic and Atmospheric Administration panel (Portney, 1994) could be followed. Some impor-tant steps and explanations, as for an example, are presented in Annex-1.

3.3 Onsite soil protection value of community forest For the estimation of onsite soil protection value, first, we should estimate the net amount of soil protected from erosion because of community forests. Then, we can esti-mate the onsite soil protection value with the help of this data and soil nutrient analysis.

3.3.1 Estimation of net onsite soil protection amount If a country has good records of different layers we can use GIS and then the Univer-sal Soil Loss Equation to determine the erosion rate of different types of forest in a given locality. In such cases the conditions of forest before handover (as a references site) should be identified very precisely. Considering the cost and time requirements, the soil erosion data could be taken from past studies of the larger area which may be the district or watershed area to which the area in question belonged.

As most of the studies (for example see, Impat, 1978; Balla, 1983; Shrestha and Zinck, 1999; Gerrard, 2002; Raghunath, 2002) followed the Universal Soil Loss Equation (i.e., RKLSCP), the values of rainfall erosivity factor (R), soil erodibility factors (K) and conservation practices factor (P) could be more or less similar to the current situation. Since the topographical factor (slope length, L and slope gradient, S) plays the major role in soil erosion, the average topographical factor value (LS value) used for each category of land (in past study) could be readjusted by the exact average topographical factor value of that particular community forest. The average LS factor can be found by using a digital elevation model or roughly it can be done by measurement. The crop management factors (C) which represent the combined effects of crown cover (CC) and ground cover (GC), is expected to change because of com-munity forest. Current and before community forest, CC and GC could be determined by image analysis of two different time periods or alternatively older people of com-munity could be consulted. Then, after adjusting crop management factor (C) and topographical factor (LS) values of each community forest, the soil erosion rate of current and before handover could be estimated. Then, the differences of erosion rate of current forest and references site gives the amount of onsite soil protected due to community forest.

3.3.2 Onsite soil protection value from nutrient analysis The same soil sampling method used for the estimation of carbon could be used in this case too. By suitable methods (that could account total amount of each nutrient regard-less of their forms), the total amount of each nutrients found in the soil could be calculated. The market price of frequently used fertilizers for N, P, K, Ca, Mg, S and lime could be the starting point and adjusted with the labor cost of transportation. The molecular weight of fertilizer and the atomic weight of that macronutrient under valuation could be determined easily with the consultation of inorganic chemistry book. In many fertilizer bags the total weight of fertilizer and amount (or percentage)


of main nutrient is written clearly. Once having all those information, the price of that particular nutrient could be determined by applying following formula.

fertiliser ofweight molecular fertiliser bag one of weight nutrient x of weight atomic

costslabor fertiliser bag one of pricegnutrient/k of Price +=

By multiplying the amount of nutrient found in that soil (kg/ha) and the price of that fertilizer we can easily estimate the onsite soil protection value of forest. For example, if the fertilizer is Muriate of Potash (KCl), the hypothetical market price is $50 per 50 kg bag and the labor costs from market to village is $5/bag then, the value of each kg of Potassium (K) will be calculated as follows.

$2.097/kg

gm 74.55Kg 50 x gm 39.0983

$5$50(K) potassium of Price =+

=

As most of the fertilizers are not pure, their purity could be found out with the consul-tation of factory personnel. We should find the exact value (price) of nutrients by dividing the prices by the fraction of purity. For example, if the purity of muriate of potash fertilizer is 80 percent, then the price of one kg potassium would be $2.62 ($2.09/ 0.8).

After finding the current and before handover soil erosion rates of community for-ests we can estimate the amount of net onsite soil protected. By multiplying the amount of nutrients found in the protected soil and their equivalent fertilizer prices (purity corrected) we can calculate the net onsite soil protection value of community forest.

4. Conclusion Community forestry (CF) is gaining popularity as a better forest management option especially in developing countries. Being a dominant management strategy, it is equally important for the livelihood of local people and regional and global environ-mental services. Lack of recognition of non-market value of forest, rapid globaliza-tion, improved communication system, easy market access and improved transport in-frastructure could lead the CF towards commodity production oriented systems, which may ultimately reduce the local/regional/global environmental services. Considering this, the global beneficiaries can be persuaded or induced by policies and agreements to pay for their contribution. Even at national and regional levels demands for envi-ronmental services have been increasing.

