Forest Accounts of the Kyrgyz Republic Kyrgyz Republic integrated forest ecosystem management project KR WAVES plus August 2020 CONTENT ACKNOWLEDGEMENTS ........................................................................................................................................................... V FOREWORD ................................................................................................................................................................................ VI EXECUTIVE SUMMARY ......................................................................................................................................................... VII FORESTS AND THEIR CONTRIBUTION TO THE ECONOMY ....................................................................................................................... VIII FORESTS IN THE COVID-19 ERA.................................................................................................................................................................. X TOWARDS POLICY DRIVEN NATURAL CAPITAL ACCOUNTS: THE FOREST ACCOUNTS ROADMAP ....................................................... XI 1. INTRODUCTION ...............................................................................................................................................................1 1.1. CONTEXT......................................................................................................................................................................................... 1 1.2. MAIN FINDINGS OF THE KYRGYZ FOREST ACCOUNTS ............................................................................................................. 2 2. RATIONALE AND APPLICATIONS OF FOREST ACCOUNTS ................................................................................7 WHAT ARE THE PROBLEMS THE FOREST SECTOR IS CONFRONTING? ..................................................................................................... 7 WHY IS THE COUNTRY DEDICATING EFFORTS TO DEVELOP THESE ACCOUNTS, FOR WHAT PURPOSE? ............................................. 8 WHO IS DEMANDING THE FOREST ACCOUNTS AND HOW WILL THEY BE USED? .................................................................................... 9 3. METHODS AND DATA ................................................................................................................................................. 17 NATURAL CAPITAL ACCOUNTING PRINCIPLES .........................................................................................................................................17 METHODOLOGY FOR FOREST ACCOUNTING ..............................................................................................................................................17 DATA SOURCES, GAPS AND LIMITATIONS ..................................................................................................................................................19 4. CORE ACCOUNTING TABLES ..................................................................................................................................... 22 ASSET ACCOUNTS IN PHYSICAL AND MONETARY TERMS .........................................................................................................................22 ASSET ACCOUNTS FOR TIMBER OF THE FOREST FUND IN PHYSICAL AND MONETARY TERMS ..........................................................24 FLOW ACCOUNTS OF FOREST FUND RESOURCES IN PHYSICAL AND MONETARY TERMS ....................................................................26 FLOW ACCOUNTS OF ECOSYSTEM SERVICES ..............................................................................................................................................29 5. LESSONS LEARNED AND WAY FORWARD ........................................................................................................... 31 ANNEX 1. FOREST RESOURCE ACCOUNTS: DETAILED ACCOUNTING TABLES ........................................... 35 ANNEX 2. ECOSYSTEM SERVICE ACCOUNTS: DETAILED ACCOUNTING TABLES ........................................ 45 i TABLES Table 1. Purposes, areas of analysis, indicators and capacity needs for the implementation of forest accounts .. 12 Table 2. General form of asset accounts for forests ............................................................................................. 18 Table 3. Physical asset account for forest land in 2018, hectares......................................................................... 23 Table 4. Physical asset account for non-forest lands that form a single natural complex with forests in 2018, hectares................................................................................................................................................... 23 Table 5. Monetary asset account for forest lands in 2018, thousand soms at current prices ................................ 24 Table 6. Monetary asset account for non-forest lands that form a single natural complex with forests in 2018, thousand soms at current prices.............................................................................................................. 24 Table 7. Physical asset account for timber in 2018, thousand cubic meters ......................................................... 25 Table 8. Monetary asset account for timber in 2018, thousand soms ................................................................... 26 Table 9. Physical supply table of natural resources from the environment in 2018, various units ...................... 27 Table 10. Physical supply table of forest goods and services in 2018, various units ............................................. 27 Table 11. Physical use table of forest goods and services in 2018, various units .................................................. 27 Table 12. Monetary supply table of forest goods and services in 2018, 1000 soms at current purchaser prices ... 28 Table 13. Monetary use table of forest goods and services in 2018, 1000 soms at current purchaser prices ......... 28 Table 14. Value of ecosystem services and natural assets in monetary terms in 2018, US$ million/year at current prices ...................................................................................................................................................... 29 Table 15. Measures to improve information for the flow accounts of ecosystem services of the Forest Fund of the Kyrgyz Republic by type of account ...................................................................................................... 31 Table 16. Measures to improve capacity and awareness of key institutions to produce forest accounts for the Kyrgyz Republic in the long term .......................................................................................................... 32 Table 17. Physical asset accounts for forest land in 2018, hectares ....................................................................... 35 Table 18. Physical asset accounts for non-forest lands that form a single natural complex with forests in 2018, hectares................................................................................................................................................... 36 Table 19. Monetary asset accounts for land in 2018, thousand soms at current prices .......................................... 37 Table 20. Monetary asset accounts for non-forest lands that form a single natural complex with forests in 2018, thousand soms ........................................................................................................................................ 38 Table 21. Physical asset account for timber in 2018, thousand cubic meters ......................................................... 39 Table 22. Monetary asset account for timber in 2018, thousand soms ................................................................... 39 Table 23. Physical supply and use table for products from Forest Fund lands in 2018, various units ................... 40 Table 24. Physical supply table for forest resources in 2018, various units ........................................................... 41 Table 25. Physical use table of forest resources in 2018, various units ................................................................. 42 Table 26. Monetary supply table of forest resources in 2018, 1000 soms at current purchaser prices .................. 43 Table 27. Monetary use table of forest resources in 2018, 1000 soms at current purchaser prices ........................ 44 Table 28. Physical supply table of provisioning ecosystem services of the forest in 2018, various units .............. 45 Table 29. Physical flow accounts of cultural ecosystem services of the forest in 2018, number of rental days per year ......................................................................................................................................................... 46 Table 30. Monetary flow accounts of cultural ecosystem services of the forest in 2018, thousand soms at current purchaser prices ...................................................................................................................................... 47 ii FIGURES Figure 1. Contrast between physical (thousand ha) and monetary (thousand soms) changes in opening and closing stocks of natural forests for the year 2018 ..................................................................................ix Figure 2. Use of fuel timber by institutional sector of the economy as percentages with individual values in cubic meters .......................................................................................................................................................x Figure 3. Disaggregation of the total economic value of the flows of provisioning and cultural ecosystem services of the forests fund in 2018 by groups of forest users and sectors of the economy of the Kyrgyz Republic, million US dollars / year .........................................................................................................xi Figure 4. Contrast between physical (thousand ha) and monetary (thousand soms) changes in opening and closing stocks of natural forests for the year 2018 ...................................................................................3 Figure 5. Use of fuel timber by institutional sector of the economy as percentages with individual values in cubic meters .......................................................................................................................................................4 Figure 6. Value of total supply of top 10 Forest Fund products and services in million soms ................................5 Figure 7. Disaggregation of the total economic value of the flows of provisioning and cultural ecosystem services of the forests fund in 2018 by groups of forest users and sectors of the economy of the Kyrgyz Republic, million US dollars / year ..........................................................................................................6 Figure 8. The total economic value of forest ecosystems. Source: Based on UN et al (2014) .............................. 18 Figure 9. Diagram form of flow accounts tables for forest .................................................................................... 19 iii ACRONYMS CICES Common International Classification of Ecosystem Services FAO United Nations Food and Agriculture Organization FMIS Forest Management Information System of the Kyrgyz Republic GHGs Greenhouse gases GIS Geographic Information Systems GIZ German Corporation for International Cooperation GKR Government of the Kyrgyz Republic KR Kyrgyz Republic Kyrg-06 Unified state coordinate system of the Kyrgyz Republic NCA Natural Capital Accounts NSC KR National Statistical Committee of the Kyrgyz Republic PAs Protected Areas SAEPF KR State Agency for Environmental Protection and Forestry of the Kyrgyz Republic SEEA EEA System of Environmental-Economic Accounting Experimental Ecosystem Accounting SEEA System of Environmental-Economic Accounting SFF State Forest Fund SNA System of National Accounts UFF Unified Forest Fund UNDP United Nations Development Program UNECE United Nations Economic Commission for Europe WAVES Wealth Accounting and the Valuation of Ecosystem Services WB World Bank iv Acknowledgements The team would like to express their sincere gratitude to all government officials for their feedback during the consultations of the report. The team would especially like to thank Nazira Kerimalieva, Chief of Sector, National Statistics Committee and Nadyrbek Kozubaev, Deputy Director of State Agency of Environmental Protection and Forestry. This report was prepared by a World Bank Group team led by Drita Dade (Sr. Natural Resources Management Specialist,) and Juan-Pablo Castaneda (Environmental Economist) and included Saida Ismailakhunova (Sr. Economist, EECPV), Georgy Fomenko (Consultant), Baktygul Ysabekova (Consultant) and Renato Vargas (Consultant). The team would like to thank Sjoerd Schenau and Mariek Rensman from CBS (Netherlands Statistics Office), Irene Alvarado-Quesada, Central Bank of Costa Rica and Michael Vardon, Australian National University for their kind review and comments. The report was reviewed and edited by Ekaterina Sleta and Manon Pascale. The team benefitted from the insights of Pablo Cesar Benitez, Peter Kristensen, Sofia Ahlroth and Elena Strukova Golub. The report was prepared under the guidance of Kseniya Lvovsky, Practice Manager, Raffaello Cervigni, Lead Environment Economist, Naveed Hassan Naqvi, Country Manager, and Salman Zaidi, Practice Manager. The financial and technical support by WAVES Partnership is gratefully acknowledged. v Foreword This publication is one of the various technical reports developed under the WAVES Plus support to Natural Capital Accounting (NCA) for Forests and Tourism. The technical work on NCA in the Kyrgyz Republic examined the policy relevance for developing NCA in the country, applied the standard methodologies and obtained some interesting initial findings. The results of this work and the continuous engagement with Government contributed to determine feasibility of future implementation, helping to obtain recommendations for future work in the form of a preliminary roadmap for NCA implementation. The reports also provide clear recommendations for improvements of data collection by staff of the National Statistic Committee, State Agency of Environmental Protection and Forestry, and Department of Tourism to better account for the respective sector contribution and inform appropriate decision-making process. This work is among the first systematic compilations of the System of Environmental-Economic Accounting (SEEA) for forests and tourism in the Kyrgyz Republic, in accordance with the United Nations international standards. The work on tourism accounts reviewed the methodology of calculation of the tourism share to economy and identified tourism satellite account tables that will enable reporting in compliance with the United Nations World Tourism Organization’s (UNWTO)Tourism Satellite Accounting (TSA) Framework and standards. The work on forests is based on best practices and complementary guidance from the United Nations Food and Agriculture Organization (FAO), such as the SEEA handbook for Agriculture, Fisheries and Forests. The “Forest Accounts of the Kyrgyz Republic� technical report emphasizes the importance of the goods and services forests provide to the Kyrgyz economy and its people. Forests and landscapes are also the unique selling points for international tourists that come to the Kyrgyz Republic for adventure sports, eco-tourism and cultural tours. However, climate change and the increasing pressure from the growing population threatens the wellbeing of the forest ecosystems. To address these challenges and unlock the full potential of the forestry sector, the government of Kyrgyzstan needs to design an effective policy framework. Accomplishing this would require filling in the data gaps, building institutional capacity and improving the IT infrastructure. This should be combined with a deeper understanding and recognition of the important role the forests can play in the sustainable development of the nation. Natural Capital Accounting is a tool that can contribute to address the above challenges. vi Executive Summary Over the past decade, forest areas and the quality of vegetation of the Kyrgyz Republic, including valuable walnut trees, have been steadily declining as a result of natural and anthropogenic factors. Forests are aging due to an overabundance of ripe trees (especially in spruce forests), as well as to grazing and haying that prevent natural recovery of vegetation and make it harder for new trees to take roots. Institutional and policy deficiencies also lead to inappropriate exploitation. Climate change and its effects on weather events and variability of temperatures also impact the quality of the forest cover. If left unmitigated, these factors can damage the productivity of the forests and their ability to provide environmental and economic services. The