Assigning Economic Value to Natural Resources (1994) / Chapter Skim
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7 Natural Resource Accounting for the Forestry Sector: Valuation Techniques and Policy Implications in Thailand
7 Natural Resource Accounting for the Forestry Sector: Valuation Techniques and Policy Implications in Thailand
Pages 132-145
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From page 132... ...
While user-cost-a~ljusted income projections showed the ban to yielc} net economic gains, the depreciation approach captured changes in wood volume which clemonstrated that stricter control of commercial wood removals was required to economically balance forgone forestry income uncler a logging ban. Thus, while a user cost analysis recommended the ban as economically beneficial, the depreciation analysis suggested that it was not.
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From page 133... ...
NATURAL RESOURCE ACCOUNTING National income indicators, by which policymakers often judge their countries' economic performance, abstract the costs of natural resource depletion and environmental degradation. By abstracting these costs, national income indicators mislead policymakers, presenting the depletion of environmental assets as income generation.
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From page 134... ...
In most cases, data availability will be the practical arbiter of such questions, but standardization and comparability will be comprises} as a consequence. The Depreciation Approach The depreciation approach emphasizes actual natural resource depreciation, in contrast to the user cost approach which focuses on losses in future income resulting from the decline in natural resource productivity.
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From page 135... ...
to adjust forestry sector income in Thailand. Thailand's Forest Logging Ban Despite a long history of forest management, deforestation has been significant in Thailand.
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From page 136... ...
As a consequence, the total income earned by 4Bangkok Bank Monthly Review, June 1980. sThai Forestry Sector Master Plan, Markets for Industrial Forest Products and Roundwood in Thailand, (Bangkok: Royal Forest Department, 1991)
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From page 137... ...
by its reliance on waste paper and non-wood pulp for fiber inputs. Thai Forestry Sector Master Plan, "Markets for Industrial Forest Products ant!
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From page 138... ...
Each of Thailand's seven National Economic ant} Social Development Plans (1961-1996) have called for a target of at least 37 percent forest cover in the country, though in nearly all periods actual forest area has fallen well below the target level.
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From page 139... ...
This forest clepletion penalty was then subtracted from forestry sector income to determine the user cost-atijusted forestry income in each period. Depreciation A similar series of resource depletion-adjusted forestry income was calculated following the depreciation approach.
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From page 140... ...
These calculations, like those performed in the user cost analysis, capture only the wood loss resulting from total forest clearing; declining densities in remaining forest areas are not reflected} by these measurements. Changes in the physical volume of the forest stock must be quantified in monetary terms if they are to be incorporated into a national income accounting framework.
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From page 141... ...
Findings and Policy Implications Following both the user cost and depreciations methodologies, depletion-adjusted forestry sector income between 1971 and 1982 were actually negative. A reversal in the sign of adjusted forestry income results from the fact that climbing rates of deforestation in the 1970s were not matched by corresponding increases in the sale of timber.
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From page 142... ...
Differences arise from the fact that the user cost approach, in this study, was calculated on a forest area basis, while the depreciation approach was based on the volume of commercial wood lost. A continuous decline in forest density made these differences more pronounced in the earlier years, when changes in forest area led to proportionately larger changes in wood volume.
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From page 143... ...
The current ban, however, achieved only a 26 percent decline in commercial wood volume removals, thus creating net economic losses when depreciation adjustments were macle. The explicit accounting of commercial wood volume changes in the depreciation methodology called attention to important facts concerning the sufficiency of the logging ban's enforcement; facts which failer]
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From page 144... ...
A natural resource accounting analysis of Thailancl's forest logging ban pointed to the differences between the two approaches. The user cost analysis found the ban to be both ecologically and economically beneficial, while depreciation adjustments suggested that forest protection was not sufficient to reap net economic gains.
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From page 145... ...
Markets for Industrial Forest Products and Roundwood in Thailand. Paper presented at Thai Forestry Sector Master Plan Seminar: Demand for Industrial Forest Products and Roundwood in Thailand up to Year 2015.
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