The major problem in pricing non-market values in forests is the ‘unavailability of suitable contextual methodologies’. Our study developed methods for the estimation of net carbon sequestration, option value and bequest value of biodiversity and onsite soil protection value of CF. These methods have important implications at a local level, where communities can collect and use these data to develop optimal produc-tion regimes. They may also be used to set appropriate prices. Although these methods are developed for CF, they could be equally applied for any types of forest if the context is similar.

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ANNEX-1: Format for the determination of bequest value of biodiversity

1. The scenario development In general, endemic species are most endangered to extinct. There may be several known and unknown endemic or endangered species in your community forest. Who knows, with the advancement of science and technology the germ plasm of these known and unknown species may have great financial significance. Moreover, there are about thousands of known and unknown chemical compounds occur in plant and animal tissues. Nobody knows what invaluable use could be made from them in the future.

Species loss is irreversible (Hanemann, 1994; Portney, 1994; Jakobsson and Dragun, 1996; Gowdy, 1997) and we can not estimate the marginal value of biodiver-sity, as one species may affect the whole ecosystem (Gowdy, 1997). Please remember that your children and grandchildren have equal right of enjoying species as we have. As a religious people and responsible citizen, you may respect their right and the principle of intergenerational equity. Also, the earth is not only a home of Homo sapiens; it is a home of millions of species including us. All species have equal right to live in and maintain their existence as we have and do. To conserve them and to respect the right of future generation is our moral and ethical responsibility too. There are several types of community forests with different species composition that you might have seen around your territory. It is assumed that you know the species found in your community forest and their importance as direct use, indirect use, option, quasi-option, existence and bequest values better then the users of other community forest. However, please be informed that we are not going to find out the direct and indirect use values through this process. We are interested only on bequest value.

2. Pre-testing of questionnaire and its final setting To reduce the outlier responses and to find the iterative values, discrete choice (dicho-tomous choice or bidding game or referendum) questionnaire could be asked. During the reconnaissance survey the questionnaire could be pre-tested using an open-ended willingness to pay question in a group of users, to find out the average of bidding range (dollar amount/labour-days).

The exact wording of the question could be as follows: Would you vote in favour to increase in your annual community forest fee in terms of money……. $ (or ……….labour-days) each year to maintain the current species composition (biodiver-sity) for its bequest value (for your children and grandchildren)?

Yes ( ) No ( ) If ‘yes’ what highest amount/labour-days you would pay? If ‘no’ why you say ‘no’? What lower amount/labour-days you would pay?

3. Elicitation methods and analysis Face-to-face interview is most preferred survey method for the elicitation of willing-ness to pay (WTP) value which could help respondents to make understanding of the scenario and thereby minimizes the chances of non-response. The vehicle of the pay-ment may be either in the form of labor-days (as the communities may not be familiar with market mechanism) or increase in annual fee to the community forest. As the household (HH) could be the unit of the measurement, the HH income should be con-sidered as reference income, and the characteristic of respondent like gender, caste, education, occupation and age should be noted for statistical and empirical analysis. The better way of comparison of WTP value with other countries’ (other users) value could be the WTP as a percent of total income.


FORESTRY ACCOUNTING IN GERMAN STATE AND MUNI-CIPAL-FOREST-ENTERPRISES - RECENT INNOVATIONS

Wolfgang Tzschupke1

Abstract Forestry accounting in nearly all German state and community owned forest-enterpri-ses was until now a rather simple single-entry book-keeping based on an accounting of revenues and expenditures according to the respective budget-plans. For internal purposes, e.g. for controlling the budget oriented cash-accounting was partially trans-formed into a widely used cost-accounting, whereas a valuation of forest-assets (soils and stands) and of non-market-benefits was not practised.