Climate Change Adaptation Program of the Forest and Biodiversity Sector estimates that with an increase in air temperature of +1.5 °C and a decrease of 10% in precipitations, Kyrgyzstan will need additional investments of 4,550.4 million soms (US$ 94.8 million) in the forestry sector to maintain the productivity of the ecosystem services. The unique mountain forest of the Kyrgyz Republic provides important services to the environment and people of the country. High-mountain forests, which account for 90% of the forests in the country, carry out climate and water regulating functions and offer critical habitat for rare and endangered species of flora and fauna, including the country’s flagship population of snow leopards. Despite that forest areas cover only 5.8% of the country’s territory, the composition of these areas is quite diverse and boasts some 180 species of trees and shrubs, with walnut, coniferous-spruce, juniper and floodplain representing the most. Forests and landscapes offer unique scenic value for international tourists that come to the Kyrgyz Republic for adventure sports, eco-tourism and cultural tours. Various actions have been undertaken to support the transition towards “green growth� and the achievement of the Sustainable Development Goals in the Kyrgyz Republic. This agenda has been taken up at the highest levels of Government under the 2040 national development strategy. This strategy states that the Kyrgyz Republic is a country with a “favorable environment for human life, developing in harmony with nature, preserving unique natural ecosystems, and wisely using natural resources�. Yet, the same document recognizes that the forest economy is in stagnation due to poor institutional and technical capacities. To address these challenges and unlock the full potential of the forest economy, the government of Kyrgyzstan needs to design an effective policy framework to translate the strategic principles into practice. Developing an integrated environmental and economic information system would show the potential for growth and improvement in the sector, promoting income-generating activities, better jobs and alternative income for rural population, as well as ensuring the conservation and sustainable use of forest resources. Natural capital accounting (NCA) is recognized as one of the useful tool to provide consistent and comparable data to show how forests contribute the economic growth. NCA uses the System of Environmental-Economic Accounting (SEEA) as the internationally agreed methodology, which is consistent with the System of National Accounts (SNA) that is used for estimation of economic vii activity, including indicators such as Gross Domestic Product (GDP).1 Comparing alternatives and trade-offs between institutional sectors, NCA reveals the value of non-market forest products and ecosystem services, showing which economic activity such as agriculture and tourism benefit from forest ecosystems. This information is critical for the development of cross-cutting sustainable development policies. In this study, a pilot implementation of NCA for the Kyrgyz Republic’s forests has been carried out for the year 2018. Forests and their contribution to the economy The Kyrgyz Republic's GDP in 2019 amounted to $ 8.45 billion with real annual GDP growth of 4.5%. The largest revenues from the forest fund are in the forest sector (97.021 million US dollars, or 62%), as well as the agriculture sector (57.6 million US dollars, or 36.8%). Tourism sector income related to forest areas is about 1.847 million US dollar or 1.2% of the total. For 2005-2014, the total sustainability capital, rooted in the country’s natural resources, increased from $54.3 to $142.6 billion, or 2.6 times. Based on the NCA physical and monetary terms, forest products in the forest fund of the Kyrgyz Republic contributed 11.2 billion soms to the national economy in 2018; about 2% of the country GDP of 570 billion (at current prices). Compared with the “fast - track� forest accounts (put in place until 2014), the growth of the contribution of forests to the Kyrgyz Republic can be estimated at 1.87% (or 37 times). This growth has two main driving forces: the 4-fold increase in the cost of natural resources and growing domestic demand. For example, 94% of the demand for forestry products is coming from the local households that use wood for fuel as well as the manufacturing industry, that relies on forests for commercial-grade timber. Even more importantly, 95.2% (or $148.9 million) of revenues generated from the forests stay within the communities that live nearby. This illustrates the important role forests play in supporting the fragile livelihoods of the rural poor that depend on the natural resources for their subsistence. In 2018, the stock of natural forest land saw an increase of 2.1% going from 783,553 to 800,002 hectares, whereas artificial lands (which refers to man-made regeneration of forests) expanded by 3.3% with 56,283 hectares at the beginning of the accounting period and 58,147 hectares. These increases were not accompanied by positive valuations in monetary terms, because these showed an average 2.3% reduction reaching 210.3 and 15.3 million soms for natural and artificial lands, respectively. Figure 1 shows this contrast between physical value growth with simultaneous monetary drop for natural forests. The axis on the left shows thousand hectares, while the right shows thousand soms. It is interesting to note that in the Kyrgyz context, pastures and hayfields are equivalent to 1.4 times the area of forest land, both natural and artificial; a feature that defines the country’s landscape and contributes to its steppe culture. 1 Further explanations of forest accounts concepts and definition can be found in the following link: https://www.wavespartnership.org/sites/waves/files/kc/forest_resourcesbook.pdf viii A. Physical Values B. Monetary Values (Million ha) (Million soms) 805 218 800 216 795 214 790 212 785 210 780 208 775 206 Opening stock Closing stock Opening stock Closing stock Note: The changes reflect the opening stock (Jan 2018) and closing stock (Dec 2018) of natural forests. Figure 1. Physical and monetary forest asset account (2018) Regarding flows of forest ecosystem services (mostly provisioning for these accounts), Forest Fund assets supplied the economy with 17,888 cubic meters of timber for industrial purposes and 178,647 cubic meters for fuel, which were complemented with 2,430 cubic meters of imports for both purposes. The Manufacturing Industry is responsible for 98.0% of the consumption of timber products for industrial purposes and households are responsible for 99.1% of the consumption of timber products for fuel, highlighting the importance of forests for household energy production and consumption as is evident in Figure 2, which shows the remaining 0.9% of the industrial uses of fuelwood. Valuation of cultural ecosystem services, determined as the income of tenants of forest plots, received from renting accommodations for recreational purposes, amounted to 0.13 billion soms (1.85 million US dollars) or 0.02% of GDP for 2018. It is worth noting that this number does not fully reflect the role that forest ecosystems play in recreation and tourism and requires harmonization with tourism accounts. In terms of regulating ecosystem services, the assessment included only the carbon stock of the Forest Fund in 20102 of 1,363.975 million tons of CO2. Notwithstanding, this value reflects only one aspect and neglects irreplaceable water and thermal regulation functions, as well as protection against mudflows, landslides. The value of the forest as habitat of rare species and provider of other ecosystem services, such as pollination, remains unassessed. 2 According to the first national forest inventory of the Kyrgyz Republic and the FAO TCP / KYR / 3102 (D) project «Capacity Building for National Forest and Tree Resource Assessment and Monitoring» ix Fuelwood use (Cubic Meters) 1,000 800 600 400 200 - Other economic Forestry: non- Manufacturing Agriculture, Rest of the Exports Botanical activities financial industry hunting and World gardens, zoos institutions corresponding and nature services reserves Figure 2. Use of fuel timber by institutional sector of the economy with individual values in cubic meters Disaggregation of the total economic value of the flows of provisioning and cultural ecosystem services of the forests of the Kyrgyz Republic by groups of forest users and sectors of the economy of the Kyrgyz Republic (Figure 6) showed that rural households living in the forest areas receive the largest income from forest territories; while the incomes of tenants of forest plots and the forestry sector are small. There is no doubt that the obtained data need to be clarified, both in terms of verifying the accuracy of data on forest use by the households (by conducting additional surveys and questionnaires), and in terms of the completeness of data provided by tenants of forest plots (improving reporting on statistical form 2-LH). Regarding the sectoral distribution of income from forest lands, the largest share is in the forest sector. Meanwhile, the research revealed a significant amount of income of the agricultural sector from forest areas. Forests also contribute to the tourism industry and the service sector; the obtained indicators reflect only a small part of it. Forests in the COVID-19 era The income-generating potential of the forest will become even more important in the aftermath of the COVID-19 crisis. Travel restrictions and the global lockdown forced many seasonal workers to return to their remote home communities. With limited access to labor markets, the rural poor will turn to forests for income and survival. In Kyrgyzstan, this is true to about two hundred thousand people that live in the forest remote areas of the country. Since 2015, the country has seen a gradual increase in agricultural production (by 11.7%) and in hunting and forest use (1.8%). But the strongest performing sector of the economy has been x tourism that experienced a remarkable 40.6% growth. Compared to its neighbors, Kyrgyzstan still lags behind in the development of the tourism infrastructure. For most international tourists, the attractiveness of the country is largely based on its undisturbed and authentic beauty and diversity of nature. Most sought-after activities include adventure tourism, eco-tourism, beach (especially the largest Issyk-Kul lake), and skiing. However, cultural tours have been gaining popularity too. Overall, there is a strong political will to pursue tourism as part of the sustainable development agenda. The importance of tourism has been recognized in the national policy, where it was included as one of the four priorities of the National Development Strategy. However, to create a sustainable tourism industry, Kyrgyzstan should thoughtfully manage its natural capital, including forests and landscapes. These are crucial resources for the sustainable green growth of the country. As mentioned before that will require substantial resources to strengthen institutions and capacities to maintain and use the newly created natural capital accounts for forests. Forest users Sectors of economy Forest plantations (harvesting Forest sector (harvesting of non-timber of non-timber products, fuel products, fuel and industrial timber from and industrial timber from forest lands) – 97,021 forest lands) - 3,351 Provisioning, Agriculture: cultural and 1. haymaking, grazing - 57,6; Tenants of forest plots 2. saving on agricultural costs for irrigation (harvesting of non-timber regulating ecosystem and fertilizing, crop pollination - ? products and fuel timber from forest lands, haymaking, services of the renting accommodation for forest fund of the Tourism: tourists) - 4,217 Kyrgyz Republic 1. renting accommodation for – $ 156.468 tourists - 1,847; million / year 2. additional income of travel agencies from services at forest facilities - ? Households (harvesting of non- timber products and fuel timber from forest lands, Transport (additional income of transport haymaking) - 148,9 companies from transportation of the tourists to the forest fund facilities) - ? Figure 3. Disaggregation of the total economic value of the flows of provisioning and cultural ecosystem services of the forests fund in 2018 by groups of forest users and sectors of the economy of the Kyrgyz Republic, million US dollars / year Towards policy driven natural capital accounts: The forest accounts roadmap Developing the forest pilot accounts in the Kyrgyz Republic, allowed to identify five aspects that require substantial support to achieve a well development accounting system. In the near term the aspects to be considered include: xi - Data gaps: The policy response to deforestation is lagging due to the lack of reliable and timely data such as the use of forest areas for grazing and haying, non-timber forest products and tourism. The lack of quantitative information halts the development of fact-based policy measures to increase the GDP contribution of the sector. Strict prohibitive measures from the government proved to be ineffective. Yet, while the reliable statistics are not available and monitoring capabilities are limited, the design of effective interventions is hardly possible. - Technical and Institutional capacities: Despite the policy efforts undertaken by the state to ensure a sustainable use of the forests, The Concept of the Development of the Forest Sector Through 2040 acknowledges the poor planning development, inefficient financing mechanisms, low investment, unqualified personnel, and an overall lack of modern tools for economic planning, forecasting, organization, and accounting that empowers effective forest management. - Information technologies and research: geographic information systems, as well as in-depth research to identify sacred places, socio-cultural locations and forest areas with cultural, historical and spiritual value for the Kyrgyz Republic need to be further developed, to provide the institutional underpinning for a continuous production of forest accounts at a longer term. - Institutionalization of forest accounts: this would increase the power to inform policy makers. Coordination and awareness across various organizations needs to be increase from Government bodies at different levels, to academia, business associations, etc. Adopting the Decree of the Kyrgyz Republic on information resources. This would help streamline the production, transfer, storage and use of data in the field of forest management and other fields related to forest accounting. - Training: Staff and key users of information have to be trained on the compilation of Natural Capital Accounting and its interpretation. The World Bank funded project on Integrated Forest Ecosystem Management Project is supporting the State Agency for Environmental Protection of Forestry through provision of capacity building, training and IT infrastructure to establish a forest management information system (FMIS). The FMIS will store, analyze, retrieve and report on the data that are being generated from the ongoing National Forest Inventory, forest management plans and existing baseline information from forest cadaster. This will create a sound monitoring framework for forest data and enable National Statistic Committee account for environmental services provided by forests. This effort can be integrated in the roadmap for accounts implementation. The need to ensure a more effective integrated forest management has prompted an institutional reform of the forest sector that aims to create a modern environment that favors practical policy applications based on consistent integrated information and indicators grounded on SEEA. Key steps to develop the roadmap are detailed in the following table. xii Task Date Legislation framework for the establishment of forest accounts, the production 2020-2021 of statistical data, and institutional arrangement among the executive bodies. Organizational – Administrative support for the creation of a coordinating 2020 council, data sharing agreements, Methodologies and information support: Guidelines for the implementation, 2021 Testing UN methodological approaches, Analysis of the results, development and approval of methodological guidelines. Advocacy, human resourcing and technical support: Training programs, engage 2022 educational institutions, improvement of human resourcing, and improvement of the technical equipment Phased implementation of SEEA/EEA forest accounts: Implementation of assets 2023 accounts (physical and monetary), implementation of forest protection and restoration activities xiii 1. Introduction 1.1. Context 1. The economy of the Kyrgyz Republic is heavily dependent on the country’s natural resources. However, there has been until now a broad lack of awareness of the true value of these resources and how to sustainably manage them for the benefit of the country’s population. As a result, natural resources, notably forests, pastures, and natural wildlife habitats, have been placed under considerable strain due to inappropriate (and often unplanned or unmanaged) exploitation. 