99517-TR Table of Contents Abbreviations and Acronyms ......................................................................................................... 3 Acknowledgements ......................................................................................................................... 4 Executive Summary ........................................................................................................................ 5 I. Introduction ........................................................................................................................ 10 II. Overview of the Forestry Sector in Turkey ........................................................................ 11 III. Forest Valuation and Accounting ....................................................................................... 15 IV. Overview of Valuation Methods for the Forest Sector ...................................................... 18 V. The Pilot Study in Bolu ...................................................................................................... 23 5.1 Basic Information on the Study Area .................................................................................. 23 5.2 Types of Forestry Products and Eco-services Identified ..................................................... 24 5.3 Data Available ..................................................................................................................... 25 5.4 Valuation: Methods Used and Results ................................................................................ 26 5.5 Summary of the Pilot Study Results ................................................................................... 31 VI. Policy Implications and Recommendations ....................................................................... 34 VII. Concluding Remarks .......................................................................................................... 37 References ..................................................................................................................................... 38 Annex 1. Selected Policy Applications of Forest Accounts ......................................................... 42 Annex 2. Overview of Existing Valuation Methods ..................................................................... 46 Annex Tables ................................................................................................................................ 51 2 Abbreviations and Acronyms AFOLU Agriculture, Forestry and Other Land Use Bolu RD Bolu Regional Directorate of Forestry CB Cost Based CE Choice Experiment CM Choice Modeling CPS Country Partnership Strategy CV Centingent Valuations DG Directorate General of Forestry Forestry/DGF EFI European Forest Institute GDP Gross Domestic Product HP Hedonic Pricing IPCC Intergovernmental Panel on Climate Change MoD Ministry of Development MoFWA Ministry of Forestry and Water Affairs MP Market Price MWTP Marginal Willingness to Pay NCA Natural Capital Accounting NGO Non-Governmental Organization NTFP Non-Timber Forest Products NWFP Non-Wood Forest Products OECD The Organization for Economic Cooperation and Development RP Revealed Preference SCC Social Cost of Carbon SEEA-CF UN System of Environmental-Economic Accounting Central Framework SNA System of National Accounts ST Stated Preference TA Technical Assistance TEMA Turkish Foundation for Combating Soil Erosion, for Reforestation and the Protection of Natural Habitats TC Travel Cost TEV Totol Economic Value TL Turkish Lira TurkStat Turkish Statistical Institute UN United Nations WAVES Wealth Accounting and Valuation of Ecosystem Services WFP Wood Forest Products WTP Willingness to Pay 3 Acknowledgements This report is an output of the World Bank’s Turkey Environment and Natural Resources Technical Assistance (TA) Program. The report was prepared by Bahar Ç. Erbaş (Consultant) and Jian Xie, with input from Esra Arıkan (forest sector overview) and Vladislava I. Nemova (overview of valuation methods) of the World Bank. Turgut Çelikkol, a retired forest engineer of DG Forestry and FAO, shared his knowledge and experience in the pilot study area. Elsa Varela of the European Forest Institute (EFI) assisted in the literature research and provided information on economic valuation of biodiversity. A number of people in Turkey provided their assistance in the pilot study. Among them, Alper Tolga Arslan, Ramazan Balı, and Banu Karabıyık of the DG Forestry reviewed and provided suggestions on some valuation components of the report. Alper Tolga Arslan, Özgür Balcı, İlknur Palaşoğlu of the DG Forestry, Gülsevil Bahçeli of TurkStat, Abdullah Demirel of Kozyaka Village in Bolu, and İsmail Kurt of beekeepers association in Yalova assisted in data collection for the Bolu pilot study. The study also benefited from the support and discussions of various Turkish government agencies and individuals, particularly Yuksel Erdogan, Alper Tolga Arslan, Basar Bakir, Cengiz Yılmaz, Galip Çağtay Tufanoğlu, Fuat Sanal, Osman Karaelmas, Ramazan Bali, Banu Karabıyık, Özgür Balkız, İlknur Palaşoğlu, Sema Oymak, Güven Kaya, Şahin Karaçorlu, Ahmet Atalan, and Nihal Argun of DG Forestry; Sema Bayazıt, Taylan Kiymaz, Mustafa Bulut, Pinar Topcu, and Feyza Eldemir of the Ministry of Development (MoD); Sebahattin Sarı, Hüseyin Şentürk, Gülsevil Bahçeli, and Levent Alpar of the Turkish Statistical Institute (TurkStat); Bahar Sel and Burak Ekinci of DG Water Management. The Turkey TA Program was managed by Jian Xie and Esra Arıkan, under the guidance and support of Martin Raiser, Kulsum Ahmed, and Stephen Karam. Glenn-Marie Lange, David Treguer, Stephen Karam, and Agi Kiss of the World Bank, Alper Tolga Arslan of the DG Forestry, Gülsevil Bahçeli of TurkStat, and Pinar Topçu of MoD helped review the draft version of the report and provide useful comments. The forest valuation study also benefits from discussions with Juan-Pablo Castaneda and Stig Gustaf Johansson of the World Bank’s Wealth Accounting and Valuation of Ecosystem Services (WAVES) Global Partnership program and many participants in the WAVES Regional Workshop held in March 2015 in Istanbul. Ülker Karamullaoğlu and Sydnella E. Kpundeh provided administrative assistance to the program. 4 Executive Summary Forests have played a major role in human history, making a broad range of economic, social and environmental contributions. Well-managed forests and woodlands provide a variety of environmental goods and services, including carbon sequestration, support and enhancement of biodiversity, better visual quality of landscapes, recreation, sustainable water supply, and the prevention of soil erosion, in addition to direct timber and non-timber forest products. In many countries, including Turkey, forests make an important contribution to poverty alleviation, socio-economic development, and food security and they also help to secure a healthy environment, regardless of their types and their management framework. The array of benefits and multi-functionality that forests provide needs to be explicitly recognized and incorporated into any development planning and policy making related to the forest sector. The policy must also be informed by the economic value of forest resources, forest goods, and services. Proper assessment of the socio-economic values of goods and services provided by forests and forest ecosystems will strengthen actions to support the sustainable management of forests and forest ecosystems, it enables countries to have balanced trade-off decisions when managing forest management plans, for example, the choice between eco-tourism and commercial logging. Many forest products and services, especially the ecosystem services provided by forests, are unaccounted for in forest and economic accounts due to a lack of price and market, which undermines the optimal decisions on forest development and management. It is known that timber is the most common of wood forest products (WFPs), but non-timber or non- wood forest products (NTFPs or NWFPs) and services are also very important. Least recognized, but most important, are public goods and the positive externalities they provide biodiversity and watershed protection and carbon sequestration. Only a few of many benefits that forests provide enter formal markets (WFPs and some NWFPs), where their price provides an estimation of their value and scarcity. However, other goods and services do not enter markets at all, and with no formal price established, they cannot serve as an indicator of the scarcity or a predictor of the demand. This leads, as the non-market component of the provided benefits is omitted, to sub- optimal forest management decisions. Forest valuation and accounting are useful tools in informed policy making. In the forestry sector, it is especially important to have tools to estimate the economic value of non-market forest goods and services. Considerable progress has been made in valuing forest products and services including non-market ones, and reflecting the real value in forest accounts and national accounts. Economic valuations of forests and forest accounts are useful tools to address the above policy questions, and to help the government create well-informed policies. Forestry valuation quantifies the economic values of forests, which are basic to the monetary accounts of forests. Forest Accounts, as part of natural capital accounts (NCA), further provide a framework to capture the detailed statistics and values of the economic contributions of forests in their many forms, and how these are linked to the economy. These accounts are important in facilitating better management of forests and the economy. 5 Forests are important to Turkey’s economy and environment. Turkey has 21.7 million hectares, or 27.6 percent of its total surface area, covered with forests. The normal forests cover 11.6 Mha comprising 53 percent of total forest area, and degraded forests are 10.1 Mha, or 47 percent of the total forests. As of 2011, the size of the tree assets in national forest areas is 1.5 billion m3. While the total increase in the national asset was 42.2 million m3 in 2011, the annual wood production was reported only 19 million m3, less than half of the annual increase, which means Turkish forests was generally managed in a sustainable way in the year (DG Forestry, 2012). The Turkish government is putting significant efforts and resources towards forest protection and management. Ninety-nine percent of the forests across the country are owned by the State. Almost all of the state forests, except for protected areas and national parks, are managed by the General Directorate of Forestry (DG Forestry or DGF). In the country, regardless of the ownership of forest land, the management, planning, protection and exploitation of forest resources are subject to State control and supervision according to Article 169 of the Constitution and Article 6 of the Forest Code. DG Forestry’s responsibility is to protect and expand the forests and their operation in such a way as to provide multi-dimensional benefits to society. In 2013, the DG Forestry spent TL 4.1 billion on forestry activities and projects and on general administrative activities of the sector, including reforestation, sustainable forest management, and social-economic support to forest villages. The contribution of the forest sector, however, is underestimated in traditional national accounts. In the national statistics prepared by the Turkish Statistics Institute (TurkStat), the production value of primary (timber) and secondary forestry products (non-timber) and services was estimated to be between 0.2-0.3 percent of the GDP. The low GDP percentage results from the economic values of many products and services not being valued and accounted for in national accounts, or implicitly reflected in non-forest sectors such as water supply and animal husbandry. The Government put in a strong request for forest valuation and accounting in order to better understand the value of forests. Government agencies, e.g., the Directorate General of Forestry (DG Forestry) under the Turkish Ministry of Forestry and Water Affairs (MoFWA), are keen on conducting a valuation which would contribute to policy debate and decision-making in forest protection and the utilization and design of payments for environmental and eco-system services. Besides the valuation of forest products and services, there exist a wide range of policy questions related to forest management, from the economic contribution natural resources make to national growth, to tradeoffs among competing users in managing and utilizing forest resources, to planning and prioritizing investments around managing forest capital and compensating or offsetting the loss of forests due to depletion. In response to the government’s request for technical assistance in valuing natural resources, a pilot study was carried out with the World Bank's assistance in the Bolu forest area to identify and quantify the forest products and services used by humans. The purpose of this report is to summarize the study’s findings, discuss its policy implications and applications, and provide recommendations for next steps. Given the time limitation, a case study was conducted in the Bolu Region, an area of 1.037 million ha located in the northwest part of the 6 country between Istanbul and Ankara. The study area includes two provinces, Bolu and Düzce, which have 22 municipalities and a total population of 640,000. About 56 percent of the study area is mountains, and about 64 percent of Bolu and 50 percent of Düzce are covered by forests. The region's total forest area is 628,734.9 hectares (ha). The climate in the northern part of the study area is Black Sea and the rest of the area is Black Sea – Central Anatolia Transition. Water surface area is 997 ha. There is one national park, Yedigöller, five nature parks, and six wildlife development centers in the area. The pilot study helped to significantly value the total economic value of forests in Bolu region. The direct use, option, indirect use, and non-use values of forest products and services were estimated with the use of various valuation methods. The estimated total net economic value (TEV) was $666.3 million in 2013. The largest portion of the TEV are the indirect use values coming from ecosystem services, including watershed protection, carbon sequestration and soil erosion control, which amounts to $341.4 million or 50.0 percent of the total economic value. In traditional national accounting, these values are largely unaccounted for or partially included in the value-added of other sectors, such as cost reduction of water supply. The second largest component of the total economic value is the direct-use value composed of timber, firewood, NWFP-plants, honey, recreation, fodder for grazing, and hunting. The sum of these direct-use values is $316.6 million, comprising 46.3 percent of the total economic value. Among them, $86.4 million of the direct-use value from timber, firewood, NWFP-plants and hunting) is normally accounted for under the forestry sector. The value of recreation services is accounted for under the tourism sector, honey, and fodder for grazing are counted under agriculture and husbandry. The values from NWFP-Plants and hunting can be accounted either under the forestry sector or agriculture. In addition to the total direct and indirect use values, the nonuse value of biodiversity and the option value of pharmaceuticals is estimated. Their values are $19.3 million and $6.1 million, respectively. These forestry benefits are normally not estimated and are unaccounted for in economic accounts. The valuation results of the case study help to adjust and better understand the scale of economic values that various forest products and services have in the local economy. The study illustrates that the economic value of various forest products and services, which is normally unaccounted for or accounted implicitly in non-forest sectors, is seven times of the value currently accounted as the forest sector's contribution. In terms of GDP, the known and accounted value ($86.4 million) of forest products was about 0.50 percent of the regional GDP in 2013. The case study further shows that the total economic value of forest product and services is $666.3 million equivalent to 3.9 percent of GDP. The TEV reflects the true value and contribution to the regional economy, and will help guide development programs and policies towards forest protection and a more sustainable use of forest resources; for instance, the justification for and prioritization of public expenditure in the forest sector in order to provide public goods and externalities to national and regional