However the recent implementation of the so-called new public management-tech-niques within German state and community-services initiated also some remarkable alterations of forestry accounting, which can be characterized by the following two items: • Introduction of double-entry book-keeping, • Differentiation as well of the financial as of the cost-accounting according to the following five product-lines: 1.) production of timber; 2.) environmental protection and rehabilitation; 3.) recreation and environmental oriented education; 4.) services for others and 5.) political and administrative tasks. The necessity of a valuation of forest-assets is still a controversially discussed issue. However it will be inevitable at least for those forest-services that will be transformed into so-called public companies or into companies with a private legal status. This is why the actual discussion is furthermore focussed on the search for the most appro-priate valuation method. Keywords: forestry accounting, double-entry bookkeeping, valuation of forest-assets, product-scheme, product-line, new public management, Germany

1. Introduction The accountancy is probably the most important information-system of an enterprise. However its relevance has not been really respected within forestry in Germany and in several other European states for a long time. This is primarily the consequence of the fact that the accountancy of German forest-enterprises was and still is more or less influenced by the bookkeeping-systems of the greater state-forest-services, though the states own only some 30% of the German forests whereas 50% are private property. Several reasons can explain this situation: 1.) The state forest enterprises, which are owned by the German „Länder“ (i.e. the states - not the Federal Republic) manage with an average forest area of some 250.000 hectares much greater territories than the majority of the nearly 2 million private forest owners, of those only a few one own more than 10.000 hectares. And therefore most of the private forest owners have no own forest organisation and now individual accounting-system. 2.) Most of the German municipal forests are managed within a close and intensive personal and organisational union with the state forest-services. Consequently the accountancy of the community forest-enterprises is largely identical with the one of their local state forest-authorities. 3.) The German fiscal law allows nearly all private forest owners to apply a single entry bookkeeping based on the record of income and expenditure and in practice this 1 Professor for Forestry-Economics at the University of Applied Sciences (Fachhochschule) Rotten-burg, Schadenweilerhof, 72108 Rottenburg a.N., Germany, [email protected]


bookkeeping-system is again strongly oriented at the bookkeeping of the state-forest services. Indeed the accountancy of the state and community forest companies was and is still intensively influenced by their general budgetary regulations. Since some years how-ever a slow transformation of our forestrial accountancy started, which was mainly triggered by an increasing political pressure for better budgetary results and for a greater cost-transparency. Furthermore the growing interest in the comparison of the economic results of different trade groups as a base for the control of the best capital use was an important pressing factor for the adaptation of the forest accountancy to common national and international bookkeeping rules.

Other actual reasons for the adaptation of the forestrial accountancy are the more or less deep cutting administrative reorganisations in all federal states, which in gene-ral result in a greater economic and juridical independence of the state and community forest-enterprises. One important effect of this new organisational frame is a growing self-responsibility for the periodic operating results, and this responsibility forces the forest-managers more and more to avoid the budgetary shortfalls which were usual until now.

Under the catchword „neue Steuerungsinstrumente“, which we use to translate as „New Public Management“ several fundamental modifications of the accountancy of the German state and municipal forest-enterprises have been installed and with my following report I want to present and explain these modifications after a short overview of the most important characteristics of the up to now used forestrial ac-countancy-systems.

2. Up to now existing bookkeeping-systems of the German state and muni-cipal forest-services

Different e.g. to Austria or France in Germany forest enterprises owned by the states and the communities were normally run as so called „Regiebetriebe“ by public autho-rities (“Forstverwaltungen”) and therefore these forestry enterprises were juridical an dependent part of their respective state or municipal administrations and for that reason their income and expenditures formed an integrated part of the general budget of these administrative units. The accountancy of the state and municipal forest ser-vices was thus traditionally a cameralistic system which was focussed on monetary in-come and payments, even though since about 30 years some elements of bookkeeping with expenditure and income were introduced. So greater machines (but not the stands) are depreciated and the annual account is performed as a profit and loss ac-count where non-operating receipts and expenditures are eliminated from the budget-ary results (see Table 1)

Table 1: Operating result of the Baden-Württemberg state forest service in 1998

Total income by payment of the forest-administration 387,2 Mio. DM - receipts, without relevance to the state forest enterprise - 53,1 Mio. DM - receipts of the state forest enterprise which are not result

of the operating activities - 10,5 Mio. DM

+ receipts without payment + 10,6 Mio. DM = gross receipts of the state forest enterprise 334,2 Mio. DM 342,2 Mio. DM Expenditures of the state forest-administration 536,9 Mio. DM + imputed amounts 6,6 Mio. DM - non-operating expenditures 252,9 Mio. DM = operating expenditures of the state forest enterprise 290,6 Mio. DM 290,6 Mio. DM Operating result of Baden-Württemberg

State forest enterprise in 1998 + 43,6 Mio. DM


Until now annual inventories of the assets and annual balance sheets were not usual, because it was believed that the control of the forestrial assets would be guaranteed by the periodical forest management-inventories which however proved only the development of the stocks of timber without any financial valuation.