2. Various actions are being undertaken supporting a transition towards “green growth� and achievement of the Sustainable Development Goals in the Kyrgyz Republic: a set of green growth indicators has been developed with the support of UNDP. This agenda has been taken up at the highest levels of Government under the Kyrgyz Republic’s national development strategy: 2040 Strategy, the mandate to modernize and digitize government data sets (TAZAKOM), and to show the real contribution of the forestry sector to GDP. 3. By demonstrating the potential for growth and improvement in this sector, there may be more potential in the future for increasing the involvement of local communities and of the private sector in investments that promote income-generating activities, value addition and better jobs, and alternative sources of income for rural populations. It is also important to ensure the conservation and sustainability of forest ecosystems, and strengthen their resilience to various external shocks, including climate change, to enhance the streams of ecosystem services they provide. 4. This technical report shows the results of the pilot implementation of Natural Capital Accounting (NCA) for Forests in the Kyrgyz Republic for the year 2018 under the KR WAVES Plus initiative, using the System of Environmental-Economic Accounting (SEEA) framework3. The objectives of this implementation are: − To improve understanding of the contribution of the forestry sector to economic development and thus facilitate improved sector management including investment allocation decisions. − To contribute to the achievement of the 2040 Strategy and to the process of the overall improvement and systemization of the System of National Accounts. − To raise awareness on the utility and importance of Natural Capital Accounting and ecosystem accounting and build technical capacity for their institutionalization. − To enhance inter-ministerial coordination on Natural Capital Accounting and strengthen information and information management systems, starting with the forestry sector. 3 European Commission, Organisation for Economic Cooperation and Development, United Nations, and World Bank (2013). “System of Environmental-Economic Accounting 2012�. New York: United Nations. 1 5. The second section of this document presents the rationale for the compilation of forest accounts in the Kyrgyz Republic, explaining the problems faced by the sector and why the country has dedicated efforts to undertake integrated environmental-economic accounting. The third section explains the methodological principles used in the compilation of these forest accounts. The fourth section addresses the gaps in data that have been identified during the compilation of the forest accounts. 6. The fifth section describes the results of the Forest Accounts of the Kyrgyz Republic, which include i) asset accounts for Forest Fund lands in physical and monetary terms; ii) asset accounts for timber in physical and monetary terms; iii) flow accounts in physical and monetary terms; and iv) flow accounts of ecosystem services in monetary terms. 7. The final section identifies lessons learned and proposes a way forward regarding measures needed to institutionalize the accounts within the country’s statistical system. 1.2. Main findings of the Kyrgyz Forest Accounts 9. Forest products in the Forest Fund of the Kyrgyz Republic contributed 11.3 billion soms to the national economy in 2018; about 2% of the country’s GDP of 570 billion (at current prices). This is important because one of the policy needs requires that the country assesses the impact of forest use on macroeconomic indicators. 10. In 2018, the stock of natural forest land saw an increase of 2.1% going from 783,553 to 800,002 hectares, whereas artificial lands (which refers to man-made regeneration of forests) expanded by 3.3% with 56,283 hectares at the beginning of the accounting period and 58,147 hectares. These increases were not accompanied by positive valuations in monetary terms, because these showed an average 2.3% reduction reaching 210.3 and 15.3 million soms for natural and artificial lands, respectively. shows this contrast between physical value growth with simultaneous monetary drop for natural forests. The axis on the left shows thousand hectares, while the right shows thousand soms. It is interesting to note that in the Kyrgyz context, pastures and hayfields are equivalent to 1.4 times the area of forest land, both natural and artificial; a feature that defines the country’s landscape and contributes to its steppe culture. 2 805,000 217,000 216,470 800,252 216,000 800,000 215,000 214,000 795,000 213,000 790,000 212,000 211,000 785,000 783,553 210,253 210,000 209,000 780,000 208,000 775,000 207,000 Opening stock Closing stock Physical (thousand ha) Monetary (thousand soms) Figure 4. Contrast between physical (thousand ha) and monetary (thousand soms) changes in opening and closing stocks of natural forests for the year 2018 11. Congruent with the growth of forest land, standing timber in both natural and artificial lands saw a net growth of 1.45%, reaching 32.63 billion and 3.76 billion cubic meters in 2018, respectively. The growth in volume did not see growth in value, because the value of natural growth was outweighed by the value of removals and a negative revaluation due to change in market prices, ending with a monetary reduction of stocks of 5.8% for a closing stock of 1.96 billion soms. Standing timber in artificial land behave similarly ending with a closing stock of 187.93 million soms in 2018. 12. Regarding flows, Forest Fund assets supplied the economy with 17,888 cubic meters of timber for industrial purposes and 178,647 cubic meters for fuel, which were complemented with 2,430 cubic meters of imports for both purposes. The Manufacturing Industry is responsible for 98.0% of the consumption of timber products for industrial purposes and households are responsible for 99.1% of the consumption of timber products for fuel, highlighting the importance of forests for household energy production and consumption as is evident in Figure 5 (note that the main axis begins at 98%). 3 100% Exports, 103 Botanical gardens, zoos and nature Manufacturing Agriculture, hunting reserves, 4 industry, 213 Forestry: non- and corresponding financial institutions , services, 114 281 Botanical gardens, zoos and nature reserves Other economic activities, 821 Rest of the World Exports Agriculture, hunting and corresponding services 99% Manufacturing industry Forestry: non-financial institutions Other economic activities Households: 177240 Households 98% Fuel timber Figure 5. Use of fuel timber by institutional sector of the economy as percentages with individual values in cubic meters 13. When looking at individual commodities, the value of total domestic supply of 11.3 billion soms is overwhelmingly dominated by the provision of hay, pistachio, and walnut, followed by almond and wild apple as shown in Figure 6. Households account for 93.65% of total demand of 11.3 billion soms (domestic demand plus imports) in the forest accounts, outweighing agriculture, the forest sector, the manufacturing industry, and the remaining economic activities, which share the remainder. Given that the supply is mostly provided by households for own consumption, it follows that their demand is dominated by mostly imputed purchases of hay, pistachio, and walnut. This first exercise has allowed for the clarification of the distribution of benefits from the Forest Fund between different sectors of users at both the national and the global level. Since households benefit from the use of forests, measures to replace household income shortfalls during forest protection measures are needed with a special emphasis on energy use in the form of fuel timber. 4 Industrial timber, 44 Travel (hotels and restaurants), 58 Grazing services, 92 Nature reserve services, 125 Other forestry services, 175 million soms Wild apple, 489 Almond, 540 Walnut, 2,716 Pistachio, 2,846 Hay, 3,953 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Figure 6. Value of total supply of top 10 Forest Fund products and services in million soms 14. In the case of provisioning ecosystem services, the economic value is defined as the cost of forest resource flows and amounted to 10.8 billion soms/year (154.621 million US dollars/year). Forest products contributed 2% to the GDP of the Kyrgyz Republic in 20184. 15. Valuation of cultural ecosystem services, determined as the income of tenants of forest plots, received from renting accommodations for recreational purposes, amounted to 0.13 billion soms (1.85 million US dollars) or 0.02% of GDP for 2018. It is worth noting that this number does not fully reflect the role that forest ecosystems play in recreation and tourism and requires harmonization with tourism accounts. In terms of regulating ecosystem services, the assessment included only the carbon stock of the Forest Fund in 20105 of 1,363.975 million tons of CO2. 16. Notwithstanding, this value reflects only one aspect and neglects irreplaceable water and thermal regulation functions, as well as protection against mudflows, landslides. The value of the forest as 4 The value of GDP for 2018 is taken according to the data of the National Statistical Committee of the Kyrgyz Republic, at current prices, and is equal to 570 billion soms (8160.53 million US dollars). 5 According to the first national forest inventory of the Kyrgyz Republic and the FAO TCP / KYR / 3102 (D) project «Capacity Building for National Forest and Tree Resource Assessment and Monitoring» 5 habitat of rare species and provider of other ecosystem services, such as pollination, remains unassessed. Forest users Sectors of economy Forest plantations (harvesting of Forest sector (harvesting of non-timber non-timber products, fuel and products, fuel and industrial timber from forest industrial timber from forest lands) – 97,021 lands) - 3,351 Provisioning, cultural and Agriculture: regulating 1. haymaking, grazing - 57,6; Tenants of forest plots (harvesting ecosystem services 2. saving on agricultural costs for irrigation and of non-timber products and fuel of the forest fund of fertilizing, crop pollination - ? timber from forest lands, the Kyrgyz haymaking, renting Republic – accommodation for $ 156.468 million / Tourism: tourists) - 4,217 year 1. renting accommodation for tourists - 1,847; 2. additional income of travel agencies from services at forest facilities - ? Households (harvesting of non- timber products and fuel timber from forest lands, Transport (additional income of transport haymaking) - 148,9 companies from transportation of the tourists to the forest fund facilities) - ? Figure 7. Disaggregation of the total economic value of the flows of provisioning and cultural ecosystem services of the forests fund in 2018 by groups of forest users and sectors of the economy of the Kyrgyz Republic, million US dollars / year 17. Disaggregation of the total economic value of the flows of provisioning and cultural ecosystem services of the forests of the Kyrgyz Republic by groups of forest users and sectors of the economy of the Kyrgyz Republic (Figure 7) showed that rural households living in the forest areas receive the largest income from forest territories, while the incomes of tenants of forest plots and the forestry sector are small. There is no doubt that the obtained data need to be clarified, both in terms of verifying the accuracy of data on forest use by the households (by conducting additional surveys and questionnaires), and in terms of the completeness of data provided by tenants of forest plots (improving reporting on statistical form 2-LH). Regarding the sectoral distribution of income from forest lands, the largest share is in the forest sector. Meanwhile, the research revealed a significant amount of income of the agricultural sector from forest areas. Forests also contribute to the tourism industry and the service sector; the obtained indicators reflect only a small part of it. 6 2. Rationale and applications of forest accounts 2.1. What are the problems the forest sector is confronting? 8. The forests of the Kyrgyz Republic are diverse and rich in valuable species, featuring more than 180 tree and shrub species, of which walnut, coniferous-spruce, juniper, and floodplain6 are most predominant. About 90% of the country's forests stand between 700 to 3,500 meters above sea level. However, both natural and socioeconomic factors contribute to a tendency towards aging of forests in the country. Moreover, there is an overabundance of overripe trees (especially true for spruce forests), on the one hand, as well as grazing and haying on the other, which harm the restoration of tree vegetation whereby young trees don’t have a chance to take root. 9. Severe weather conditions create high vulnerability for mountain forest ecosystems and negatively change their condition. Changes in climate have an impact on the physiology and metabolism of trees and wildlife, as well as on the functioning of ecosystems. The Climate Change Adaptation Program of the Forest and Biodiversity Sector estimates that with an increase in air temperature of +1.5 °C and a decrease of 10% in precipitation, Kyrgyzstan will need additional investments of 4,550.4 million soms (US$ 94.8 million) in the forestry sector in order to be able to maintain the productivity of ecosystem services.7 10. While the contribution of Kyrgyzstan to the increase in the global concentration of greenhouse gases (GHGs) that negatively affect climate is relatively small (13,046 Gg CO2-equivalent or 2 tons per capita per year in 2011), its forest resources play a large role in global processes of prevention of the negative effects of climate change. Kyrgyz forests sequester carbon, regulate rivers’ water flows, and help prevent mudflows, landslides, and snow avalanches in mountainous terrain. 11. Notwithstanding, traditional economic measures from the System of National Accounts (SNA) place the contribution of the forest sector at around 0.05% of GDP. 8 Forests of the Kyrgyz Republic are underestimated, because ecosystem services of the forest provided to households (such as the use of forest areas for grazing and haying, non-timber forest products, tourism, etc.) remain hidden by traditional National Accounts. 12. About two hundred thousand citizens of the Kyrgyz Republic live within the borders of forests and are completely dependent on forest resources 9 . These individuals place pressures on 6 Review of the political and institutional framework for financing environmental protection in the Kyrgyz Republic. Bishkek: 2019. 114 p. 7 Climate Change Adaptation Program of the Forest and Biodiversity Sector for 2015-2017. 8 National Statistical Committee of the Kyrgyz Republic, 2016. 9 The main causes of forest degradation and deforestation in Kyrgyzstan. Bishkek: MED “Biom�, 2001. 7 deciduous forests, walnuts, pistachios, and almonds, which mainly grow in regions with high population density, and from a government response standpoint, strict prohibitive measures have proven ineffective to halt deforestation. While illegal logging has a negative impact on the qualitative and quantitative state of forests and forest ecosystems, reliable statistics are not available, and monitoring capabilities are significantly limited. 13. The Forest Code (FC), which became effective in 1999, establishes that all forests, irrespective of their ownership status, comprise the Unified Forest Fund (hereinafter “Forest Fund�) of Forest of the Kyrgyz Republic. It includes forests and associated land, as well as land that is not covered by forest, but that is suitable for afforestation. Within the Unified Forest Fund, the State Forest Fund (SFF) is made of state-owned forests, which is distinct from municipal land and privately- owned land. Despite the increase in the area covered by forest in Kyrgyzstan, the total area of the SFF has decreased by 20 percent, from 3,279.3 to 2,619.7 thousand hectares, between 2003 and 2016. 10 Conservation and restoration is carried out by the State Agency for Environmental Protection and Forestry (SAEPF). It is important to understand that when we mention the Forest Fund in this document, we are referring to all forests in the Kyrgyz Republic. 2.2. Why is the country dedicating efforts to develop these accounts, for what purpose? 14. As previously stated, the mountain forests of the Kyrgyz Republic ensure the livelihoods of households and carry out important environmental protection functions. However, over the past decade, their area and the quality of vegetation, including especially valuable walnut trees, has been steadily declining. Traditional forest statistics and national accounting methods fail to reveal important functions of forests that contribute to human well-being and natural capital, and this underestimation leads to errors in policy design and ineffective forest management. 