economy. The study demonstrates that improving forest valuation and accounting will be an important first step in getting the information right in order to ensure well informed decision-making on forest sector protection and development and the prioritization of forestry sector activities. The report further concludes that Turkey will need to continue to improve its standards and systems of forestry data collection and surveys, develop its own valuation methods and national 7 guidelines on economic valuation and accounting of the forest sector, scale up its valuation efforts nationwide, and systematically integrate valuation results into national development planning and policy making. Specific recommendations are as follows: Improve data availability and associated institutional arrangement. The study found out that data, especially related to forest services, is scarce and has not been systematically collected and processed at local and national levels. Some data and coefficients needed to quantify ecosystem services does not exist, and have to be collected through field surveys; for example physical data regarding water and soil protection and monetary data of recreation and tourism. There are different agencies and institutions which collect and possess some data useful to economic valuation such as DG Forestry, DG Water Management, the Ministry of Food, Agriculture and Livestock, Turkish Statistical Institute (TurkStat) and the regional offices of these agencies. It is necessary to develop a unified information system at the national level to collect, manage and use the data. Therefore, to move forward with an institutional arrangement for data gathering and management for economic valuation and accounting, we recommended developing a more unified information system for forest data that can be easily used to locate and categorize available data sets in different agencies for the purpose of economic valuation and policy making. Standardize data gathering methods. We recommend standardizing the terminology and methods for data collection efforts across institutions and regions. As part of the effort to improve data coordination and consistency, it is necessary to develop standards for use in the field to both gather data and apply to appropriate methodologies. The concepts, terminology, and data collection methods used in forestry data generation and application need to be standardized. Such standards will help to eliminate inconsistencies and misunderstandings in data collection and use. Improve the accuracy of valuation through site specific surveys and field studies. Given the time and funding constraints, the pilot study has relied on the benefit transfer approach which adopts and converts the unit value or parameters estimated by others elsewhere in valuing a number of indirect ecosystem services provided by forests in the pilot study area in order to demonstrate the orders of magnitude of forest values. But due to the complex and unique nature of forest ecosystem services, more site specific surveys and studies are necessary to improve the quality and accuracy of economic valuation and calibrate the methodology for valuing forest ecosystem services. We recommend developing a systematic and scientific approach to sample different types of regions by forest type to study and value ecosystem services in these regions. For example, the water supply service of Turkey's forests is crucial due to the high stress on water sources under the impact of global climate change in both the country and the surrounding region. There is therefore a need for studies on the quantity and costs of water supply production in different regions covered by different forest types in Turkey. Develop national guidelines on the economic valuation of forest products and service. For DGF to guide forest valuation efforts, we recommend developing and adopting national guidelines on forest valuation methods. The guidelines will outline data requirements, data quality assurance, valuation methods and application examples to guide regional and local offices in carrying out their forest valuation programs. 8 Pilot integrated physical and monetary forest accounts. To guide decision making, the results of forest valuation need to be integrated into existing economic and forest accounts. We recommend piloting forest accounts that integrate physical and monetary results. This can start in one region. Scale up forest valuation accounting efforts at the national level. With more experience obtained and the national guidelines in place, forest valuation efforts can be scaled up in more regions and eventually nationwide. The results will be aggregated at the national level, and lead to the development and enhancement of forest and economic accounts, which will be used to guide national development planning and policy making. 9 I. Introduction Forests are one of Turkey’s significant natural endowments. The country’s forest areas occupy 21.7 million ha (approximately 27.6 percent of its total surface area), and are inhabited by close to 10 percent of its total population. The forest sector generates a variety of timber and non- timber products and eco-services. It is strongly linked to the economic growth and well-being of people living both within and outside of forested areas. Development decisions that discount (or ignore) the value of natural resources often lead to their mismanagement and to issues of scarcity, situations which often require more extreme measures to correct in the future., It is therefore in Turkey’s national interest to ensure that natural resources are used sustainably and in the long-term. The Turkish government has put great effort into reforestation and forest management, increasing the total area of forests. However, according to national statistics, to date the forest sector is responsible for only 0.2-0.3 percent of Turkey’s GDP. This is because forest statistics are currently largely underused due to insufficient valuation efforts. Since forests are a major factor in biodiversity, protection from soil erosion, water conservation, carbon sequestration and other types of non-timber forest products or ecosystem services, the government is eager to conduct a full economic valuation of forest products and services. In their Tenth National Development Plan (2014-2018), the Turkish Government has decided to take a series of actions, including quantifying the value of natural resources and their ecosystem services and taking them into account in making and implementing policy decisions. In response to the government’s request for technical assistance in valuing natural resources, the World Bank assisted the Directorate General of Forestry (DGF) under the Turkish Ministry of Forestry and Water Affairs (MoFWA) in conducting a pilot study in the Bolu forest area to identify and quantify the forest products and services used by humans and assess the possibility to expand and scale up forest valuation. The purpose of this report is to summarize the study’s findings and discuss its policy implications and next steps. The report contains six chapters, starting with this introductory one. Chapter 2 provides an overview of the forest sector in Turkey, from physical conditions to institutional aspects. Chapter 3 presents the justification and application of forest valuation and accounting, while the valuation methods for forest products and services are introduced in Chapter 4. Chapter 5 then discusses the findings and results of the Bolu pilot study. The Policy implications, areas for improvement, and recommendations for scaling up are discussed in Chapter 6. 10 II. Overview of the Forestry Sector in Turkey Turkey’s surface area of 78.5 million hectares (Mha) has forests covering 21.7 Mha, or 27.6 percent of the country. The forests suitable for timber production total 11.6 Mha, and comprise 53 percent of total forest area, while degraded forests are 10.1 Mha, or 47 percent of total forests. The total area of high forests is 17.3 Mha, while the total coppice forests cover 4.4 Mha. Conifers, broadleaved and mixed high forests are 68.2, 17.9 and 13.9 percent, respectively, of the total high forests (DG Forestry, 2013). The distribution of growing stock (measured in m3) by 2012 was 95 percent high forests and 5 percent coppice forests (Ministry of Forests and Water Affairs, 2014). With its many plant species and fauna, the country is on the list of temperate zone countries rich in biological diversity. Ninety-nine percent of the forests across the country are owned by the State. Almost all state forests, except for protected areas and national parks, are managed by the General Directorate of Forestry (DG Forestry or DGF) of the Ministry of Forests and Water Affairs (DG Forestry, 2012). DG Forestry is a special, budgeted institution with public legal entity, and was established by Law 3204 in 1937. The legal basis of Turkey’s modern forestry management was first laid out by Forest Law 3116 (in 1937), and later improved by Forest Law 6831 (1956). In Turkey, regardless of the ownership of forest land, the management, planning, protection and exploitation of forest resources are subject to the State control and supervision according to Article 169 of the Constitution and Article 6 of the Forest Code. The responsibility of the DG Forestry is to protect and expand the forests and their operation in such a way as to provide multi-dimensional benefits to society. Its headquarters has 18 departments. At the regional level, the DG Forestry has two types of main units: 27 Regional Directorates of Forestry and 12 Research Institute Directorates. There are a total of 40,658 staff in DG Forestry at the national level and 17,524 working in DG Forestry’s regional directorates and local offices in 2013 (DG Forestry, 2014) The Forestry District (Management) Directorates under the Regional Directorates are important for forest management as they carry out any field applications in connection with the protection, development and management of the forests. The Research Institute Directorates perform analyses and research, provide technical support, training and consulting services over issues identified by the DG Forestry and other public entities. They also develop and implement research projects via pilot testing and trials (DG Forestry, 2014). According to the DG Forestry, in 2013 it received a budget of about 4.4 billion Turkish Lira (TL) and actually spent 93 percent. 50 percent of budget allocation was for general administration activities and the rest was for financing various activities such as: investments in wood production and quality (17.4 percent), forest fires control (5.5 percent), afforestation, soil conservation and range management (3.6 percent), and financial support to forest villagers (3.2 percent). In accordance with recent functional forest management plans, 50 percent of total forest area was categorized with an ecological function, while 47 percent had an economic function, and 3 percent a social function in 2009 (DG Forestry, 2009). Further sub-functional breakdown shows that 47 percent of the total forest area serves forest production, 19 percent nature production, 16 11 percent hydraulic production, 11 percent erosion protection, 2 percent aesthetic, and the remaining 5 percent is shared equally among eco-tourism and recreation, climate change activities, public health, national defense and scientific. By 2012, the percentage of forest areas fulfilling economic and social functions had increased to 63 and 5 percent, respectively, while the percentage of forest areas having ecological functions went down to 32 percent, a decrease of 18 percent (The DG Forestry, 2012). The changes are primarily due to official reclassification of forest areas for filling economic and social functions of land use. As of 2011, the size of tree assets in national forest areas is 1.5 billion m3. While the annual total increase was 42.2 million m3, a little less than half this amount, 19 million m3, is the annual wood production (DG Forestry, 2012). According to national statistics, prepared by TurkStat on annual production and statistics of industrial products, the sales value of wood (sawn or chipped lengthwise, sliced or peeled, of a thickness > 6 mm; railway or tramway sleepers of wood not impregnated) was around $340.5 million in 2013 and the sales value of wood (continuously shaped along any of its edges or faces (including strips and friezes for parquet flooring, not assembled, and beadings and mouldings) was $283.5 million. The production value of primary (timber) and secondary forestry products (non-timber) and services was estimated to be between 0.2-0.3 percent of the GDP. Many sectors of economies also rely on forests and their ecosystems for various inputs just as the forest sector relies on many other sectors. The forestry sector in Turkey also serves the development of the country by providing high levels of employment per unit of output; it ranks 17th among 64 sectors with respect to the employment multiplier. DG Forestry has established and maintained a great number of recreation areas to fulfill the public’s need to utilize the social, cultural, scientific, sportive and aesthetic services provided by forests. Recreation areas number 1450, and there are 122 urban forests operated by the DG Forestry. Existing as protected areas, there are 40 national parks on 848,447 ha, 31 natural conservation areas on 64,225 ha, 183 natural parks on 81,189 ha and 106 natural monuments on 5,549 ha (DG Forestry, 2013). The DG Forestry also follows national and international processes to improve the protection and development of biodiversity in the forests. The country has two of the eight major gene centers in the world. There are about 3,400 endemic plants among the country’s more than 9000 species. Moreover, Turkey provides habitats for 192 inland freshwater fish species, 18 amphibian species, 83 reptile species, a minimum of 426 bird species, and 120 species of mammals (DG Forestry, 2012). Turkish forests generate a wide range of ecological services for the protection and maintenance of soil, water and health. Furthermore, the forests also provide biospheric services such as climate regulation and biodiversity conservation. The forests regulate hydrological flows and water quality; supply water, by surface drainage and infiltration, to ground water; intercept and store rainfall and moisture; regulate river flow; and reduce soil loss and sedimentation. In a fragile environment as the Mediterranean country, the role of forests in protecting water supplies, regulating water flows, and conserving soil is particularly important. Compared to conventional agricultural land, forest catchments supply downstream populations with higher quality water (Croitoru and Liagre, 2013). Soil erosion is being acknowledged a serious problem for Turkey where some 80 percent of the total land area has mountainous and rugged topography and sensitive soil— water helps create balance. Soil erosion was measured as 500 million tons every year. Some 70 percent of this volume is carried by rivers and streams into the dams producing 12 irrigation services, energy, and water provisions (DG Forestry, 2012). Soil loss per ha is 2, 6, and 22 times more than in Asia, North America, and Africa, respectively ( Çepel, 1997; Özden et al., 2007; Karahalil et al., 2009). The economic cost of sediments to dams and other water infrastructure downstream is significant. In recognition of the role forests play in soil and water protection, “protective forests” have been designated worldwide to prevent soil erosion and preserve water resources. The country’s forests also provide benefits for human health and services such as reduction of floods, drought, and landslides, and the assimilation of contaminants and filtration of airborne particles. They are therefore an essential component of mental health and well-being. Biospheric services include the forests’ contribution to the protection, preservation and creation of biodiversity at the gene, species, community, and ecosystem levels, as well as climate and gas regulation, including the sequestration of CO2. The forest area dedicated to the conservation of biodiversity in Turkey is a little less than 1 million ha, which is significantly below, by about 3.3 million ha, that in Italy, and 2.3 million ha below the Mediterranean region (Plan Bleu FEEM, 2014). Regarding carbon sequestration, it is estimated that national forests retained an annual net volume of 6,045,000 metric tons of carbon,, which is equivalent to a carbon dioxide volume of 58,833,000 metric tons in 2010 (DG Forestry, 2012). Forests are an area where a significant portion of Turkish population lives, and poverty is a major concern. Due to rural poverty