By the way within the hitherto practiced annual account of the state forest-services various operating-assets are not depreciated; this are e.g. forest roads, hunting facilities or recreational installations.

Insofar the annually published operating results of the state and municipal forestry enterprises don’t allow a serious control of the development of the operating assets. Especially seen before the background of the growing need for significant financial savings this is a problematic fault, because it is then rather easy to achieve good annual results by concentrating the exploiting activities on stands with better paid timber-sorts and by avoiding long-term silvicultural investments as thinning and pruning in younger stands and thus the traditional way of calculating the operating results seduces to management practices which on the long-term impairs future managing results.

3. Recent innovations in the bookkeeping-systems of German state and municipal forest-enterprises

3.1 Introduction of “product-lines” according to the recommendations of the German Forestry Advisory Council (Deutscher Forstwirtschaftsrat)

Forestry accountancy is strongly influenced by the work of the managerial committee of the German Forestry Advisory Council, who since many years has successfully taken care for standardized economic and managerial terms and for a common book-keeping-draft for forest-enterprises.

While it was usual during many decades to separate the accountancy-results only into operating and non-operating receipts and expenditures with a rather inexact allo-cation of the administration costs and to analyze then only the results of the forestrial branch this separation has now been given up. In a kind of overall controlling the for-est-services are now considered as a multifunctional company and therefore all activi-ties are now recorded and documented by the newly installed bookkeeping-systems. The main characteristic of this new system is the classification of all activities accord-ing to a product scheme with five product groups. In this product scheme each “pro-duct” is classed and summarized into a hierarchal system of product groups and pro-duct sub-groups (see Table 2). The term “product” is used here for all kinds of forestrial output – as well for products which are demanded from the market as for non-market products which have to be provided because of the owners’ decisions.

By that the forest-enterprises became free to define their products and product sub-groups individually without reduction of comparability of the key-figures on the pro-duct-group level. Furthermore the complete registration of all operational activities is now the methodological base for the extension of the cost unit calculation also to those outputs whose costs were only known until now as an undifferentiated sum. Si-multaneous that system allows for the first time a differentiated achievement calculation for all non-market-products.


Table 2: Product-scheme „Forestry“ according to the recommendations for the standardiza-tion of the forestrial accountancy of the German Forestry Advisory Council (Deutscher Forst-wirtschaftsrat, 1998)

1 2 3 4 5 Product groups

Production of timber and other goods

Environmental activities

Recreational activities and activities for environmental education

Services for others

Juridical and other adminis-trative tasks

Timber Protection of soils

Recreational activities

Management of other forest-enterprises

Juridical supervision

Secondary forest products (e.g. Christmas-trees)

Activities for the protection of endangered species and biotopes

Forest related education

Practical opera-tions with person-nel and machines in other forest-enterprises

Participation in land-use and other special governmental planning

Land properties

Activities for the protection of groundwater

Public relations

Basic and advanced education

Forestrial Research

Hunting, fishing

Activities for special protective functions

Grant of state subventions

Product sub-groups

etc. etc. etc. etc. etc.

Compared with the remarkable gain of more detailed and more precise information the consequence that the new key-figures can not be compared or can only be compared with a certain bias with those key-figures of former periods is not to drama-tic (Fillbrandt and Tzschupke, 2005). Table 3 shows for the forest-service of the state of Baden-Württemberg the results within the new product-groups for 2003 and the difference to former results.

