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Valuation of Forest Resources

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Valuation of Forest Resources essay
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The values held by first group is known as Use values. It is divided into:

  1. Direct value use
  2. Indirect value use

Direct use Values

Derived from consumptive uses (e.g. fuel wood collection), and/or Non-consumptive uses (e.g. hiking in the same forest), and may involve commercial activities such as selling fuel wood or collecting visiting tolls), and/or non-commercial activities (home consumption of fuel wood or enjoyment of an open access wilderness area.)

Indirect Values

Known as Functional Values- can be derived from natural interaction between different ecological systems and processes. Ecological functioning of one system may affect the functioning and productivity of an adjacent system that is being exploited economically. Indirect use values may be described as the benefits individuals experience, indirectly, as a consequence of the primary ecological function of a given resource.

  • Forest may provide off-site benefits – defence against soil erosion, flood control, carbon sequestration.
  • Use Value of Mangrove system may derive from its indirect support, as a breeding ground, for an offshore fishery.

Different Methods for Valuation of Forests

  1. Estimating value of forest as carbon sink
  2. Assessing economic goods and services provided by forests
  3. Green accounting

Method of eliciting values

Changes in the Ecosystem are inevitable. Important to estimate the impacts of changes in ecosystem services on the welfare or utility (Satisfaction or enjoyment) of individuals. Valuation focuses on maximum that anglers would pay for this improvement in fishing – This can be derived from each angler’s expression of his/her maximum willingness to pay represents how much the angler is prepared to compensate the rest of society for increased individual enjoyment gained from improved recreational fishing.

This is recreational benefit. This is measured in the form of gains and losses – economic values measured as monetary payment or monetary compensation. Valuation methods are used to estimate the gains or losses that people may experience as a result of changes in aquatic ecosystems in order to inform policy decisions. Different types of changes in aquatic ecosystems affect different groups of people, which may influence the choice of valuation methods used. Hence Two basic concepts of value:

  1. Willingness to Accept (Compensate) and
  2. Willingness to Pay (WTP)

Willingness to pay – the maximum sum of money an individual would be willing to pay rather than do without an increase in some good such as an environmental amenity. This sum is the amount of money that would make the individual indifferent to either a) paying for and having the improvement or b) forgoing the improvement while keeping the money to spend on other things.

Willingness to accept – the minimum sum of money an individual would require to voluntarily forgo an improvement that otherwise would be experienced. It is the amount that would make a person indifferent to either having the improvement or forgoing the improvement while getting extra money.

Case Study: Meghalaya

Based on legal status, Meghalaya can be classified into protected forests, reserved forest and unclassed forests.

  • Meghalaya’s forest provides wide range of goods and services, which have significant economic value. Benefits from forest goods fall under direct use category. Forest good have timber and non-timber products which have some market value.
  • Forest have both direct use and indirect use. Some forests can be used for recreational, education, research purpose which is non-commercial use. Indirect use is flood damage control, soil erosion control etc. Meghalaya has both timber and non-timber products which are source of livelihood for local people of Meghalaya.

Assessing the economic goods and services for Meghalaya’s forest

Timber

  • It is rich in timber resources. Timber is used widely in construction of houses and making of furniture.
  • It is direct use value and generates a lot of economic value.
  • It is solely for commercial use.
  • There is great demand of timber both outside and inside the state.
  • It is also extracted and used as poles, beams, scaffolding and ladder for coal and mining. This is done as small scale and in sustainable manner.
  • For domestic purpose it is extracted for domestic purpose.
  • Its extraction is more from unclass forest than reserved forest.
  • The market rate of timber varies from species to species.
  • The extraction at large scale has exploited the resources and hence the government has passed the rule for its extraction.
  • Most of the timber trade goes from the informal routes. The ban on extraction have severely affected the livelihood of local people of west khasi hills as timber activities on those areas generates maximum employment among local communities.
  • Extraction of timber has reduced in those areas where strict rules are implemented.
  • This is one of the reason in increase in forest cover area.
  • There are ups and down in its extraction because in reserve forest it is extracted taking into consideration the health of the forest.

Non timber forest products

  • NTFP’s are used for subsistence as well as cash income which is extracted from forest on daily basis.
  • More than 300 NFTP’s are collected by local people on daily basis.
  • These are amla, Cane, Lichen, Bay leaf, Firewood, Torchwood, Charcoal, Broom grass, wild pepper, Thatch grass etc.
  • 51% are used for medicinal purpose and 36 as food.
  • Ever increasing population puts tremendous pressure on forest resources and exploitation is increasing rapidly.

Bamboo

  • Its area is maximum in khasi hills followed by garo hills and least in Juanita hills.
  • They have larger size and long durability. Hence they are having huge market value.
  • Hence bamboo fetch good price and is a direct use value.
  • It is used in paper mills near khasi hills and garo hills.
  • Bamboo is also in high demand for food. Young tender shoots are sold in market.
  • Bamboo shoot pickles and fermented slice bamboo are also sold in market.
  • In garo hills official records show less consumption of bamboos for commercial use.

Forest Services

In addition to multiple goods, forest provides innumerable services which contributes to economic development and human welfare. Forest plays a crucial role in the ecology of watersheds that supply much of fresh water, conserve soil by controlling soil erosion, improve soil fertility, promote soil formulation and protect the natural habitat of wild life, cleanse the air and water and also maintain Co2 balance and aesthetic quality of the environment. Same way Meghalaya provides important services rendered by the forest ecosystem of Meghalaya such as supply of water, stabilization of soil in hill slope, input of nutrients to nearby agricultural fields and protection of biodiversity.

Valuation of Forest Resources essay

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Valuation of Forest Resources. (2021, Jan 18). Retrieved from https://samploon.com/valuation-of-forest-resources/

FAQ

How do you value a forest?
A range of methods have been developed to estimate the total economic value of forests, including both marketed and non-marketed benefits. These include valuation using market prices, surrogate market approaches, the production function method, stated preference and cost-based techniques .
What are the values of forests?
Forests provide us with shelter, livelihoods, water, food and fuel security . All these activities directly or indirectly involve forests. Some are easy to figure out - fruits, paper and wood from trees, and so on.
What is the economic value of forests?
This paper reviews estimates of the economic value of forest ecosystem goods and services in the United States. Globally, Costanza et al. (1997b) estimated the total value of for- est ecosystem goods and services at $4.7 trillion annually and the total annual value of all temperate/boreal forests at $894 billion.
Why are forests valued?
The world's forests—which today cover 30% of the earth's land surface—are an incredibly valuable resource, storing massive amounts of carbon, helping to purify water and air, ensuring natural biodiversity, and providing livelihoods for millions of people .
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