and poor accessibility to modern facilities in forest villages, and the hope that cities and urban life can provide better education and health services, there is a migration from forest villages to cities. In the 1970s, the forest village population was about 12 million, or about 22 percent of the country’s population. In 2004 the share of forest village population went down to 10 percent of the country’s population. As of 2014, 7.16 million people live in 21,723 forest villages, which comprise approximately 9.2 percent of the national population and 40 percent of the rural population. The rate of unemployment in the forest villages is estimated at 60 percent. With national attention on poverty reduction, forest villages are a key area for consideration. The state forestry service has created some supporting measures for the development of forest villages. These mainly provide employment to forest villagers through forestry activities in their regions, both direct and indirect resource allocation. State programs aim to minimize the pressures on forests and direct forest villagers to alternative income sources by making contributions to the social and economic development of village people living inside, and adjacent to, the forests. In 2013, the total amount allocated directly to the development of forest villages was 142.2 million TL. Forestry management units employ forest villagers in all sorts forest work such as the harvesting of timber and non-timber forest products, afforestation and rehabilitation works, etc. According to DG Forestry, there are about 300,000 forest villagers employed at least seasonally each year for above works. Despite the various benefits provided by Turkey’s forests, few studies are available on the economic valuation of forestry contributions to ecosystems and the economy. The Turkish government affirms that calculations of the economic value of the protective and environmental services of forests is vitally important to making well informed public policies on forest management and development and in increasing public social welfare and wellbeing. The DG 13 Forestry is keen on conducting the valuation of forestry products and services which in turn will contribute to the policy debate and decision making around forest protection and utilization, and also the design of payments for environmental and ecosystem services. Policy questions which could be important for the country include: • What role do forestry resources play in economic growth, and what could their potential contribution to GDP be? • How can economic contributions of forests guide sector and macro-economic investment and budget plans? • How can the quality of feasibility studies on investments and development programs be improved, taking into account the full economic value of forests and eco-system services protection? • What would the appropriate pricing policy be for scarce forestry resources? • How should entrance fees in national parks and other eco-tourism pricing be determined? 14 III. Forest Valuation and Accounting Need for forestry Valuation and Introduction to the NCA approach Although Turkey’s forests make a major contribution to its biodiversity, soil erosion protection, water conservation, carbon sequestration and other types of non-timber forest products or ecosystem services, their economic and environmental contributions are largely underestimated or unaccounted for in statistics due to insufficient valuation efforts. TurkStat reports that the annual contribution of forest products to GDP is only 0.2-0.3 percent of GDP and that most non- market values are unaccountable. The drawbacks of national accounts have been well discussed in literature. If these unaccounted values are not taken into account, the economic contribution of forests is much less appreciated. This will undermine the government’s ability to make informed decisions on forestry policy and investment. Government agencies (e.g., DG Forestry) are keen to conduct a valuation which would contribute to policy debate and decision-making in forest protection and the utilization and design of payments for environmental and eco-system services. Besides the valuation of forest products and services, a wide range of policy questions exist related to forest management, from the economic contribution of natural resources to national growth, to tradeoffs among competing users in managing and utilizing forest resources, to planning and prioritizing investments around managing forest capital and compensating or offsetting the loss of forests due to depletion. The economic valuation of forests and forest accounts are useful tools to address the above policy questions and help the government make well-informed policies. Forestry valuation quantifies the economic values of forests, which are basic to the monetary accounts of forests. Forest Accounts, as part of natural capital accounts (NCA), further provide a framework to capture the detailed statistics and values of the economic contributions of forests in their many forms, and how they are linked to the economy. They are important to facilitate better management of forests and the economy. NCA is particularly useful in measuring the value of natural resources that currently do not have any price or estimated value (e.g. ecosystem service value of forests). The valuation methods inherent in NCA can help value the economic benefits and costs of the service values and environmental externalities from forests. Many of these values are non-market in nature, and at present it is normal that non-market values are not properly reflected in cost-benefit analyses. The application of NCA enables the government to better integrate the full economic value of natural resources into their development planning and prioritization, understand any potential tradeoffs of development, and helps them make more informed policy decisions. NCA efforts have been seen for years on particular issues in specific countries using disparate methodologies. In recent years, momentum for the development and application of NCA has been growing around the concept of looking beyond traditional national income accounts to evaluate economic growth. Today there exist a methodology for calculating the value of goods and services provided by forests and an internationally approved statistics framework to do 15 systematic forest accounting. In 2012 the UN System of Environmental-Economic Accounting Central Framework (SEEA-CF) was adopted as an internationally agreed upon standard. The SEEA provides methodology for building forest asset accounts as well as flow accounts for timber and non-timber forest products as an extension of the System of National Accounts (SNA). Forest ecosystem services can be captured in both physical and monetary terms. The SEEA expands the asset boundary of the SNA to include both cultivated and natural forests. In addition, SEEA flow accounts for forest goods and services are integrated into national income accounts. Policy Applications of Forest Accounts Forest accounts provide a comprehensive framework for representing all forest goods and services provided to all other sectors, with extensive policy applications. Examples of the policy uses of forest accounts and the actions that could be taken on the basis of the policy analysis are shown in Annex 1. Prominent among the policies are the institution of fees for environmental services, which may be used to fund forest management—which is often woefully underfunded in many countries—and to compensate other users, often local communities who may have to sacrifice some forest uses in order to maintain the flow of forest protection services. Several of these policy issues are being considered for Turkey’s planned update of its Forest Sector Review. Forest accounts help to identify potential conflicts, both at the level of Ministry development objectives and between local users of forest resources. By quantifying the relative values, trade- offs among users can be assessed as well as an optimal forest strategy designed to take all stakeholders into account. Forest accounts also assist in the building of multidisciplinary alliances across ministries and among different stakeholders in the private sector, each realizes the extent of their dependence on forests. International Experience As a tool for analyses and decision-making around sustainable development and green growth policies, NCA has been used to help governments better define national targets of sustainable natural resource management, address policy questions around natural resource management, and improve the government’s policies and investment prioritization processes. NCA can also help identify and guide the interactions between economic activities and actions in the natural resources sector through the valuation and pricing of natural resources. Developed countries have a long history of working with natural capital accounts. For instance, the EU Statistical Office (Eurostat) has been instrumental in piloting programs and providing insight for the development of SEEA. In recent years, the European Union has passed a variety of regulations and directives related to natural capital accounting, and several countries have already established natural capital accounting programs. Most of Europe’s western and northern countries (namely Germany, France, the Netherlands, the UK, Sweden, and Norway) have established forest accounts and applied them to their development policy making. Other OECD countries such as Australia, Canada, and New Zealand have also advanced natural capital accounts. Emerging economies like South Africa and Mexico have created their own water and forest accounts. China is actively valuing forest resources and the economic costs of 16 environmental pollution in an attempt to pilot green GDP. In Turkey, some agencies have started exploring the valuation of eco-system services for some natural conservation areas. The following introduces the recent application of forest accounting in Spain and Guatemala. In Spain, a recent study (Caparros et al., 2014) examined forest ecosystems in Andalusia to establish a system of ecosystem accounts for the Andalusian forests, conduct income estimates for almost all of Andalusia’s forest ecosystems, and provide the total economic contribution of these ecosystems. The study’s information enables the Andalusian government to prioritize planning and budgetary considerations for managing these ecosystems (see Box 1 below). Box 1. Forest Accounts of Andalusia, Spain Policy question: How to manage the global biodiversity hotspot region of Andalucia? Context: Traditionally, Andalucia’s ecosystems were managed for timber, cork, hunting, and grazing livestock. As pressures on the forest grew, policy makers realized the ecosystems were worth much more. The region provides ecosystem services—public and private recreation, forest produce, carbon storage, and biodiversity— whose values are not readily observable in markets. The challenge was how to develop the area while making sure that it continued to provide the other ecosystem services in the long run, including drawing millions of tourists annually. Four years ago, the government decided to spend $9 million on building a detailed set of land accounts related to its forests and the complex system they support. While most of the research follows the SEEA methodology, they are pushing to develop their own ecosystem accounts. Applications of the accounts: Evaluating trade-offs for development: When building roads or bridges, these accounts show which parts of the forests store more carbon and are worth preserving or how much compensation should be paid to local residents for commercial revenue lost as a result of the road. Public buy-in for millions spent on fire protection in the region: The accounts map fire expenditures and help in determining whether money is being spent on the forests with the greatest value. This helps in communicating and justifying the public expenditure on protection against forest fires. Setting entry prices for tourists: One part of the land accounts involves using the Simulated Exchange Value tool, which determines the amount of money tourists would be willing to pay to visit a particular area of Andalucia. Efforts to establish forest accounts have also been seen in some developing countries. In Guatemala, the forest accounts showed that the country’s deforestation rate was the highest in Central and South America. That information has fueled strategies to control the use of firewood and unauthorized logging, a review of the forestry law, and an update of regulations. Greater budget resources for these initiatives were made available. 17 IV. Overview of Valuation Methods for the Forest Sector This chapter provides an overview of the concept and application of total economic value (TEV) and valuation methods and techniques commonly used in the forestry sector. Economists developed the TEV concept to capture the full value that eco-systems such as forests provide to human society. The notion of TEV provides an all-encompassing measure of the economic value of any environmental asset (Pearce, et al., 2006). In recent years, the TEV has been widely used to quantify the full value of different components of ecosystems, including those provided by forests (Mavsar, et al., 2014; Merlo and Croitoru, 2005). The wide range of benefits that forests provide requires a coherent analytical framework, and assigning monetary economic values helps to create a common metric for comparison. The main advantage of using TEV is that all forestry benefits are considered systematically and comprehensively without any double counting (Mavsar, et al., 2014). The classifications and terminology vary, but TEV generally categorizes values into use and non- use (or passive use) (Pearce, D., et al., 2006). See Figure 1 below. Use values relate to actual use of the good in question (e.g. a visit to a national park), planned use (a visit planned in the future) or possible use. Actual and planned uses are fairly obvious concepts, but possible use could also be important since people may be willing to pay to maintain a good in existence in order to preserve the option of using it in the future. Option value thus becomes a form of use value (Pearce, et al., 2006). It is the value obtained from maintaining the option of the future use of goods or services. In other words, it is potential use values, which might be realized in the future. Figure 1. Total Economic Value Total Economic Value Use values Non-use values Direct use values Indirect use values Option values Existence values Altruistic and bequest values (usually measures outputs) (usually measures benefits/services) Use value can be further divided into direct use value and indirect use value. According to Dixon and Pagiola (1998) Direct use value derives from goods which can be extracted, consumed or directly enjoyed; for example, extractive use value would be derived from timber, from harvest minor forest products, hunting and fishing. In addition to these directly consumed goods, direct use value can also be non-consumptive. For example, people who enjoy hiking or camping in the same forest receive a direct use value, but not actually "consume" any of the forest resource. Indirect use value, also known as non-extractive use value or functional value, derives from the services the environment provides. These services do not require any good to be harvested, although they may require someone's physical presence. 