Social and private total Hicksian incomes of multiple use forests in Spain
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Transcript of Social and private total Hicksian incomes of multiple use forests in Spain
www.elsevier.com/locate/ecolecon
Ecological Economics 5
ANALYSIS
Social and private total Hicksian incomes of
multiple use forests in Spain
Pablo Campos*, Alejandro Caparros 1
Instituto de Economıa y Geografıa (IEG), Consejo Superior de Investigaciones, Cientıficas (CSIC), Pinar 25, 28006 Madrid, Spain
Received 15 September 2004; received in revised form 1 May 2005; accepted 9 May 2005
Available online 5 July 2005
Abstract
The present national accounting system for forests measures only the commercial flows of the production account and the
consumption of durable goods produced by human intervention, and focuses particularly on final output, while ignoring any
intermediate output not arising from harvested agricultural crops. Environmental goods and services, whether for public
consumption or for the landowner’s private use (owner’s self-consumption), are ignored in conventional measurements of the
net domestic product of forests. This paper presents and applies a forest accounting methodology that overcomes these
limitations and allows for homogeneous aggregation of commercial and environmental values (using exchange values, and not
welfare measurements, for the latter). We have applied the accounting system proposed here to two major types of multiple-use
forest of the Iberian peninsula: Mediterranean forest (Monfrague cork oak dehesa) and conifer forest (Scottish pine in the
Guadarrama mountain range). Our results show that non-commercial incomes are relatively more important in the pine forest
under consideration, both in private and in social terms. Cork oak forest is notably more profitable in private terms than pine
forest, however. Conventional national accounting measures only 24% and 77% of social total income in Guadarrama Scottish
forest and Monfrague cork oak dehesa, respectively.
D 2005 Elsevier B.V. All rights reserved.
Keywords: Multiple use forests; Green national accounting; Hicksian income; Contingent valuation; Simulated exchange values
1. Introduction
A growing interest in mitigating the deterioration
and destruction of natural resources has led the public
0921-8009/$ - see front matter D 2005 Elsevier B.V. All rights reserved.
doi:10.1016/j.ecolecon.2005.05.005
* Corresponding author. Tel.: +34 91 411 10 98; fax: +34 91 562
55 67.
E-mail addresses: [email protected] (P. Campos),
[email protected] (A. Caparros).1 Tel.: +34 91 411 10 98; fax: +34 91 562 55 67.
institutions in charge of national accounts and inter-
national bodies to develop new methods to cover all
flows of goods and services generated by forests and
changes in the capital endowment of forests
(ISWGNA, 1993; United Nations et al., 2003; Euro-
stat, 2002; Nordhaus and Kokkelenberg, 1999).
There is a general consensus that bproduction-based measures usually rely on Hicksian income,
which is the standard definition of net domestic or
national product used in the national income accounts
7 (2006) 545–557
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557546
[regulations] of virtually all nations todayQ (Nordhausand Kokkelenberg, 1999, p. 35). In the same line, the
Economic Account for Agriculture and Forest-
ry(EAA/EAF-97) system of the European Union
defines income as bthe maximum amount which the
beneficiary can consume over a given period without
reducing the volume of his/her assetsQ (Eurostat, 2000,p. 87).
Theoretical literature has also propounded the use
of net domestic product (NDP), which is closely
linked to the concept of Hicksian income2 (Hicks,
1946, pp. 172–173), as the most appropriate national
income measure given its welfare interpretation, under
a given set of ideal conditions. Weitzman (1976) laid
the theoretical foundations for such use, and later
research extended the concept to cover natural and
environmental resources (e.g., Dasgupta and Maler,
2000; Heal and Kristrom, 2001). Based on these pre-
cedents, Vincent (1999) proposed a theoretical model
of sustainable total income specific to forests; he
examined the issues of which items to include and
how to adjust for the dislocations of inter-sector
incomes in forests. However, the theoretical results
of these developments are far from showing a com-
plete and homogeneous integrated approach to mea-
sure total Hicksian income (Heal and Kristrom, 2001,
p. 74).
The definition of Hicksian income used in this
paper is as follows: the sustainable total income of
a forest is the flow (income) of money (real or imput-
ed) generated during an accounting period (one year)
which, being wholly consumed within that same ac-
counting period, leaves the forest with the same value
of economic wealth (capital) at the end of the period
as it had at the start in real terms, in the absence of
new discoveries of wealth and net transfers from
outside the forest. In this paper, we estimate that
item as conventional net domestic product (NDP)
extended to environmental goods and services, rather
than net national product (NNP), which refers to the
income produced in a given accounting period by the
nationals of a country.
