INTEGRATING FOREST RESOURCE VALUES INTO NATIONAL INCOME ACCOUNTING: AN EMPIRICAL ANALYSIS

Abstract

The traditional System of National Accounts (.\"NA)neglects the Total EconomicValue (TEl) oftheforest resource, and any degradation to which it is subjected.This study proposes an Environmental and Natural Resource Accounting(ENRA) frameworkfor theforest resource in Sri Lanka. The economic values ofmarketed and non-marketed commodities are estimated by various techniques.Changes in the monetary value of the timber stock are computed from estimatedeconomic accounts, using the net price method. The results for 1995 put the TEVof the forest resource at Rs 13,-100 million. The total depreciation offoresttimber stock in 1995 was Rs -116 million. The true contribution of the forestresource to the National Income (NI) was 2.2-1% of the Gross Domestic Product((IDP). However, the contribution of the forest resource as estimated by thetraditional ,,)"iYAwas reported by the Central Bank ofSri Lanka as only 0.2% 0/the GDP. This misleading estimate may have led to under-investment in theforestry sector in the past. This past under-investment needs to be compensatedfor in thefuture national investment in forestry.