15. The country has taken policy steps to ensure sustainable use of the forest for its people through the adoption of the Concept of the Development of the Forest Sector Through 2025 (hereinafter “the Concept�), which states that the Kyrgyz Republic is a country with a “favorable environment for human life, developing in harmony with nature, preserving unique natural ecosystems, and wisely using natural resources.� Notwithstanding, the same document recognizes that the forest economy is in stagnation due to poor development planning, inefficient financing mechanisms, low investment, unqualified personnel, and an overall lack of modern tools for economic planning, forecasting, organization, and accounting that empowers effective forest management. 16. The need to ensure a more effective integrated forest management has prompted an institutional reform of the forest sector that aims to create a modern environment that favors practical policy applications based on consistent integrated information and indicators grounded on the 10 Concept of the green economy in the Kyrgyz Republic "Kyrgyzstan is the country of green economy" (Approved by the resolution of the Jogorku Kenesh of the Kyrgyz Republic dated June 28, 2018 No. 2532-VI) 8 internationally agreed conceptual framework for Natural Capital Accounting System of Environmental and Economic-Accounting (SEEA), as well as on definitions, classifications, and accounting principles that can aid in the monitoring of the forest through time and facilitate international comparisons. Box 1 shows the objectives of the reform. An important fraction of the population of the Kyrgyz Republic derives increasing value from forests. However, most of the value that is derived from them is not represented via market transactions. For that reason, it is important to compile Experimental Ecosystem Accounts (SEEA-EEA) in addition to SEEA- Central framework in order to quantify those additional benefits that are reaped by households, in the form of production for own consumption, carbon storage, and industries related to forests indirectly, such as tourism. Box 1. Objectives of the forest reform proposed by the Government • Enhancement of efficiency of implementation of forest activities considering the ecological, economic, and social factors. • Ensuring of the further improvement and development of forest, flora, and fauna use. • Prevention of degradation and conservation of the forest ecological systems. • Improvement of the guarding of forests irrespective of the ownership forms. • More precise identification of influence of the other sectors on the status of forests and biodiversity, including through comprehensive monitoring. • Development of the network of the specially protected territories and territories with unique nature resources. • Determination of the technical norms for sustainable forest management. • Improvement of the legislation relating to guarding and use of forest resources, as well as resources of flora and fauna. • Determination and clear-cut separation of powers of the bodies of state governance and the private sector. • Improvement of the systems of the joint forest management and leasing relations. • Improvement of the economic mechanism in the forestry sector with the purpose of introduction of the efficient system of financing of the special forest activities. • Improvement of the forest science and education. • Enhancement of awareness of the population about the status of the forestry sector. 2.3. Who is demanding the forest accounts and how will they be used? 17. At the national level, there are several efforts that have made the need for Natural Capital Accounting a pressing issue. The forestry program, through consultation with several stakeholders of the forest sector, has supported various initiatives that have shaped a sustained policy of three pillars—State, Man, and Forest—over the past two decades. This has prompted a decentralization of forest management, seeking the involvement of local communities in decision making, especially through the development of community-based forest management (CBFM) and joint forest management (JFM) arrangements. These initiatives include: 18. • Decree of the President of the Kyrgyz Republic “On the New National Forest Policy in the Republic� No. 300 of October 6, 1998. 9 • Forest Code of the Kyrgyz Republic of July 8, 1999, Law of the Kyrgyz Republic No. 6611. • Matrix of indicators for monitoring and evaluating the progress of transition of the Kyrgyz Republic towards sustainable development (based on the OECD Green Growth framework)12. • National Development Strategy of the Kyrgyz Republic for 2018-204013, • The concept of the green economy in the Kyrgyz Republic “Kyrgyzstan is the country of green economy� (Approved by the Resolution of the Jogorku Kenesh of the Kyrgyz Republic dated June 28, 2018 No. 2532-VI). • Program and action plan for adaptation to climate change in the “Forest and Biodiversity� sector for 2015-2017.14 • National priorities for the conservation of biological diversity of the 2025 and the Action Plan for their implementation for 2014-2020.15 • The program of improvement and development of state statistics of the Kyrgyz Republic for 2015-201916; • The concept of development of the forest sector of the Kyrgyz Republic for the period to 202517 and the Action Plan for the implementation of the Concept of development of the forest industry of the Kyrgyz Republic for 2019-2023 (hereinafter “the Action Plan�)18, as 11 As amended by the Laws of the Kyrgyz Republic of June 28, 2003 No. 119, June 28, 2003 No. 120, March 3, 2005 No. 41, July 2, 2007 No. 94, July 25, 2012 No. 132, March 11, 2013 No. 38, July 30, 2013 of the year No. 178, March 13, 2014 No. 43, July 2, 2015 No. 142, July 25, 2016 No. 135. 12 Decree of the Government of the Kyrgyz Republic of February 19, 2015 No. 48-r. 13 Approved by Decree of the President of the Kyrgyz Republic dated October 31, 2018 No. 221; 14 Order of the SAEPF of April 17, 2015 No. 01-9/110. The document addresses ecosystem-based adaptation issues, and measures aimed to strengthen ecosystem management that provides a wide range of public benefits. 15 Decree of the Government of the Kyrgyz Republic dated March 17, 2014 No. 131. 16 Approved by the Decree of the Government of the Kyrgyz Republic of March 24, 2015 No. 144; (As amended by the Decree of the Government of the Kyrgyz Republic of November 15, 2016 No. 589; 17 This Concept was developed based on the assessment of the implementation of the strategic directions of the Forest Sector Development Concept, approved by the Decree of the Government of the Kyrgyz Republic dated April 14, 2004 No. 256 (hereinafter referred to as the Concept 2004), and subject to changes at the global and national levels. The concept is based on the 12 objectives of UN Sustainable Development Goal No. 15, “Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss� (SDGs adopted at the 70th session of the UN General Assembly - “Transforming our World: The 2030 Agenda for Sustainable Development.�). The Concept was developed on a bottom-up principle, with the participation of all interested parties, and contains goals, objectives and strategic directions of the long and medium-term vision, as well as an Action Plan for the implementation of the Concept for 2019-2023 (hereinafter referred to as the Action Plan). 18 The Action Plan includes the priority areas for the development of the forest sector for 2019-2023 in details and step-by-step implementation of the tasks. The comprehensive nature of the measures will allow to coordinate the capabilities of state bodies, public and international organizations in the implementation of the Action Plan for the implementation of sustainable forest management as much as possible. 10 well as a matrix of indicators for monitoring and evaluating the implementation of the Action Plan and budget for the Action Plan19. 19. Translating these principles into practice have had its difficulties and forest sector stakeholders will benefit from integrated environmental and economic information that allows evidence-based policy discussions with the authorities. 20. According to the Concept of Development of the Forest Sector of the Kyrgyz Republic for the period to 2025, economic factors dominate the priorities in the development of the Kyrgyz forest sector. Forest resources are defined as natural capital, which is considered as a combination of forest resources and ecosystem services. In this context is recognized that the implementation of SEEA forest accounts will contribute to the increase in the contribution of forestry to GDP to 1%. 21. Table 1 shows the purposes, areas of analysis, indicators and capacity needs for the implementation of forest accounts). 19 Decree of the Government of the Kyrgyz Republic of May 27, 2019 No. 231. Ministry of Justice of the Republic of Kyrgyzstan; http://cdb.minjust.gov.kg/act/view/ru-ru/14276?cl=ru-ru 11 Table 1. Purposes, areas of analysis, indicators and capacity needs for the implementation of forest accounts No. The purpose of Purpose justification Areas of analysis Used indicators Forest accounts of the Kyrgyz implementation of forest Republic for the development of accounts of the Kyrgyz indicators Republic 1 Improving the assessment 1. Assess the impact of forest use on Analysis of the impact of Economic contribution of Flow accounts for Forest Fund and accounting of economic macroeconomic indicators. deforestation or land-use forest resources and resources and products benefits from forest change on aggregate products to GDP / GRP Flow accounts of provisioning, ecosystems for all macroeconomic cultural and regulating ecosystem institutional sectors of the indicators services of the Forest Fund economy 2. Determine the total economic value Economic value of Land and timber asset accounts of of the Forest Fund and forest areas, natural assets of the the Forest Fund including the non-market value of forest Forest Fund as part of products and ecosystem services of natural capital. Flow accounts of provisioning, forests not included in the SNA. cultural and regulating ecosystem Economic assessment of services of the Forest Fund 3. Identify the economic value of depletion of forest assets deforestation and transfer of lands for Flow accounts for Forest Fund other categories of use, including loss of resources and products including ecosystem benefits, affecting all activities of households institutional sectors of the Kyrgyz Republic. Flow accounts of provisioning, cultural and regulating ecosystem 4. Clarify the distribution of benefits Economic analysis of Economic contribution of services of the Forest Fund. from the Forest Fund between different alternative types of forest forest resources and Accounts of spatial parameters sectors of users, for example, state management and their products to GDP / GRP and the state of ecosystems of the forestry, tenants of forest plots and best combination for Forest Fund households, as well as other users of planning local/regional regional, national, and global levels. land use and development. 5. Assess trade-offs between competing forest uses. 6. Substantiate economic relations between forest users of the upper and lower courses of water flows (rivers), based on the results of the assessment of regulating ecosystem services. 12 No. The purpose of Purpose justification Areas of analysis Used indicators Forest accounts of the Kyrgyz implementation of forest Republic for the development of accounts of the Kyrgyz indicators Republic 2 Improving the measurement 1. Assess the impact of non-forest Analysis of the entire Economic assessment of Land and timber asset accounts of of the value of forest sectors of the economy on forest chain of causal depletion of forest assets the Forest Fund ecosystems for all sectors of management throughout the economy. relationships; from the national economy macroeconomic policies (primarily agriculture, 2. Measure the relationship between and policies of non-forest Economic contribution of Flow accounts for Forest Fund tourism). Improving economic activity and the demand for institutional sectors of the forest resources and resources and products macroeconomic resources and products of the forest economy, to decisions on products to GDP / GRP management, considering sector and the Forest Fund. types of forest Flow accounts of provisioning, the impact on the Kyrgyz management and Economic contribution of cultural and regulating ecosystem Forest Fund deforestation. tourism on forest lands to services of the Forest Fund the total value added of the tourism sector 3. Assess the impact of non-forest Economic assessment of Land and timber asset accounts of institutional sector policies on the ability depletion of forest assets the Forest Fund of the Forest Fund to provide critical goods and services. 4. Show the impact of macroeconomic Economic assessment of Land and timber asset accounts of policies on the Forest Fund (both direct depletion of forest assets the Forest Fund and indirect consequences). Losses of forest resources because of fires. 5. Measure the external environmental Public expenditures on Flow accounts for Forest Fund impacts of forestry and their the protection and resources and products. consequences for non-forest institutional reproduction of forests Flow accounts of provisioning, sectors cultural and regulating ecosystem Growth of artificially services of the Forest Fund grown timber Land and timber asset accounts of the Forest Fund 13 No. The purpose of Purpose justification Areas of analysis Used indicators Forest accounts of the Kyrgyz implementation of forest Republic for the development of accounts of the Kyrgyz indicators Republic Accounts of spatial parameters and the state of ecosystems of the Forest Fund. 3 Improving the resilience of 1. Identify territories of potential social Disaggregation of forest The economic Flow accounts for Forest Fund households under climatic conflicts related to the loss by accounts to regional and contribution of forest resources and products including and other uncertainties and households of previously available local levels makes it resources and products to activities of households risks flows of forest ecosystem services. possible to identify GDP / GRP, household income flows disaggregated at the Flow accounts of provisioning, from the consumption of territorial (oblast, district) cultural and regulating ecosystem forest ecosystem services and sectoral (in terms of services of the Forest Fund over time, as well as to households) levels. including activities of households predict socially dangerous Economic assessment of depletion of natural depletion of forest assets Accounts of spatial parameters capital (Forest Fund). at the regional and district and the state of ecosystems of the levels Forest Fund Ecosystem asset accounts of the Forest Fund 2. Predict the prevention of possible Flow accounts of provisioning, ethnic conflicts in multinational cultural and regulating ecosystem territories in the field of forest services of the Forest Fund management. including activities of households 3. Substantiate measures to replace Accounts of spatial parameters household income shortfalls during and the state of ecosystems of the forest protection measures. Forest Fund Ecosystem asset accounts of the Forest Fund 14 22. At the international level, there have been efforts to reform the Kyrgyz Republic to better respond to the needs of sustainable development and the Green Economy. Specifically, Natural Capital Accounting for forests provides a standardized way to monitor indicators for 7 Sustainable Development Goals, which have been adopted by the country (SDG2, SDG6, SDG8, SDG11, SDG12, SDG15, and SDG17). As a member of the international statistical community, the Kyrgyz Republic also benefits from adopting Natural Capital Accounting to better interact with the following: • Green Growth / Green Economy Initiatives by UNDESA20, UNEP21, UNDP22, OECD23. • Beyond GDP24. • World Bank Natural Capital Accounting 25 / Wealth Accounting and the Valuation of Ecosystem Services (WAVES) 26. • Aichi Goals of CBD Strategic Plan for 2011-2020 (e.g. Goal 2: By 2020, monetary value of biodiversity is included in national and local development and poverty reduction strategies, in planning processes, and in national accounting systems). 23. Natural Capital Accounting for forests is a useful planning tool for coordinating policies of various ministries and assessing intersectoral interaction, allowing them to compare alternatives and trade-offs between institutional sectors, in order to preserve and efficiently use the ecosystems of the Forest Fund of the Kyrgyz Republic. They reveal the value of non-market forest products and ecosystem services, which show which economic activities, such as agriculture and tourism, benefit from forest ecosystems. This information is crucial for the development of cross-cutting sustainable development policies. 24. At the sectoral level, forest accounts will improve the analytical powers of SAEPF and its structural divisions with a positive impact on sustainable management of the forests, as well as a more sustainable use of non-forest uses. By revealing the non-market contributions of ecosystem services, SEEA-CF and SEEA-EEA forest accounts are a powerful information tool for promoting policies that integrate economic activities related directly and indirectly to the forest, such as agriculture and tourism. 