Hicksian income provides a substantial theoretical
advance with respect to the way income is now mea-
2 Similar concepts were put forward earlier by Fisher, in 1906,
and Lindahl, in 1933 (Aronsson et al., 1997).
sured by national accounting systems. To date, forest
income is not calculated fully in accordance with the
national accounts standard European System of
Accounts – ESA-95 – (Eurostat, 1996). Instead, the
satellite system EAA/EAF-97 (Eurostat, 2000) is in
use; this scheme fails to consider environmental
values and the capital balance. The Eurostat working
group that is now looking at how to incorporate
environmental values in the economic accounts of
European forests has proposed the pilot accounting
system The European Framework for Integrated En-
vironmental and Economic Accounting for Forests —
IEEAF — (Eurostat, 2002), which does take account
of the capital balance of a forest, as required by the
Regulation enacting ESA-95, although the integration
of environmental values is still out of the accounting
framework, since the integration of monetary environ-
mental values is bnot part of official statistical pro-
grammes [given that] the methods and assumptions
used in the valuation studies are not standardized, and
many theoretical and practical problems are still being
debatedQ (Eurostat, 2002, p. 45).In this paper we base our estimate of the sustain-
able total income (Hicksian income) of a forest on the
methodological proposal Agro-forestry Accounts Sys-
tem(AAS), as developed in recent articles (Campos,
1999; Caparros et al., 2001, 2003a). AAS presents a
method of calculation of Hicksian income which, in
line with the prescriptions of theory (Vincent, 1999;
Nordhaus and Kokkelenberg, 1999), estimates sus-
tainable total income within the applied national ac-
counting system (see also Lange (2004)). The
relationship of the AAS methodology with the recom-
mendations of the theoretical literature on green na-
tional accounting has been developed in Caparros et
al. (2003a).
The concept of Hicksian income may apply both to
estimation of social income and to calculation of pri-
vate income. Major differences may arise depending
on the significance of environmental services and
public expenditure, as shown in the applications pre-
sented in this paper. In particular, private income
includes private commercial goods and services and
environmental goods and services self-consumed by
the forest owner, while social total income includes the
private income of landowners and employees at mar-
ket prices plus environmental goods and services con-
sumed by free public visitors and by society as a whole
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557 547
at simulated exchange prices. That is, as suggested in
Lange (2004), we include all forest goods and services,
both market and non-market in the flow accounts.
AAS was applied in Caparros et al. (2003a) to the
pine forests of the Guadarrama mountain range for
partial calculation of social income. Private capital
income from landowners’ self-consumption of envi-
ronmental services was not calculated, although, as
we shall show later, this item is significant in the
forests under study; the value of free mushroom-pick-
ing was not estimated, either, and this is also a sub-
stantial activity in pine forests. In this paper we extend
this application and compare it with another applica-
tion to Mediterranean forests. The two agro-forestry
systems considered are relevant systems of the Iberian
peninsula: (i) the pine forests of the Guadarrama
mountain range (representative of the mountain con-
ifers in Spain and similar to other coniferous forests in
northern-central Europe) and (ii) the cork oak forests
at Monfrague (representative of the dehesa-type Med-
iterranean forests of the southwestern Iberian penin-
sula). The applications presented here are interesting
in themselves, but their special role is to exemplify the
usefulness of AAS in comparing on a uniform basis
the commercial and non-commercial values generated
by two types of multiple-use forest.
The rest of the article is structured as follows.
Section two sets out our methodology, and is divided
into three sub-sections. The first sub-section describes
the simplified form of the AAS accounts system used.
The second provides a general analysis of the values
to be included in the system and the third briefly
outlines the two applications of AAS made for this
paper. Section three discusses the results of our com-
parison of the two accounting applications, and Sec-
tion four compares the results obtained applying the
AAS methodology to those that would be obtained
with current national accounting rules and with the
developments recently proposed. Finally, Section five
puts forth our main conclusions.
2. Methodology
2.1. The agro-forestry accounting system (AAS)
AAS divides data into three different accounts
(Campos, 1999; Caparros et al., 2003a). The produc-
tion account records the total cost incurred throughout
the accounting period by the activities giving rise to
the total output of the forest; the difference between
total cost and total output is the forest-owner’s oper-
ating benefit (margin) where all the work is done by
employees, as is the case in the two forests examined
here. Variations from initial and final values of capital
and inflows and outflows are reflected by two
accounts: the balance of production in progress and
the fixed capital balance. The first balance presents as
residual value the revalorisations of production in
progress at the end of the period, while the second
balance treats as residual value the revalorisations of
the durable finished goods involved in the economic
activities of the forests for more than one period (fixed
capital goods).
