5. Strengthening Forest Resource Valuation and Accounting System: A Case of Forest Resources of Kerala, India

Forest resources are of great concern all over the world due to their eminent quality in maintaining ecological balance, supporting the economy and meeting the social requirements. However these resources are overtly exploited and prone to various threats. Proper forest resource valuation and accounting help to understand the stock and flow of the forest resources and thus represents status of forests resources not only in quantitative/qualitative terms but also monetary terms. It would facilitate to consolidate the forestry sector contribution to gross domestic products (GDPs). The estimation of the economic value of forest goods and services and their inclusion in the national accounting system is essential to substantiate the positive impacts of forestry projects and programmes not only on local economy but also in the regional and global economies.

In India, the conventional system has some semblance of forest resource accounting (FRA) and neglects most of forest benefits. This in turn contribution from the forestry sector to the economy is grossly underestimated. This is primarily due to the fact that the conventional system of FRA, not only in India but also in many countries, partially includes the value of tangible and intangible benefits, thus consequently underestimating the real contribution of the forest sector. The chapter presents three case studies—one each relating to Palakkad Division, Munnar Forest Division and Thenmala Forest Division in the state of Kerala. The case studies were conducted with a view to understand the conventional system of FRA and to apply some of the methods of valuation to estimate the values of various forests goods and services and highlight the extent of distortions involved in the existing system of FRA. The study compared and identified the gaps between monetary values of recorded and unrecorded forest benefits and costs at the divisional as well as the state level. This chapter also demonstrates an approach for preparation of forest assets and flow accounts at the state level. The studies also present an approach for improving the conventional system of FRA through incorporation of unrecorded forest benefits. Further, at the national level the values of unrecorded forest benefits will be enormous indeed if such system is adopted throughout the country and the real contribution of the forest sector to the country’s economy will be revealed. The FRA presented in this chapter if practiced and institutionalised will help understand the sustainability of resources through intervention of appropriate policy and planning.