18 Non-use value refers to the willingness to pay to maintain some good in existence despite having no actual, planned or possible use. The types of non-use value vary, but the following are convenient classifications: existence value, altruistic value, and bequest value. Existence value refers to the willingness to pay (WTP) to keep a good in existence in a context where an individual expressing the value has no actual or planned use for his/herself or for anyone else. Motivations here vary, and might include having a feeling of concern for the asset itself (e.g. a threatened species) or a “stewardship” motive whereby the “valuer” feels some responsibility for the asset. For example, many people will never have the opportunity to see the Amazon rainforest, yet are willing to pay for its preservation. Altruistic value might arise when an individual is concerned that the good in question should be available to others. A bequest value is similar, but concerned that the next and future generations have the option to make use of the good. As for the forest sector, the definitions of direct use, indirect use, and option values or benefits can be further elaborated as follows (Lange, 2004): direct use values include economic benefits obtained from direct use of the forest, which can be extractive (e.g. timber, fuelwood, edible plants, game and medicinal plants) or non-extractive (e.g. recreation and tourism). Indirect use benefits refer to environmental services provided by forests that are of indirect value, such as carbon sequestration, the provision of a habitat to protect biodiversity, or various ecosystem protection services such as the ability to reduce soil erosion and siltation in rivers. Option value refers to the value people may place on maintaining forests to enjoy their direct or indirect use values at some time in the future, including preservation of a natural gene bank. Direct use values include market or near-market goods whose physical volume and monetary value can be measured. Many of forest products either have market prices (e.g. commercial timber) or prices that can be readily estimated by closely related market goods and services (e.g. own-account fuelwood, edible plants and game). In principle, these products or goods should be included in SNA although in practice the estimation of non-market goods and services may be quite limited in some countries. Indirect use of forest services, such as for biodiversity protection and hydrologic function, are often represented in physical terms only because of difficulties with valuation (Lange, 2004). Wherever possible, all of these values should be represented in both physical (forestland in hectares, timber harvested in cubic meters) and monetary units in the accounting framework. Owing to measurement problems, forest accounts have been limited to some direct use values, such as timber, non-wood forest products (NWFP), recreation and tourism, and fodder for grazing. Indirect use of forest services for carbon storage is relatively easy to measure in physical terms, and there is some international consensus on valuation. But use of other indirect services, such as biodiversity protection, is represented qualitatively through physical indicators. In the forestry economic literature, quite a bit of work has been done to estimate option value and non-use values. However, these values are rather experimental at the present time; neither SEEA nor any official forestry accounts have attempted to include these values. 19 In some forestry analyses (Table 1), TEV is broken down into 6 types of values, with the adding up of the types of benefits and outputs provided by forests and associated social costs should damage to forests occur. Many forest outputs, e.g. timber, recreation and soil conservation, have positive value and can be easily located within TEV categories. Other results, such as damages of forest fires, soil erosion, and floods, are social costs with negative value, and mostly affect the indirect use values of forests (Croitoru, 2007). Table 1: TEV Categories with Several Examples of Forest Benefits and Social Costs TEV Use Value Non-Use Values Direct use Indirect use Option value Altruistic Bequest value Existence value value value value Direct Ecosystem Direct or indirect Value for the Value for Value derived consumption functions future us values enjoyment of future from the products other people generations existence of the resource Timber, Watershed Personal future Recreational Habitats, Endangered firewood, cork, protection, soil recreation, opportunities avoided species, resin, sparto conservation, potential source enhanced for irreversible conservation of grass, decorative avalanche and of energy and other people changes, biodiversity, plants, floods raw materials, landscape, habitats, species mushrooms, prevention, potential recreation, for the right or truffles, berries, landscape unknown source energy and raw welfare of non- grazing, quality, carbon of biodiversity material human beings recreation, sequestration and plants, availability, hunting preserved habitat potential unknown source of biodiversity affecting future generations Social Costs: Damage by forest fires Erosion, floods, avalanches due to poor or no forest management Pollen or other allergic factors Loss of recreation opportunities due to intensive plantation forestry and poor management Loss of landscape values due to excessive expansion of forest land use Loss of biodiversity and landscape values due to plantation forestry Source: developed based on Croitoru (2006). A variety of environmental valuation methods has been developed to estimate the value of ecosystem goods and services. They are presented in Table 2 below. The main categories of these methods are the revealed preference (RP) and stated preference (SP) methods (Mavsar, et al 2014). These could be applied to the forestry sector. 20 Table 2. List of Economic Valuation Methods Direct Indirect Revealed Competitive Market Price Travel Cost Preferences Simulated Markets Hedonic Property Values (Observed Avoidance Expenditures Behavior) Referendum Voting Contingent Valuation Contingent Ranking Stated Preferences (Hypothetical) Bidding Games Contingent Activity Contingent Referendum Unit Value Transfer Benefit Transfer Function Transfer Source: Adopted with modifications from Freeman, 1994 and EFIMED and CTFC, 2014 The revealed preference (RP) methods are based on actual observed behaviors of people. These methods are suitable when a relationship exists between the environmental goods or services at stake and a functional and well established market (Mavsar, et al. 2014; Morrison, 1996). For example, part of the real estate value is often associated with the environmental quality (e.g., pollution level). It is very likely that RP methods underestimate the value of public goods, as they are not able to capture all the possible ways in which people benefit from them (i.e. non-use values). The main advantage of RP methods is that they are based on actual market behavior of users of non-market goods and services (e.g. paying a higher price for a house because of a nice forest view); however, their applicability is limited to only a few non-market forest goods and services (recreation, tourism and landscape aesthetics) (Mavsar, et al., 2014). The stated preference methods are based on people’s responses to questions describing hypothetical markets or situations (Mavsar, et al., 2014). These techniques are suited to eliciting each of these kinds of value; although, in practice, it is usually not possible to disaggregate individual types of non-use value, and also not usually relevant to a decision to secure that breakdown. But differentiating between use and non-use values is important because the latter can be large relative to the former, especially when the good in question has few substitutes and is widely valued. In addition, non-use value remains controversial in some decision-making contexts, so it is important to separate it out for presentational and strategic reasons (Pearce, D., et al., 2006). The main disadvantages to this methodology is that they are based on hypothetical situations (no real market transaction is performed and the received answer might not reflect the real situation) and their application is complex (specialists are needed for the development of a questionnaire and for data analysis) and time consuming. Another weak point for this group of methods is a high risk of biases that may lead to inaccurate WTP estimations. A specific method is the benefit transfer approach, which is not a valuation method, but which uses (transfers) economic estimates from previous studies with similar changes in environmental 21 goods and services to estimate the value of environmental changes at the valued site (Mavsar, et al., 2014). The method is still relatively new, and no widely accepted standards for its application have yet been adopted. The benefit transfer is a process of “borrowing” values that have already been estimated in some other study or context, and would save considerable time and effort in conducting “primary” valuation studies. Certainly, the more primary valuation research there is the more we can learn about the benefit transfer (Pearce, et al., 2006). It could be used for screening to determine if a more detailed, original valuation study should be conducted. Benefit transfer may not be accurate, except for making gross estimates of recreational values, unless sites share all of the site, location, and user-specific characteristics. Unit value estimates become outdated quickly. A detailed introduction to each valuation methods can be found in Annex 2. 22 V. The Pilot Study in Bolu Bolu region, which is the jurisdiction of the Bolu Regional Directorate of Forestry, was chosen as the pilot study area. The DGF suggested Bolu because of the region’s relatively rich forest products and services, adequate institutional support, and the availability of data. 5.1 Basic Information on the Study Area The Bolu study area (Figure 2) is located in the northwest part of the country between Istanbul and Ankara, and its total area of 1.037 million ha includes the municipalities of Bolu and Düzce. The total population of the study area is 640,338 with a density of 34 persons per km2 in Bolu and 139 persons per km2 in Düzce. About 56 percent of Bolu is mountains. The climate in the northern part of the study area is Black Sea, and the rest is Black Sea – Central Anatolia Transition. Water surface is 997 ha composed of 478 ha of natural lakes, 131 ha of dam reservoirs, 127 ha of manmade small lakes and 260 ha of rivers. There is one national park, Yedigöller, five nature parks, and six wildlife development centers in the area. Figure 2. The Boundary of Bolu Regional Directorate Source: Strategy Development Department, DG Forestry, Turkey About 64 percent of Bolu and 50 percent of Düzce are forest areas. The region’s total forest area is 628,734.9 ha. High forests, i.e. a stand of trees generally of seedling origin, that normally develop into a high, closed canopy, are 628,517 ha, and coppice forests are 217.5 ha (Table 3). 23 About 80 percent of the high forests are normal, and 20 percent are degraded. All coppice forests are degraded. The vegetation has a great range of flora consisting of 89 families and 363 species. Majority of flora family, about 82, are endemic plants. There is rich wild life in forest areas of high altitude, including bears, wildcat, roe-deer, deer, and wolf. The region’s main tree species are Pinus Brutia (Calabrian Pine), Pinus Nigra (Crimean Pine), Pinus Silvestris (Scotch Pine), Abies Nordmandiana (Fir), Juniperus sp (Junier), Fagus Orientalis (Beech), Horn Beech, Quercus sp (Oaks), Carpinus sp (Hornbeam), Alnus sp (Alder), Castanea Sativa Mill (Anayolian Chestnut), Fraxinus (Ash), Populus-Moula (Poplar), Acer sp (Maple), Tilia sp (Lime). In terms of vegetation, the forest is 90,611.8 ha broadleaved and 537,905.6 coniferous. Table 3. Forest Resources in the Bolu Regional Directorate High Forest Coppice Forests Total Forest Area (ha) (ha) (ha) Normal 500,393.3 0 500,339.3 Degraded 128,178.1 217.5 128,395.6 Total 628,517.4 217.5 628,734.9 Source: DG Forestry The forests are mostly state-owned and under the management of the Bolu Forestry Regional Directorate (Bolu RD), which has 12 Management Departments with 80 Forest Management Chieftainships and 6 other Units (for seedling production, education, production storage, information technology and communication, wireless and machines). There is a Research Institute Directorate of DGF covering the Western Black Sea located in Bolu. Stakeholders are forest owners (both the State and Private), villagers living in or near forests, foundations, associations, NGOs, and investors, and the general public. The service sector has the largest share in the region’s economy at 40.7 percent followed b y agriculture with 37.7 percent and industry with 21.6 percent. 754,870 m3 industrial wood and 199,945 ster 1 firewood were produced in 2014. The sale of these forest products provided revenue of 133 million TL and a profit of 48 million TL. There are about 118 plants operating in the forestry sector (Bolu City Government, 2014). Major industrial sectors are manufacturing, mining, utilities, and construction. In terms of socio-economic development measures as defined by the Ministry of Development, Bolu ranks 11th and Düzce ranks 35th among 81 cities in the country. In Bolu City alone, 402 villages out of 487 are located inside or near forests. 5.2 Types of Forestry Products and Eco-services Identified Forests in Bolu provide a variety of products, both timer and non-timber, and ecosystem services, which are presented in Table 4. 1 Ster is a measure used by the DG Forestry to measure a volume of wood stack with 1 meter length and width and 1.1 meter height. 1 ster is 0.75 m3 when the spaces within the stack of wood are taken into account. 24 Table 4. Forest Goods and Services Considered in the Pilot Study Value Types Forest Products or Services Timber Firewood NWFP-Plants DIRECT USE VALUE Honey Recreation Fodder for Grazing Hunting OPTION VALUE Pharmaceutical Watershed Protection (Water Supply) INDIRECT USE VALUE Carbon Sequestration Soil Erosion Control NONUSE VALUE Biodiversity Source: The authors. Timber, firewood, non-wood forest products-plants (NWFPs-plants), honey, recreation, fodder for grazing, and hunting—are products and eco-system services considered in the study under the category of direct use value since they have direct use or interaction with local people or visitors to the site. The benefits from education activities and over-night eco-tourism activities were identified but not quantified in the valuation exercise below due to data limitations. For the future use of goods and services, option value only includes pharmaceutical value. The indirect use of forests include watershed protection, water supply, carbon sequestration, and soil erosion control, which largely benefits people downstream or outside of the study area. Reduction of air pollution is not included in this category. Biodiversity, existence value, and bequest value are the non-use values, and they are estimates to some extent. To avoid double counting, conservatively, only the value associate with biodiversity is taken into account in the calculation of the total economic value. Furthermore, altruistic value exists, but was unable to be estimated in the analysis given the unavailability of related data and usable studies. 5.3 Data Available The pilot study relied on the use of readily available data of the Bolu study area. The specific data immediately available from DGF and its regional directorate as well as local experts and communities are gathered, organized, and analyzed to perform valuation analysis. The data obtained for the Bolu forest area includes forest land area, timber and wood production, the amount of NWFP produced and revenue from sales of NWFP, tourist and hunter data as well as 25 their prices and fees. In general, the availability of relevant economic data diminishes as one moves from the top categories of direct use values to the bottom categories of non-use values. More specifically, for the goods and services providing direct use value, the physical extraction and production amounts are available, but their monetary values are largely unavailable in statistics or government records. The gate prices for NWFPs-plants and honey are not available from published sources and they were obtained from interview of local experts or village heads. Due to time and resource limitations for conducting field studies, the lack of field-specific information such as the physical amounts of soil erosion, water supply and biodiversity per hectare of forests by type is a serious problem in terms of valuing indirect ecosystem services. The presence of the studies in the literature for other countries such as Nunez et al. (2006) indicates that it is possible to conduct similar studies that obtain physical measurements regarding ecosystem services in certain regions in Turkey. However it is beyond the scope of this pilot study, which aims to quickly demonstrate forest valuation and its policy application. The benefit transfer approach was employed in quantifying most indirect use values. The base year of the study is 2013. All the unit prices and values were adjusted to the base year. 5.4 Valuation: Methods Used and Results The aim and limitation of the pilot study and the data availability determined the choice of valuation methodologies. The economic valuation undertaken in the pilot study mainly relies on the following methods: market price, cost based method, standard value use, adjusted and unadjusted benefit transfers. As introduced in the early chapters, environmental and nature resource economics provide various forms of valuation methods depending upon whether individuals’ preferences are revealed through their choices in the market or not. When the preferences are not observed, the methods rely on stated preferences. There is also literature, mostly from international experience but also relevant to Turkey, to support the valuation of ecosystem services or non-use values of forests through the adoption of the benefit transfer approach (Nunez et al., 2006; Kaya et al., 2009; Croitoru, 2007; Bann and Clemens, 1998; Vilademir, 2014; and Walsh et al. 1999). There have been similar studies found in the literature that use a similar methodology with readily available data such as Croitoru (2007), Türker et al. (1999; 2001) and Pak, et al. (2010). Therefore, a number of valuation methods were applied based on available field data and relevant coefficients from the literature, and presented below by category of forest products and services. 