25. Natural Capital Accounting for forests will provide a better identification of areas of susceptible to lower flows of ecosystem services from forests, which can prevent negative social and 20 A Guidebook to the Green Economy Issue 4: A guide to international green economy initiatives by UNDESA: https://sustainabledevelopment.un.org/index.php?page=view&type=400&nr=916&menu=1518 21 Green Growth Indicators by UNEP: https://www.unenvironment.org/resources/report/green-growth-indicators 22 Green Economy in Action by UNDP: https://www.undp.org/content/undp/en/home/librarypage/environment- energy/integrating_environmentintodevelopment/green-economy-in-action.html 23 Towards Green Growth by OECD: https://www.oecd.org/env/towards-green-growth-9789264111318-en.htm 24 https://ec.europa.eu/environment/beyond_gdp/index_en.html 25 https://www.worldbank.org/en/topic/natural-capital 26 Wealth Accounting and the Valuation of Ecosystem Services: https://www.wavespartnership.org/ 15 economic impacts to vulnerable populations. It will also help improve the resilience of those households whose livelihoods depend on forest ecosystems. 16 3. Methods and data 3.1. Natural Capital Accounting principles 26. Natural Capital Accounting for the Forest Fund of the Kyrgyz Republic has relied upon international standards for the development of this implementation, which have been adapted to the specific institutional and organizational conditions of the country. Three principles have guided the effort, namely i) step-by-step implementation of SEEA/EEA forest accounts, taking into account available data, regulatory requirements and needs of integrated forest management; ii) flexible and modular approach, in accordance with the priorities of the Kyrgyz Republic in forest management, development of national statistics, and international comparisons; and iii) cross-cutting inter agency interactions. The local adaptation of Natural Capital Accounting for forests is firmly grounded in: 27. • System of Environmental-Economic Accounting 2012 – Central Framework. • System of Environmental-Economic Accounting 2012 – Experimental Ecosystem Accounting. • The 2019 technical Recommendations in support of the SEEA 2012 - Experimental Ecosystem Accounting. • The Forest Accounting Sourcebook: Policy applications and basic compilation. • The Forest Code and other legal documents of the Kyrgyz Republic in the field of accounting for stocks and use of forest resources and forest ecosystem services. • Analysis of data on various aspects of forest management in the Kyrgyz Republic, available in statistical and administrative accounting systems, as well as data obtained during field studies. • Identification and analysis of the interconnections of ecosystem structures and processes and further identification of generated forest products of ecosystem services provided by lands of the Forest Fund which are summarized in Figure 8. 3.2. Methodology for forest accounting 28. The following SEEA/EEA forest accounts have been developed for the Kyrgyz Republic for the year 2018: • Asset accounts for Forest Fund lands in physical and monetary terms. • Asset accounts for timber resources of the Forest Fund in physical and monetary terms. • Flow accounts for the Forest Fund in physical and monetary terms. • Flow account of ecosystem services of the Forest Fund. 17 Structures Processes Biomass, water/salt reserves, Primary production, decomposition of Land cover minerals, land/water structures, organics, nitrogen-phosphorus turnover, soils, etc. internal and external transfers of nutrients. Provisioning Regulating ecosystem Cultural ecosystem services ecosystem services services Tourism and recreation, Services Timber, non-timber CO2 sequestration, regulation scientific and educational forest resources, herbs, of surface runoff, soil use, spiritual and religious etc. protection against erosion, purposes, etc. waste assimilation, etc. Direct use Indirect use Non-use Values Market estimates, Market estimates, hedonic Willingness-to-pay, replacement costs, value pricing, transportation costs, value value transfer transfer method. transfer method. method. Total economic value of forest ecosystems Figure 8. The total economic value of forest ecosystems. Source: Based on UN et al (2014) 29. Asset accounts, both in physical (e.g. kg, ha, tm, individual units) and monetary terms (i.e. soms) follow the accounting structure of SEEA in which we assess an initial opening stock equivalent to the availability of that resource at the beginning of the year (in the Kyrgyz case available forest land and non-forest land associated with the forest, as well as standing timber). After that, we report the additions to stock (for example, from afforestation or natural expansion), deduct the reductions of stock (due to deforestation or natural reductions), record any positive or negative revaluations of the stock in the case of monetary values, to find the availability of the resource at the end of the accounting period or closing stock. Table 2 shows the general form of an asset account for forests. Table 2. General form of asset accounts for forests No. Indicator 1 Opening value of stock Additions to stock (+), total for the reporting year 2 Additions (afforestation, natural growth) 3 Reclassifications Reductions in stock (-), total for the reporting year 4 Reductions (removals, felling residuals, natural losses) 5 Reclassifications 6 Revaluations of lands due to change in market prices (in the case of monetary stocks) 7 Closing value of stock of land Source: Economic Commission et al. (2013) 18 30. In the case of flows, Forest Fund assets provide products and services that are made available to the economy each year. In this case, flows from the environment to the economy are accounted for in a supply table, and then track how those products and services are used by institutional sectors of economic activity and exported to the rest of the world in a use table, both in monetary and in physical terms. Figure 9 shows a highly aggregated diagram of supply and use tables for forest resources, both in physical and monetary terms. Blocked out cells are null by definition. The supply table explains that natural sources flow from the environment (1), but at the same time, industries (disaggregated by the State Classification of Economic Activity – 3, based on the International Standard Industry Classification) are offering products (according to the Statistical Classification of Products – 2, based on the Central Product Classification - CPC) manufactured from those natural resources to the economy (2). 31. Products from the rest of the world can be imported as well (3). Finally, all institutional sectors in the economy and the environment itself can create residuals (4, 5, 6, 7). Conversely, the use table in Figure 9 shows that once available, those natural sources or products can be used by industries (8) as inputs to manufacture products, while the products made by industries in the supply side can be purchased by other industries as inputs (9), by households (10), or they can be exported (11), while residuals can be used as inputs for industries as in recycling (12), exported, as is the case with certain residuals (13) or discarded to the environment (14). Supply table Household Final Flows to/from the Flows from the Industries (ISIC) Consumption rest of the world environment Total Natural sources 1 Products (CPC) 2 3 Residuals 4 5 6 7 Use table Household Final Flows to/from the Flows to the Industries (ISIC) Consumption rest of the world environment Total Natural sources 8 Products (CPC) 9 10 11 Residuals 12 13 14 Figure 9. Diagram form of flow accounts tables for forest 3.3. Data sources, gaps and limitations 34. For this implementation, the following data sources were used: • Official statistics produced by the National Statistical Committee of the Kyrgyz Republic. • Official administrative data in the form of databases from government bodies, such as the SAEPF and its subordinate structures in the regions of the Kyrgyz Republic; the State Registration Service under the Government of the Kyrgyz Republic; the Ministry of 19 Economy; Ministry of Agriculture; Food Industry and Land Reclamation; the Ministry of Emergency Situations; and the Ministry of Finance of the Kyrgyz Republic, among others. • Expert data that describe the phenomena and facts of an unregistered 27 economic phenomena. This is necessary in situations where official statistical and administrative data are not available. When using expert data, appropriate assumptions were made. • Geographical Information Systems. • Data in physical terms for available quantitative data (for example, data on the mass of harvested nuts); available quantitative data obtained on the basis of conversion and a combination (for example, an assessment of the volume of hay harvesting by the number of livestock). • Data in monetary terms, obtained by multiplying data in physical terms by the corresponding price (for example, the value of standing timber stocks is obtained by multiplying the harvesting volume (cubic meters) by the cost of 1 cubic meter of standing timber). • For asset accounts, market price of the resource in its natural environment (for example, auction prices for standing timber); market price of the product obtained from the resource minus the costs of harvesting the resource, processing, transportation, etc. (for example, the market value of the round timber minus the cost of procurement, processing and transportation) multiplied by the physical volume of the estimated resource. • For flow accounts, the value of the product obtained using the resource at the consumer's price. Data in monetary terms are represented in monetary units (som, dollar, etc.). 35. In general, the revision of data gaps on the forest accounts of the Kyrgyz Republic showed that there are large data gaps for the compilation of the asset account of non-forest lands of the Forest Fund, which form a single natural complex with forests, and asset accounts of timber. It was also difficult to find systematic information characterizing changes in the assets of forest and non- forest lands, as well as timber, during the reporting year 2018 (both for anthropogenic and natural reasons). • Among the flow accounts of ecosystem services provided by the Forest Fund of the Kyrgyz Republic, the largest gaps were identified in flow accounts of regulating ecosystem services, where there is almost none of the required data (not only official, but also expert). Moreover, according to the methodology of ecosystem accounting, these data should be provided not only in physical terms but also in a spatial manner. There is a need to produce geographic Land Use Land Cover information on the area and location of forests that provide various regulatory ecosystem services, such as water protection, protective, sanitary, and recreational, environmental protection, etc. 27 Unregistered economy - economic activity that is not fully covered by the system of state statistical accounting (Source – https://investfuture.ru/dictionary/word/neregistriruemaya-ekonomikaunregistered-economy). 20 • As for cultural ecosystem services, there is no information on the activities of travel agencies, educational, scientific, and cultural institutions on the lands of the Forest Fund. • Finally, in the case of flow accounts for provisioning ecosystem services, data are mostly available; but there is no disaggregation of the expenses by producers and consumers of products and services. 21 4. Core accounting tables 37. This section presents the results from the compilation of Natural Capital Forest Accounts of the Forest Fund of the Kyrgyz Republic for the year 2018, both in physical and monetary terms. When we mention the Forest Fund in this document, we are referring to all forests in the Kyrgyz Republic. Here we present aggregated versions of the main tables of the exercise along with a description of relevant aspects of each of them. Fully disaggregated tables can be found in Annex 1. The pilot exercise of Forest Fund lands successfully compiled the following sets of accounts: • Asset accounts in physical and monetary terms. • Asset accounts for timber in physical and monetary terms. • Flow accounts in physical and monetary terms. • Flow accounts of ecosystem services in monetary terms 4.1. Asset accounts in physical and monetary terms 38. The following asset accounts describe how the stocks of forest land changed in 2018, due to additions, reductions in the case of physical accounts, and those categories along with appreciation or depreciation of the stock for monetary accounts. In physical terms, Table 3 and Table 4 show the physical composition of assets in hectares for forest land and non-forest lands within the Forest Fund, respectively. In 2018, the stock of natural forest land saw an increase of 2.1% going from 783,553 to 800,002 hectares, whereas artificial lands expanded by 3.3% with 56,283 hectares at the beginning of the accounting period and 58,147 hectares at the end as shown in Table 3. In this exercise, non-forest lands that form a single natural complex with forests were also considered. Table 4 shows that there were no changes to the area under this category in 2018 with an unchanged stock of 8,480 hectares for agricultural land; 1.2 million hectares of pastures and hayfields; 1.2 million hectares for other types of land; and 1,407 thousand hectares for infrastructure (roads, fire breaks, power lines, pipelines). Changes are not shown due to a lack of information for 2018. In the Kyrgyz context, it is important to note that pastures and hayfields (Table 4) are equivalent to 1.4 times the sum of natural and artificial area of forest land (Table 3). 22 Table 3. Physical asset account for forest land in 2018, hectares Forest lands By type By protection category No. Transaction Sanitary Forests of Water Undisturbed Natural Artificial Protective and Protected protection recreational Areas Opening stock of forest 1 783553 56283 1114 1012278 3496 135879 land 1 Jan 2018 Total additions to stock 2 16699 1864 (+) Managed expansion of 3 1864 the area Natural expansion of the 4 16699 area Total reductions in 5 stock (-) Managed reduction in the 6 area Natural reduction in the 7 area Closing stock of forest 8 800252 58147 1114 1012278 3496 135879 land 31 Dec 2018 Source: author’s own elaboration. See Table 17 of Annex 1 for disaggregation. Table 4. Physical asset account for non-forest lands that form a single natural complex with forests in 2018, hectares Non-forest lands that form a single natural complex with forests Agricultural land Land under No. Transaction (except Pastures and roads, fire Total Other lands pastures and hayfields breaks, power hayfields) lines, pipelines Opening stock of forest land 1 Jan 1 8480 1194830 1179232 1407 2383949 2018 2 Total additions to stock 3 Managed expansion of the area 4 Natural expansion of the area 5 Total reductions in stock 6 Managed reduction in the area 7 Natural reduction in the area Closing stock of forest land 31 Dec 8 8480 1194830 1179232 1407 2383949 2018 Source: author’s own elaboration. See Table 18 of Annex 1 for disaggregation. 