However, a uniform comparison of the two forests
cannot be made directly for any year in the cycle;
variation can be significant, according to the specific
time of the cycle at which measurements are taken.
Therefore, to compare the two forests, we have sim-
ulated a forest’s hypothetical steady state. This entails
that there are not capital gains other than those arising
from the effect of discounting production in progress,
and the AAS versus ESA/EAF comparison can be
made using only the simplified production account.
That is, in steady-state we can avoid considering
natural growth (GNG), production in progress used
(PPu) and capital balances (see Campos, 1999 and
Caparros et al., 2003a). The steady-state scenario
likewise implies that no income is associated with
increased carbon sequestration in the forest (Caparros
and Jacquemont, 2003; Caparros et al., 2003b).
The simplified production account under AAS
(Table 1) allows for the calculation of NVA (private
or social) using the following identities:
NVAX ¼ NOMX þ LCX; X ¼ P; Sð Þ
NOMX ¼ TOX � TCX; X ¼ P; Sð Þ;
where, NOM: net operating margin, TO: total output,
TC: total cost. LC: labour cost, and the subindex (P or
S) indicates private or social values.
The AAS methodology distinguishes between so-
cial income and private income. In steady-state, AAS
private total income (TIP) equals private net value
added at market prices (NVAP) from private commer-
cial goods (timber, cork, firewood, and grazing rent)
Table 1
Steady-state production account (1998 euros per hectare)
Class Guadarrama pines Monfrague cork-oaks
ESA 95 Public
environmental
AAS ESA 95 Public
environmental
AAS
EAF 97 Omitted EAF 97 Omitted
1 2 3 4=1+2+3 1 2 3 4=1+2+3
Total output (TO) 235 394 235 864 538 138 17 693
Intermediate output (IO) 12 12 16 16
Livestock-grazing (GR) 12 12 16 16
Final output (FO) 235 382 235 852 538 122 17 677
Timber (TH) 235 235
Cork (CS) 462 462
Firewood (FH) 76 76
Hunting (HR) 3 3 37 37
Mushrooms (MC) 24 24
Owners’ self-consumption (SC) 379 379 85 85
Min 199 199 n.a.
Max 379 379 85 85
Public access recreation (VR) 178 178 8 8
Min 38 38 3 3
Max 178 178 8 8
Conservation, visitors (VC) 33 33 9 9
Total cost (TC) 100 62 162 192 6 198
Intermediate consumption (IC ) 45 48 93 48 6 54
Private (PIC) 45 45 48 48
Governmentala (GIC) 48 48 6 6
Labour (L) 47 14 61 142 142
Private (PL) 47 47 142 142
Governmentala (GL) 14 14 n.a.
Fixed capital consumption (FCC) 8 8 2 2
Net operating margin (NOM) 135 332 235 702 346 132 17 495
Gross value added at market prices (GVA) 190 346 235 771 490 132 17 639
Net value added at market prices (NVA) 182 346 235 763 488 132 17 637
n.a.: not available.
Source: Caparros et al. (2003a), Campos et al. (2003) and own elaboration.a GE=GIC+GL.
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557548
and services (hunting rent and owners’3 self-con-
sumption of environmental services).4
The AAS NVAP is the same as the ESA private net
value added at market prices. However, this is only
true for the theoretical ESA (ESA is the SNA frame-
work Regulation in the European Communities) since
current applications at national level are incomplete
for different reasons. The conventional EAF private
net value added at market prices actually measured
3 An institutional private landowner does not consume private
environmental services; therefore, by considering these services, the
economic results obtained in this paper relate to a forest managed by
an individual private landowner.4 For simplicity, operating subsides net of taxes on products are
not considered.
(NVAC) undervalues the real private income generate
in the forests by the aggregated values of grazing,
hunting and owners’ self-consumption outputs. That
is, we have:
NVAC ¼ TOC þ LCP
TOC ¼ THþ CSþ FH
TIP ¼ NVAC þ GRþ HRþ SC ¼ NVAP;
where NVAC: conventional net value added, TOC:
private total output in conventional national account-
ing, TH: timber harvest, CS: cork stripping, FH:
firewood, GR: grazing rent, HR: hunting rent, SC:
owners’ environmental self-consumption.
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557 549
AAS social total income(TIS) includes private
income at market prices (NVAP), public environmen-
tal goods and services consumed by free public
visitors and governmental expenditures. That is, the
social total income item estimated aggregates the
different incomes generated by individual uses irre-
spective of the recipient, who may be the forest
landowner, workers, recreational visitors and hunters.