5.4.1 Direct Use Value Market price is used to value timber, firewood, NWFP-Plants, honey and fodder for grazing. Recreation is valued by benefit transfer while hunting value is computed based on license fees, i.e., the minimum costs to hunters. The services provided for research-education activities, eco- tourism, and over-night stays under recreation, as well as spiritual or cultural services of forests were not quantified in the valuation exercise due to no data immediately available. For the future use of goods and services, option value only includes pharmaceutical value, and excludes medicinal research. The economic value for the region from direct use of forest goods and services in 2013 was estimated to be $316.6 million, and makes up 46.3 percent of the forests’ total economic value. The values should be treated as low end results due to the omission of 26 some benefits mentioned above. The calculation of each product or service category is presented in below. Timber and Firewood. The timber or wood production includes telephone pole, mining pole, other industrial wood, pulp wood, fire-chip wood, and thin pole and it is measured in m3. Firewood production measured is measured in ster. The timber production in Bolu Forest Area has been managed by the Bolu Regional Directorate (BRD) in a sustainable way to ensure no excessive harvesting over years. According to BRD, the annual production of standing tree is 1,234,543 m3 in 2013, of which 868,687 m3 is from coniferous forests and 365,856 m3 is from broadleaved forests. The timber was harvested and sold to timber or industrial wood producers. The stumpage value is 85 TL/m3 for standing coniferous timbers and 67 TL/m3 for broadleaved. The economic value of wood products in 2013 is calculated to be $75.1 million or 11 percent of the total economic value (see table A.1). The annual firewood value is calculated separately from the value of the wood production. The amount of firewood production is 295,529 ster (127,047 ster from coniferous and 132,482 ster from broadleaved) in 2013. The average regional price for firewood is 58 TL/m3. The economic value of firewood is $10.4 million, or 1.5 percent of the total economics value. The unit cost of production for each type (TL/m3) was also estimated by BRD. BRD further assumed that the unit cost of firewood is 40 percent of the unit cost of general wood production. NWFP-Plants. Non-Wood Forest Products (NWFP-Plants) include non-animal products such as laurus nobilis, tilia, castanea sativa, ruscus aculeatus and boletus. Table A.2 has the complete list of NWFP-plants that were harvested in the study area in 2013. Bolu RD staff conducted field surveys to obtain their quantities sold and the revenue obtained by the region’s villagers in 2013. The unit prices of harvested products are the quarterly averages obtained by dividing quarterly sales by quarterly revenue. The data set does not include maintenance costs and self- consumption quantities. Therefore, on one hand the economic value calculated for the pilot study is over estimated due to lack of cost data. On the other hand it is under estimated due to lack of self-consumption value. The economic value of NWFPs-Pants is calculated to be only $0.5 million, the one of the smallest components of direct use values, or 0.1 percent of TEV. Honey. Due to data availability, honey is the only animal based forest product that was able to be quantified in the study. The data necessary to calculate the economic value of honey produced from forests are available from various different sources. Two types of honey, chestnut and flower, are produced in the region: Düzce produces honey from chestnut trees and Bolu produces honey from other plants, considered to be flower honey. The honey production (metric ton/year) from Bolu and Düzce in 2013 is available from the Turkish Statistical Institute (TurkStat). According to DG Forestry, the honey produced from the forests is 80 percent of the total honey production in the region, which results in 440.3 metric tons in Bolu and 221 metric tons in Düzce in 2013 (Table A.3). There are different prices for each type of honey obtained by DG Forestry staff from the Bolu and Düzce Regional Honey Producers Association. However, the Associations do not have the unit cost data (TL/hive/year). The average cost data were obtained from the Honey Producers Association of Yalova, a nearby region. The cost is calculated by summing up the average costs of labor, materials, hive, honey bee food and medications, and comb. The economic value of honey produced in the region is calculated at $ 5.3 million, which makes up 0.8 percent of TEV. 27 Recreation. The calculated recreation value includes daily trips only to park areas and other types of recreational locations. The recreational area in the pilot study is the sum of the areas of a national park and five natural parks, and also the areas of two waterfalls. Their total area is 3,852.4 ha. The number of visitors and size of the parks were obtained from the Bolu RD (Bolu 9th Regional Directorate Web Site, 2015). In 2012 the total number of daily visitors to the parks was 788,252. Recreational use value has been the most widely studied in Turkish valuation literature. Among them is a study by Kaya et al. (1999) conducted in Soğuksu National Park, a park adjacent to Bolu with similar features to Bolu’s recreational areas. By using the benefit transfer method and discounting the consumer surplus value per visitor, each daily trip was calculated to be 17.2 TL in 2013. Both the study area, Soğuksu national park, and also parks in the pilot area attract visitors from big cities, especially from Ankara. There is no income elasticity data, the income adjustments are not done for the unit value, and income elasticity is assumed to be one comparable to that in the literature. Due to a lack of visitor numbers for 2013, the 2012 numbers of were used. The total maintenance costs of the parks in the pilot area are assumed to be the same as the total expenses of picnic areas, a figure provided by the DG Forestry (Table A.4). The economic value estimate for recreational use is $12 million in 2013, or about 1.8 percent of TEV. This value is a very conservative one since (i) it does not include the values of other types of recreational use such as overnight stays and eco-tourism, and (ii) the pilot study area may have a higher demand for recreational use since it is closer to another big city, Istanbul. Fodder for Grazing. To determine the economic value of fodder for grazing, fodder (grass, seeds, leaves, shoots) production per ha in a specific area was calculated by using coefficients obtained from interview with experts and villagers for each of specific forest areas. The specific areas considered in the study include forest soil (pasture), degraded coppice, normal coppice, broadleaved coppice, coniferous degraded coppice and coniferous coppice. After calculating the fodder production, the actual use of fodder for grazing was assumed to be the half of the production amount, relying on expert judgment. This represents a conservative assumption. The price (TL/kg) is obtained by interviews with local people in the study area (Table A.5). The economic value of fodder for grazing is $ 212.9 million which corresponds to 31.1 percent of the TEV. Hunting. The economic value of hunting is estimated by the cost based method. Literature searches did not result in studies that would provide a willingness to pay value per hunter. The only data available was the number of hunters registered in the region’s Bolu and Düzce Hunters’ Associations. Hunters have to obtain a hunting permit (certificate) from the regional Association. The permit costs 169.4 TL for nonmembers and 155 TL for members. In addition to the permits, hunters must pay a fee of 140 TL to hunt during hunting season. In the valuation exercise, it is assumed that the difference between the permit values for members and nonmembers is the membership fee for the Associations. Therefore, each hunter incurs the cost of 169.4 TL for the permit. There are only few hunters from outside of the region (they number 11) and for them the hunting fee is 220 TL2. Given the number of registered hunters in Bolu, Düzce and outside the region, and assuming that they went hunting one time in the study year, 2 These values are obtained from the web site of the region (http://bolge9.ormansu.gov.tr/9bolge/AnaSayfa/avcilikbelgesi.aspx?sflang=tr). 28 the total costs they incurred was calculated to be $0.5 million or 0.1 percent of the TEV. It is important to note that this figure does not include other expenses to hunters such as materials needed for hunting, travel costs, and others. Therefore, the value of hunting in the region is underestimated. 5.4.2 Indirect Use Value The indirect use values estimated in the study contain the values driven from forest ecosystem services including watershed protection, soil erosion control, and carbon sequestration. The valuation of each service is discussed in the following sections. The economic value of forest ecosystem services under the indirect use category is estimated to be $341.4 million or 50.0 percent of the TEV in Bolu in 2013. Indirect use value of forests also includes assimilation of contaminants, filtering of air pollutants, and climate regulation as biospheric services (EFIMED and CTFC, 2014). These services are not valued in the pilot study due to lack of data and resources. Watershed Protection. Watershed protection functions of forests include regulation of rainfall and water flow, water quality, sustainable water supply, reduction of overflow, and flooding. Watershed protection and water supply services were calculated separately in the pilot study following the studies of Croitoru (2007) and Nunez et al. (2006). However, to avoid double counting, only the value associated with water supply under watershed protection is included in the study. Nunez et al. (2006) stated that water supply is one of the crucial ecosystem services of temperate forests in Chile, and they valued the economic benefit of Chilean temperate forests in sustaining the supply of drinkable water for human consumption. Nunez, et al. (2006) employed a change in productivity method by including stream flow from a forested watershed into a production function of drinkable water for Valdivia, a city in Southern Chile. The study area is similar to the pilot study area in at least two ways: (i) vegetation in the pilot study area is also temperate forests as in the study area in Chile, and (ii) as in the case of the study of Nunez et al (2006), big cities surrounding the pilot study area, especially Istanbul with a 2013 population of 14,160,467, consumed water from the Melen River in the pilot study area. Nunez et al. (2006) estimates the economic value of the benefits from the water supply as $162.4 per ha for the summer period and $61.2 per ha for the rest of the year. Therefore, in order for the unit value to be transferred, the weighted average of the two values is calculated by using the lengths of the summer and non-summer periods as weights. The unit value is adjusted for income and price level differentials between Chile and Turkey and carried forward to 2013 by the consumer price index (The World Bank, 2015; OECD Statistics, 2015; TurkStat, 2015). The economic value of the water supply is estimated to be $125.5 million (Table A.8), or 18.4 percent of the TEV. Soil Erosion Control. The economic value of soil erosion control services of the forests in Bolu RD was estimated by the unit value transfer method (Table A.10). Bann and Clemens (1998) computed $46 per ha as the soil erosion control services for forests in Turkey. The value was calculated by replacement cost of nutrients and flood damages. It does not include actual sediment removal costs of specific reservoirs and river channels in the pilot study area due to lack of data and thus may underestimates the value of the forests’ soil protection. The unit value was adjusted to the base year 2013 and applied to forest areas that control soil erosion including reforested and rehabilitated forests, areas covered by soil conservation efforts, however the areas 29 of degraded forest were excluded. The economic value is estimated to be $103.8 million or 15.2 percent in the TEV. Carbon Sequestration. Estimation of the carbon sequestration value of Bolu’s forests required a standard price and the estimated amount of carbon sequestered in the form of CO2. The amount of carbon sequestered was calculated from the 2013 forest increments (m3) by following the methodology presented in Karabıyık (2014). The data of annual timber and firewood production, including the illicit firewood available from DG Forestry, were used to approximately represent the annual increment of wood for carbon storage (Tables A.9.4 and A.9.5). Above ground biomass of broadleaved and coniferous forests in m3 and metric ton are computed from the wood for carbon storage by using biomass expansion factors (BEF) and volume weights (metric ton/m3, respectively) that were calculated by Prof. Ünal Asan (Table A.9.1) and presented in Karabıyık (2014). Underground biomass was calculated by using the coefficients of root-to- shoot ratios for temperate forests with the two types of vegetation (Karabıyık, 2014). These ratios are from the Agriculture, Forestry and Other Land Use, Intergovernmental Panel on Climate Change (AFOLU, IPCC 2006). After obtaining both aboveground and underground biomass, the total incremental biomass was estimated for both types of forests. In order to compute the carbon captured in the biomass, the oven dried total biomass needed to be calculated. Oven dried total biomass (metric ton) is computed by using the dried weight figures for other broadleaved and coniferous (Table A.9.3). The dried weight figures were obtained from Karabıyık (2014) and Tolunay (2013b). The carbon captured by total biomass in broadleaved and coniferous forests is computed by multiplying the total biomass with the corresponding carbon contents of coniferous and broadleaved as determined in agriculture, forestry and other land use (AFOLU) (Karabıyık, 2014). To convert carbon to CO2, the conversion factor is used, and thus the total CO2 captured in 2013 was estimated to be about 1.8 million metric ton. As the social cost of carbon (SCC) is the most common approach to carbon valuation (EFI, 2014), it was used in this pilot study to value carbon sequestration services. The European Forest Institute (EFI, 2014) reviewed 237 studies and the average SCC for CO2 was € 49 per metric ton. Since carbon sequestration service is a global public good and benefits the citizen of the entire world, the unit value does not need further adjustments. Bolu’s economic value of carbon sequestration was estimated to be $112.2 million in 2013, or 16.4 percent of the TEV. 5.4.3 Option Value The only study found on option values in Turkey was on the option value of pharmaceuticals. This value is derived from forest genetic materials and is estimated to be €5 per ha (Croitoru, 2007). This is the future use value of pharmaceutical materials, and is separated from non-use value related to biodiversity. The unit value in TL in 2013 was converted by using 2004 comparative price levels in Euro areas and Turkey (OECD Statistics, 2015) and Turkey’s consumer price index (TurkStat, 2015). The forest area of 718,446.30 ha was used to calculate the economic value for pharmaceuticals. The option value of pharmaceuticals was estimated to be $6.1 million or 0.9 percent of the TEV. 5.4.4 Non-Use Value 30 Computation of non-use values is challenging compared to use values. In the pilot study, two types of non-use values were estimated: biodiversity and existence and bequest value combined. Both values are estimated by using unit value transferred from other studies. To avoid the possibility of double counting, as well as to provide a conservative estimate for a non-use value, only the biodiversity value was taken into account in the study3. Vilademir (2014) estimated non-use value of forests designated for conservation or protected areas for countries of the Mediterranean region including Turkey. Vilademir (2014) conducted meta-analysis, an econometric approach that estimates the marginal willingness to pay (WTP), based on the data gathered from several studies that use stated preference techniques implemented in countries of the region. The study specifically states that non-use value includes altruistic, bequest and existence values. The pilot study employs non-use values specifically calculated for Turkey in Vilademir’s study. Therefore, the value in this category is not connected to values like recreation and direct use values. Specifically, Vilademir’s study shows that marginal WTP values for temperate and subtropical forests in Turkey in 2005 are $20.17 per ha and $19.0 per ha, respectively. The total forest areas designated for conservation in Bolu area is 98,535 ha, as provided by DGF. The marginal WTP for non-use benefits are adjusted to 2013 based on the country’s consumer price index. The economic value of biodiversity is estimated to be $19.3 million, or 2.8 percent of the TEV. 5.4.5 Costs and Negative Externalities The net total economic value is calculated by deducting operation and maintenance expenditures to keep forests sustainable and negative externalities from TEV (Turker 2001 and 2006, Pak, 2001, 2006 and 2010, and Croitoru, 2007). The total forestry expenditure of Bolu RD includes expenses related to soil conservation, afforestation, range management, and rehabilitation of degraded coppice forests, and it amounted to $3.1 million in 2013. Furthermore, the value of negative externalities needs to be deducted from the TEV. The soil erosion from degraded forests, the value of negative externalities, was estimated in the study. Degraded forest areas cause more soil erosion than normal forest cover, yet compared to uncovered land they eliminate some soil erosion. Therefore, the unit value of soil erosion was adjusted for the ability of degraded forests’ to partially stop soil erosion by a factor of two thirds of unit value of soil erosion, taken from Bann and Clemens (1998). The value of soil erosion for degraded forests is $14 million. Therefore, costs and negative externalities add up to $17.1 million. 