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THE ECONOMIC VALUE OF FORESTS FOR REDD+
XIV World Forestry Congress, 9 September 2015
IVO MULDER
THE UN-REDD PROGRAMME
• A collaborative UN partnership between FAO/UNDP/UNEP on REDD+ established in 2008
• Main aim: To support developing countries in building capacity to participate in a future REDD+ system: assisting countries to set up REDD+ systems that align with the UNFCCC agreements: Cancun Agreements (2010) and Warsaw Framework (2013)
• Secondary aim: Develop international best practice for REDD+ (e.g. tools, methodologies, knowledge management, south-south exchanges)
• > 60 partner countries (> 50% of world’s tropical forests), 23 countries with UN-REDD
National Programmes, Donor contributions: US$ 266 million
• Various Support Modalities: National Programmes (main support mechanism – comprehensive) Targeted Support (specific focus on key REDD+ elements) Tier-2 (bilateral funding with UN-REDD quality assurance)
UN-REDD Partner countries at a glance
Objectives:• Look at the economic rationale for linking REDD+ and forest management and
utilization to a broader transition to a green economy from the perspective of Africa's sustainable development priorities;
• Draw examples and trends on forest management and utilization in a green economy (with case study from Cameroon, Ethiopia, Ghana, Kenya, Mozambique and South Africa)
• Identify challenges and opportunities for achieving these benefits at national/regional level, and
• Built scenarios on the demand and supply trends in the region and management options.
THE ROLE OF FORESTS IN A GREEN ECONOMY TRANSFORMATION IN AFRICA
Key Findings/Messages:
• Africa’s economies overtly depend on natural resources and the ability to generate growth in the future and to meet wider development challenges and priorities will largely depend on what happens to forests
• Economic policy-making and official statistics in the forestry sector in Africa tend to focus only on
timber for export or domestic uses. But the major part of Africa’s roundwood production and consumption, about 90% is not for timber products, but for woodfuel (fuelwood and charcoal).
• The business as usual scenarios to 2030 and 2050 indicate that the demand for industrial
roundwood could be two to three times the current levels by 2050. But it would be impossible to meet such demand from existing natural forests without inflicting severe ecological damages.
• But there is considerable scope in Africa to increase resource efficiency through tree-planting/forest landscape restoration, wood processing, charcoal processing, improved cooking stoves, improved handling and storage practices and the organization of the entire wood supply chains.
• Sustainable consumption interventions can equally reinforce initiatives that focus on managing, enhancing and restoring natural capital and increase resource efficiency.
THE ROLE OF FORESTS IN A GREEN ECONOMY TRANSFORMATION IN AFRICA
Some Policy pointers
• Forests need improved governance that involves all stakeholders in decision-making processes, including local people with traditional claims to forest resources.
• Governments and companies need to explore new ways to engage with communities — giving local people more control can spread benefits more widely, reduce social risks and provide a better long-term investment prospect.
• Overcoming financial barriers to scaling up green economy interventions requires both an improved climate for investors and the channeling of public funds to enabling activities at local level, such as capacity-building.
• Further research is needed to better understand the value of forest assets and of the ecosystem services used by different sectors and livelihood systems.
THE ROLE OF FORESTS IN A GREEN ECONOMY TRANSFORMATION IN AFRICA
• Forest economic valuation provides insight in the ‘holistic’ or ‘full’ economic value that forest ecosystems to a country’s national economy.
• Typically Ministries of Finance / Office of Statistics ‘only’ include timber resources, non-timber forest products (nuts, fruits, etc) as long as there is a market price and if it involved a (commercial) transaction.
• Deforestation can have negative financial effects on other productive/economic sectors e.g. agriculture (e.g. soil erosion, water regulation), power sector (siltation dams) and tourism (reduce tourism revenue if scenic forest areas are impacts). These need to be calculated and visualized as well as to get ‘holistic’ or ‘full’ economic value
• UN System of National Accounts: system used around the world to enable international comparisons of all significant economic activity. Mainstream system used to calculate GDP
THE ROLE OF FOREST ECONOMIC VALUATION
THE ROLE OF FOREST ECONOMIC VALUATION
• Forest economic valuation studies aim to capture:
1. Contribution of the forestry sector to GDP. This is compatible with the System of National Accounts and captured by Office of Statistics.