Table 3: Annual results of the Baden-Württemberg state-forest-service in 2003 differentiated according to the new product-scheme for forestry

Product-Groups Income Expenditure Balance PG 1 new (Production of timber and other goods) 119,4 116,4 3,0 State forest (former definition) 119,6 171,2 -51,6 PG 2 new (Environmental activities) 0,0 11,0 -11,0 PG 3 new (Recreational activities ) 0,1 17,1 -17,0 PG 4 new (Services for others) 22,7 154,9 -132,2 PG 5 new (Juridical and other administrative tasks) 4,1 59,5 -55,3 Sum 266,0 530,0 -264,0

3.2 Introduction of double-entry bookkeeping As long as the state and the municipal forests were run by state or by municipal authorities, i.e. as long as they were an integrated part of the state or municipal administration and as long they were integrated in the general budgets of their owner-state or community there was no imperative need to replace the budget-oriented single entry bookkeeping by a double entry bookkeeping system.

However with the progressive transformation of the public forest-enterprises into companies with a more or less independent public or even private legal status also state and municipal forest-enterprises are forced to establish a bookkeeping-system according to the German commercial and fiscal law and insofar it was necessary to install the double entry bookkeeping system also in forestry.

For several reasons this change of bookkeeping systems was not unproblematic, especially because of the following items:


1.) A faultless data-transfer from the double entry bookkeeping into the still necessary traditional budgetary system had to be guaranteed;

2.) It was necessary to conserve and to integrate the proved existing elements of the hitherto applied forestrial accountancy into the new bookkeeping system;

3.) Intensive training of the staff, which was not accustomed to the system of double entry-bookkeeping;

4.) a special chart of accounts had to be developed that takes care for the peculiarities of forestry;

5.) all existing assets had to be inventoried and valuated and finally 6.) the depreciation rules and methods for the fixed assets had to be stipulated. Of course these and other problems could finally be solved, but those forest-services who changed their bookkeeping-system reported without exception that the need of time, of personnel and last but not least of money was much higher than was expected before (e.g. Langer and Lehmann, 2004; Deger et al., 2005).

Parallel to the introduction of the double entry bookkeeping system the state and municipal forest-enterprises install in general an additional system of detailed forest-related key-figures and an up-to-date reporting system as necessary precondition for an effective managerial controlling system.

3.3 Annual valuation of forest-assets Since nearly 100 years the question if it is necessary to balance annually also the forest-assets – i.e. the value of land and timber-stocks – has been an enduring issue in Central Europe (see Tzschupke, 1993). Up to the present the majority of experts and forest-managers rejected all submitted proposals as not practicable and necessary because the German commercial and fiscal law does not require such a balance. I agree however with the conclusion of my colleague Hans Jöbstl (2005) that the lack of consideration of annual changes in forest assets is one of the main actual problems in forestry accountancy.

Meanwhile we can observe signs of a slowly changing opinion concerning that question and recently a few German state forest-enterprises (e.g. in the state forest enterprises of Hessen und North-Rhine-Westphalia) decided even to activate the value of their estates and timber stocks within their annual balance-sheet.

The reason for that new tendency is the general trend to apply the usual book-keeping-rules also in public-services and companies and furthermore the internatio-nally wide-spread Anglo-American bookkeeping philosophy with its fundamental principle of “true view and fair value” (IAS) is another important argument for an annual valuation of forest-assets.

Unfortunately there is still a controversial discussion about the best practical realization (see Finckenstein, 2004); an important issue is in particular the valuation method, but at the moment there is a tendency to valuate younger stands with their costs of production and to valuate older stands with their theoretically achievable net selling prices (i.e. market prices minus harvesting costs).

An alternative way, which is e.g. proposed by Jöbstl (2004) and applied in the state of Sachsen-Anhalt would be the valuation of the stands according to their in future expected yields; this approach however is mostly rejected because of the great uncertainty of future yields (see Borchers, 2000).

A further controversially discussed question is the way of an annual updating of the asset-values. While some experts argue that such an updating would be not useful (Finckenstein, 2004), others as Borchers et al. (2002) propose to perform it according to the well-known scheme of commercial bookkeeping by deriving the closing stock from the opening stock minus retirements plus accrual of assets.


The opponents of such an updating explain their opinion in general with the following arguments: 1.) The costs for an annual updating would be to high or 2.) lower costs could only be reached for the price of an unacceptable inaccuracy of

the results; 3.) the annual operational result would be dominated by the natural growth and

increment and not by the managerial activities and also 4.) Timber-price alterations would have a greater influence for the annual result than

the managerial operations of the company. Whereas the two first arguments can’t be refuted easily (i.e. that a rather great updat-ing-error has to be accepted until the values are adjusted in greater periods) the other arguments are not convincing. So the local yield-potential and also the annual varia-tions of increment have to be accepted as external cost-determinants to which the ope-rational silvicultural, technical and commercial activities have to be optimally adapted.

