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Valuation of forest goods and services and forest of the Beijing municipality, China S. Wu, Y. Hou and G. Yuan

An attempt to estimate the full market and non-market values of Beijing’s forests, as well as the sectoral and spatial distribution

FORESTS IN THE SERVICE OF PEOPLE QHVJGHQTGUVDGPGſVU Y. HOU

Landscape forest orest ecosystem goods and ser- around the Great Wall: vices, and the natural capital forests, both natural and planted, have a critical Fstocks that produce them, make role in Beijing’s ecology, significant direct and indirect contribu- aesthetics and socio- tions to national economies and human economic development welfare. There have been many attempts to these contributions. In the past As the capital of China, Beijing is gov- two decades a good deal of progress has erned as a municipality under the direct been achieved in developing valuation administration of the central govern- methods for forest ecosystem services ment. The municipality is divided into and promoting their inclusion in national 16 urban and suburban districts and two economic accounts. TWTCNEQWPVKGUGZVGPFKPIQXGTCRRTQZK- In China the valuation of forest eco- OCVGN[  MO, of which about system goods and services has been one RGTEGPVKUOQWPVCKPQWU6JGOWPKEK- of the most researched topics over the RCNKV[JCUDGGPGZRGTKGPEKPITCRKFGEQ- past decade, with a rising number of nomic growth and urban population studies at national, provincial and local GZRCPUKQPCVVJGGPFQHKVUTGUKFGPV management unit levels (Yang, Wen and population was 16.3 million, and per 5QPI /CP[QHVJGUGJCXGHQEWUGF capita gross domestic product (GDP) was Shuirong Wu is Associate Professor, and on Beijing, carried out with different 56 000 yuan (around US$7 370).1 Yuanzhao Hou is Professor, at the Research scales, perspectives and purposes and Institute of Forestry Policy and Information, Chinese Academy of Forestry, Beijing. using different valuation concepts and Gongying Yuan is Senior Engineer at the methods; they have come up with widely 1 Conversions in this article use the Beijing Municipal Bureau of Landscape and varying results. CXGTCIGCPPWCNGZEJCPIGTCVGHor Forestry, Beijing. US$1 yuan.

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Forests, both natural and planted, and assets (natural capital stocks) and pro- Data on forest area, growing stock, including trees spread across the ter- duction (the flow value of forest goods net increment, age classes and species rain, have a critical role in the ecology, and services), which have generally been were from a survey conducted by the aesthetics and socio-economic deve- OKZGFVQIGVJGTKPQVJGTXCNWCVKQPUVWFKGU Beijing Forestry Survey and Design lopment of the municipality. Beijing’s in China. Change in the former indicates +PUVKVWVGKPCRRN[KPI5VGEJPQNQI[ forest resources have been increasing whether forest management is sustain- (integrating remote sensing, geographic significantly since the 1950s as a result able or not. The latter is what should be information systems and global position- of active planting and management. At counted in GDP or green GDP. ing systems) and field investigations. VJGGPFQHVJGOWPKEKRCNKV[ŏUHQTGUV In this framework, the benefits people Where value data were taken from earlier area reached almost 1.1 million hectares obtain from forests are classified into UVWFKGUVJG[YGTGEQPXGTVGFVQ (Figure 1), with a total standing timber three categories: forest goods, environ- XCNWGUWUKPIVJGEQPUWOGTRTKEGKPFGZ volume of 13.7 million cubic metres. mental services and sociocultural bene- for Beijing. The dominant tree species include Quer- fits. Forest environmental services have cus mongolica, Platycladus orientalis, been included in most studies in China, VALUATION CATEGORIES Pinus tabulaeformis, Populus davidiana, but the new framework includes an addi- Forest natural capital Betula platyphylla, Robinia pseudoaca- tional and innovative category, forest Forest land assets. Forest land, one of cia and Larix principis-rupprechtii. The environmental assets. This concept dif- the most important economic assets, is forests are rich in biodiversity, hosting HGTGPVKCVGUHQTGZCORNGHQTGUVECTDQP generally valued on the basis of market a variety of fauna and flora. storage (as an asset) from forest carbon transactions, either directly (e.g. using This article reports an attempt to sequestration flow (as a service). market prices for bare forest land) or as estimate the full market and non-mar- The valuation method in this study CTCVKQQHVJGXCNWGQHGZEJCPIGFHQTGUV ket values of these forests, using the involved quantification of all forest eco- property. In this study, forest land was latest survey data on Beijing’s forest system services and goods. The main categorized into five types (forested land, resources. Unlike most other valuation methods used to value these amounts open forest land, shrub land, nursery land studies, it also includes an analysis of the were the market value, direct revealed and bare forest land) and valued accor- distribution of the benefits from forest preference (replacement costs, pro- ding to the prices of each type. Zhou and goods and services among economic ductivity loss, cost of illness, etc.) and .K  CRRNKGFCUVTCVKHKGFUCORNKPI sectors and among local, regional and benefit transfer methods. method to investigate the transaction global beneficiaries. There are naturally many limitations 1 to both the current and previous studies, Distribution of forest and other many of which are pointed out in the land use in Beijing CTVKENGCPFKVKUTGEQIPK\GFVJCVGZRGTVU are unlikely to reach consensus on non- market values. Such efforts are neverthe- less important to help raise awareness of the multifunctional roles of forest eco- systems, and can ultimately contribute to the conservation and sustainability of forest resources.