Thus:
TIS ¼ NVAP þMCþ VRþ VC� GIC ¼ NVAS;
where, MC: mushrooms collected, VR: public
visitors recreation, VC: public visitors conserva-
tion value and GIC: governmental intermediate
consumption.
The main differences with the EAF/EAA system is
that grazing resources, hunting and mushrooms gath-
ering are included in the agriculture production ac-
count (EAA), and not in EAF. However, hunting and
mushrooms are forest products and services and in-
come from grazing resources should be treated as an
intermediate output provided by the forest to livestock
activities. In addition, neither owner’s self-consump-
tion nor public recreation and conservation services
are taken into account in the presently applied EAA/
EAF framework.
The private or social capital profitability rate of
the steady state is obtained from the quotient of
capital income (NOM) and immobilised capital
(IMC): rX=NOMX/ IMCX (X=P, S). Immobilised
capital for the accounting period is intended to pro-
vide a standardised value of the average social or
private investment allocated during that period
to obtaining the social or private capital income of
the forest. Private immobilised capital is estimated as
follows (in the steady-state): IMCP=CiP+
0.5(TCP�FCC ), where CiP is the initial private
capital, essentially land (valued at market prices)
and FCC is fixed capital consumption. In the case
of social immobilized income (IMCS) we have added
to the IMCP the theoretical value associated to the
bsocialQ capital formed discounting the future value
of public uses at a given social discount rate (2.5%).
2.2. Values included in the production account
This sub-section sets out the values considered
under AAS so as to ensure that all relevant items
are included and to avoid double accounting. The
production account comprises production and costs
arising during a period, and provides the informa-
tion needed to calculate net value added at market
prices (termed dnet value addedT from now on). We
set out below the methods proposed for valuation
of goods and services by looking directly to the
market and by simulating specific markets.
2.2.1. Values drawn directly from the market
The production account places in order the income
and costs associated with each activity and arising
during the period. Prices for commercial goods and
services are offered objectively by the market and are
directly observable; hence estimating such prices is a
relatively simple – though laborious – process. This is
the case with the commercial values of wood, cork
and firewood.
2.2.2. Values obtained from simulated markets
Within a partial equilibrium framework, exchange
values (price times quantity) and not consumer sur-
plus values have been estimated (Vanoli, 1998, p.
363) for the goods and services which are not at
present explicitly and independently put up for sale.
This procedure is quite common in the central norma-
tive national accounts framework (ISWGNA, 1993),
where the use of prices from similar markets is pro-
posed as the first criterion for cases where no market
prices are observable. Hultkrantz (1992) uses this
method for the estimation of values for several non-
timber products only partially traded in markets in
Sweden (see also United Nations et al. (2003, chapter
8)), and so do we for hunting, grazing resources and
mushrooms gathering (using local market prices, see
below).
In the methodology followed here (Caparros et
al., 2001, 2003a), the procedure is extended to
include cases where no similar market prices exist
(e.g. public recreational services). In principle, noth-
ing distinguishes a service like public recreation
(presently outside of the market since access is
free, but which could be incorporated) from a
non-timber product like berries in Sweden (presently
outside of the market since picking is free, see
Hultkrantz (1992)). Nevertheless, since no market
for the recreational services of forests exists it is
necessary to simulate the market to determine what
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557550
the price would be if the services were internalised.
The first temptation is to use consumer surplus
measurements (or any other welfare measure) pro-
vided by contingent valuation studies (see United
Nations et al. (2003, chapter 9) or Skanberg
(2001)). However, this implies assuming that all
the visitors pay their maximum willingness to pay
(WTP) and this is too strong an assumption if the
objective is to simulate a real market. Therefore,
this paper assumes that the owner can only choose
one price for the recreational access and that his/her
revenues will be given according to demand. This
paper further assumes that the forest-owner will set
the price for access to his/her property in order to
maximise his/her revenues (assuming a linear de-
mand function, this maximisation will occur for the
median, for the price half of the population is ready
to pay). This provides an upper limit for the market
revenue of the recreational services provided by the
forests (costs still need to be deducted). A lower
limit will be given by the costs of the services,
assuming that the owner sets the price in order to
cover the costs5 with no margin (or with a given
dstandardT margin). The former option implies a mo-
nopolistic solution assuming that no variable costs
exist (the monopolist would maximise his/her benefit
and with no variable costs this implies maximisation
of the revenues) and the latter option is a perfect
market solution. The real market price would be in
between, and in the particular case studies considered,
probably close to the monopoly solution since the
areas studied are relatively unique in their respective
regions. Thus, we use the value of the monopoly
solution for aggregation.
