Valuing the environmental impacts of depleting forests – by Kiran Dhanapala

Global Forest Watch’s (GFW) 2015 satellite based global data indicates continued high tree cover loss (47% less in 2015 than in 2001). Improved technology – with apps conveying satellite based alerts – provides greater data accuracy in identifying deforestation hotspots (e.g. the Mekong region – particularly in Myanmar, Laos and Thailand).

GFW crowdsources stories including those for Sri Lanka – for instance, on the destruction of a forest lake bund at Seeppukulama Meda Wewa, and indigenous tree afforestation in a Global Environment Facility funded tank based biodiversity improvement and a protection project at Alistane Lake, also in the Anuradhapura District.

The information age empowers everyone to better protect forests.

Forests provide myriad values that are yet not fully understood. They have direct use values (consumption of fuel wood, clean air services etc.), indirect use (lesser impacts from global warming averted) and non-use values (enjoyment by future generations). Forest benefits are also categorised as carbon and non-carbon benefits (NCBs). Carbon relates to global climate change while NCBs are localised.

The United Nations Programme on Reducing Emissions from Deforestation and Forest Degradation (UN-REDD) in Sri Lanka has identified 41 NCBs from our forests. About 18,000 rural people depend on our forest ecosystem services.

Environmental valuation of natural resources such as forests assesses the change in human welfare associated with changes in a natural resource – not its intrinsic value. Benefit values calculated depend on the method, number of services or benefits valued and local context. Environmental costs or benefits usually occur outside of market transactions.

Consequently, the externalities (i.e. positive or negative effects) associated with our use of a resource aren’t valued. They remain without a price. To value such environmental impacts, economists use market and non-market valuation techniques, and doing so enables a fuller assessment of the benefits or cost of scarce resources used in specific initiatives.

Forest ecosystem service values are high for watershed protection services, carbon sequestration, and environmental purification and pollination services. Globally, the annual value of forest ecosystem services ranges from US$ 8 to 4,080 dollars a hectare (2010 PPP) with an average of US$ 753.

Speaking at the 2017 Economic Forum, Professor Prasanthi Gunawardena noted that one hectare of upper watershed forest in Sri Lanka is valued at Rs. 50,000 and the pollination value is 50 billion rupees a year. Researchers have also estimated other forest linked values such as local leopard tourism at over 16 billion rupees.

But our decision making does not account for these values as they’re not included in market prices.

This market failure results in adverse outcomes (e.g. declining forest cover that affects everyone). Natural capital losses such as in forests result in increased healthcare costs and lower GDP. Asian countries have a greater economic dependence on natural capital, which is why the economic risks from environmental damages are greater.

In Sri Lanka, forest cover has declined to 29.7 percent due to four key drivers: infrastructure development projects, encroachments, local drivers (e.g. cattle grazing, firewood collection, gem mining etc.) and agriculture.

Six socioeconomic factors catalyse the drivers – viz. governance related forces including land policy, political interference, poor coordination, population growth, agricultural mechanisation and the commercialisation of rural areas.

The government aims to increase forest cover to 35 percent by 2020 by protecting and conserving existing forests and expanding cover to new areas. Sri Lanka’s UN-REDD Programme recently developed a five year National REDD+ Investment Framework and Action Plan (NRIFAP). It aims to achieve this target through collaboration including with the private sector.

Local corporates feel that their direct contribution to deforestation and forest degradation – i.e. through activities related to forest risk commodities (e.g. agricultural products, handicrafts, timber, tourism, mining and energy) – is relatively low. Potential indirect contributions are higher and largely unknown through supply chains.

A 2015 REDD survey notes private sector involvement in reforestation, tree planting and clean development mechanisms is around 70 percent. This is led by those in forestry related activities, the plantations, hotels and the energy sector. Ad hoc tree planting must give way to an engagement mechanism if the 35 percent target is to be met.

Partnerships will be key. REDD identifies 10 entry points for collaborative action including awareness building; a forest friendly activity database; private sector representation on REDD committees; corporate assistance in implementing media strategy; providing technical assistance, training and capacity building; supportive policy reforms to encourage carbon footprint improvements; partnering with the community using CSR funds; ensuring environmental responsibility through financial institutions; educating communities or future generations; and active involvement in sustainable forest management.