STUDY FRAMEWORK The study applied an updated frame- work for valuation of forest ecosystems Forest land RTQRQUGFD[*QWCPF9W  YKVJ Farm land reference to authoritative international Water area Residential area FQEWOGPVUKPVJGHKGNF 'WTQUVCVC Bare land D7PKVGF0CVKQPUet al./KN- NGPPKWO'EQU[UVGO#UUGUUOGPV (#1  (KIWTG  The framework distinguishes between

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Forest land assets Aiming at the evaluation Forest natural of sustainability of Standing timber assets capital stocks development based on the change Forest environmental assets of capital stocks

Annual increment Valuation of Forest goods forest ecosystem Products of economic forests Non-wood forest products

Water conservation

Soil protection FORESTS IN THE SERVICE OF PEOPLE Aiming at macro-level Gross analysis Annual value flow Agricultural protection policy evaluation (GDP, income, of forest ecosystem and analysis within Carbon sequestration consumption, goods and services and beyond and oxygen supply savings, investment) Forest the forest sector environmental Biodiversity conservation services Air purification/ temperature regulation

Forest

Job opportunities

Science and education

Aesthetics and living conditions Sociocultural Cultural/artistic services benefits Spiritual/historical services Source: Adapted from Hou and Wu, 2008. 2 Framework for Forest environmental assets. The and Beijing’s wildlife resources, with valuation of forest environmental assets considered in the EQPXGTUKQPVQVJGXCNWG ecosystem services and natural capital study were forest carbon stock and forest wildlife. Forest goods prices for different types of forest land Estimates of forest carbon stock and Annual increment of standing timber. in the Beijing area. Their results were stock changes were calculated based on The value of the annual increment of EQPXGTVGFVQXCNWGU growing stock and net increment using the forest stand was estimated by the VJGDKQOCUUGZRCPUKQPHCEVQTU $'(U  stumpage value method using the annual Standing timber assets. A simple of the Intergovernmental Panel on Cli- increment by species and age classes and stumpage value method was used for the OCVG%JCPIG +2%% 6JGXCNWGQH the corresponding stumpage prices per valuation of standing timber. Stumpage forest carbon stock assets was calculated cubic metre by species. prices by species and diameter were taken by multiplying forest carbon stock by the HTQOGZKUVKPIVTCPUCEVKQPUKPVJGUVWF[ carbon price derived from the Badaling Products of economic forests. The area and in southern China. In the latter forest farm carbon project in Beijing market value method was used to esti-

case, the prices were adjusted using the [WCPQT75RGTVQPPG%1). mate the value of fresh fruits, nuts and TCVKQQHEQPUWOGTRTKEGKPFGZHQTVJG For Beijing’s rich wildlife resources, flower products from economic forests, area of origin to that of Beijing (and the study adopted the value estimated by i.e. forests of economic value including other conversion factors as needed).