38. In monetary terms, Table 5 shows that the physical expansion of the natural forest that occurred in 2018 (see Table 3 above) had a market value of 4.6 million soms, but a negative revaluation of stocks due to market prices, resulted in a lower value of the stock of natural forests, going from 216.4 to 210.3 million soms. This represented a 2.9% decrease in monetary terms. In addition, artificial forests showed a 1.7% reduction in its monetary stock at the end of the accounting period due to a negative revaluation that outweighed the positive value of the managed expansion of that area, going from 15.5 to 15.3 million soms. 23 Table 5. Monetary asset account for forest lands in 2018, thousand soms at current prices Forest lands By type By protection category No. Transaction Sanitary Water and Forests Undisturbed Natural Artificial protection Protective recreational of pas Total Opening stock 1 Jan 1 216470 15549 308 279659 966 37539 1728983 2018 Total additions to stock 2 4613 515 12180 (+), including 3 Managed area expansion 515 515 Natural expansion of the 4 4613 11665 area Total reductions in 5 44 stock (-) 6 Managed area reduction Natural reduction in the 7 44 area Revaluations due to 8 change in market -10830 -778 -15 -13991 -48 -1878 -86499 prices (+/-) Closing stock 31 Dec 9 210253 15286 292 265668 918 35661 1654619 2018 Source: author’s own elaboration. See Table 19 of Annex 1 for disaggregation. Note: approximately 73.77 per 1 US$. Table 6. Monetary asset account for non-forest lands that form a single natural complex with forests in 2018, thousand soms at current prices Land under Agricultural roads, fire land (except Pastures and Other breaks, No. Transaction Total pastures and hayfields lands power hayfields) lines, pipelines 1 Opening stock of forest land 1 Jan 2018 276443 763247 1039690 2 Total additions to stock (+) 3 Managed expansion of the area 4 Natural expansion of the area 5 Total reductions in stock (-) 6 Managed reduction in the area 7 Natural reduction in the area Revaluations due to change in market 8 -13822 -38162 -51985 prices (+/-) 9 Closing stock of forest land 31 Dec 2018 262621 725084 987706 Source: author’s own elaboration. See Table 20 of Annex 1 for disaggregation. Note: approximately 73.77 per 1 US$. Asset accounts for timber of the Forest Fund in physical and monetary terms 39. While areas presented above provide an overall understanding of the availability of forest land for various purposes (i.e. production, water protection, conservation, recreation) and open the door for a more comprehensive valuation outside SNA’s boundary of production, the asset accounts explained in this section are more closely tied to the traditional value of the forests for the economy 24 in the form of timber, both in physical as well as in monetary terms. Standing timber in natural forest land saw a net growth of 1.4%, going from 32.22 to 32.63 billion cubic meters in 2018, while timber in artificial land grew by 1.5% going from 3.70 to 3.76 billion cubic meters as shown in Table 7. This is consistent with the fact that between 1990 and 2010, the Kyrgyz Republic gained 14.1% of its forest cover, or around 118,000 hectares28. In monetary terms, Table 8 shows that that growth in volume was not accompanied by a growth in value, because the value of natural grown was outweighed by the value of removals and a negative revaluation due to change in market prices. For that reason, natural forests saw a monetary reduction of stocks of 5.8% between the beginning and end of the accounting year (2018), showing a closing stock of 1.96 billion soms. Standing timber in artificial land saw a similar relative reduction in monetary stocks, going from 239.19 to 187.93 billion soms in 2018 (Table 8). Table 7. Physical asset account for timber in 2018, thousand cubic meters Forest lands By type By protection category Sanitary No. Transaction Water Forests of Undisturbed Natural Artificial Protective and protection pas recreational A B C D E F G Opening stock of timber 1 Jan 1 32183745 3703421 34678 31513746 108830 4229912 2018 2 Total additions to stock (+) 3 Natural growth 450830 56283 4 Reclassifications 5 Total reductions in stock (-) 6 Removals 512 724 1236 7 Felling residuals 8 Natural losses 9 Catastrophic losses 10 Reclassifications Closing stock of timber 31 Dec 11 32634063 3758980 34678 31512510 108830 4229912 2018 Source: author’s own elaboration. See Table 21 of Annex 1 for disaggregation. 28 Global Forest Resources Assessment. FAO (2010). 25 Table 8. Monetary asset account for timber in 2018, thousand soms Forest lands Total for By type By protection category timber of the No. Transaction Water Sanitary and Forests Undisturbed Natural Artificial Protective Forest protection recreational of pas Fund A B C D E F G P 1 Opening stock 1 Jan 2018 2078617 239189 2240 2035344 7029 273193 2317806 2 Total additions to stock (+) 3 Natural growth 11479 1433 12744 4 Reclassifications 5 Total reductions in stock (-) 7 Removals 28804 40730 69534 69534 8 Felling residuals 9 Natural losses 10 Catastrophic losses 11 Reclassifications Revaluations due to change in 12 -103931 -11959 -112 -101767 -351 -13660 -115890 market prices (+/-) 13 Closing stock 31 Dec 2018 1957361 187932 2128 1864043 6677 259533 2145125 Source: author’s own elaboration. See Table 22 of Annex 1 for disaggregation. Note: approximately 73.77 per 1 US$. 4.2. Flow accounts of Forest Fund resources in physical and monetary terms 40. The following tables show the supply of forest products from the environment to the economy, and how those products are processed and delivered as inputs to economic sectors. It also shows which sectors use those products and in what proportions, both in physical and monetary terms. Supply and use tables are an important tool to understand which sectors depend on forest products the most and develop public policies, accordingly, for the purpose of incentivizing or limiting the use of environmental resources. Table 9 shows that in the accounting period, the assets discussed in sections 4.1 and 0 supplied the economy with 403,635.2 metric tons of non-timber forest products, which were complemented with 459.5 metric tons of imports to provide an availability of 404,094.7 metric tons of non-timber forest products. These were provided mainly to the Forestry sector and by the Tenants of forest plots who then distribute it commercially, as well as by households for own consumption (see Annex 1 for these details). It is worth noting that, household production for own consumption accounted for 99.1% of the supply of non-timber products under the Forest Fund (Table 10), such as walnuts, almonds, pistachios, mushrooms, wild apples, apricots, cherries, pears, hay, medicinal herbs and fruits. There is correspondence in the use of non-timber forest resources shown in Table 11, because household final demand is responsible of that same 99.1% of consumption. Forest Fund assets were able to supply the economy with 17,888 cubic meters of timber products for industrial purposes and 178,647 cubic meters for fuel (Table 10) which were complemented with 2,430 cubic meters of imports for both purposes. Conversely, Table 11 shows that the Manufacturing Industry is responsible for 98.0% of the consumption of timber products for industrial purposes as expected, while households are responsible for 99.1% of the consumption of timber products for fuel. The generalized use of fuelwood warrants future assessments of indoor air quality. 26 Table 9. Physical supply table of natural resources from the environment in 2018, various units Aggregated product groups Unit From forests Total Non-timber forest products kg 403,635,183 403,635,183 Industrial timber m3 17,888 17,888 Fuel timber m3 178,647 178,647 Planting material pieces 541,461 541,461 Wild game animals 1,000 1,000 Source: author’s own elaboration. See Table 23 of Annex 1 for disaggregation. Table 10. Physical supply table of forest goods and services in 2018, various units Aggregated HH Production for Gross capital Rest of the product groups Unit Production own consumption Households Government formation World Total Non-timber forest products kg 3,123,276 400,511,907 459,533 404,094,716 Industrial timber m3 17,889 0 2,302 20,191 Fuel timber m3 8,283 170,364 128 178,775 Planting material pieces 541,460 0 0 541,460 Wild game animals 1,000 0 0 1,000 Agricultural products kg 1,206,615 0 0 1,206,615 Raw milk liter 982,000 0 0 982,000 Dairy products kg 50,672 0 0 50,672 Services n.d. Source: author’s own elaboration. See Table 23 of Annex 1 for disaggregation. Table 11. Physical use table of forest goods and services in 2018, various units Aggregated HH Production for Gross capital Rest of the product groups Unit Production own consumption Households Government formation World Total Non-timber forest products kg 1,862,333 0 401,032,037 903,119 297,227 404,094,716 Industrial timber m3 19,885 0 0 1 305 20,191 Fuel timber m3 1,433 0 177,240 -1 103 178,775 Planting material pieces 527,344 0 2,783 11,333 0 541,460 Wild game animals 420 0 580 0 0 1,000 Agricultural products kg 753,782 0 392,705 60,128 0 1,206,615 Raw milk liter 644,454 0 337,547 -1 0 982,000 Dairy products kg 752 0 49,745 175 0 50,672 Services n.d. Source: author’s own elaboration. See Table 23 of Annex 1 for disaggregation. 41. In monetary terms, Table 12 shows that national Forest Fund assets supplied the economy with 11.3 billion soms worth of forest related commodities, of which non-timber forest products represented 94.2% (including, walnut, almond, pistachio, mushroom, wild apple, apricot, cherry, pear, seeds, planting material, hay, medicinal herbs and fruits and wild game); 0.6% were timber forest products, both for industrial purposes and fuel; 0.1% represented agricultural sub products; 27 and 4.4% were attributed to forest-related services. These were complemented with 74.3 million soms worth of imports of all products. When looking at individual commodities (see Annex 1 for details), the value of total domestic supply is dominated by the provision of hay (35.1%), pistachio (25.3%), and walnut (24.1%); followed by almond (4.8%) and wild apple (4.2%); with the remaining 6.5% spread over 23 commodities of timber products, non-timber products, agricultural sub products, and forest services. Table 13 shows the uses in monetary terms of the previously described commodities. For the Forest Fund lands of this exercise, the use is carried out predominantly by households, who consume 93.65% of total demand of 11.3 billion soms in the forest accounts, with agriculture accounting for 0.9%, the forest sector itself 0.7%, manufacturing industry 1.78%, and the remaining 0.21% spread out over the rest of activities. Given that the supply is mostly provided by households for own consumption, it follows that their demand (see Annex 1 for details) is led by purchases of hay (37.1%), pistachio (26.4%), and walnut (24.8%); followed by almond (5.1%) and wild apple (4.6%). Table 12. Monetary supply table of forest goods and services in 2018, 1000 soms at current purchaser prices Aggregated HH Production for own Gross capital Rest of the product groups Production consumption Households Government formation World Total Non-timber forest products 188,907 10,427,088 61,429 10,677,424 Industrial timber 31,636 0 12,026 43,662 Fuel timber 3,852 20,957 796 25,605 Planting material 49,393 0 0 49,393 Wild game 21 0 0 21 Agricultural products 16,522 0 0 16,522 Raw milk 14,938 0 0 14,938 Dairy products 6,213 0 0 6,213 Services 499,018 0 0 499,018 Total 810,500 10,448,045 74,251 11,332,796 Source: author’s own elaboration. See Table 27 of Annex 1 for disaggregation. Note: approximately 73.77 per 1 US$. Table 13. Monetary use table of forest goods and services in 2018, 1000 soms at current purchaser prices Aggregated HH Production for own Gross capital Rest of the product groups Production consumption Households Government formation World Total Non-timber forest products 151,912 0 10,497,887 8,685 18,940 10,677,424 Industrial timber 42,875 0 0 0 787 43,662 Fuel timber 318 0 24,679 -1 609 25,605 Planting material 47,461 0 460 1,472 0 49,393 Wild game 9 0 13 -1 0 21 Agricultural products 13,659 0 6,497 731 0 20,887 Raw milk 9,637 0 5,302 -1 0 14,938 Dairy products 79 0 6,134 0 0 6,213 Services 149,693 0 238,532 71,718 26,036 13,039 499,018 Source: author’s own elaboration. See Table 28 of Annex 1 for disaggregation. Note: approximately 73.77 per 1 US$. 28 4.3. Flow accounts of ecosystem services 42. In this section we present the current developments of a pilot implementation of an ecosystem service account for the Forest Fund of the Kyrgyz Republic which offers an estimate of the extended contribution of the forest to the economy. Ecosystem services include i) provisioning services which are accounted for in the supply and use tables from section 4.2 (output of timber and non-timber forest products: walnut, almond, pistachio, mushroom, wild apple, apricot, cherry, pear, seeds of tree species, planting material, industrial timber, fuel timber, hay, medicinal herbs and fruits, and game); ii) regulating services (mainly pollination, CO2 sequestration, and others); and iii) cultural services (tourism and recreation, education, and others). At this point, preliminary figures have been compiled for provisioning and cultural services, while regulating services have only been estimated for carbon stocks of the Forest Fund in 2010. Table 14. Value of ecosystem services and natural assets in monetary terms in 2018, US$ million/year at current prices Concept Unit Value Value of natural assets Land assets US$ million 37.839 Timber assets US$ million 30.709 Value of ecosystem service flows Provisioning ecosystem services flow US$ million / year 154.621 Cultural ecosystem services flow US$ million / year 1.847 Regulating ecosystem services flow (СО2 sequestration) * US$ million / year 78.0 (*) Source: author’s own elaboration. See Annex 2 for more details on Ecosystem Service Accounts. (*) —approximate value. 43. Provisioning services account for those products that are being supplied to the economy by Forest Fund lands shown in Table 12, equivalent to 11.3 billion soms. The value of cultural ecosystem services has been determined on the basis of data on the number of days of rental housing by visitors of forest plots and on the revenue and expenses of tenants of forest plots connected with rent, equivalent to 129 million soms in 2018. For regulating ecosystem services, it is currently possible to determine only the state of Forest Fund ecosystems in terms of the size of carbon stocks of the Forest Fund as of 2010. Based on the available data of the 1st National Forest Inventory of the Kyrgyz Republic (2010), the corresponding total value was determined as 1.363.975 million tons of CO2. We assumed that the possible rate of sequestration and annual increase in carbon stocks of the Kyrgyz Forest Fund is equivalent to 0.2% of its stocks according to the results of the 1st National Forest Inventory of the Kyrgyz Republic, i.e. 2.73 million tons of CO2 per year. For valuation purposes, the price of the carbon emission quota was set at 25 Euro per ton of CO2-eq . The economic value of the flow of regulating forest ecosystem services of the Kyrgyz Republic for carbon sequestration in 2018 amounted to 2.73 million tons of CO2/year * 28.61 $/t CO2-eq. = $78 million/year. Both the value of cultural ecosystem services and provisioning services sum 11.33 billion soms, equivalent to 2% of GDP. 44. It is important to note that the Kyrgyz Republic has a great number of large and medium sized rivers offering significant hydropower potential, estimated at 140-170 TWh, of which only about 10 per cent has been exploited. The country is highly dependent on hydropower, which produced around 90 per of total electricity generated in 2019. At the end of 2017, the water volume at 29 Toktogul sat at almost 18.75 billion cubic meters, which was higher than 2016 by 12% and enabled power exports to neighboring countries. This has not been considered in this assessment, but there are contributions from forests to annual water yield and soil erosion prevention (that reduces costs associated with dredging of hydroelectric dams), which are important ecosystem services to hydroelectric production that should be taken into account in future implementations of ecosystem accounting. 30 5. Lessons learned and way forward 45. This exercise has revealed interesting data and institutional gaps that need to be addressed in order to ensure the production of Natural Capital Accounts for Forests in a continuous and sustained manner. In the first place, we believe that implementation and approval of the results of the second national forest inventory would provide a quick win in the formalization of forest compilation efforts. Additionally, in order to better comply with the information needs of forest accounts, existing forms of statistical monitoring in the field of forest management would need to be adjusted in terms of disaggregation, degree of processing, and selling prices (wholesale or retail), for example. We have also identified the need to add SNA accounts and plan accordingly to obtain disaggregated data or conduct research to obtain missing data for the accounts. 46. In the case of accounts of ecosystem services, Table 15, shows measures to increase the information for the flow accounts of ecosystem services of the Forest Fund of the Kyrgyz Republic, based on their current status. One group of recommendations are related to adjustments to the disaggregation of SNA classifications that allow for a better match with forest accounting. A second set of recommendations are related to improving geographic information, and conducting in-depth research to identify sacred places, sociocultural locations, and forest areas with cultural, historical, and spiritual value for the Kyrgyz Republic. Table 15. Measures to improve information for the flow accounts of ecosystem services of the Forest Fund of the Kyrgyz Republic by type of account No. Account Measures to improve information 1 Account of provisioning 1. Statistical institutionalization of data on types and volumes of forest use of ecosystem services for non-tenant households in terms of provisioning ecosystem services. forest lands 2. Expansion and refinement of the classification of products (goods and services) within Statistical Classification of Products-2 in terms of forest products, in order to obtain a more adequate picture of the value of specific types of forest use 3. Disaggregation in the tables of the SNA of the general indicator of the expenses of forest users by type of products and services sold 2 Account of regulating 1. Approval of the results of the 2nd national forest inventory of the Kyrgyz ecosystem services for Republic. The results should not only meet the needs of the forest classification forest lands within the SEEA (by age, species composition, type, etc.), but also contain information about the protective status of forest areas and their spatial location 2. Development of cartographic materials on the forest territories of the Kyrgyz Republic in the Kyrg-06 system, with the data on the type of land cover and altitude 3. Conducting scientific research on the identification and spatial arrangement of the regulating ecosystem functions of forest areas, in order to obtain data for the assessment of regulating ecosystem services. 