The document discusses the implementation of forest accounts in Himachal Pradesh (HP). It notes that forests provide important goods and services but traditional accounting does not capture these fully. Forest accounts following the SEEA framework will help quantify the full economic contribution of forests, inform policies, and demonstrate forests' role in supporting key sectors like hydropower and tourism. HP is developing forest accounts to better understand forest resources, contributions to GDP, and dependencies. Challenges include data gaps which require new surveys and methodologies to estimate values. Forest accounts can help optimize forest management and integrate forests into economic planning.

1. FORESTS ACCOUNTS
WHY AND HOW
HP IS IMPLEMENTING
FOREST ACCOUNTS
28th January, 2017
Chandigarh

2. HP FORESTS –CHALLENGES &
OPPORTUNITIES......
• Distinguished geography - challenges and
opportunities for development
-Richly endowed with natural resources
-Economically valuable environmental
services
-Sustains life support systems of majority of
rural population of the State
• Catchment area of major rivers:
- sustains economic livelihood and industries
in neighbouring plains
»Water regulation
»Sediment regulation

3. .....HP FORESTS –CHALLENGES &
OPPORTUNITIES.....
• Altitudinal variation generates habitats for a
number of faunal species
-Global Biodiversity hotspots
• Forests an important natural asset for HP
providing critical goods and services
– Provisioning (timber, firewood, NTFP)
– Regulating (water regulation, soil protection,
biodiversity)
– Cultural (recreation, tourism)
• Vast potential of its forests to act as carbon sink

4. ......HP FORESTS –CHALLENGES &
OPPORTUNITIES.....
• Potential for attracting higher value added
tourists
• Hydro power potential –clean and renewal source
of energy (23000 MW)
• Dependence of these two critical sectors on
sustainable management of forests:
– Hydropower (water flows, sedimentation, lean
season flow)
– Tourism (climatic, natural heritage,
environmental advantage)

5. .....HP FORESTS –CHALLENGES &
OPPORTUNITIES
• 12th and 13th Finance commissions grant
• Special grant for States having more than 50%
forest area
• The Forests of the State have Potential to
increase contribution to economic growth by
providing ES services crucial for other sectors

6. WHY FOREST ACCOUNTS....
• Environmental assets
• Traditional approach
-Accounted through their individual
components (timber)
-other benefits to Society & Economy
overlooked
• Forests degradable assets, Depreciate if
misused
-May impact well being of economy

7. ........WHY FOREST ACCOUNTS
• Need for other sectors to be sensitized about
their dependence on healthy forests in
economic terms
• Need for quantification and monetization of
non marketable environmental services
• Need for robust methodology to capture all
goods and services
• Fiscal transfers are generally linked with
contribution of a sector to the state
revenue/GDP.

8. THINK BEYOND GDP.....
• GDP is an unsuitable indicator of sustainable
development
-Invisible values are not captured
• Cannot record trade-offs
-Non marketed products
-Upstream Forest cutting vs downstream flood
protection
• Intermediate benefits attributed to using sectors
• looks at only one part of the economic performance –
Income - but says nothing about assets that underlie
this income
–False signals of illusory gains
–Income at the cost of depletion?

9. .....THINK BEYOND GDP
• The declining natural assets are invisible
in GDP and so are not measured
-Sustainability?
• For Forestry sector, timber resources are
counted in National accounts but
services like water regulation, soil
protection, carbon sequestration and
many supporting services are ignored

10. CONCERNS….
• Lack of information on true contribution of
forests to the economy
-monetization of ES services (IPH Schemes)
• Lack of information on impacts of non-
forestry policies on forest resources and
services
• Abundant natural resource base crucial for
State’s economy, especially priority sectors of
Hydro Power and Tourism

11. The Present HP Scenario…..
• Green growth Agenda of the State
- Balanced and sustainable economic and
environmental conditions
-HP’s commitment to low carbon growth
• Average growth rate of 8% from 2005-06 to
2012-13
- Whether state’s natural resources and
other forms of capital increased or growth
achieved at the cost of depletion?
• Needs yardsticks to measure whether the State is
following the path of sustainable development

12. …..The Present HP Scenario…..
• Climate change may alter distribution and
quality of natural resources
-By year 2100, under most probable scenario,
for the State:
-3 centigrade degrees increase in Temp
- 20% decrease in precipitation

13. …..The Present HP Scenario…..
• 66.5% of total geo area as forest
• 26.4% area actually supports forest cover
• Forests role in State’s commitment to carbon neutral
economy
• Complementary role in life support system in
agriculture and horticulture in hills
• Economic contribution of forests is captured under
forestry and logging category of industries (SNA)
• Contribution of forestry sector in GSDP- 4.8%
- under estimated
- wrongly assigned
- omitted

14. Forest Product or
Service
Services
provided
State Income Accounts (1999-2000 to 2006-07)
Industrial Wood Provisioning Depletion of forests not included in net value added or net domestic
product.
Fuelwood and charcoal Provisioning Underestimated? NSS Consumption Expenditure Surveys (every five
years)
Minor Forest Products Provisioning
(Resin)
Production estimates from H.P. State Corporation
Others (NTFP) Underestimated? Only royalty value exported quantity available from
HPFD
Forest Services
Livestock Grazing Provisioning Attributed to agriculture (recently added to forestry sector)
Pollination services of wild
bees
Supporting service Attributed to agriculture
Recreation and Tourism Cultural services Attributed to trade, hotel, and restaurant, or Other services
Carbon storage Regulating services Omitted
Biodiversity Protection Supporting service Omitted
Soil Protection Supporting service Omitted
Water regulation Supporting service Omitted