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“Green reservoir” ment dredging in the Beijing area and services of forests the finding of Yu and Wang (1999) that include the capture, storage and the soil erosion on non-forested lands is RWTKſECVKQPQHYCVGT 3.7 tonnes per hectare per year higher than that on forested lands in Beijing. The value of soil fertility protection was estimated by applying the market value method, assuming that the forested soil around Beijing contains on average CTQWPFRGTEGPVEQORQWPFHGTVKNK\GT (Yu and Wang, 1999) and using the observed market price of compound HGTVKNK\GTKP

Agricultural protection. The study Y. HOU Y. focused on the increased crop produc- #FOKPKUVTCVKQP CPFVJGRTKEGU HQTGCEJHQTGUVV[RG6JGOCZKOWOYCVGT tion benefits provided by forest shelter- came from market surveys and direct quantity regulating capacity was seen belts. The market value method was observations. as equal to the total storage capacity of adopted to estimate this value based on the catchment forests, and its value was the increase in crop production, the area Non-wood forest products (NWFPs). estimated using the replacement cost of cropland with forest shelter and the The value of the main non-wood forest method (using the cost of establishing a price of the crop. products (wild medicinal materials, conventional water reservoir in Beijing, mushrooms, wild vegetables, bee pro- taken from Yu and Wang [1999] and Air purification and temperature ducts and hunting, as well as tree breed- Zhang et al=?CPFEQPXGTVGFVQ regulation. Air pollution is the great- ing and planting, which are listed as VJGXCNWG  est of Beijing’s environmental prob- NWFPs in Chinese forestry statistics) lems, and the municipal government was calculated using the market value Soil protection. Forest vegetation helps has proposed tree planting as a measure method. Production data for these pro- stabilize soils, reduce surface erosion and to alleviate it (Yang et al 6JKU ducts were from a survey conducted by sedimentation and maintain soil fertility. study valued the services of forests in

the Beijing Municipal Bureau of Land- The estimated value of soil stabilization VJGTGOQXCNQHUWNRJWTFKQZKFG 51), ) and fluoride and UECRGCPF(QTGUVT[KP primarily reflects the costs associated PKVTQIGPQZKFG 01X with sediment clearance, calculated with the suppression of dust, based on the Forest ecosystem services the replacement cost or avoided cost average removal rates for these pol- Water conservation. “Green reservoir” method, using the average cost for sedi- lutants by broadleaves and conifers as services of forested watersheds include the capture and storage of water (contri- Xiangshan (Fragrant buting to the quantity of water available Hills) Park, a popular scenic spot for during the dry season) and the purifica- Beijing residents and tion of water through the filtering of visitors of all ages, contaminants and the stabilization of has important value for outdoor recreation soils. The total value of water conserva- as well as air quality tion services was estimated based on the and temperature water regulating capacity and the cost regulation – and also raises the value of the of supplying water for the city (which surrounding houses includes the sewage treatment fee). Water quantity was estimated by the water balance method, using the forest area and rainfall data to get the total water input into the catchments and subtracting S. WU evapotranspiration and surface runoff

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Forest ecotourism tion of forest stands and the soil carbon – a marketable sequestration by type of forest stand, environmental service (collection of entrance derived from the literature (Fang, Liu and fees, Badaling Xu, 1996). Again, the carbon price was National Forest Park) derived from the forest carbon project in Badaling forest farm of Beijing. The QZ[IGPRTKEGYCUVJGQDUGTXGFRTKEGQH KPFWUVTKCNQZ[IGP

Forest ecotourism. The travel cost method has often been used to estimate the value of forest ecotourism. Because of limited time and funding, the present

FORESTS IN THE SERVICE OF PEOPLE study applied the results from other research: the ecotourism value estimated D[

Biodiversity conservation. The study adopted the average per-hectare value of forest biodiversity conservation for the $GKLKPICTGCGUVKOCVGFD[

FAO/J. CARLE FAO/J. (QTGUVUQEKQEWNVWTCNDGPGſVU reported in the State report on biodiver- The study’s analysis of remote sensing, Job opportunities. Employment crea- sity of China (State Environmental Pro- field investigation and meteorological tion was considered as a social rather VGEVKQP#FOKPKUVTCVKQPQH%JKPC  data showed that in areas of Beijing than an economic benefit because the The costs of removing these pollutants with forest vegetation, temperature was capacity of forests to provide traditional were calculated based on air pollution decreased by an average of 3͠ in sum- employment in remote communities was charges in China. mer (May to September). Forests also seen as more important than the strictly The study also included the value of conserved heat in winter (December to economic benefits of employment crea- noise reduction by the so-called “four February), although the effect was less tion, since employment opportunities sides” tree belt (comprising trees on pronounced. Other studies (e.g. Li et al., are abundant in Beijing. The analysis non-forested lands beside villages, ,KCPI%JGPCPF.K9W covered direct and indirect employment, houses, roads and watercourses), esti- 9CPICPF