4. Build capabilities in ecosystem service modeling (e.g. InVEST) in order to better understand the benefits in annual water yield and soil erosion mitigation from forests for ecosystem service accounting. 3 Account of cultural 1. Statistical institutionalization of data on types and volumes of forest use of ecosystem services for non-tenant households in terms of cultural ecosystem services. forest lands 31 2. Obtaining data on the income of travel agencies from activities in the territories of the Forest Fund, as well as information on the incomes of protected areas from visitors of the forest areas 3. Expanding and clarifying the Statistical Classification of Products-2 (goods and services) in terms of tourism as a type of forest use in order to obtain a more adequate picture of the value of cultural ecosystem services of the Forest Fund 4. Disaggregation in the tables of the SNA of the general indicator of the costs of forest users by type of products and services sold 5. Conducting scientific research to identify sacred places, sociocultural dominants and other unique objects in forest areas that represent the cultural, historical and spiritual value of the Kyrgyz Republic in order to give them an appropriate status as sources (assets) of cultural ecosystem services 47. Increasing the organizational capacity of forest accounts and increasing the capacity and awareness of key agencies will provide the institutional underpinning for a continuous production of forest accounts in the long term. Table 16 provides a detailed list of measures to improve that capacity, divided in regulatory, organizational, and administrative, professional, and technical support. Table 16. Measures to improve capacity and awareness of key institutions to produce forest accounts for the Kyrgyz Republic in the long term No. Type of measure Measures for key agencies 1 Regulatory support National Statistical Committee of the Kyrgyz Republic - Supplement the (sufficiency of legislative Regulation on the National Statistical Committee of the Kyrgyz Republic norms and strategic planning (Section 6 of Chapter III) with the functions: documents) - coordination of activities in the field of official statistics in the preparation of national accounts in accordance with the requirements of international statistical standards SNA-2008 and SEEA, as well as Tourism Satellite Accounts TSA, health and other accounts. - development of a methodology for compiling national SEEA accounts of the Kyrgyz Republic and its approval SAEPF under GKR - Supplement the Regulation on the Agency (Section 6 of Chapter 4) with the powers to develop forms and summarize the data of the primary accounting of forest and other controlled SAEPF natural resources, with the aim of subsequent transfer of the completed forms to the National Statistical Committee of the Kyrgyz Republic for the formation of natural resource accounts within SEEA, but also TSA. 2 Organizational and National Statistical Committee of the Kyrgyz Republic - the creation of an administrative support interdepartmental working group on the implementation of SEEA and TSA, (the elimination of existing in order to coordinate interaction in the production of data for the current and potential gaps in the tasks of developing accounts. system of departmental SAEPF under GKR - adoption of a regulatory document on the organizational and implementation of the agency's powers in the field of SEEA accounts. A administrative similar mechanism is suggested to coordinate with the Ministry of documentation, as well as in Information, Culture and Tourism of the Kyrgyz Republic. the implementation of the Conclusion of the Agreement on cooperation and data sharing between the necessary interagency NSC and SAEPF, defining a specific set, formats, and timing for the communications) provision of data for the compilation of forest accounts. These institutions have to coordinate with respect to definitions and classifications with the 32 No. Type of measure Measures for key agencies Ministry of Information, Culture and Tourism of the Kyrgyz Republic for the compatibilization of these efforts with Tourism Satellite Accounts. 3 Professional and Supplementing training programs for specialists of SAEPF and its informational support subordinate organizations with issues of terminology of sustainable (correspondence of development, accounting and assessment of natural resources and ecosystem professional experience and services, SEEA, ecosystem accounting, etc. available knowledge in the Supplementing training programs for specialists of National Statistical field of SNA / SEEA of key Committee of the Kyrgyz Republic with issues of methodologies and employees and ordinary practices for the compilation of SEEA forest accounts of and ecosystem specialists to current needs) accounts of the Forest Fund, the integration of data in the tables of the SNA, etc. Increasing the number of experts working at key agencies (the National Statistical Committee of the Kyrgyz Republic and the SAEPF under GKR) considering the large volume and long-term nature of the work on SEEA development, including the initial compilation of accounts and their further maintenance (with necessary adjustments) Regular participation of leading NSC KR and SAEPF experts in the work of UNECE and OECD on the SEEA development and implementation 4 Technical support 1. Providing computer equipment and necessary software to automate (sufficiency of technical calculations. equipment and software, 2. Organization of network communications, especially in the transition to financial and other resources) regionalization of accounts, and their subsequent aggregation at the country level. 3. Providing visualization tools using GIS technologies. 4. Allocation of necessary funding, in accordance with Appendix 4 to the Decree of the Government of the Kyrgyz Republic dated May 27, 2019 No. 231 “On approval of the Concept of development of the forest sector of the Kyrgyz Republic for the period until 2040�. 48. One key step that is necessary in legislative and administrative spheres is related to the adoption of the Decree of the Government of the Kyrgyz Republic (or the Law of the Kyrgyz Republic) on information resources. This will help streamline production, transfer, storage and use of data in the field of forest management and other fields related to forest accounting. This will also provide the Government of the Kyrgyz Republic with a firm legal base to create the coordinating council for the implementation of the SNA / SEEA as the basic information platform for sustainable socio- economic development and green growth 49. Additionally, there is a need to develop and implement a Comprehensive Training Plan on the System of Environmental-Economic Accounting of the Kyrgyz Republic for the effective forest management. This training plan would allow key users with a common language to understand and build upon the development of forest accounting, to better assess the state of natural resources and ecosystem services, and raise the level of the discussion around the Green Economy. Preferably, this plan would permeate into the bachelor's and master's programs of higher education institutions of the Kyrgyz Republic. 33 50. The lack of some information should not be regarded as an obstacle for the implementation and publication of forest accounts and accounts of flows of ecosystem services of the Forest Fund of the Kyrgyz Republic29. Even in countries with high statistical capacity and developed statistical traditions, not all SEEA accounts are published with 100% cells filled. Rather than hinder the decision to compile forest accounts, data gaps show the way to improve the capabilities of the Kyrgyz statistical system. 29 In particular, it is noted in the documents of the Joint OECD/UNECE Seminar on the Implementation of SEEA, February 21-22, 2018 http://www.unece.org/index.php?id=47522 34 Annex 1. Forest Resource Accounts: Detailed Accounting Tables Table 17. Physical asset accounts for forest land in 2018, hectares Forest lands By type By protection category By species composition By age composition No. Transaction water sanitary and ripe and undisturbed Natural artificial protective forests of PAs nut spruce juniper flood-plain young middle-aged ripening protection recreational overripe A B C D E F G H I J K L M N O 1 Opening stock of forest land in 2018 783553 56283 1114 1012278 3496 135879 625492 1581526 1473760 78744 90133 91318 93432 231375 2 Total additions to stock (+), including 16699 1864 3862 10616 11046 3 Managed expansion of the area 1864 4 Natural expansion of the area 16699 3862 10616 11046 5 Total reductions in stock (-), including 160 6 Managed reduction in the area 7 Natural reduction in the area 160 8 Closing stock of forest land in 2018 800252 58147 1114 1012278 3496 135879 625492 1581526 1473760 78744 89973 95180 104048 242421 35 Table 18. Physical asset accounts for non-forest lands that form a single natural complex with forests in 2018, hectares Non-forest lands that form a single natural complex with forests Agricultural land (except Land under roads, fire breaks, Pastures and hayfields Other lands pastures and hayfields) power lines, pipelines No. Transaction Urban and Urban and Urban and Urban and SFF SFF SFF SFF municipal municipal municipal municipal A B C D E G H I 1 Opening stock of forest land in 2018 8480 1194830 1179232 1407 2 Total additions to stock, including 3 Managed expansion of the area 4 Natural expansion of the area 5 Total reductions in stock , including 6 Managed reduction in the area 7 Natural reduction in the area 8 Closing stock of forest land in 2018 8480 1194830 1179232 1407 36 Table 19. Monetary asset accounts for land in 2018, thousand soms at current prices Forest lands Total for By type By protection category By species composition By age composition forest sanitary lands of No. Transaction water and forests of middle- ripe and the forest undisturbed natural artificial protection protective recreationa PAs nut spruce juniper flood-plain young aged ripening overripe fund A B C D E F G H I J K L M N O P Opening stock of forest land in 1 216470 15549 308 279659 966 37539 172803 436923 407151 21754 24901 25228 25812 63921 1728983 2018 Total additions to stock (+), 2 4613 515 1067 2933 3052 12180 including 3 Managed expansion of the area 515 515 4 Natural expansion of the area 4613 1067 2933 3052 11665 Total reductions in stock (-), 5 44 44 including 6 Managed reduction in the area 7 Natural reduction in the area 44 44 Revaluations of stocks due to 8 10830 778 15 13991 48 1878 8645 21859 20369 1088 1246 1262 1291 3198 86499 change in market prices (+/-) Closing stock of forest land in 9 210253 15286 292 265668 918 35661 164158 415064 386782 20666 23611 25033 27454 63775 1654619 2018 37 Table 20. Monetary asset accounts for non-forest lands that form a single natural complex with forests in 2018, thousand soms Non-forest lands that form a single natural complex with forests Agricultural land Land under roads, fire (except pastures and Pastures and hayfields Other lands breaks, power lines, Total for hayfields) pipelines non-forest lands of No. Transaction the forest forest fund communal forest fund communal forest fund communal forest fund communal fund forests forests forests forests forests forests forests forests A B D E G H J K M 1 Opening stock of forest land in 2018 276443.3 763246.7 1039690 2 Total additions to stock (+), including 3 Managed expansion of the area 4 Natural expansion of the area 5 Total reductions in stock (-), including 6 Managed reduction in the area 7 Natural reduction in the area 8 Revaluations of stocks due to change in market prices (+/-) 13822.2 38162.3 51984.5 9 Closing stock of forest land in 2018 262621.1 725084.4 987705.5 38 Table 21. Physical asset account for timber in 2018, thousand cubic meters Forest lands By type By protection category By species composition (forest types) By age composition No. Transaction undistur water protectiv sanitary forests flood- middle- ripe and natural artificial nut spruce juniper young ripening bed protectio e and of PAs plain aged overripe A B C D E F G H I J K L M N O 1 Opening stock of timber in 2018 32183745 3703421 34678 31513746 108830 4229912 3039832 5835423 5092142 21919771 2 Total additions to stock (+), including 3 Natural growth 450830 56283 84397 91318 93432 231375 4 Reclassifications 5 Total reductions in stock (-), including 6 Removals 512 724 1236 512 724 7 Felling residuals 8 Natural losses 9 Catastrophic losses 10 Reclassifications 11 Closing stock of timber in 2018 32634063 3758980 34678 31512510 108830 4229912 3123717 5926741 5185574 22150422 Table 22. Monetary asset account for timber in 2018, thousand soms Forest lands T otal for By type By protection category By species composition By age composition timber of No. T ransaction the forest water sanitary forests of middle- ripe and undisturbed natural artificial protective nut spruce juniper flood-plain young ripening fund protection and PAs aged overripe A B C D E F G H I J K L M N O P 1 Opening stock of timber in 2018 2078617 239189 2240 2035344 7029 273193 196330 376886 328881 1415708 2317806 2 T otal additions to stock (+) 3 Natural growth 11479 1433 2149 2325 2379 5891 12744 4 Reclassifications 5 T otal reductions in stock (-) 7 Removals 28804 40730 69534 28804 40730 69534 8 Felling residuals 9 Natural losses 10 Catastrophic losses 11 Reclassifications 12 Revaluations of stocks due to change in market prices (+/-) 103931 11959 112 101767 351 13660 9817 18844 16444 70785 115890 13 Closing stock of timber in 2018 1957361 187932 2128 1864043 6677 259533 0 0 0 0 159859 360367 314816 1310084 2145125 39 Table 23. Physical supply and use table for products from Forest Fund lands in 2018, various units Production HH Interaction with from Production nature Economic for own Gross capital Rest of the Supply/Use Aggregated product groups Unit Activities consumption Households Government formation World Environment Total 1 Non-timber forest products kg 403,635,183 403,635,183 From 2 Industrial timber m3 17,888 17,888 environment to Physical Supply 3 Fuel timber m3 178,647 178,647 economy 4 Planting material pieces 541,461 541,461 5 Wild game animals 1,000 1,000 1 Non-timber forest products kg 3,123,276 400,511,907 459,533 404,094,716 2 Industrial timber m3 17,889 0 2,302 20,191 3 Fuel timber m3 8,283 170,364 128 178,775 4 Planting material pieces 541,460 0 0 541,460 Supply 5 Wild game animals 1,000 0 0 1,000 6 Agricultural products kg 1,206,615 0 0 1,206,615 7 Raw milk liter 982,000 0 0 982,000 8 Dairy products kg 50,672 0 0 50,672 9 Services n.d. Physical 1 Non-timber forest products kg 1,862,333 0 401,032,037 903,119 297,227 404,094,716 2 Industrial timber m3 19,885 0 0 1 305 20,191 3 Fuel timber m3 1,433 0 177,240 -1 103 178,775 4 Planting material pieces 527,344 0 2,783 11,333 0 541,460 Use 5 Wild game animals 420 0 580 0 0 1,000 6 Agricultural products kg 753,782 0 392,705 60,128 0 1,206,615 7 Raw milk liter 644,454 0 337,547 -1 0 982,000 8 Dairy products kg 752 0 49,745 175 0 50,672 Within the 9 Services n.d. economy 1 Non-timber forest products thousand soms 188,907 10,427,088 61,429 10,677,424 2 Industrial timber thousand soms 31,636 0 12,026 43,662 3 Fuel timber thousand soms 3,852 20,957 796 25,605 4 Planting material thousand soms 49,393 0 0 49,393 Supply 5 Wild game thousand soms 21 0 0 21 6 Agricultural products thousand soms 16,522 0 0 16,522 7 Raw milk thousand soms 14,938 0 0 14,938 8 Dairy products thousand soms 6,213 0 0 6,213 9 Services thousand soms 499,018 0 0 499,018 Monetary 1 Non-timber forest products thousand soms 151,912 0 10,497,887 8,685 18,940 10,677,424 2 Industrial timber thousand soms 42,875 0 0 0 787 43,662 3 Fuel timber thousand soms 318 0 24,679 -1 609 25,605 4 Planting material thousand soms 47,461 0 460 1,472 0 49,393 Use 5 Wild game thousand soms 9 0 13 -1 0 21 6 Agricultural products thousand soms 13,659 0 6,497 731 0 20,887 7 Raw milk thousand soms 9,637 0 5,302 -1 0 14,938 8 Dairy products thousand soms 79 0 6,134 0 0 6,213 9 Services thousand soms 149,693 0 71,718 238,532 26,036 13,039 499,018 40 Table 24. Physical supply table for forest resources in 2018, various units Production [P1] Fore st se ctor Fore st se ctor Accumulatio and and Fore st se ctor Colle ctive Botanical n, change s consumption Flows from Flows from Type s of e conomic activity, Agriculture , corre spondi corre spondi and garde ns, O the r Private house hold Final consumption of of stocks of of the re st of the TO TAL State Classi-fication of Economic Activity-3: hunting and ng se rvice s, ng se rvice s, corre spondi Manufacturi Hote ls and z oos and e conomic production of a varie ty of house holds mate