The issue of the number of units consumed
remains. The conventional procedure (Hultkrantz,
1992; Skanberg, 2001) consists in multiplying the
simulated market price by all the units consumed
outside the market; thus, assuming that the setting of
a price would not reduce consumption. This assump-
tion is acceptable if the influence on the overall results
is small (see mushrooms above). Nevertheless, estab-
lishing a price would obviously reduce the number of
units consumed. Concretely, if the price for the recre-
5 Since costs are assumed to be constant, marginal and average
costs are equal.
ational service were set equal to the median of the
WTP, only 50% of current visitors would be ready to
pay it (Caparros et al., 2003a).
A similar criterion is supported by the Eurostat
Task Force on Forest Environmental and Economic
Accounting: bFor a service with a zero price, the
consumer surplus represents the area under a stated
demand curve, and often the valuation studies allow
deriving the shape of this demand curve. This can
then be used to determine a dquasi-marketT value of
the service. If the demand curves are linear, it can be
shown that the maximum hypothetical dquasi-market
valueT [price] of output would be 50 % of the
consumer surplus. Analyses of the forms of demand
curves derived from contingent valuation method
(CVM) studies show that they tend to be convex
rather than linear, which implies that the dquasi-marketT value will be less than 50% of consumer
surplus (Eurostat, 2002, p. 48).QA value for bconservationQ has also been included,
although the integration of this value in national ac-
counting is probably arguable, since it is a passive-use
value. We have included the total value that visitors
declared to be ready to pay for this concept to a fund,
since under this assumption each agent could pay a
different amount, his/her maximum willingness to pay
(Caparros et al., 2003a). Conservation is a concept
that could be estimated, theoretically, for society as a
whole, but due to data limitations, we have focused
solely on visitors.
In addition to the public access environmental
services described above, this paper also estimates
the environmental services (in a large sense) that the
owner of the farm consumes himself (Martin and
Jefferies, 1966; Samuel and Thomas, 1999). These
environmental services include private recreational
services, the possibility to invite friends, the
bcountry way of lifeQ, etc. As stated above, owner’s
self-consumption is valued in the central national
accounting framework with market prices (and in
the SEEA (United Nations et al., 2003)). Unfortu-
nately, market prices for these services are not
available. The value of these services should be
capitalised in the price of the land, since owners
are willing to pay for these private uses when they
decide the price to pay for a piece of land. Thus, a
hedonic price approach could give us the part of the
land price that corresponds to this use. Nevertheless,
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557 551
this approach has two main drawbacks, one that
applies generally and one that is more particular
to our case studies. The general problem is that
our approach is actually more interested in flow
values6 (production and value added) and these
values could only be obtained from a capital value
once the discount rate is fixed (an always extremely
delicate task). The particular drawback comes from
the low number of transactions in the areas what
makes the application of a hedonic approach a dif-
ficult task. Therefore, we followed an alternative
option.
In purely financial terms, owners may be losing
money by keeping their properties, since they might
obtain higher revenues in alternative investments.
The difference between the capital income in an
alternative investment and their present market cap-
ital income is what they are actually bpayingQ for
the environmental services that they enjoy7 (Campos
and Riera, 1996, p. 89). Nevertheless, this is only a
lower bound for the price that the market of land-
owners is ready to pay for this environmental service.
To find the upper bound we asked landowners about
their maximum willingness to pay for the private
environmental services that they enjoy (the question
was framed in terms of the maximum amount that
they were ready to lose before selling their property).
This is the upper bound for the market price of these
environmental services, because if they had found
somebody ready to pay more than this amount they
would have sold their property bto other investors
who have similar feelings for the land (Pope and
Goodwind, 1984, p. 750).Q The real market price is
somewhere in between these two bounds. Neverthe-
less, if the interviewed landowners (a representative
sample of the current landowners) are representative
of all the landowners-market-agents, the price would
be close to the value expressed by them as the min-
imum level in order to sell (otherwise transactions
would never take place). Thus, we use again the
upper limit for aggregation purposes.
6 Kallio (1999) estimates owners’ WTP for self-consumption of
environmental goods and services as a flow, although in terms of
utility.7 To do this calculation we need to know the appropriate interest
rate, what is easier to obtain than the discount rate, since they do not
always coincide.