Even less convincing is the reference to the fluctuation of timber-prices. I suppose that we would make us a fool with that argument in other branches, because this phenomenon exists nearly everywhere and furthermore it is no serious problem to separate the effect of price alterations on the annual operating result from the effects of managerial decisions.

There is now doubt, that an annual inventory and valuation of timber stocks would be the best way to make an end-of-year balance according to the commercial law, but the costs of such an inventory would exceed any reasonable limit. On the other hand an extensive sampling-inventory would be too inexact for an annual value account. In consequence annual physical timber inventories can not be performed. However an acceptable solution would consist in an only calculative updating of the asset-values until the next exact inventory will be performed (in Germany normally every ten years). Such suggestions exist (Tzschupke, 1997) and have already been tested successfully in some pilot-forest-districts (see e.g. Müller, 2000).

Recently Borchers et al. (2002) have again proposed a convincing and easily appli-cable concept for the forest-enterprises of the „Klosterkammer Hannover“ in Lower-Saxony: Based on the results of an exact well established ten-years timber inventory they proposed to calculate the opening value with the theoretically achievable contribution margins of each diameter class. Starting from that opening value the closing value could be derived by correcting the opening value by the difference between the realized contribution margins and the calculated value of the annual increment (see Table 4). Of course this again is only an approximative method; but if one agrees that the annual balance of assets within forestry serves above all to show trends, than this concept is well suitable for that task.

Table 4: Scheme of annual updating of the value of the timber-stocks according to the pro-posal of Borchers et al. (2002)

Forest inventory value of timber-stocks calculated differentiated according

to species and diameter-classes value of the opening stock at the beginning of the year

+ sales revenues – harvesting costs net value of exploited timber

+/- difference between net value of exploited timber and calculated net value of the annual increment value of the closing stock at the end of the year


4. Final comments It is remarkable how slowly in Germany rules and systems of general commercial accountancy are introduced into forestry. This statement refers primarily to state and municipal forest-services, which for a long period have not been seriously forced to operate with good economic results. Therefore these forest-enterprises were not really interested in the application of an accountancy system with year-end-statements, asset-balances and other elements which would allow a direct comparison with other branches.

Of course the main operating-objective of private forest-companies was always a good financial result; never-the-less also the accountancy of private forests did and does not capitalize its forest-assets in the annual balance-sheet.

Never-the-less the described alterations lead to a step-by-step approach of the forestrial accountancy to the general bookkeeping-system. However the moving power is not forestry itself but the growing necessity for a financial recovery of the public budgets. This fact is not unproblematic because there is a real risk that the politically enforced improvement of the annual results will lead to a growing disregard of long-term sustainability and of other non-monetary objectives, because the existing accountancy-systems provide no or not sufficient indicator-figures for the control of overall sustainability (Jöbstl, 2005).

Therefore it is necessary to transform the forestrial bookkeeping-systems to instruments for an effective control of sustainability according to the individual busi-ness-objectives.

This challenge refers as well to the external as to the internal accountancy. There exist recent suggestions for such an extended forestrial accountancy (e.g. Jöbstl, 2005) and there are some existing examples. In general they consist of some supplementary objective-oriented reports, as e.g. the annual report of the Austrian Federal forest Company (ÖBf, 2004).

Finally it is justified to conclude that there is a realistic chance that forestrial ac-countancy will be adjusted to general and international accounting-rules without ignoring the specific forestrial operating objectives, i.e. the objective of overall – eco-nomic, socioeconomic and ecologic sustainability and insofar it will become an effec-tive irreplaceable management instrument.

References Borchers, J. (2000) Überlegungen zur Einbindung des aufstockenden Holzes in den Jahres-

abschluss von Forstbetrieben vor dem Hintergrund des Paradigmenwechsels internationa-ler Bilanzierungskonventionen. In: Jöbstl, H. (ed.), Schriften aus dem Inst. f. Sozioökono-mik der Forst- u. Holzwirtschaft, H. 15, Wien. pp. 37-42.

