WAVES Natural Capital Accounting Natural Capital Accounting in Action Dec 2014 in Action Guatemala’s forest accounts link forest In brief resources with the economy • While Guatemala’s GDP appears to be increasing, the Guatemala lost 40 per cent of its forest cover between 1950 country’s forest assets are and 2001. Concerns regarding the future of forests and the declining. Between 1950 and forestry sector prompted key government agencies, 2010, Guatemala lost 47% of its forest cover. 96% of timber including the Central Bank working with the Rafael Landivar extractions are not recorded University, to begin constructing forest accounts in 2006, publishing them in 2009. Guatemala had a much higher rate • For the first time, national accounts incorporated of deforestation than elsewhere in Central America, and the information from the forestry accounts provided more than statistics on the issue. They inventory (eg volume of timber made explicit the link between forest resources and the in forests) economy, as well as the cost of losing the country’s forests. • The real contribution of forests to the economy is 2.5% The process, and the results, opened up a lively debate of GDP versus the current 1% between the stakeholders involved, and informed national that is recorded in the national policies — such as on fuelwood use. accounts. The Rafael Landivar University and organizations that had a • Depreciation of forests is equivalent to 0.9% of GDP while kickstarted the process to stake in Guatemala’s forests, with government expenditure in the generate the first set of the university providing rigor and forest sector is less than 0.2% of environmental and economic public acceptance, as well as the GDP. A big proportion of this is accounts in 2006, supported by a space for dialogue between administrative or current Dutch government-funded agencies. investment. “ project. National forest accounts Subsequently other accounts like were the first in the series. Beyond The Forestry energy and ecosystems just designing a methodology to Enterprises Electronic supplemented information on Systems (SEINEFF) is an collect data, the process involved forest assets and the services example of how information formal bilateral agreements for they provide to the economy. from the forest accounts has information sharing and capacity Several rounds of consultation been used. This online platform building among key institutions generated the information provides trusted, up-to-date such as this private University, the needed about how forests were information on legal forestry Central Bank, National Statistics used commercially and at the products to promote legal Institute, the government marketing and trade.” household level, the range of Planning Secretariat and the income-generating opportunities Jaime Luis Carrera, Institute of Ministry of Environment. The they provided, the population’s Agriculture, Natural Resources, creation of forest accounts in energy needs and the accessible and the Environment (IARNA) particular engaged individuals energy alternatives to fuelwood. www.wavespartnership.org Wealth Accounting and the Valuation of Ecosystem Services System of Forest Sectoral National Institutional Financial Environmental accounts studies strategies strengthening instruments Economic Accounting Modeling National Strategy for Institutional Eg ProForest − deforestation Production and Use restructuring of extending forest of Fuelwood National Forest incentives to 30 Institute years and to forest Supply and demand for restoration and fuelwood in Guatemala National Strategy for Control of Illegal agroforestry systems Logging Non controlled logging in Guatemala − the impact on the economy and on forests The process of data to model to policy impact. Adapted from a slide by Rafael Landívar University and IARNA They also revealed the cultural practices associated While the losses associated with forest assets were with fuelwood collection and the impact of land use high, the government expenditure on maintaining change from forests to greater expanses of the health of the resource was inadequate. Most of pastureland and agricultural land. this information was not recorded or was not explicit in GDP calculations for the forest sector. This detailed work took several years to complete and the process was not without controversy. Not all The impact of the information stakeholders agreed with the findings. However, the Data from the accounts were used to model the debate was healthy and opened up discussion about relations between deforestation, fuelwood and the state and value of the country’s forests beyond energy security in the long term, and the results the confines of academia and government became headline news. In response, the government departments. This was the first attempt to presented a proposal to Congress for a new public/ understand the interplay between forests and the private strategy for the sustainable production and country’s broader economic trends. efficient use of natural resources, including fuelwood What the forest accounts revealed and soils. The strategy will combine policies and incentives for forest protection, rehabilitation and The accounts show how in 60 years Guatemala has reforestation, creating over 20,000 direct and gone from nearly 7 million hectares of forest to just 60,000 indirect jobs and ensuring fuelwood as well 3.7 million — losing nearly half of its forests in a as timber supply for small and medium industry. relatively short time. The added transparency in Linked to these reforestation incentives is the accounting also revealed the extent of non- National Strategy for Production and Use of controlled logging by private landowners, which Fuelwood, which will supply households with takes place outside institutional regulatory 1.2 million cubic meters of wood each year, and frameworks and some of which is illegal. It also promote technologies for the efficient use of revealed households’ high dependence on fuelwood through distribution of 100,000 improved fuelwood: 64 per cent of the population, for cook stoves. example, relies on fuelwood for their main source of energy — two thirds of that number in rural areas. Finally, the forestry section of the National And while the percentage of the population using Development Plan, K’atun: Our Guatemala 2032, fuelwood had fallen between 1964 and 2006, the was formulated on and specifically mentions the actual amount used in cubic meters had increased. findings of the SEEA and the forests accounts. What is natural capital accounting? A set of objective data showing how natural resources contribute to the economy and how the economy affects natural resources. The accounts are an extension of the System of National Accounts. Natural capital accounting integrates natural resources and economic analysis, providing a broader picture of development progress than standard measures such as GDP. Further resources can be found at www.wavespartnership.org Facilitated by the World Bank, Wealth Accounting and the Valuation of Ecosystem Services is a global partnership that aims to promote sustainable development by ensuring that the national accounts used to measure 1818 H Street, NW, and plan for economic growth include the value of natural resources Washington, DC 20433 USA