2.3. Description of accounting applications
The pine forests (Pinus silvestris, L.) of the Gua-
darrama range (PGs) and the cork oak (Quercus
suber, L.) dehesas of Monfrague (DMs) are set
apart in social terms and by considerable differences
in altitude and climate. Monfrague shire is near the
Sierra de Gredos range in Caceres province, about 250
km from Madrid. A relatively flat area, it registers
average annual rainfall of 550 mm and has a Medi-
terranean climate. Visitors are relatively few, at an
estimated two visits per hectare per annum. The Gua-
darrama pine forests are in a high mountain area and
have a Mediterranean-Continental climate, with annu-
al rainfall in excess of 800 mm. Visiting rates are high,
at 29 visits per hectare per annum, due to its proximity
to Madrid: only 60 km away at the nearest point. Sole-
boundary forest properties in Monfrague and Guadar-
rama are frequently large estates, often in excess of
1000 ha. Private landowners therefore tend to use
employees when they take direct charge of the private
agricultural, forestry and livestock uses of their prop-
erty. In the Guadarrama pinewoods, public land-
owners abound, as do private properties held in
common by residents’ associations; but the great ma-
jority of dehesasin Monfrague are owned by private
individuals.
For pines in Guadarrama, we accepted the artificial
regeneration cycle of 110 years, which is usual in the
study area, reiterating indefinitely. For commercial
data, we examined the accounts of a large private
property (1966 ha) over a five-year period (this prop-
erty is currently in a steady-state from an economic
point of view). This data where completed with data
from other two large properties and with in-depth
interviews with the various economic agents involved,
such as silviculture firms. See Caparros et al. (2003a)
for a more detailed presentation.
For the cork oaks of Monfrague we assumed a
natural regeneration cycle of 144 years, also reiter-
ating indefinitely (Campos et al., 2003). In this case
no property in the area is at the steady-state, so that
data could not be obtained from one particular prop-
erty. However, data from different properties and in-
depth interviews with several silvicultural firms
working in the region permitted us to simulate the
revenues and cost that would be obtained in a hy-
pothetical steady-state.
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557552
Hunting and grazing resources have been value
at forest gate local imputed market prices (Rodrı-
guez et al., 2004, p. 89), and mushroom gathered
have been valued at forest gate market prices (only
in Guadarrama), taking into account mushroom pro-
ductivity from a similar area 150 km far from
Guadarrama, the Pinar Grande in Soria (Martınez,
2003).
For our study of Guadarrama, environmental ser-
vices to free public visitors, which comprise recrea-
tional use and the conservation value of a registered
habitat, were valued using a dichotomous contingent
valuation survey on 520 respondents. The output of
the recreational service was valued as outlined in the
preceding section, while the conservation value was
valued as the total annual contribution to a fund as
stated by visitors (Caparros et al., 2003a; Caparros
and Campos, 2002). Landowners’ self-consumption
was valued using an open contingent valuation survey
on 21 individuals.8 The sample is representative,
given the small number of large private landowners
in the area (Campos and Martınez, 2004).
For the cork oak dehesasof Monfrague, we includ-
ed three environmental services. Recreational services
and habitat conservation services for free public visi-
tors were valued by multiplying the average9 WTP
obtained from the two questions posed in the contin-
gent valuation survey (Campos, 1998) by 50% of
estimated visits10. This survey comprised 419 inter-
views. Landowners’ environmental self-consumption
was valued using a contingent valuation survey on 19
individuals (Campos and Mariscal, 2003).
8 The value attributed to environmental self-consumption was the
average for the three main steady-state pine forests of the sample, as
these are the only ones representing the case-study.9 The contingent valuation survey for Guadarrama was dichoto-
mous, using a censored logit model for estimates; hence the mean
and the median were the same. To avoid that the use of the median
in the case of Monfrague (where the contingent valuation survey
was open) increases the difference between the two case studies due
to different ways of estimating willingness to pay, we chose to use
the mean for Monfrague (which was higher than the median). Even
so, the results made for a far lower value for free public recreation in
DMs (Table 1).10 It was assumed that the value of habitat conservation would be
included in a single entry price in conjunction with the recreational
value, unlike the Guadarrama survey, where it was estimated by
visitors’ estimated contribution to an annual habitat-conservation
fund.
3. Comparison of applied results
3.1. Total output
The main commercial output of each forest is
wood, for pine, and cork, for cork oak. Private total
output is higher in the dehesas of Monfrague
(DMs), although this is particularly true for com-
mercial total output, given the high value of cork
production. On the contrary, social total output is
higher in the PG. The reason is that DMs output is
chiefly commercial, whereas the greater part of total
PG income is environmental, both private and so-
cial (Table 1)11. Since the currently applied EAF
system focuses on commercial values (timber or
cork), current national accounts capture a higher per-
centage of the total output in the cases of the dehesas
in Monfrague.