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TABLE 1. Different types of output from Beijing’s forests but its forests are making a notable con- Output Marketable Non-marketable Total tribution to improving environmental and air quality. Billion Billion Billion Billion Billion Billion yuan US$ yuan US$ yuan US$

Forest goods 6.77 0.89 – – 6.77 0.89 GDP and annual output of forest goods and services Forest ecosystem servicesa 1.12 0.15 39.96 5.26 41.08 5.41 The flow value of the annual output of Forest environmental services 0.38 0.05 39.66 5.22 40.03 5.27 forest ecosystem goods and services in Forest sociocultural benefits 0.74 0.10 0.30 0.04 1.04 0.14 Beijing amounted to 5.3 percent of its Total 7.89 1.04 39.96 5.26 47.85 6.30 )&2KP$TQMGPFQYPHWTVJGTVJG a+PENWFGUHQTGUVGPXKTQPOGPVCNUGTXKEGUCPFUQEKQEWNVWTCNDGPGſVU XCNWGQHHQTGUVIQQFUCOQWPVGFVQ Note: The ratio of services to goods is 6.07. The ratio of non-marketable to marketable goods and services is 5.06. percent of GDP and forest environmen- the Beijing Songshan National Natural ecosystem goods and services of Beijing, tal services and sociocultural benefits 4GUGTXGWUKPIVJGGZRGPFKVWTGOGVJQF 39.7 billion yuan (US$5.3 billion), was amounted to 4.6 percent. The value of The total value was estimated by mul- PQVTGCNK\GFVJTQWIJVJGGZKUVKPIOCTMGV marketable forest outputs amounted to tiplying this unit price by the total area system. Non-marketable outputs had 5.1 0.9 percent of Beijing’s GDP, and non- of forest parks and nature reserves in times the value of marketable outputs marketable output 4.5 percent. Beijing. (Table 1). However, the share of forest goods and Among the forest environmental ser- services included in Beijing’s official RESULTS vices, water conservation and air puri- )&2KPKPCEEQTFCPEGYKVJVJG Stock value of forest natural capital fication had the most important role current national accounting system, was The value of the capital stock of the (Figure 3). This finding accords with the QPN[RGTEGPV forest resources of Beijing reached 19.5 real situation in Beijing: Forest inven- DKNNKQP[WCP 75DKNNKQP CVVJGGPF tory data indicate that the city has scant DISTRIBUTION OF FOREST BENEFITS QHQHYJKEJHQTGUVGPXKTQPOGPVCN YCVGTTGUQWTEGUQDVCKPKPIRGTEGPV Among different economic sectors CUUGVUCEEQWPVGFHQTRGTEGPVUVCPF- of its drinking-water from the Miyun The current system of national account- KPIVKODGTRGTEGPVCPFHQTGUVNCPF Reservoir of Beijing. Protection forests ing records the direct economic outputs 16.0 percent. The per capita stock of CEEQWPVHQTRGTEGPVQHVJGHQTGUV from forests such as timber and timber- HQTGUVPCVWTCNECRKVCNYCU[WCP area, and watershed forests account for related products, part of the non-wood (US$157). RGTEGPVQHVJGUGRTQVGEVKQPHQTGUVU forest products and forest ecotourism. Beijing is listed among the world’s ten However, part of these outputs are #PPWCNƀQYXCNWGQHHQTGUVIQQFUCPF OQUVRQNNWVGFEKVKGU 9QTNF$CPM  counted in the forestry sector, and part services The flow value of annual output of forest 3 ecosystem goods and services of Beijing Forest environmental Soil services in the Forest protection ecotourism was 47.9 billion yuan (US$6.3 billion), Beijing municipality 0.5% Agricultural Carbon 0.7% of which forest environmental services sequestration protection and oxygen supply 0.2% CEEQWPVGFHQTRGTEGPVHQTGUVIQQFU 8.8% RGTEGPVCPFHQTGUVUQEKQEWNVWTCN DGPGHKVURGTEGPV+PQVJGTYQTFUVJG Biodiversity value of intangible forest environmen- conservation 18.5% tal services and sociocultural benefits YCUUKZVKOGUVJCVQHVJGHQTGUVOCVG- rial goods. The forest goods were all marketable. Of the forest environmental services, only forest ecotourism was marketable. As for the sociocultural benefits, job opportunities were market- Air purification Water able while the scientific and educational and temperature regulation conservation benefits were not. Therefore, most of 19.3% 52.0% the value of the annual output of forest

