A report was prepared which examines the economic value of non-timber products and services that forested lands provide to the people of New South Wales. The report covers all public forests and seeks to:
As a result of the IAP and CRA processes, forests currently within State Forest tenure may be transferred to the CAR reserve system. Forests remaining in State Forest tenure will be subject to the principles of sustainable forest management.
Forested areas provide a unique array of economic values. While timber provides significant economic benefits for the community, there is also a range of other products and services that the forest provides. These products and services have an economic value which relates the contribution of forests to community welfare or social well-being.
The capacity for the public forests to provide the full range of products and services is directly related to the applied operating conditions within forest tenures. Activities that take place in State Forest areas, for the most part, may not be allowable in the reserve system. Similarly, there are some activities that can only be achieved in reserve systems.
The key economic question is how the net economic benefits associated with the forests will change under different resource allocation options/ scenarios. The economic framework developed for the IAP (see Section 5.6 below) will take into account the wide range of use and non-use values associated with forests and describe appropriate techniques to estimate their economic value.
The total economic value of forests is the summation of net economic benefits generated by all the goods and services sourced from the forest (NRAC).
This concept of economic value therefore includes both use and non-use values of forests as shown in Box 1.
"Use values are those that accrue from the physical use of environmental resources" (DEST, DoF & RAC, 1995, p17). These include direct use values such as beekeeping, grazing, tea tree oil, eucalyptus oil, recreation and tourism, research, education, food, medicinal resources as well as indirect use values such as ecological function values.
The Natural Resources Audit Council (NRAC) examined some of the economic values of public lands (including many forested areas) in the upper north east region of NSW. For non-timber products (gravel, rock, oils, seed, bees etc) and grazing permits it was estimated that the economic value of these products was $5.6 million in 1992/93 (Jensen R. Bayne B. & West G. 1995). This figure represents the value added to the economy ie. sales revenue less the cost of imports and intermediate goods and services from other sectors.
A study of the Gibraltar Range and Dorrigo National Parks in north-eastern NSW estimated the annual economic value of recreation use to be approximately $630,000 and $2.75m respectively (Bennett, J. Gillespie, R. Powell, R. Chalmers, L. 1995). A study of recreation on public lands of the upper north east region of NSW (much of which is forested) estimated the economic value of terrestrial recreation to be in the order of $280 million per annum (NRAC 1995). Both forests used for production of timber and those set aside for conservation purposes can have recreation and tourism economic values.
Indirect use values include ecological function values. "Ecological function value is the value of the ecological services and functions provided by an area" (Young 1992). For forested areas, ecological function values include protection of water resources, soil formation and protection, nutrient storage and cycling, pollution breakdown and absorption, climatic stability, pest control etc (Young 1992).
Non-use values or benefits refer to the benefits individuals may obtain from forest areas without directly using or visiting them (DEST, DoF & RAC, 1995). They can be classified in a variety of ways. However, they are generally considered to comprise option values, vicarious values, quasi-option values, bequest values and existence values.
Option values are "the welfare obtained by retaining the option to use an environmental resource at some future date. Option value stems from the combination of the individual's uncertainty about future demand for the resource and uncertainty about its future availability" (DEST, DoF & RAC, 1995, p 17).
Vicarious values relate to "the welfare obtained from the indirect consumption of an environmental resource through books and other media" (DEST, DoF & RAC, 1995, p 17). The popularity of natural history documentaries attests to the significance of these types of values.
Quasi-Option values relate to "the welfare obtained from the opportunity to get better information by delaying a decision that may result in irreversible environmental loss. This kind of value may be obtained when future technologies or knowledge enhance the value of a natural resource" (DEST, DoF & RAC, 1995, p 17).
Bequest values relate to "the welfare that the current generation obtains from preserving the environment for future generations" (DEST, DoF & RAC, 1995, p 17).
Existence values relate to "the welfare people obtain from the knowledge that an environmental or cultural resource exists" (DEST, DoF & RAC, 1995, p 17). It is unrelated to either current or optional use.
Section 5.6 below outlines a framework for estimating these economic values. Particular attention is given to the measurement of both benefits and costs of proposed re-allocations of forest resources.
Some activities and uses of the forest are exclusive to State forests (eg timber production) while others are exclusive to national parks and reserved areas (eg wilderness experiences). There are also some activities and uses which are not mutually exclusive and with careful management, can co-exist (eg recreation). One of the key issues is the extent to which these non-timber values will change if forested land is placed in reserve.
The following table illustrates those activities and uses that could be considered complementary, exclusive or for which substitutes may apply. The comments column addresses the issue of whether re-allocating timber production forest to conservation reserves changes these non-timber values.