The two methods used to estimate public access
recreation and owners self-consumption of environ-
mental services have yield high differences. This is
especially true in the case of the Guadarrama pines,
although both methods have shown that the two
values under consideration are relevant in this sys-
tem. In the case of the dehesas of Monfrague, only
one method could be applied to the estimation of
owners self-consumption (since commercial private
profitability is above market low risk interest rates,
see below). In regard to public access recreational
services, both methods applied have yielded low
values in the dehesas.
Timber contributes 27% of the social total output
(TOS) of PGs and 37% of the private total output.
Consumption of environmental services by the public
accounts for 25% of TOS and landowners’ environ-
mental self-consumption contributes 60% of private
total output (TOP), using upper bounds for aggrega-
tion (Tables 2 and 3).
Social and private total outputs are very similar
for DMs, given the small number of visitors per
hectare per annum. TOP accounts for the lions
share of the total output of DMs, insofar as public
environmental output is barely 2%. The main part of
11 The difference in the WTP for recreational use is partly
explained by the payment vehicle: an entry fee at Monfrague and
increased travel cost in Guadarrama.
Table 2
Economic indicators in steady-state (1998 euros per hectare)
Class Guadarrama
pines
Monfrague
cork-oaks
Social Private Social Private
Total output 864 629 693 676
Timber 235 235
Cork 462 462
Firewood 76 76
Livestock-grazing 12 12 16 16
Hunting 3 3 37 37
Mushrooms 24
Owners’ self-consumption 379 379 85 85
Min 199 199 n.a. n.a.
Max 379 379 85 85
Public access recreation 178 8
Min 38 3
Max 178 8
Conservation (visitors) 33 9
Total cost 162 100 198 192
Intermediate consumption 93 45 54 48
Private (conventional) 45 45 48 48
Governmental 48 6
Gross value added at
market prices
771 584 639 628
Fixed capital consumption 8 8 2 2
Net value added at
market prices
763 576 637 626
Governmental 14 n.a.
Net operating margin 702 529 495 484
Conventional net
value added
182 182 488 488
Immobilized capital 20,556 11,156 5,661 4,981
Profitability rate 3.41 4.74 8.74 9.72
Owner’s commercial
profitability
1.22 7.42
n.a.: not available.
Source: Caparros et al. (2003a), Campos et al. (2003) and own
elaboration.
Table 3
Forestry systems comparison ratios (percentage)
Class Guadarrama
pines
Monfrague
cork-oaks
Total production (TO)
Private TO/Social TO 73 98
Timber or cork/Social TO 27 67
Timber or cork/Private TO 37 68
Owners’ self-consumption/Private TO 60 12
Recreation and conservation
(visitors)/Social TO
24 2
Total cost (TC)
Private intermediate consumption/Social
intermediate consumption
48 89
Private labor/Social labor 77
Private TC/Social TC 62 97
Net value added (NVA)
Conventional NVA/Social NVA 24 77
Conventional NVA/Private NVA 32 78
Private NVA/Social NVA 75 98
Social labor/Social NVA 8 22
Social net operating margin/Social NVA 92 78
Private labor/Private NVA 8 23
Private net operating margin/Private NVA 92 77
n.a.: not available.
Source: Caparros et al. (2003a), Campos et al. (2003) and own
elaboration.
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557 553
this TOP comes from cork stripping (68%), the
remaining is accounted for by firewood, grazing,
hunting and owner’s self-consumption of environ-
mental services (Tables 1 and 2).
3.2. Total cost
The pine forests of the Guadarrama range entail a
lower total cost per hectare than the cork oak dehesas
of Monfrague. The social costs of PGs are 82% the
social costs of DMs, and only 52% as regards private
costs (Table 2). This difference is chiefly due to the
higher amount of private labour employed on DMs. In
PGs, the private cost is 62% of social cost, while in
DMs the ratio rises to 97%. This difference is mostly
explained by higher governmental expenditures on
PGs (Tables 1 and 2). Once more, current national
accounts come closer to the true value of total cost in
the case of the dehesas in Monfrague, since govern-
mental expenditures are not accounted in the forestry
sector in the EAA/EAF system.
3.3. Net value added
The Guadarrama pine forests generate more net
value added (this equals the social total income in
the steady state situation) per hectare than the mul-
tiple uses of the cork oak dehesas of Monfrague,
while the opposite is true for private net value added,
although the differences are relatively small (Table
2). However, this gap widens if we use conventional
value added for comparison, since PGs only generate
37% of the conventional value added produced by
DMs (Table 2).