5.5 Summary of the Pilot Study Results Table 5 summarizes the final results of the valuation exercise. The total estimated value of the various types of goods and services of forest resources net of costs and negative externalities of 3 The existence and bequest values were also estimated for the pilot study area. These estimates rely on very specific value calculated for the existence and bequest value of the wildlife in Colorado, US, as the average WTP in US dollars in 1999 in the study of Walsh et al. (1999). These two values together are estimated to be $13 million for the pilot study but were not included in TEV to avoid double counting. Thus the details of this estimation are not included in the report. 31 the pilot area is $666.3 million in 2013. The net unit value per ha is $9304. The total economic value is made up of direct use, option, indirect use, and non-use values. The largest component was the indirect use values coming from ecosystem services including watershed protection, carbon sequestration, and soil erosion control, which amounts to $341.4 million or 50 percent of the total economic value. In traditional national accounting, these values are largely unaccounted or are partially included in the value added of other sectors, such as cost reduction of the water supply. Table 5. Total Economic Value of Forest Goods and Services in Bolu in 2013 Percentage Value Type Products or Services TEV - 2013 ($) Valuation Method Shares in TEV (%) (2013)* Timber 75,049,925 Market Price 11.0 Firewood 10,366,677 Market Price 1.5 NWFP-Plants 534,252 Market Price 0.1 DIRECT USE Honey 5,337,387 Market Price 0.8 VALUE Recreation 12,020,272 Unit Value Transfer 1.8 Fodder for Grazing 212,845,872 Market Price 31.1 Hunting 469,631 Cost Based Valuation 0.1 Total Direct Use Value 316,624,017 46.3 OPTION Pharmaceutical 6,081,991 Unit Value Transfer 0.9 VALUE Total Option Value 6,081,991 0.9 Watershed Protection (Water Adjusted Unit Value 18.4 Supply) 125,449,004 Transfer INDIRECT Standard Value Transfer 16.4 USE VALUE Carbon Sequestration 112,204,911 (SCC) Soil Erosion Control 103,744,814 Unit Value Transfer 15.2 Total Indirect Use Value 341,398,728 50.0 NONUSE Biodiversity 19,247,591 Unit Value Transfer 2.8 VALUE Total Nonuse Value 19,247,591 2.8 Total Economic Value 683,352,327 100.0 Expenditure related to Soil Conservation, Aforestation, Range Management, 18.2 General Rehabilitation of Degraded Costs and Forests 3,103,081 Actual Expenses Negative Externalities Soil Erosion for Degraded 81.8 Forests 13,992,820 Value Transfer Total Costs 17,095,901 100.0 * For the presentation purpose, the percentage shares are rounded to one decimal and therefore their sum may not exactly be 100 percent. 4 Purchasing Power Parity Exchange Conversion from OECD is used to convert Turkish TL to US Dollar. 32 The second largest component of the total economic value is the direct used value composed of timber, firewood, NWFP-plants, honey recreation, fodder for grazing and hunting. The sum of these direct use values is $316.6 million, comprising 50 percent of the total economic value. Among these $86.4 million of the direct use value from timber, firewood, NWFP-plants and hunting) is normally accounted for under the forestry sector. The value of recreation services are accounted for under the tourism sector, and fodder for grazing and honey are accounted for under agriculture. The values from NWFP-Plants and hunting can be accounted for either under the forestry sector or agriculture. In addition to the total direct and indirect use values, the nonuse value of biodiversity and the option value of pharmaceuticals were estimated. Their values are $19.3 million and $6.1 million, respectively. These forestry benefits are normally not estimated and unaccounted. The monetary results of the pilot study help better understand the scale of economic values of various forest products and services (see Figure 3). The study illustrates that the economic value of various forest products and services which are normally unaccounted or accounted implicitly in non-forest sectors is seven times of the value currently accounted as the forest sector’s contribution. The Bolu region produced about $17.3 billion in GDP in 2013. The known and accounted for $86.4 million in forest products comprised about 0.50 percent of regional GDP. The case study further shows that the total economic value of forest product and services of $666.3 million is equivalent to 3.9 percent of GDP. Figure 3. TEV components of the Pilot Study and Forestry Accounts Source: Authors’ own calculation Although the valuation tried to capture major categories of values in the total economic value, there are some categories of economic valuations which were not done due to the limitations of data, time, and resources. Also, most of the valuation was done under conservative assumptions. Therefore, the estimated total value may represent an underestimated result. The following chapter will elaborate the limitations, areas for improvement, and recommendations. 33 VI. Policy Implications and Recommendations Current national accounts significantly underestimate the economic value of the forest sector and may mislead policy making related to the sector development. The value of the forest sector reflected in traditional economic accounts has significantly underestimated the sector’s real contribution to the economy and natural environment. In Turkey, including the Bolu region, the percentage of forestry value in GDP is very low compared to the total economic value estimated in the study. The low percentage even fails to help justify the forestry spending made annually by the government, and may result in misallocation and inefficient use of national resources and also mislead policy making regarding forest development and management in the long-run. The total economic value of the forest sector may be over seven times higher than the value of forest products currently accounted for in statistics; an accurate accounting can and help restore the importance of the sector. The case study results show that a large portion of economic benefits from forest products and services have been underestimated or unaccounted in the forest sector in national accounts. The majority of unaccounted values are from ecosystem services that forests provide to human society. Their economic value, as estimated in the study, is in the scale of over seven times the value of forest products reported in the current form of national statistics. Given its scale, the government cannot overlook the missing value, particularly in forest-rich regions. The TEV of forests helps justify and prioritize the public expenditure in the forest sector in order to provide public goods and externalities to national and regional economy. Valuation of ecosystem services also helps other related sectors such as tourism, water supply, agriculture, fisheries, and animal husbandry to better understand and appreciate the important contribution of forests. This is illustrated in the case of the values of NWFP- Plants, honey and fodder for grazing shared with agricultural sectors, and value of recreation services captured by tourism sector. Values of watershed protection, soil erosion control and carbon sequestration are also obtained by several different sectors of the economy. Further understanding of which sectors benefit from these forestry services and by how much will enable policy makers to instrument appropriate tools to finance these services and maximize the overall outcome. This will strengthen cross-sectoral coordination, and support and promote sustainable development at the multi-sectoral level. To improve forest valuation and develop more policy applications, we make the following recommendations. Improve data availability and associated institutional arrangement. The study found out that data, especially related to forest services, is scarce and has not been systematically collected and processed at local and national levels. Some data and coefficients needed to quantify ecosystem services does not exist, and have to be collected through field surveys; for example physical data regarding water and soil protection and monetary data of recreation and tourism. 34 There are different agencies and institutions which collect and possess some data useful to economic valuation such as DG Forestry, DG Water Management, the Ministry of Food, Agriculture and Livestock, Turkish Statistical Institute (TurkStat) and the regional offices of these agencies. It is necessary to develop a unified information system at the national level to collect, manage and use the data. Therefore, to move forward with an institutional arrangement for data gathering and management for economic valuation and accounting, we recommended developing a more unified information system for forest data that can be easily used to locate and categorize available data sets in different agencies for the purpose of economic valuation and policy making. Standardize data gathering methods. We recommend standardizing the terminology and methods for data collection efforts across institutions and regions. As part of the effort to improve data coordination and consistency, it is necessary to develop standards for use in the field to both gather data and apply to appropriate methodologies. The concepts, terminology, and data collection methods used in forestry data generation and application need to be standardized. Such standards will help to eliminate inconsistencies and misunderstandings in data collection and use. Improve the accuracy of valuation through site specific surveys and field studies. Given the time and funding constraints, the pilot study has relied on the benefit transfer approach which adopts and converts the unit value or parameters estimated by others elsewhere in valuing a number of indirect ecosystem services provided by forests in the pilot study area in order to demonstrate the orders of magnitude of forest values. But due to the complex and unique nature of forest ecosystem services, more site specific surveys and studies are necessary to improve the quality and accuracy of economic valuation and calibrate the methodology for valuing forest ecosystem services. We recommend developing a systematic and scientific approach to sample different types of regions by forest type to study and value ecosystem services in these regions. For example, the water supply service of Turkey's forests is crucial due to the high stress on water sources under the impact of global climate change in both the country and the surrounding region. There is therefore a need for studies on the quantity and costs of water supply production in different regions covered by different forest types in Turkey. Develop national guidelines on the economic valuation of forest products and service. For DGF to guide forest valuation efforts, we recommend developing and adopting national guidelines on forest valuation methods. The guidelines will present the data requirements, data quality assurance, valuation methods, and application examples to guide regional and local offices to carry out their forest valuation programs. Pilot integrated forest physical and monetary accounts. To guide decision making, the result of forest valuation needs to be integrated into existing economic and forest accounts. It is recommended to pilot in a region to improve forest accounts with the integration of physical and monetary results. Scale up forest valuation and accounting efforts at the national level. With more experience obtained and the national guidelines in place, forest valuation efforts can be scaled up in more regions and eventually nationwide. The results will be aggregated at the national level, and lead 35 to the development and enhancement of forest and economic accounts which will be used to guide national development planning and policy making. With forest valuation and accounting in place at the national level, policy makers will be able to make well-informed decision on program prioritization, budget allocation, and pricing policy related to the forest sector. With valuation methods available, the feasibility study of investment activities involving forests can be much improved to ensure better economic efficiency of public investments. 36 VII. Concluding Remarks The Government of Turkey has made significant investments in reforestation, forest management, and poverty alleviation through its national programs in its forest areas. Despite the efforts, the forest sector appears less important in national statistics. According to TurkStat, the sector contributes to only 0.2-0.3 percent of GDP. It is well known that forests provide a variety of products and ecosystem services to human society such as water conservation, soil protection, recreation, and carbon sequestration. The low GDP percentage is because the economic values of many products and services have not yet been valued and accounted for in national accounts, or implicitly reflected in non-forest sectors such as water supply and animal husbandry. The results of the Bolu case study show that forests provide a variety of non-timber products and services and that the total value of those unaccounted or less accounted, forest products and services can be over ten times higher than the value of forest products already accounted for in the traditional GDP. Therefore, improving forest valuation and accounting will be an important first step to get the information right and ensure a well informed decision making around forest sector protection, development, and prioritization of forestry sector activities. Turkey will need to further improve its systems of forest data collection and surveys as a starter. It will also need to develop its own valuation methods and national guidelines on economic valuation and accounting of the forest sector, scale up its valuation efforts nationwide, and systematically integrate valuation results into national development planning and policy making. 37 References Ateşoğlu, I. 