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6#$.'&KUVTKDWVKQPQHHQTGUVDGPGſVUCOQPIFKHHGTGPVGEQPQOKEUGEVQTU Output Forestry Other sectors

Subtotal Environment Water Agriculture Tourism Science, education and culture

Billion Billion Billion Billion Billion Billion Billion Billion Billion Billion Billion Billion Billion Billion yuan US$ yuan US$ yuan US$ yuan US$ yuan US$ yuan US$ yuan US$

Forest goods 4.48 0.59 2.29 0.30 ––––2.29 0.30 – – – –

Forest environmental 0.21 0.03 39.82 5.24 25.14 3.31 14.19 1.87 0.11 0.01 0.38 0.05 – – services

Forest sociocultural 0.74 0.10 0.30 0.04 ––––––––0.30 0.04 benefits

FORESTS IN THE SERVICE OF PEOPLE Subtotal 5.44 0.72 42.41 5.58 25.14 3.31 14.19 1.87 2.41 0.32 0.38 0.05 0.30 0.04

Share of total 11.4 88.6 52.5 29.7 5.0 0.8 0.6 flows (%)

in the agriculture and tourism sectors. Among different groups in society )NQDCNDGPGHKEKCTKGUTGEGKXGFRGT- Forest ecosystem services besides forest The analysis showed that communities cent of the benefits, through services ecotourism are not included at all in living just outside the Beijing municipal- such as carbon storage, biodiversity con- national economic accounts but are ity and those residing elsewhere in China servation and international tourism. partly indirectly reflected in the outputs were the largest receivers of benefits of related sectors or industries. from Beijing’s forests, receiving 47.3 CONCLUSIONS: POLICY The analysis indicated that the value of percent of the total flow value of forest IMPLICATIONS forest goods and services to non-forestry ecosystem goods and services (Table 3). Unless most forest values are recog- sectors of the economy accounted for Such non-local communities benefit nized through institutionalized valuation RGTEGPVQHVJGVQVCNHNQYUQHYJKEJ directly from recreation and indirectly methods, forests as a land use will not the environment sector accounted for from environmental services such as get the societal attention needed to make RGTEGPVCPFVJGYCVGTUGEVQT watershed protection, even though they them an integral part of a sustainable RGTEGPV 6CDNG 6JGKORQTVCPEGQH may not be fully aware of the value of global economy. Many attempts in this the forests of Beijing to these sectors the indirect benefits they receive. direction have been made in China, as of the economy is thus clear. Local beneficiaries, living in close in many other parts of the world, but RTQZKOKV[VQVJGHQTGUVTGEGKXGF because of the wide differences in con- Catchment forests percent of the benefits. These benefi- cepts and methods, the many estimates around the Miyun ciaries are usually aware of the direct of forest ecosystem goods and services Reservoir, which provides 80 percent benefits they receive from the forest. made in the past have been inconsistent of Beijing’s water and not amenable to meaningful com- parison across services and periods. As natural capital and ecosystem ser- vices become more stressed in the future, on account of both greater demand and reduced supplies (in part due to changing ENKOCVG VJGKTXCNWGECPDGGZRGEVGFVQ increase. Given the huge uncertainties involved, it may never be possible to have a precise estimate of the value of ecosystem services. Nevertheless, even crude estimates provide a useful start- ing point (Costanza et al., 1997), with implications for decision- and policy- making. What this study makes clear is Y. HOU Y.