2. Contribution forest ecosystems to other sectors. This can be measured as a percentage of GDP. Indirect contributions of forest ecosystem can benefits sector including agriculture, power, tourism. Benefits or costs are hidden in overall GDP figures but can be ‘visualized’. These are generally compatible with the System of National Accounts
3. Contribution of other forest ecosystem services (biodiversity, carbon storage, etc) that have an economic value but are not compatible with System of National Accounts
+
-
Cont
ributi
on to
the
econ
omy
Financial contribution forestry sector (timber, NTFPs, etc) as % GDP
Real financial contributionforestry sector / forest
ecosystems to theeconomy (% GDP)
Visualizing ‘real but hidden’ financial contribution forest ecosystem to agriculture & other sectors (% of GDP)
Economic value other ecosystem services (biodiversity, carbon sequestration, etc
Financial contribution forestry sector to the
economy (% GDP)
Compatible with the System of National Accounts(SNA) used to assess GDP
‘Full’ or ‘holistic’ economic contribution forestry
sector & forest ecosystems to the economy
THE ROLE OF FOREST ECONOMIC VALUATION
RESULTS TANZANIA
Firewood for domestic energy supply, water for hydroelectric power generation: forests contribute significantly to the Tanzanian economy.
Still, Tanzania’s deforestation rate is around 372,816 ha per year (NAFORMA, 2014).
Investments in the forestry sector – as part of REDD+ implementation – can enhance economic contribution of forests to the national economy and alleviate poverty
RESULTS TANZANIA
Present value of net benefits/costs of deforestation(assuming current deforestation rates continue for the next 20 years (2013-2033)
TShs 273 billion(USD 171 million)
TShs 5,589 billion(USD 3.5 billion)
Costs deforestation only looking at effects on forestry sector (Captured by System of National Accounts (SNA)*
Bene
fits
Cost
s
Full costs deforestation including effects on all forest ecosystem services (partly captured by System of National Accounts (SNA)
* Based on CBA with 5% discount rate (used by National Bank of Tanzania); assuming current deforestion rates remain the same. Underlying analysis conducted using IO table in combination with Social Accounting Matrices
Deforestation in Tanzania could cost the national economy 5,588 billion Tanzanian Shillings (US$3.5 billion, based on 2013 exchange rates and current deforestation rates) between 2013 and 2033.
Analysis revealed that equal investments in the forestry and agricultural sectors lead to comparatively higher income for rural populations when investing in the forestry sector.
This highlights the importance of investing in the forestry sector to alleviate poverty, boost growth and transition to a more resource efficient and low-carbon economy.
REDD+ implementation can be the vehicle to ensure enhancement of investments in the forestry sector.
RESULTS TANZANIA
RESULTS ZAMBIA
Firewood for domestic energy supply, non-wood products and the economic value for tourism: forest ecosystem services contribute almost US$ 1 billion to the Zambian economy.
Still, Zambia has the second highest per capita deforestation rate in Africa and the fifth highest in the world.
The main deforestation drivers are charcoal production,agricultural and human settlement expansion and the illegal exploitation of timber
RESULTS ZAMBIA
RESULTS ZAMBIA
When including the full range of forest ecosystem services, forests make a direct contribution to the national economy of Zambia of 4.7% of GDP, which rises to 6.3% of GDP or US$ 1.3 billion when including multiplier effects.
Compared to the presently recognized contribution of forests to the Zambian economy, there is a significant undervaluation of the contribution of Zambia’s forests to the national economy. This provides the basis for a potential higher domestic budget to counter deforestation.
Zambia’s forests are estimated to provide over 1 million jobs, supporting more than 60% of rural Zambian households.
Implementation of REDD+ should address the driving forces behind deforestation and improve governance in order for the Zambian society & economy to benefit from the economic value of forests in the future.
The role and contribution of montane forests and related ecosystems to the Kenyan economy is significant
Deforestation in the “Kenyan water towers” (montane forests in the mountaneous areas of Kenya providing a host of ecosystem services most notably regulation of water) deprived the economy of KSH 3,652 million or USD 40 million in 2010.
RESULTS KENYA
The report showed that the contribution of forests in conventional accounts is undervalued by 2.5%, and estimated that its annual contribution to GDP is around 3.6%.
Impact: deforestation on Kenyan economy (in Million KSH 2010)
RESULTS KENYA
USE OF THE FINDINGS
Options to use the findings of the national forest economic valuation studies in practice include: • Results accelerate the national REDD+ process (including by getting other ministries
such as finance, planning and economy behind the implementation of REDD+) • Integration of the results in the National Strategy / Action Plan (NS/AP)• Results provide the basis for higher national budget to protect and sustainable use
forests.• Results provide the basis for the development of an Inclusive Wealth Account (IWR)• The findings provide the basis for stricter laws or regulations to reduce deforestation
and increase forest protection
UNEP will assess the uptake of the national studies carried out to date and include the findings in a ‘synthesis report’ that is scheduled for the Global Landscapes Forum (GLF) in Paris in December.