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What is the total economic contribution of forests and what are the benefits from sustainable management? Total value of forests More comprehensive, Showing a higher value for forest including non-market accurate value of forests’ contribution to GDP may increase the forest goods and contribution to GDP. forestry sector’s ability to request a services. larger share of national budget for forest management and investment. Value of forest services Measure of the economic Design economic instruments to to non-forestry sectors. importance of forest promote sustainable forest use, for services to agriculture, example: electricity, fisheries, tourism, municipal water - institute a conservation fee on water supply, etc. and hydroelectricity tariffs for downstream beneficiaries that can be used for forest management or to compensate local communities - institute tourism fees for biodiversity conservation for forest management/compensation of local communities - negotiate international payments for carbon storage services of forests Build multi-sectoral stakeholder alliances on the basis of mutual benefits. Identify institutional weaknesses in forest management, e.g. where one sector benefits but does not pay, or does not have a say in forest management. Value of forest goods Share of forest goods in Useful for design and implementation and services used by rural livelihoods provides of poverty reduction strategies. local communities. measure of local communities’ dependence on forests 2. What is the distribution of forest benefits among different groups in society? 42 Indicator/measure Use for policy analysis Examples of policies and actions taken from policy analysis Share of forest benefits Identify social benefits Identify potential conflicts, e.g. benefits accruing to commercial, from preservation of local to subsistence users/local communities artisanal and communities and are low because commercial/ subsistence users of increased equity. downstream users obtain benefits. forests, or, Design economic instruments so that beneficiaries pay for their benefits, Share accruing to local, compensating those who may sacrifice downstream and global benefits. For example, property beneficiaries. rights—having a say over how a forest is managed—and fees for environmental services received. Optimize investment in forests and forest infrastructure that balances social objectives for equity and regional development as well as economic objectives of maximizing national income. 3. Is economic growth sustainable or is it based on the depletion of forests? Value of forest assets Macroeconomic indicators Reassess forest management if and the cost of of sustainability (such as deforestation is occurring. deforestation and forest adjusted net saving degradation. (ANS), net domestic product (NDP), national wealth, asset depletion). 4. What are the trade-offs among competing users of forests? 43 Indicator/measure Use for policy analysis Examples of policies and actions taken from policy analysis Value of forest goods Measure economic Optimize forest use and investment in and services under linkages between forestry forests and forest infrastructure by alternative forest and other sectors of the taking into account total economic management options. economy, upstream and value of forests, market and downstream. non-market, including linkages to non- forestry sectors and impacts on all Identify the economic stakeholders, economy-wide. trade-offs among competing sectors. Identify winners and losers. Design appropriate economic instruments to achieve that strategy (fees, compensating payments, property rights, etc.). 5. What are the impacts of non-forestry policies on forest use? 44 Indicator/measure Use for policy analysis Examples of policies and actions taken from policy analysis Analyze economic Measures the winners and Identify winners and losers. development scenarios losers, pressures on forests that trace the full chain and forest users from Identify optimal forest management of causation from alternative development strategy based on addressing conflicts macroeconomic policy strategies. among ministries and within a single and/or non-forestry ministry. sector policies to their Identifies potential conflicts between Design appropriate economic impact on forestry and development objectives of instruments to achieve that strategy land use. forestry and those of other (fees, compensating payments, property sectors, e.g. commercial rights, etc.). logging vs. catchment protection (Ministry of Forestry and Water Affairs, Ministry of Food, Agriculture and Livestock, Ministry of Energy and Natural Resources, etc.). Identify potential conflicts among divisions of the same ministry (Ministry of Forestry and Water Affairs), e.g. pastoralists’ use of forest vs. downstream water needs of farmers. Source: Adopted from Lange (2004). 45 Annex 2. Overview of Existing Valuation Methods There is a broad array of valuation techniques to estimate TEV for forest goods and services as shown in Table 1 above. All these methods are potential tools; the choice of one or another of them will depend on the objectives, data availability, and time and resource limitations of the valuation study. Knowing the benefit provided by forests in a study area, one could select the valuation method. The market price based method is typically used for the whole range of forest resources while it may not be applied to spiritual or cultural services of forests. For such forest benefits as biodiversity protection, climate regulation, air quality regulation, health protection, and water regulation, the most appropriate approach will be to rely on contingent valuation or choice experiment methods. The value of recreation and hunting is estimated wherever possible using the consumer surplus derived from the application of CV or the TC methods (Croitoru, L. 2006). Some of the methods (e.g. the travel cost method, hedonic pricing) rely on the revealed behavior of the users for these goods while others are using surveys and directly asking users about their WTP for certain goods or services (e.g. the contingent valuation method, choice modelling). The advantage of the first group of methods (revealed preference methods) is that they are based on actual market behavior of users of non-market goods and services (e.g. paying a higher price for a house because of a nice forest view); however, their applicability is limited to only a few non- market forest goods and services (recreation, tourism and landscape aesthetics). Nevertheless, in the last decade, the methodology and knowledge on these methods has improved considerably, enabling sound estimation of economic values of non-market goods and services. Each of the techniques and methods has its own strengths and weaknesses and specific characteristics, which are detailed in this section. Table 6 gives a flavor of how each method is applicable to this or that group of forest goods or services. The final selection of the method depends on many factors, including: (i) type and number of objects to be valued; (ii) relevant population (e.g. users or non-users or both); geographical scope (local, regional, national, international); (iii) data availability (e.g., restricted data access – data on house values); (iv) available time and financial resources; (v) team (e.g., experience). Market price method This method values those forest goods or services that are traded mainly in resource markets (e.g. fuel-wood, timber, cork, non-wood forest products), thus it is always preferable to use if a market exists for the forest product at stake. But as understood markets exist for a limited amount of forest goods and services, so market price should be carefully considered due to subsidies or markets that are not fully competitive. Seasonal variations and other effects on price must be considered. Another strength of this method is that both direct and indirect value are captured. For some WFPs and NWFPs whose prices are unknown, the opportunity cost of labor or the cost of harvest is used. For unpriced products, the market price of similar goods is used (Croitoru, 2007). 46 Application of the market price method requires data to estimate consumer surplus and producer surplus. The Market Price (MP) method is sometimes used for carbon sequestration, water purification, soil protection, recreation and tourism values of forest goods and services. The method cannot be easily used to measure the value of larger changes that are significantly affecting the supply of or demand for a good or service. Table 6: Overview of the valuation methods for forest goods and services. Group Forest Good/Service MP CB HP TC CV CE Industrial wood + ○ ─ ─ ─ ─ Fuelwood + ○ ─ ─ ─ ─ Resources Cork + ○ ─ ─ ─ ─ Food products + ○ ─ ─ ─ ─ Fodder and forage + + ─ ─ ─ ─ Decorative material + ○ ─ ─ ─ ─ Hunting and game products + ○ ─ ─ ─ ─ Pharmaceuticals, cosmetics + ○ ─ ─ ─ ─ and other raw materials for industrial application Biodiversity protection ─ ○ ─ ─ + + Climate regulation ─ + ─ ─ + + Biosp heric Air quality regulation ─ + + ─ + + Carbon sequestration ○ + ─ ─ + + Health protection ─ + ─ ─ + + Water regulation ─ + ─ ─ + + logical Eco- Water purification ○ + ─ ─ + + Soil protection ○ + ─ ─ + + Recreation ○ ○ ─ + + + Tourism ○ ○ ─ ○ + + Social Spiritual and cultural services ─ ─ ─ ─ + + Historical and educational ─ ─ ─ ─ + + Ameni ties services Aesthetic services ─ ○ + ○ + + Source: Mavsar, et al., 2014 Note: MP-market price based method; CB-cost based methods; HP-hedonic pricing method; CV- contingent valuation method; CE- choice experiment method. + typically used; ○ sometimes used; - not applicable. Cost based (CB) methods These methods can be used to estimate values of ecosystem goods and services based on either the costs of avoiding damages due to lost goods and services, the cost of replacing ecosystem goods and services, or the cost of providing substitute goods and services (King and Mazzotta, 47 2000). An example of cost based method application could be valuing erosion protection services by measuring the cost of removing eroded sediment from a downstream area. Cost based methods rest upon: (i) notion that costs do not exceed the economic value of the good or service; (ii) costs to substitute or restore and replace can be found with accuracy; (iii) extent and nature of the damage is predictable. Often they are applied when estimating the value of climate regulation; air quality regulation; carbon sequestration; and all aspects of ecological forest benefits (health protection; water regulation, water purification and soil protection, flood prevention, erosion mitigation, dam sedimentation). Nowadays for this group of methods market data is available and robust. Another good example of CB methods application is when estimating damages to WFPs due to forest fires. The replacement cost method is suggested to be used in this case. Forest fires actually cause losses of benefits from all TEV components. The damage to WFPs could be measured either through application of replacements costs or the value of burnt wood. Losses of NWFPs as a result of forest fires are valued based on their average value per hectare of forests. In some cases, these estimates are weighted according to the estimated degree of damage (Croitoru, L., 2006). These methods assume that expenditures to repair damages or to replace ecosystem goods and services are valid measures of the benefits provided. However, costs are usually not an accurate measure of benefits, which should be measured by peoples’ WTP. These methods do not consider social preferences for ecosystem services, or the behaviour of individuals in the absence of those services. Hedonic pricing (HP) method This method is suitable for investigating the influence of forest view or forest proximity in the price of a house. The basic premise of the HP method is that the price of a marketed good is related to its characteristics, or the services it provides. The main strength is that it can be used to estimate values based on actual choices. The method will only capture WTP of people for perceived differences in environmental attributes, and their direct consequences. Thus, if people are not aware of the linkages between the environmental attribute and benefits to them or their property, the value will not be reflected in home prices. Travel cost (TC) method This is a good method for measuring recreational, scenic and cultural destinations and relatively inexpensive to apply, relying on people’s actual behaviour. The travel cost method (TC) uses the cost of travel, observed site characteristics, and observed trip patterns to value the characteristics, or existence, of a site-specific environmental amenity (for example, how much people spent to arrive at and stay at their destination (e.g., forest) for the entire length of their visit). To do this, the TC method estimates use values for site-specific amenities, particularly use values that can only be obtained by visiting a site. Its use requires that out-of-pocket expenses occur, and that they vary across users. 48 TC models can be used to value access to sites, i.e., the welfare effects of the elimination of a recreational site, or to value the characteristics of a site, i.e., a change in the level of the quality of the site. Secondly, TC models are commonly used to estimate benefit changes due to the implementation of an environmental policy which aims, for example, at decreasing the level of water pollution in a lake or extending the number and/or length of hiking trails in a forest. More generally, it might be interesting to value changes in site attributes when considering a set of recreational sites; or to determine how variations in site quality affects the probability of choosing one site over another. The travel cost method can be used to estimate the economic benefits or costs resulting from:  Changes in access costs for a recreational site;  Elimination of an existing recreational site;  Addition of a new recreational site;  Changes in environmental quality at a recreational site The method is based on behaviour—what people actually do—rather than stated WTP—what people say they would do in a hypothetical situation. The method is relatively inexpensive to apply. But it cannot be used to assign values to on-site environmental features and functions that site users do not find valuable. It cannot be used to appraise off-site values supported by the site. Most importantly, it cannot be used to measure non-use values. Thus, sites that have unique qualities valued by non-users will be undervalued. Contingent valuation (CV) and the choice modelling (CM) methods This family of methods is the only one allowing estimates of use and non-use values simultaneously: biodiversity conservation and recreation for this or that forest area or pilot area. In forest-related studies, the choice experiment (CE) is the most widely used method within the CM family. Choosing between contingent valuation (CV) and choice experiment (CE) depends upon several criteria, such as the study aim and the nature of the change to be valued. When the change is multi-dimensional and affects several goods and services, CE is preferred. In CV questionnaires, people are presented with a hypothetical change in the provision of goods and/or services and are asked to state their WTP (or WTA). Whereas in a typical CM questionnaire, respondents are faced with several alternatives and are (in most cases) asked to pick their most preferred alternative (Riera and al., 2012); this variant of CM is known as choice experiment (CE). The CV leads to a more holistic approach than CE that focuses on single components (Kramer and al., 2004). However, the CV only provides a single WTP (WTA) estimate for the complete change, while the CE delivers marginal WTP (WTA) for each of the components. The CE method focuses on the value of a number of attributes relevant for policy design or forest management (Holmes and Boyle, 2004) rather than focusing on the total (holistic) value of forest ecosystems. This approach is best suited for management decisions that are concerned with changing attribute levels rather than estimating the overall change in the provision of environmental goods and services (Hanley and al., 2001b). Benefit transfers: unit value transfer method and function transfer methods. 