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6#$.'&KUVTKDWVKQPQHHQTGUVDGPGſVUCOQPIFKHHGTGPVITQWRUKPUQEKGV[ Finally, these findings can be used to Output Local beneficiaries Regional Global raise public awareness of the multiple beneficiaries beneficiaries values of forests to society. Billion Billion Billion Billion Billion Billion The absence of a real market for most yuan US$ yuan US$ yuan US$ of the forest ecosystem services dis- Forest goods 6.77 0.89 – – – – cussed in this article implies a certain Forest environmental degree of subjectivity in the valuation 7.4 0.97 22.35 2.94 10.28 1.35 services RTQEGUUCPFKVKUNKMGN[VJCVOCP[GZRGTVU Forest sociocultural would hesitate to concur with the actual 0.74 0.10 0.30 0.04 – – benefits values assigned to these services, even Subtotal 14.92 1.96 22.65 2.98 10.28 1.35 if they agree with the methodology in Share of total flows (%) 31.2 47.3 21.5 general. However, the central purpose of this study will have been achieved if that forest ecosystem services provide an This finding could also be helpful in it helps to further robust debate on the important part of the total contribution building cross-sectoral alliances based valuation process. X to economic development and social on mutual benefits. welfare of Beijing. The forest natural The analysis of distribution of forest capital stock that produces these services benefits among different groups in soci- must thus be given adequate weight in ety is useful in identifying obstacles to the decision-making process. sustainable forestry. Local communi- In recent years, the importance of forest ties in mountainous areas of Beijing, Bibliography ecosystems to Beijing has been well HQTGZCORNGJCXGJCFVQHQTGIQUQOG recognized, and the forest sector has forest uses in order to maintain a sustain- Beijing Statistics Bureau.  Beijing been getting an increasing share of the able flow of forest protection services, Statistics Yearbook 2007. Beijing, China, public budget for forest protection and and these foregone benefits need to be China Statistics Press. management. The institutionalization of compensated adequately. The incen- Costanza, R., d’Arge, R., deGroot, R., payment for forest ecosystem services tive for sustainable forestry declines Farber, S., Grasso, M., Hannon, B., has become a prominent policy issue. A when local communities do not receive Limburg, K., Naeem, S., O.’Neill, R.V., special fund has been allocated to local appropriate benefits. The identification Paruelo, J., Raskin, R.G., Sutton, P. & communities for tending of protection of stakeholders provides a good basis for van den Belt, M. 1997. The value of the forests in the mountainous areas since negotiations over payments for forest world’s ecosystem services and natural  ecosystem services. capital. NatureŌ The share of forest goods and ser- Estimation of the full range of values Eurostat.CThe European framework vices actually included in Beijing’s from forests is helpful in designing forest for integrated environmental and GDP accounting, however, is a small management strategies. Forests have economic accounting for forests – IEEAF. fraction of the flow value of the annual multifunctional uses to society, and by .WZGODQWTI 1HHKEG QH VJG 'WTQRGCP output of forest ecosystem goods and quantifying the relative values and iden- Communities. services shown in this study. This find- tifying the economic trade-offs among Eurostat.DNatural resource accounts ing could support requests for a larger competing uses of forests, it should be for forests .WZGODQWTI 1HſEG QH VJG share of the national budget for forest possible to determine optimal and sec- European Communities. management and investment, which are ondary targets for forest management, Fang, J., Liu, G. & Xu, S. 1996. Biomass and often woefully underfunded in many use and investment, and to take appropri- net production of forest vegetation in China. developing countries. ate measures to achieve them. Acta Ecologica Sinica  Ō +P The demonstrated importance of forest Forest valuation can also demonstrate Chinese with English abstract) ecosystem services to other sectors, the impacts of non-forestry policies on FAO. Manual for environmental and especially water and environment, could forest use. It can help identify poten- economic accounts for forestry: a tool for contribute to the design of economic tial conflicts between the development cross-sectoral policy analysis, by G.M. instruments such as water resources fees objectives of forestry and those of other Lange. FAO Forestry Department Working CPFGPXKTQPOGPVCNVCZGUYJKEJEQWNFDG sectors, as well as within the forest sec- Paper. Rome. used to promote sustainable forest use tor, for the design of a forest strategy that Hou, Y. & Wu, S.4GEGPVRTQITGUUQP or to compensate local communities. takes into account all stakeholders. theory and method of ecosystem valuation

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