rial corre spondi fore strie s: fore strie s: ng se rvice s, ng industry re staurants goods for own gove rnme nt the world e nvironme nt nature activitie s circulating ng se rvice s non- non- te nants of consumption bodie s re se rve s asse ts financial budge tary fore st plots institutions institutions 03-09; 34.0- base d on base d on 54.0; 57.0- surve ys of surve ys of 01.00.0 2 10.0-33.0 55.0 - 56.0 91.04.0 98.10.0 P31 P32 P5/P52 P7 Fore st products, Statistical Classification of Products-2: 90.0; 92.0- rural rural 97.0 house holds house holds 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Walnut, kg 02.30.40.300 17 0 0 187915 960291 0 0 0 0 0 8653843 0 9802049 Almond, kg 02.30.40.300 18 0 0 353 20 0 0 0 0 0 1350000 40 1350413 Pistachio, kg 02.30.40.300 19 0 0 2836 84803 0 0 0 0 0 5039400 603 5127642 Mushroom, kg 02.30.40.100 20 0 0 0 280 0 0 0 0 862 862 0 2004 Wild apple, kg 02.30.40.900 21 0 0 0 195670 0 0 0 0 0 9514600 212440 9922710 Apricot, kg 02.30.40.900 22 0 0 0 19137 0 0 0 0 0 0 158236 177373 Cherry, kg 02.30.40.900 23 0 0 0 1220 0 0 0 0 0 0 14 1234 Pear kg 02.30.40.900 24 0 0 0 9005 0 0 0 0 0 0 84472 93477 Others (barberry, hawthorn, sea 02.30.40.900 25 0 0 0 425 0 0 0 0 0 634377 0 634802 buckthorn, rosehip, etc.), kg Seeds of tree and shrub 02.10.12,000 26 0 0 0 0 0 0 0 0 0 0 2300 2300 species (pure), kg Planting material, pcs 02.10.11.000 27 0 5325 522937 13198 0 0 0 0 0 0 0 541460 Industrial timber, м3 02.20.11-13,.15 28 0 833 13597 3459 0 0 0 0 0 0 2302 20191 Fuel timber, m3 02.20.14 ,000 29 0 0 6243 2040 0 0 0 0 85182 85182 128 178775 Hay, kg 01.19.10.710 30 1659275 0 0 0 0 0 0 0 0 374962251 0 376621526 Medicinal herbs and Products 02.30.40.900 31 0 0 2046 0 0 0 0 0 0 355712 1428 359186 fruits, kg Wild game, animals 01.70.10.200 32 850 0 0 150 0 0 0 0 0 0 0 1000 Cereals, etc., kg 1.11 33 418932 0 69070 46548 0 0 0 0 0 0 534550 Potatoes, kg 01.13.51 34 602916 0 0 59629 0 0 0 0 0 0 662545 Honey, kg 01.49.21 35 9095 0 0 0 0 0 0 0 0 0 9095 Other products, kg 1.99 36 0 0 0 425 0 0 0 0 х 0 425 Raw milk, liter 01.49.22 37 982000 0 0 0 0 0 0 0 0 0 982000 Milk processing products (cottage cheese, kurut, sour 10.51.1 38 50672 0 0 0 0 0 0 0 0 0 50672 cream, homemade butter, airan), kg Grazing services 01.62.10.930 39 0 T ravel services related to hotels and 55.0-56.0 40 0 restaurants Nature reserve 91.04.12 41 0 services Forest growing 02.40.10.100 42 0 services Other forestry 02.40.10.120-190 43 0 services Logging services 02.40.10.200 44 0 T OT AL 3723740 6158 804997 1396300 0 0 0 0 86044 400596227 0 0 0 0 461963 0 407075429 RESIDUALS PRODUCT ION FLOWS 41 Table 25. Physical use table of forest resources in 2018, various units Production [P1] Accumulat Colle ctive ion, Flows from consumpti change s of Flows from Type s of e conomic activity, Fore st Fore st Final consumption of the on of stocks of the re st of TO TAL State Classi-fication of Economic Activity-3: se ctor and se ctor and house holds e nvironme Fore st gove rnme n mate rial the world Agricultur corre spond corre spond nt se ctor and Botanical t bodie s circulating e , hunting ing ing Private house hold asse ts corre spond Manufactu Hote ls and garde ns, O the r and se rvice s, se rvice s, production of a varie ty ing ring re staurant z oos and e conomic corre spond fore strie s: fore strie s: of goods for own se rvice s, industry s nature activitie s ing non- non- consumption te nants of re se rve s se rvice s financial budge tary fore st plots institution institution s s 03-09; 34.0- base d on base d on 54.0; 57.0- surve ys of surve ys of 01.00.0 2 10.0-33.0 55.0 - 56.0 91.04.0 98.10.0 P31 P32 P5/P52 P7 Fore st products, Statistical Classification of Products-2: 90.0; 92.0- rural rural 97.0 house holds house holds 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Walnut, kg 02.30.40.300 1 0 0 0 0 570972 100760 0 0 0 197475 8653843 -1 279000 9802049 Almond, kg 02.30.40.300 2 0 0 0 0 413 0 0 0 0 0 1350000 0 0 1350413 Pistachio, kg 02.30.40.300 3 0 0 0 0 74419 0 0 0 0 13657 5039400 -250 416 5127642 Mushroom, kg 02.30.40.100 4 0 0 0 0 88 38 0 0 0 988 862 0 28 2004 Wild apple, kg 02.30.40.900 5 0 0 0 0 140255 46752 0 0 0 204790 9514600 5800 10513 9922710 Apricot, kg 02.30.40.900 6 0 0 0 0 72452 31051 0 0 0 71678 0 0 2192 177373 Cherry, kg 02.30.40.900 7 0 0 0 0 551 138 0 0 0 545 0 0 0 1234 Pear kg 02.30.40.900 8 0 0 0 0 49234 8688 0 0 0 31694 0 1 3860 93477 Others (barberry, hawthorn, sea 02.30.40.900 9 0 0 0 0 260 0 0 0 0 165 634377 0 0 634802 buckthorn, rosehip, etc.), kg Seeds of tree and shrub species 02.10.12,000 10 0 0 710 1590 0 0 0 0 0 0 0 0 0 2300 (pure), kg Planting material, pcs 02.10.11.000 11 10565 2507 500458 0 0 0 13814 0 0 2783 0 11333 0 541460 Industrial timber, м3 02.20.11-13,.15 12 0 0 0 0 19786 0 0 99 0 0 0 1 305 20191 Fuel timber, m3 02.20.14 ,000 13 114 281 0 0 213 0 4 821 0 92058 85182 -1 103 178775 Hay, kg 01.19.10.710 14 760705 0 0 0 0 0 0 0 0 0 374962251 898570 0 376621526 Products Medicinal herbs and fruits, kg 02.30.40.900 15 1223 0 0 0 1878 2 0 154 0 0 355712 -1001 1218 359186 Wild game, animals 01.70.10.200 16 0 0 0 0 385 35 0 0 0 580 0 0 0 1000 Cereals, etc., kg 1.11 17 165127 0 0 0 289354 0 0 0 0 70769 9300 0 534550 Potatoes, kg 01.13.51 18 48276 0 0 0 149849 87412 0 12488 0 313797 50723 0 662545 Honey, kg 01.49.21 19 310 0 0 0 0 614 0 0 0 8066 105 0 9095 Other products, kg 1.99 20 0 0 0 0 0 200 120 32 0 73 0 0 425 Raw milk, liter 01.49.22 21 33472 0 0 0 610982 0 0 0 0 337547 -1 0 982000 Milk processing products (cottage cheese, kurut, sour 10.51.1 22 0 0 0 0 0 752 0 0 0 49745 175 0 50672 cream, homemade butter, airan), kg Grazing services 01.62.10.930 23 0 T ravel services related to 55.0-56.0 24 0 hotels and restaurants Nature reserve services 91.04.12 25 0 Forest growing services 02.40.10.100 26 0 Other forestry services 02.40.10.120-190 27 0 Logging services 02.40.10.200 28 0 T OT AL 1019792 2788 501168 1590 1981091 276442 13938 13594 0 0 1396410 400596227 0 974754 297635 0 407075429 RESIDUALS FLOWS T O T HE ENVIRONMENT 42 Table 26. Monetary supply table of forest resources in 2018, 1000 soms at current purchaser prices Production [P1] Forest sector Forest sector Accumulation, Forest sector Collective changes of and and Flows from the Types of economic activity, State Classi-fication of Agriculture, corresponding corresponding and Botanical Private household production of Final consumption of consumption of stocks of Flows from the rest of the TOTAL Economic Activity-3: hunting and services, services, corresponding Manufacturing Hotels and gardens, zoos Other economic a variety of goods for own households government material environment corresponding services, industry restaurants and nature activities world forestries: non- forestries: consumption bodies circulating services tenants of reserves assets financial budgetary forest plots institutions institutions 03-09; 34.0- based on based on 01.00.0 2 10.0-33.0 55.0 - 56.0 91.04.0 54.0; 57.0-90.0; 98.10.0 surveys of rural P31 surveys of rural P32 P5/P52 P7 Forest products, Statistical Classification of Products-2: 92.0-97.0 households households 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Walnut 02.30.40.300 1 0 0 19088 101251 0 0 0 0 0 2596153 0 2716492 Almond 02.30.40.300 2 0 0 10 4 0 0 0 0 0 540000 7 540021 Pistachio 02.30.40.300 3 0 0 1268 47386 0 0 0 0 0 2796867 123 2845644 Mushroom 02.30.40.100 4 0 0 0 43 0 0 0 0 104 43 0 190 Wild apple 02.30.40.900 5 0 0 0 2414 0 0 0 0 0 475730 11206 489350 Apricot 02.30.40.900 6 0 0 0 769 0 0 0 0 0 0 40465 41234 Cherry 02.30.40.900 7 0 0 0 36 0 0 0 0 0 0 1 37 Pear 02.30.40.900 8 0 0 0 191 0 0 0 0 0 0 5612 5803 Others (barberry, hawthorn, 02.30.40.900 9 0 0 0 47 0 0 0 0 0 70416 0 70463 sea buckthorn, rosehip, etc.) Seeds of tree and shrub 02.10.12,000 10 0 0 0 0 0 0 0 0 0 0 3808 3808 species (pure) Planting material 02.10.11.000 11 0 456 44738 4199 0 0 0 0 0 0 0 49393 Industrial timber 02.20.11-13,.15 12 0 443 22391 8802 0 0 0 0 0 0 12026 43662 Fuel timber 02.20.14 ,000 13 0 0 3608 244 0 0 0 0 9031 11926 796 25605 Products Hay 01.19.10.710 14 16275 0 0 0 0 0 0 0 0 3937104 0 3953379 Medicinal herbs and fruits 02.30.40.900 15 0 0 125 0 0 0 0 0 0 10671 207 11003 Wild game 01.70.10.200 16 18 0 0 3 0 0 0 0 0 0 21 Cereals, etc. 1.11 17 5027 0 860 559 0 0 0 0 0 0 6446 Potatoes 01.13.51 18 7921 0 0 783 0 0 0 0 0 0 8704 Honey 01.49.21 19 1332 0 0 0 0 0 0 0 0 0 1332 Other products 1.99 20 0 0 0 40 0 0 0 0 0 0 40 Raw milk 01.49.22 21 14938 0 0 0 0 0 0 0 0 0 14938 Milk processing products (cottage cheese, kurut, sour 10.51.1 22 6213 0 0 0 0 0 0 0 0 0 6213 cream, homemade butter, airan) Grazing services 01.62.10.930 23 92375 0 0 0 0 0 0 0 0 0 92375 Travel services related to 55.0-56.0 24 0 0 0 0 0 58173 0 0 0 0 58173 hotels and restaurants Nature reserve services 91.04.12 25 0 0 0 0 0 0 124813 0 0 0 124813 Forest growing services 02.40.10.100 26 0 0 26036 0 0 0 0 0 0 0 26036 Other forestry services 27 02.40.10.120-190 0 7035 168081 0 0 0 0 0 0 0 175116 Logging services 02.40.10.200 28 0 0 22505 0 0 0 0 0 0 0 22505 TOTAL 144099 7934 308710 166771 0 58173 124813 0 9135 10438910 0 0 0 0 74251 0 11332796 43 Table 27. Monetary use table of forest resources in 2018, 1000 soms at current purchaser prices Intermediate consumption [P2] Forest sector Accumula- Forest sector Forest sector and corre- Collective tion, changes and and corre- Agriculture, sponding Botanical Flows to the corresponding sponding Other Private household production Final consumption of consumption of stocks of Flows to the hunting and services, Manufacturin Hotels and gardens, zoos rest of the TOTAL services, state services, economic of a variety of goods for own households of government material cir- environment corresponding tenants of g industry restaurants and nature world Types of economic activity, State Classification of forestries: (as forestries: activities consumption bodies culating as- services forest plots reserves sets Economic Activity-3: in the form No. budgetary (as in the form 1-LH) institutions No. 2-LH) based on based on 03.00.0 - surveys of surveys of 01.00.0 02.00.0 98.10.0 P31 P32 P5/P52 P6 97.00.0, 98.20.0 rural rural households households Forest products, Statistical 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Classification of Products-2: Walnut 02.30.40.300 1 0 0 0 0 60857 10739 0 0 0 31297 2596153 0 17446 2716492 Almond 02.30.40.300 2 0 0 0 0 21 0 0 0 0 0 540000 0 0 540021 Pistachio 02.30.40.300 3 0 0 0 0 39501 0 0 0 0 9362 2796867 -125 39 2845644 Mushroom 02.30.40.100 4 0 0 0 0 11 5 0 0 0 124 43 0 7 190 Wild apple 02.30.40.900 5 0 0 0 0 4237 1412 0 0 0 7420 475730 57 494 489350 Apricot 02.30.40.900 6 0 0 0 0 14196 6084 0 0 0 20423 0 0 531 41234 Cherry 02.30.40.900 7 0 0 0 0 16 4 0 0 0 17 0 0 0 37 Pear 02.30.40.900 8 0 0 0 0 2774 490 0 0 0 2238 0 -1 302 5803 Others (barberry, hawthorn, sea 02.30.40.900 9 0 0 0 0 25 0 0 0 0 22 70416 0 0 70463 buckthorn, rosehip, etc.) Seeds of tree and shrub 02.10.12,000 10 0 0 1101 2707 0 0 0 0 0 0 0 0 0 3808 species (pure) Planting 02.10.11.000 11 904 214 44966 0 0 0 1377 0 0 460 0 1472 0 49393 material Industrial 02.20.11-13,.15 12 0 0 0 0 42661 0 0 214 0 0 0 0 787 43662 timber Fuel timber 02.20.14 ,000 13 17 144 0 0 32 0 1 124 0 12753 11926 -1 609 25605 Hay 01.19.10.710 14 7461 0 0 0 0 0 0 0 0 0 3937104 8814 0 3953379 Medicinal herbs and 02.30.40.900 15 102 0 0 0 156 0 0 13 0 0 10671 -60 121 11003 fruits Wild game 01.70.10.200 16 0 0 0 0 8 1 0 0 0 13 -1 0 21 Products Cereals, etc. 1.11 17 2130 0 0 0 3405 0 0 0 0 804 107 0 6446 Potatoes 01.13.51 18 662 0 0 0 1785 1042 0 149 0 4486 580 0 8704 Honey 01.49.21 19 43,65 0 0 0 0 89 0 0 0 1199 44 0 1332 Other 1.99 20 0 0 0 0 0 18 11 3 0 8 0 0 40 products Raw milk 01.49.22 21 555 0 0 0 9082 0 0 0 0 5302 -1 0 14938 Milk processing products (cottage 10.51.1 22 0 0 0 0 0 79 0 0 0 6134 0 0 6213 cheese, kurut, sour cream, homemade butter, airan) Grazing 01.62.10.930 23 92375 0 0 0 0 0 0 0 0 0 0 0 92375 services Travel services related to 55.0-56.0 24 0 0 0 0 0 0 0 0 0 47217 0 10956 58173 hotels and restaurants Nature reserve 91.04.12 25 0 0 0 0 0 0 0 0 0 24501 98229 0 2083 124813 services Forest growing 02.40.10.100 26 0 0 0 0 0 0 0 0 0 0 26036 0 26036 services Other forestry 02.40.10.120-190 27 0 523 8611 23407 0 0 2271 0 0 0 140303 1 0 175116 services Logging 02.40.10.200 28 0 41 0 16 22449 0 0 0 0 0 -1 0 22505 services TOTAL 104206 922 54678 26130 201216 19963 3660 503 0 173780 10438910 238532 36921 33375 11332796 44 Annex 2. Ecosystem Service Accounts: Detailed Accounting Tables Table 28. Physical supply table of provisioning ecosystem services of the forest in 2018, various units Institutional sectors Forest fund ecosystems Forest sector Forest sector Forest sector and and Agriculture, and Botanical corresponding corresponding Private household production of a hunting and corresponding Manufacturing Hotels and gardens, zoos services, services, Other variety of goods for own Non-forest lands corresponding services, industry restaurants and nature forestries: non- forestries: consumption services tenants of forest reserves financial budgetary Forest lands plots institutions institutions 03-09; 34.0- based on Land under 01.00.0 2 10.0-33.0 55.0 - 56.0 91.04.0 54.0; 57.0-90.0; 98.10.0 surveys of rural Pastures Other lands crops 92.0-97.0 households 1 2 3 4 5 6 7 8 9 10 11 12 15 16 Walnut, kg 02.30.40.300 1 9802049 Almond, kg 02.30.40.300 2 1350373 Pistachio, kg 02.30.40.300 3 5127039 Mushroom, kg 02.30.40.100 4 2004 Provisioning ecosystem services Wild apple, kg 02.30.40.900 5 195670 9514600 Apricot, kg 02.30.40.900 6 19137 Cherry, kg 02.30.40.900 7 1220 Pear kg 02.30.40.900 8 9005 Others (barberry, hawthorn, sea 02.30.40.900 9 634802 buckthorn, rosehip, etc.), kg Seeds of tree and shrub species 02.10.12,000 10 0 (pure), kg Planting material, pcs 02.10.11.000 11 541461 Industrial timber, м 3 02.20.11-13,.15 12 17888 Fuel timber, m3 02.20.14 ,000 13 178647 Hay, kg 01.19.10.710 14 0 376621526 Medicinal herbs and fruits, kg 02.30.40.900 15 357758 Wild game, animals 01.70.10.200 16 1000 Walnut, kg 02.30.40.300 17 0 0 187915 960291 0 0 0 0 0 8653843 Almond, kg 02.30.40.300 18 0 0 353 20 0 0 0 0 0 1350000 Pistachio, kg 02.30.40.300 19 0 0 2836 84803 0 0 0 0 0 5039400 Mushroom, kg 02.30.40.100 20 0 0 0 280 0 0 0 0 862 862 Wild apple, kg 02.30.40.900 21 0 0 0 195670 0 0 0 0 0 9514600 Apricot, kg 02.30.40.900 22 0 0 0 19137 0 0 0 0 0 0 Cherry, kg 02.30.40.900 23 0 0 0 1220 0 0 0 0 0 0 Pear kg 02.30.40.900 24 0 0 0 9005 0 0 0 0 0 0 Others (barberry, hawthorn, sea 02.30.40.900 25 0 0 0 425 0 0 0 0 0 634377 buckthorn, rosehip, etc.), kg Seeds of tree and shrub species 02.10.12,000 26 0 0 0 0 0 0 0 0 0 0 (pure), kg Planting material, pcs 02.10.11.000 27 0 5325 522937 13198 0 0 0 0 0 0 Industrial timber, м 3 02.20.11-13,.15 28 0 833 13597 3459 0 0 0 0 0 0 Fuel timber, m3 02.20.14 ,000 29 0 0 6243 2040 0 0 0 0 85182 85182 Products Hay, kg 01.19.10.710 30 1659275 0 0 0 0 0 0 0 0 374962251 Medicinal herbs and fruits, kg 02.30.40.900 31 0 0 2046 0 0 0 0 0 0 355712 Wild game, animals 01.70.10.200 32 850 0 0 150 0 0 0 0 0 0 Cereals, etc., kg 1.11 33 418932 0 69070 46548 0 0 0 0 0 Potatoes, kg 01.13.51 34 602916 0 0 59629 0 0 0 0 0 Honey, kg 01.49.21 35 9095 0 0 0 0 0 0 0 0 Other products, kg 1.99 36 0 0 0 425 0 0 0 0 х Raw milk, liter 01.49.22 37 982000 0 0 0 0 0 0 0 0 Milk processing products (cottage cheese, kurut, sour cream, homemade 10.51.1 38 50672 0 0 0 0 0 0 0 0 butter, airan), kg Grazing services 01.62.10.930 39 Travel services related to hotels and 55.0-56.0 40 restaurants Nature reserve services 91.04.12 41 Forest growing services 02.40.10.100 42 Other forestry services 02.40.10.120-190 43 Logging services 02.40.10.200 44 45 Table 29. Physical flow accounts of cultural ecosystem services of the forest in 2018, number of rental days per year Institutional sectors Forest fund ecosystems Forest sector and Botanical gardens, corresponding zoos and nature services, tenants of Non-forest lands reserves (NSC KR Forest TOTAL forest plots (data of data) lands form No.-2LH) Other 2 91.04.0 Pastures Crops lands No. 1 2 8 9 10 11 12 Supply table Ecosystem service - natural 1 311412 57861582 58172994 conditions for recreation Product - a service of rental housing 2 311412 57861582 58172994 for travelers Use table Ecosystem service - natural 3 311412 57861582 58172994 conditions for recreation Product - products consumed for 4 311412 57861582 58172994 rental housing for travelers 46 Table 30. Monetary flow accounts of cultural ecosystem services of the forest in 2018, thousand soms at current purchaser prices Institutional sectors Forest fund ecosystems Forest sector and Botanical gardens, corresponding zoos and nature services, tenants of Non-forest lands reserves (NSC KR forest plots (data of Forest TOTAL data) form No.-2LH) lands Other 2 91.04.0 Pastures Crops lands № 1 2 8 9 10 11 12 п/п Supply table Ecosystem service - natural 1 128010 689 128699 conditions for recreation Product - a service of rental 2 173585 934 174519 housing for travelers Use table Ecosystem service - natural 3 128010 689 128699 conditions for recreation Product - products consumed 4 45575 245 45820 for rental housing for travelers 47