49 Benefit transfer is not a valuation method, but a method that involves transferring economic estimates from previous studies to value the environmental change at a policy site. There are two primary groups of BT methods (Navrud, 2004): UNIT VALUE TRANSFER METHOD FUNCTION TRANSFER METHOD - Simple unit value transfer - Benefit function transfer - Unit value transfer with income - Meta-analysis adjustments The benefits set to be transferred from the study site or from several study sites to the policy site can be estimated using either revealed preference methods like travel cost and HP, or stated preference methods like the CV and CM. For example, for a CV the benefit function can be written as: = 0 + 1 + 2 + Where, WTPij is the willingness to pay off household i for site j; Gj is the set of characteristics of the environmental goods at site j, and Hij is the set of characteristics of household i at site j, and 0, 1 and 2 are sets of parameters; and is the random error. To implement this approach, first a study in the existing literature has to be found, with estimates of the constant 0, and the sets of parameters, 1 and 2. Then data on the two groups of independent variables, G and H, at the policy site. Unit value transfer method Simple unit value transfer (i.e., from one study, or as a mean value estimate from several studies) is the simplest method to transferring benefit estimates from a study site, or as a mean from several study sites, to the policy site. This method assumes that the well-being experienced by an average individual at the study site is the same as will be experienced by the average individual at the policy site, and that the change in the environmental amenity being valued is the same at the two sites. The main problem with simple unit value transfer is that individuals at the policy site may not value ecosystem services the same as the average individual at the study sites. Function transfer method Transferring the entire benefit function is conceptually/theoretically more appealing than just transferring unit values, because more information is effectively taken into account in the transfer. However, transfer evidence is mixed in regard to whether function transfers perform better than unit value transfers (Bateman and al., 2009; Ready and al., 2004). Often, it seems that the benefit function transfer does not reduce transfer errors significantly, in comparison to a simple unit value transfer. 50 Annex Tables Table A.1 - Wood Production, Economic Value -2013 - Bolu Regional Directorate Harvesting Average Economic Coniferous Broadleaved Total Cost Price 2013 Economic Value ($) Value (TL) (TL/m3) (TL/m3) 85 (Conf) ;67 868,687 365,856 1,234,543 83,305,416,9 75,049,925.2 Standing (KGH m³) (BrdLvd) Log (m³) 281,639 93,337 374,976 87.2 220 Telephone pole (m³) 1,034 0 1,034 87.2 270 Mining pole (m³) 11,725 973 12,698 87.2 176 Other industrial wood (m³) 192 5,532 5,724 87.2 124 Pulpwood (m³) 233,801 58,389 292,190 87.2 129 Fiber-chip wood (m³) 149,834 94,024 243,858 87.2 82 Thin pole (m³) 160 67 227 87.2 98 Fuel wood (Ster) 127,047 137,482 264,529 34.9 58 11,507,011.5 10,366,667.0 Note: 1 ster = 0.75 m3 and 1 m3=1.33 ster. Thin pole production is given in m³ whereas its price is available in ster. Thus, the production amount is concerted to ster in calculating the economic value. 2. The data is provided by DG Forestry and Bolu Regional Directorate. 3. There are three alternatives for the valuation of wood: the first one is the valuation with the stumpage price. It is available from the regional RD (85 TL/m3 for coniferous and 67 TL for Broadleaved). Small portion of the threes are sold as standing. Moreover, the market prices for each industrial wood product are also available. Therefore it is possible to use market prices to arrive to a value for wood production. To be consistent with the ongoing practice and total economic value concept, the stumpage price will be used for this study. 51 Table A.2. - NWFPs-Plants Harvest and Economic Value -2013 - Bolu Regional Directorate 4. Quarter 1. Quarter 2. Quarter (April- 3. Quarter (June- (October- 2013 (January-February- May-June) July-August) November- Yearly March) December) Total Unit Unit Quantit Quantit Total Quantity Quantity Unit Unit NWFP - Plants Price Price y Sold y Sold Revenue Sold (kg) Sold (kg) Price ($) Price ($) ($) ($) (kg) (kg) ($) Laurus nobilis (leaf) 0 0.000 32000 0.450 10000 4.505 32000 0.450 73873.9 Tilia L. 0 0.000 0 0.000 0 0.000 300 36.036 10810.8 Castanea Sativa (fruit) 1995 4.505 0 0.000 10000 4.505 25000 4.505 166644.1 Ruscus Aculeatus L. (herba) 0 0.000 2000 3.604 2000 3.604 3000 3.604 25225.2 Boletus Edulis 0 0.000 0 0.000 0 0.000 1500 1.802 2702.7 Pteridium Aquilium 0 0.000 0 0.000 3000 0.901 10000 0.901 11711.7 Rosa Canina 0 0.000 0 0.000 2000 1.802 4000 1.802 10810.8 Rhododendron L. 12200 0.036 17200 0.009 25000 0.901 20000 0.901 41135.1 Bark 0 0.000 1000 0.901 100000 0.225 35000 0.225 31306.3 All Kinds of Onions 0 0.000 200 0.225 0 0.000 0 0.000 45.0 All Kinds of Empty Cones 200 5.405 0 0.000 7200 0.315 8000 0.315 5873.9 All Kinds of Seed Cones 0 0.000 0 0.000 25000 0.631 0 0.000 15765.8 Morchella Esculenta 0 0.000 100 9.009 0 0.000 0 0.000 900.9 Other Mushrooms 0 0.000 0 0.000 500 7.207 2000 7.207 18018.0 Wood of Pine Root Without Tinder 0 0.000 0 0.000 0 0.000 20000 0.360 7207.2 Stone-Sand 0 0.000 0 0.000 0 0.000 200000 0.045 9009.0 All Kinds of Residues 0 0.000 0 0.000 100000 0.225 100000 0.225 45045.0 All Kinds of Plant Residues-Humus 1000 0.023 150000 0.054 0 0.000 115000 0.054 14346.8 Other Non-wood products 12200 0.631 0 0.000 0 0.000 20000 1.802 43729.7 Sapling 0 0.000 50 1.802 0 0.000 0 0.000 90.1 Total NWFP 534.252,25 52 Table A.3 - Honey Production and Economic Value 2013 - Bolu Regional Directorate Honey All Other Honey Productio Number Cost Economic Economic Costs Productio n in of Price Type of of a Economic Value (TL) Value ($) (Materials n (metric Forests Active TL/Kg Honey Hive Value (TL) Regional Regional and Labor) ton) (metric Hives (TL) Total Total TL/Hive Region ton) Chestnut Düzce 518 440.3 51973 35 Honey 15 222 3,092,899.0 5,924,500.0 5,337,387.4 Bolu 260 221 16027 30 Honey 15 222 2,831,601.0 Note: 1. Honey production data is available from TUIK and number of active hives data is available from Turkish Honey Producers Association 2. Honey produced from Forests is assumed to be 85% of honey produced in the region. This percentage is provided by Animal Products Unit of the DG Forestry. 3. Prices of honey were obtained from Animal Products Unit of DG Forestry. Production Cost of Honey TL/year* Costs (TL)/Hive/year Hive 15 Honey Bee Medications 8 Honey Bee Food 80 Comb 30 Materials 4 Total 137 Labor 100 Total (TL/Hive) 237 Average Honey Production (kg)/hive/year 14 Average Cost (TL/kg) 16.93 Note: * The data from Bolu and Düzce Region was not available. Instead, İsmail Kurt. Mr. Kurt got the data from Yalova Honey Producers Association 53 Table A.4 - Recreational Use Value 2013 - Bolu Regional Directorate CS/ CS/person in Total Consumer Total Economic Economic Total person in 1999 (TL)* Surplus (TL) Expenditures Value (TL) Value ($) 2013 (TL) No. of Visitors 788,252.4 17.02 2,096,000.00 13,412,502.22 70,000.00 13,342,502.22 12,020,272.27 Area (ha) 3852.4 Total Area used in recreation includes Yedigöller National Park, Güzeldere waterfall, Samandere waterfall and natural monument, and five natural parks namely, Abant, Gölcük Gölü, Sünnet Gölü, Sülüklü Gölü and Kıbrıscık Karagöl. Note: 1. The number of visitors and areas of the parks and other recreational location are taken from the web page of http://bolge9.ormansu.gov.tr/9bolge/AnaSayfa/ilsube/bolusube/bolutabiatparklari/bolukaragoltb.aspx?sflang=tr Accessed 25 1 2015 2. The benefit values are carried to 2013 by CPI. Table A.5 – Economic Value of Fodder for Grazing 2013 - Bolu Regional Directorate Usable Fodder Fodder per Price Düzce Produced Economic Economic Bolu (ha) Total (ha) Area Actual Use* (kg) (TL/ (ha) per Area Value (TL) Value ($) (metric kg) (ton/ha) ton) Forest Soil (Pasture) 83,349.8 4,729.9 88,079.7 6.00 528,478.2 264,239,100.00 0.5 Degraded Coppice 217.5 0.0 217.5 1.80 391.5 195,750.0 0.5 Normal Coppice 0.0 0.0 0.0 - Broadleaved 64,168.4 26,443.4 90,611.8 1.80 163,101.2 81,550,620.0 0.5 Coniferous Degraded 114,418.6 2,647.7 117,066.3 0.70 81,946.4 40,973,205.0 0.5 Coniferous 334,083.6 93,712.2 427,795.8 0.40 171,118.3 85,559,160.0 0.5 Total 945,035.7 472,517,835.0 0.5 236.258.917,5 212.845.871,6 Note: 1. Fodder production per area for each type of forest area and fodder prices were obtained from interview with forestry experts and villagers as well as the assumption that actual fodder consumption is half of usable fodder. 54 Table A.6. Hunting Value Registered Hunters Hunter Permit Hunter Fee Total Expenses for Total Expenses for (number of (Nonmembers)* (Nonmembers)** Permit and Fee (TL) Permit and Fee ($) individuals) Bolu (from region) 602 169.4 140 186,258.8 167,800.7 Düzce (from region) 1069 169.4 140 330,748.6 297,971.7 Bolu ve Düzce (foreign) 11 169.4 220 4283.4 3,858.9 Hunting Total 469,631.4 Note: * There is a membership fee for the hunters' associations. There is a fee for hunting. The difference between the fee for the members and nonmember was assumed to be membership fee for the assocaition. ** Hunters are assumed to come from around the region except for few foreign hunters. Source: http://bolge9.ormansu.gov.tr/9bolge/AnaSayfa/avcilikbelgesi.aspx?sflang=tr 55 Table A.7. Pharmaceutical Value (PV) Forest Area Pharmaceutical Pharmaceutical Pharmaceutical Economic Value Forest Area Economic Value of Region and Forest Soil Value (PV) Euro/ha Value (PV) Value (PV) TL/ha of MSV TL (in (km2) MSV $ (in 2013) (ha) (in 2004) TL/ha (in 2004) (in 2013) 2013) Bolu 5,976.45 597,644.50 Düzce 1,208.02 120,801.80 Total 7,184.46 718,446.30 5.00 4.67 9.40 6,751,009.85 6,081,990.85 Notes:1. Forest areas include forest soil. 2. The option value of pharmaceuticals derived from forest genetic materials was estimated to be € 5 per ha for Turkey (Croitoru, 2007). 3. Croitoru, L. (2007) "How much are Mediterranean forest worth?" Forest Policy and Economics, v9, pp. 536-545. 4. The benefit values are carried to 2013 by CPI. 56 Table A.8 Watershed Protection (Water Supply) Water Forest Forest Area Supply Income Water Supply Water Supply Economic Economic Region Area and Forest Value (WSV) Adjusted WSV Value (WSV) Value (WSV) Value of WSV Value of WSV (km2) Soil (ha) $/ha (in $/ha (in 2004) TL/ha (in 2004) TL/ha (in 2013) TL (in 2013) $ (in 2013) 2004) Bolu 5,976.45 597,644.50 Düzce 1,208.02 120,801.80 Total 7,184.46 718.446.30 94.93 89.48 96.37 193.82 139,248,393.9 125,449,003.5 Note: 1. Unit value is taken from Nunez et al. (2006). 2. The study area is Chile's temperate forests which is similar to the project area (the pilot area) forests. 3. The benefit values are carried to 2013 by CPI. 57 Table A.9 - Carbon Sequestration by Forest Increments in Bolu and Düzce Forest Areas and economic value Credits from the Increments (BL: Broadleaved; CNF: Coniferous; tonne: t) Total Forest Total Forest Increments Forest Area (Hectar) Total Forest Asset (m3) Forest Increments (m3) 2013 Increments (m3) 2013 (m3/ha) 2013 BL CNF BL CNF BL CNF BL CNF BL CNF Düzce 26,443.4 96,359.9 10,055,011 23,616,274 163,388 491,343 1,740 (ster) 87 (ster) Bolu 64,168.4 441,545.7 65,362,249 1,737,396 20,110,885 493,581 30,165,896 656,969 Total 90,611.8 537,905.6 88,978,523 2,228,739 657,034.4 2,228,739 7.3 4.1 1,740 (ster) 87 (ster) Total Area 628,517.4 Debits from the Production Firewood Wood Production Wood Production Firewood Production (including elicit Roots left TOTAL Production (m3) (m3/ha) (including elicit firewood) firewood) (m3/ha) Roots left in in Forests TOTAL LOSS LOSS [Table A.9.5] [Table A.9.5] (m3) [Table A.9.4] [Table A.9.4] Forests (m3) (m3/ha) (m3) (m3/ha) CN CN BL CNF BL BL CNF BL CNF BL CNF BL BL CNF BL CNF F F 69,481. 147,99 435,173 926,901. 252,322 678,385 2.8 1.3 113,369.9 100,524.1 1.3 0.2 0.8 0.3 4.8 1.7 5 2.7 .4 8 58 Net Gain Forest Forest Increments Wood for Carbon Storage Wood for Carbon Forest Increments Increments (Biomass (=Increment- Storage (=Increment- (Biomass Above (Biomass Forest Increments (Biomass Under Ground) (Production+Firewood+Ro (Production+Firewood Ground) (t) [Table Above Ground) Under Ground) (tons) [Table (tons/ha) ots) (m3) +Roots) (m3/ha) A.9.3] (tons/ha) A.9.2] [Table A.9.2] BL CNF BL CNF BL CNF BL CNF BL CNF BL CNF 122,023. 561,091. 221,861.0 1,301,837.2 2.4 2.4 1.35 1.04 56,130.84 224,436.74 0.62 0.42 6 8 Forest Carbon Increments Carbon Captured CO2 Total CO2 Economic Captured CO2 (tons) Forest Increments (Total (tons) (tons/ha) (tons) Value [SSC] $ (tons/ha) (Total Biomass)(tons) Biomass)(t/ha) BL CNF BL CNF BL CNF BL CNF BL CNF BL CNF 178,154.40 785,528.58 1.97 1.46 85,514.11 400,619.57 0.94 0.74 312,981.65 1,466,267.64 3.45 2.73 1,779,249.30 112,204,910.52 59 Table A.9.1 (Taken from Table 2.6: Biomass Expansion Factor (BEF) calculated by Prof.Dr. Ünal ASAN and weight -per- Table A.9.3 (Karabıyık, B., 2014 and Tolunay, volume values) 2013b) Volume Percentages Weight Dried Weight Broadleaved in Forest (metric metric ton/m3 Area Tree Type BEF1 BEF2 ton/m3) Fagus Coniferous 1.22 1.24 0.496 Orientalis 0.53 0.75 Broadleaved 1.24 1.26 0.638 Carpinus 0.63 0.1 Other Broadleaved 0.55 0.15 Table A.9.2 (Taken from Table 3.5: Root-to-Shoot Ratio for Temperate Forest; MA Thesis of Banu Karabıyık, pp 32-33 Weighted (AFOLU IPCC 2006)) Average 0.543 Root- Percentages to- Dried Weight Coniferous in Forest Above Shoot metric ton/m3 Area Tree Type Ground Ratio <50 0.40 Pinus Nigra 0.47 0.1 Coniferous Pinus 50-150 0.29 Sylvestris 0.43 0.9 Weighted 75-150 0.23 Average 0.434 Broadleaved >150 0.24 60 Table A.9.4 Firewood Production Total Firewood Firewood Ilicit Firewood Production Production Firewood Extracted Forest Type (Ster) (m3) (m3) (m3) Broadleaved 137,482.0 103,369.9 10,000.0 113,369.9 Coniferous 127,047.0 95,524.1 5,000.0 100,524.1 Table A.9.5 Wood Production 2013 Broadleaved Coniferous Standing (KGH m³) 365,856 868,687 Log (m3) 93,337 281,639 Telephone pole (m³) 0 1,034 Mining pole (m³) 973 11,725 Other industrial wood (m³) 5,532 192 Pulpwood (m³) 58,389 233,801 Fibre-chip wood (m³) 94,024 149,834 Thin pole (m³) 67 160 Fuel wood (Ster) 137,482 127,047 Wood Production 252,322 678,385 61 Table A.10 Soil Erosion Control Value Forest Area Forest Soil (SEV) Area Erosion PPP- SEV Economic Economic which Value Exchange TL/ha Region Value of SEV Value of SEV eliminate (SEV) Conversi (in TL (in 2013) $ (in 2013) s Erosion Degraded Normal Soil Range Forest $/ha (in on TL/ha 2013) Reforestation (ha) Forest Forest Conservation Management Soil 1998) (in 1998) (1999-2013) (ha) (ha) (1999-2013) (1999-2013) (Pasture) 479,528. 389,221. Bolu 2 118,116.3 9 3,502.0 3,454.5 1,632.5 83,349.8 118,023. 112,749. Düzce 8 2,778.0 9 544.0 0.0 0 4,729.9 597,552. 501,971. 14,430,5 115,156,743. 103,744,813. Total 0 120,894.3 8 4,046.0 3,454.5 1,632.5 88,079.7 46.0 22 192.7 4 9 Note: 1. Degraded forest areas were not included in the forest area which eliminates erosion. Areas of reforestation, forest rehabilitation, and soil conservation activities are added to normal forest area and subtracted from degraded forest area. The area where range management was realized is already included in the forest soil (pasture area) 2. Unit value of soil erosion is the specific value calculated for Turkey and taken from Bann and Clemens (1998). 3. This value was evaluated by replacement cost of nutrients and flood Damages. 4. The benefit values were adjusted to 2013 by CPI. 62 Table A.12. Biodiversity Value for Bolu Regional Directorate Forest MWTPof MWTP of Areas MWTP of MWTP of MWTP of MWTP of Total Value Subtropical Temporate Designated Subtropic Temporat Subtropic Temporat for Total Forests Forests to al Forest ( e Forests al Forests e Forests Designated Amount for Total Value Total Value (2005 (2005 Conservati 2005 (2005 (2013 (2013 Forests Undesignat of of Forest int.$/ha/yea int.$/ha/yea on Total TL/ha/yea TL/ha/yea TL/ha/yea TL/ha/yea (TL) in ed Forests Biodiversity Biodiversity Areas r) r) (ha) r) r) r) r) 2013 (TL) in 2013 (TL) in 2013 ($) in 2013 Bulu and 716,814. 3,083,679. 18,281,146. 21,364,826. 19,247,591. Düzce 6 19.00 20.17 98,535.01 15.789 16.76 29.57 31.30 98 44 42 37 MWTP- Marginal Willingness to Pay; Note: 1. The unit value is specifically calculated for Turkey in Vladimir (2014) by meta-analysis. 2. Two different unit values for temporate and subtropical forests are used. 3. The forest areas designated for conservation is taken from Table A.12.1. The data in ATable A.12.1 is obtained from the DG Forestry. 4. Unit values are carried to 2013 by CPI. Table A.12.1. Total Forest Area Designated to Conservation BOLU Düzce Wild Life Wild Life Forest Area Nature Nature Forest Area Nature Protection National Nature Protection Nature having National Protection Protection having Parks and Parks Parks and Monuments conservation Parks (ha) Forest Forest conservation (ha) Development (ha) (ha) Development (ha) feature (ha) Area (ha) Area (ha) feature (ha) Area (ha) Area (ha) 1,4409.4 1,623.027 2,982.87 992.36 6,3952.53 0 186.73 437.29 764 11.3 1,3175.5 Note: Forest Areas having conservation features are the forest areas in which all management activities are conducted although they are not conservation forests. DG Forestry states that these forest areas need to be distinguished and assigned a special status in planning, that is why thety are included in this table. 64