15. ……The Present HP Scenario
• But policy makers do not have information they
need to manage this critical economic asset as to:
– Extent of forest resource -how and why it is
changing
– True economic contribution of forests
– Extent of dependence of other sectors of
economy on healthy forests
– Impacts of non –forestry policies on forest
resource and ES services (Landscape
management)

16. How Would Forest Accounts Help?
• Demonstrate improved measures of economic
benefits from forest Ecosystems to all sectors of
economy
• Will help monitor interaction between forest
resources and State of economy
- Improved sectoral planning
- more equitable social allocations
• Would capture both – resource use as well as
damaging effects of degradation
• Would track causes of depletions and additions
so that these are targeted at policy level
• Forests accounts at watershed level will help
design PES schemes

17. POLICY ISSUES TO BE INFORMED BY
FOREST ACCOUNTS…..
• Detailed Forest accounts will help to
monitor state of forest resources and
state of economy
–Asset account to monitor changes in
stocks of natural resources
–Flow accounts to monitor use of natural
resources

18. …..POLICY ISSUES TO BE INFORMED BY
FOREST ACCOUNTS….
• Quantify dependence of other sectors on
healthy forests (ES valuation)
• How has forest wealth evolved over the
years (physical and monetary terms)?
• Contribution of NTFPs to the state GDP
- how are these benefits distributed
-how can they be increased?

19. ……POLICY ISSUES TO BE INFORMED BY
FOREST ACCOUNTS
• Value of forest Ecosystem Services to the
hydropower sector
-how can this be optimized?
• Contribution of forests to tourism sector
-how can this be increased sustainably

20. Policy issues to be addressed by Forest
Accounts…..
• How to ensure that forests get rightful
place in Macro economic policy?
• Economy-wide linkages with forestry
needs to be improved by:
–Demonstrating economic benefits from
forest ecosystems to all sectors of the
economy

21. …Policy issues to be addressed by
Forest Accounts
• Identification of beneficiaries of ES
services
-(User Pays/PES)
• Valuation of Non- Marketable
Environmental Services

22. WHAT WE ARE DOING
• SEEA Central framework allows to capture
relationship between economic activity and
environment (resource based perspective)
• SEEA Ecosystem accounts allows systematic
integration of true contribution of Ecosystem
assets and economic activity (mapping ES &
their flow)
• Decided to implement Forest account in one
District following SEEA Central framework
–Standardisation & Upscaling

23. ……WHAT WE ARE DOING……
• Preparation of physical area and volume
accounts of Forest resources
• Estimate the exact potential and contribution
of NTFP to the state (Survey)
• Develop PSUT and MSUT tables for the timber
and NTFP
• Understand the exact contribution of the
Forests to Tourism sector of state economy
(Tourism Account)
• Towards Ecosystem Experimental accounts......

24. …..WHAT WE ARE DOING…..
• Steps taken to build Forest accounts:-
-Develop indicators to answer policy question
-Corresponding accounting tables that need to
be compiled
-Define data needs to populate these tables
-Evaluate what data is available to prepare the
tables
-Identify what data is missing

25. …..WHAT WE ARE DOING…..
• Identify data sources for missing data
• Propose ways to solve data gaps
–Primary survey?
–Drawing on secondary data?
• Define calculations that should be performed
to populate the accounts
• Understand what the SNA of the State is
compiling and what is missing

26. …..WHAT WE ARE DOING…..
• Started with accounts from 2007 onwards
• Initially tried to align our tables with FSI data
–Forest cover versus forest area-ToF
–Variation in Forest area as computed in GIS
environment
–Lack of data with HPFD on many
parameters w.r.t. ToF for accounting tables
–Density class wise compilation found not
possible

27. …..WHAT WE ARE DOING…..
• Decided to follow working Plan data
• legal classification wise compilation not
relevant
• Data of all working plans brought to
common base year of 2007
• NTFP/Fuelwood/Fodder Survey
conducted

28. …..WHAT WE ARE DOING…..
• Developed ways to derive missing data
(Statistically robust!)
– Growing stock data for PAs
– No green felling-How to assess notional area
harvested (NPV formula or WP data)
– Parameters developed to assess the volume
accretion in plantation <10 cm DBH
– Volume accretions due to natural growth (MAI)
– Area under grazing-How it will impact volume?
– Encroachments
– Impacts of forest fires on volume/Area

29. …..WHAT WE ARE DOING…..
• Data limitation Encountered:
– Data from ToF needs to be captured as there is
significant flows of goods and services from ToF to
the economy
– Mismatch between forest area as per forest
record and revenue record
– Lack of digitization of forest boundaries a major
handicap

30. LEARNINGS SO FAR
• Different sectors depending on natural resources
cant work in isolation
• If data becomes fragmented, it provides false
signals to policy makers rendering it difficult to
take informed and positive decisions
• Need to quantify and monetize goods and
services to demonstrate benefits from forest
ecosystems to other sectors of economy and
planners
• Regular availability of data crucial for Forest
accounts
• Scope for enhancing the delivery of ES services by
Forest Department?

31. Learnings within forestry sector
• Urgent need to improve its data base w.r.t.
– Forest area
– Boundaries
– ToF
– Non market Environmental services
– Seamless integration /digitization
– Institutionalization of robust data gathering
systems
– Refine methodologies to capture changes in
resource

32. WAY FORWARD
• Establish close collaboration between data
producers, policy and decision makers
• Demonstrate the practical policy implications
of using forest accounts
• Development of Institutional arrangement /
Procedures for:
-Improvement in data availability (Gaps ?)
-Capacity building
-Communication and advocacy
-Indicators for cultural services
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