What exactly is a forest, land or water account? This new series describes in simple terms what they are, how they are produced, and their potential benefits. They also provide examples from WAVES countries.
Natural Capital Accounting: Forests
Forest accounts are a systematic framework for collating data on forest assets and activities, using methodologies approved by the United Nations to ensure these data are comparable and replicable. Importantly, they are linked to the System of National Accounts and its traditional indicators of economic performance, such as GDP. This means that results from forest accounts can be used by economic groups beyond the forestry sector, including agriculture, manufacturing and trade. Forest accounts also introduce a better recording framework, to understand stocks (i.e. total forests available in a country) and flows or changes during a period of time.
"It is important to highlight the extent of uncontrolled timber extraction that the accounts reveal. There is no institutional control, and evidently an important part of it is illegal," said Guillermo Alejandro Gándara, Universidad Rafael Landívar, Guatemala.
Natural Capital Accounting: Land
Land accounts are the basic building block of natural capital accounts, and underpin the creating of ecosystem accounts. Their main role is to map the physical location of economic activities and environmental processes. They provide the key information needed for resource management: how much forest, desert and cropland exists? Where are the cities or glaciers, and how much land area do they cover? And importantly, they show how this cover is changing through time and what the impact is of this change on the economy and ecosystems. Through land accounts it is also possible to explore issues such as ownership and wealth, urbanization, and intensity of crop and animal production.
"The land account [in the Philippines] provided the basis to build a forest account, carbon account, and ecosystem condition account. The process pulls information that is usually dispersed in different agencies and line ministries into an aggregated and coherent format. This facilitates the ability to provide useful, fast ￼￼￼and low-cost policy advice," said Sofia Ahlroth, WAVES Senior Environmental Economist.
Water accounts link the physical amount of water used by each sector with what value the same sector contributes to the economy. This can help policymakers design better policy around, for example, water allocation between households, manufacturing, services and agriculture. Information from the accounts can help design pricing strategies more in line with the ability to pay. The accounts can also inform where targeting of investments in water infrastructure can generate the largest impact on the economy.
"We plan to sustain the good work going forward. Annual updates of water accounts, expansion of the accounts and studies on experimental accounts will continue to guide policy and development," said Dr. Obolokile Obakeng, Deputy Permanent Secretary, Botswana's Ministry of Mineral, Energy and Water Resources.