Borchers, J., Merker, K., Schaefer, G. and Wippel B. (2002) Einstieg in die Bilanzierung stehender Holzvorräte – ein Beispiel aus der Klosterkammer Hannover. Forst und Holz 57: 516-519.

Deger, U., Gundlach, N., Kaufmann, G., Langer, H., Rost, M. and Stroh, R. (2005) Das Rechnungswesen im Landesbetrieb HESSEN-FORST – Konzeption, Einführung und Betrieb. Forst und Holz 60:159-164.

Deutscher Forstwirtschaftsrat. (1998) Empfehlungen zur Vereinheitlichung des forstlichen Rechnungswesens.

Fillbrandt, T. and Tzschupke, W. (2005) Ertrag und Aufwand in der Landesforstverwaltung Baden-Württemberg. AFZ/Der Wald 60:522-525.

Finckenstein, B. v. (2004) Zur Bilanzierung des Waldvermögens in öffentlichen Forstbetrie-ben. Ber. d. Arbeitsgruppe „Bilanzierung Waldvermögen“ des Ausschuss f. Betriebswirt-schaft des Deutschen Forstwirtschaftsrates.


Jöbstl, H.A. (2004) Controlling – Grundlagen und Konzepte für die Forstverwaltung. Schrif-ten aus dem Inst. f. Sozioökonomik der Forst- u. Holzwirtschaft, H. 17, Wien. 108 p.

Jöbstl, H.A. (2005) Can Traditional Forestry Accounting Contribute to Measuring the Sustainability of a Forest-Enterprise? (not yet published manuscript).

Kalkuhl, R., Meyer-Reichert, R. and Spors, H.-J. (2001) Entwicklung und Einführung einer EDV-gestützten Forstlichen Erfolgsrechnung für die Landesforstverwaltung Nordrhein-Westfalen. Forst und Holz 56:438-443.

Langer, H. and Lehmann, G. (2004) Veränderungen im Rechnungswesen öffentlicher Verwal-tungen am Beispiel des Landes Hessen und des Landesbetriebes HESSEN-FORST. Forst und Holz 59:351-356.

Müller, D.M. (2000) Annahmen, Prämissen, Konventionen und Normen bei der forstlichen Vermögensrechnung. In: Jöbstl, H. (ed.), Schriften aus dem Inst. f. Sozioökonomik der Forst- u. Holzwirtschaft, H. 15, Wien. pp. 27-35.

ÖBf, Österreichische Bundesforste AG (2004) Wir leben Nachhaltigkeit. Purkersdorf, Austria. 120 p.

Tzschupke, W. (1993) Die forstliche periodische Erfolgskontrolle in der Bundesrepublik Ger-many - eine Darstellung ihrer geschichtlichen und theoretischen Grundlagen sowie ihrer gegenwärtigen Praxis mit Vorschlägen für ihre Weiterentwicklung. Habil.-schrift v. 1988, veröffentl. als Bd. 2 der Schriftenr. d. FHF Rottenburg a.N.

Tzschupke, W. (1997) Die forstbetriebliche Erfolgsrechnung - Instrument zur Nachweisung des forstbetrieblichen Wirtschaftserfolges? Forstarchiv 68:64-70.


Author Index

A Apan, A. 10, 67 Atkinson, G. 9

C Camacho, L.D. 8 Campos-Palacín, P. 5, 13 Caparrós-Gass, A. 5, 13 Carballo-Penela, A 8 Chas-Amil, M.L. 8 Cockfield, G. 10, 67

D Dieter, M. 11 Doldan-Garcia, X.R. 8

E Elsasser, P. 11

G Gios, G. 5, 31 Goio, I. 5, 31 Gundimeda, H. 9

H Herbohn, K. 6, 45

J Jöbstl, H.A. 6, 57

L Lange, G.-M. 7

M Maksymiv, L. 9 Maraseni, T.N. 10, 67

N Nogueira-Moure, E. 8 Notaro, S. 5

P Peyron, J.-L. 7 Pollini, C. 5, 31

R Rosin, A. 11

T Terán, J. 10 Thoroe, C. 11 Tzschupke, W. 7, 83

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