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557554
In DMs, similar magnitudes are obtained for social
and private total income, unlike PGs, where private
total income accounts for 75% of social total income
(Table 3). The distribution of total income between
labour and capital income also differs for PGs and
DMs, since labour is relatively more important in
Monfrague.
In the case of PGs, conventional net value added
(NVAC) reflects only 24% of social net value added
(NVAS), while in DMs it reflects 77% (Table 3, Fig.
1). Therefore, NVAC is a better measure of sustainable
total income in the case of Monfrague. This is due to
the high proportion of public environmental income
measured for the Guadarrama pine forests.
3.4. Net operating margin and profitability rates
Social as well as private capital income (net oper-
ating margin) is higher in PGs than in DMs (Table 2).
This should imply higher values for land in PGs than
in DMs, and this is case. However, land prices are
much higher than should be expected if these values
would be estimated by capitalization (the immobilized
capital, mainly land, is more than two times higher in
PGs than in DMs, both in private and in social terms).
Of course, these differences in land prices have a
significant impact on profitability rates, which differ
much more than net operating margins do. That is,
DMs have relatively high profitability rates: the social
profitability of this agro-forestry system is 8.74%,
while the private profitability is 9.72% (Table 2).
PGs, however, have lower profitability rates: social
Fig. 1. Net value added
profitability in PGs is 3.58%, and private profitability
is 4.74%. Finally, if only commercial values are in-
cluded in the estimation of the private profitability rate
the differences are even higher: 1.22% in the PGs and
7.42% in the DMs.
4. Comparing AAS with recent integrated
environmental and economic systems of accounts
AAS is essentially an applied approach to green
national accounting. Thus, we will compare in this
section the results obtained applying the AAS meth-
odology to those that would arise applying conven-
tional accounting, or the extensions recently proposed
by official statistical institutions (Eurostat, 2002; Unit-
ed Nations et al., 2003).
For this purpose, we shall focus on Table 1. The
first column in Table 1 shows the result that would be
obtained applying the current methods applied in
conventional national accounting (in Europe, those
included in EAF97). As shown, current national
accounts focus on timber (or cork in the case of
cork-oaks) since these are the most obvious commer-
cial values. On the cost side, only private costs are
taken into account in the forestry sector.
The second column of Table 1 shows those values
theoretically included in ESA 95 but which are cur-
rently omitted in applied national accounting. How-
ever, recent developments propose to measure most of
these values in an essentially similar way to the one
that we have used. Non-timber goods and services
at market prices.
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557 555
(e.g. hunting or mushrooms) are supposed to be in-
cluded in future national accounting systems accord-
ing to Eurostat (2002) or United Nations et al. (2003).
Owners’ self-consumption of environmental ser-
vices is conceptually an ESA 95 value, since the
market incorporates it in the value of land. However,
the difficulties to estimate a flow value imply that
even recent developments (Eurostat, 2002; United
Nations et al., 2003) do not consider to include this
value. The AAS proposes to include these values, but
the difficulties to obtain an accurate flow value are
recognised (we therefore show two values, a lower
bound and an upper bound, expecting the real value to
be somewhere in between).
The value of the grazing resource rent is currently
incorporated indirectly in conventional accounts in the
agricultural sector, although it would be more appro-
priate to include it as an intermediate production of
the forestry sector (Vincent and Hartwick, 1997, p.
25). Grazing resources have been valued using market
prices for renting pastures, and not using market
prices of artificial feeding, as has been proposed in
other applications (Skanberg, 2001, p. 51). In Mon-
frague, market prices for a forage unit (FU) from
grazing rented is about 50% cheaper than the same
FU obtained from commercial hay at farm gate
(Rodrıguez et al., 2004, p. 89).
On the costs side, the main contribution of the
AAS system is to incorporate governmental expendi-
tures (GE) in the forest under consideration. In the
SNA bGovernment administration is a non-market
service with no identifiable product sold in markets,
so it is valued in national accounts at its cost of
production (Lange, 2004, p. 83).Q However, includinggovernment expenditures in the output side has a
strong risk of double counting if the services produced
have already been valued; e.g., fire fighting efforts
(the lion’s share of public expenditures in Spain) have
a direct impact on commercial timber output. Thus,
we have included governmental expenditures only in
the cost side.
The third column of Table 1 presents public envi-
ronmental values. These values are the most contro-
versial ones and current proposals (Eurostat, 2002;
United Nations et al., 2003) do not expect them to
be included in national accounts in the near future.
The main reason is the lack of homogeneity between
the exchange values considered in conventional na-
tional accounting and the welfare measurements (in
terms of consumer surplus or any of the Hicksian
welfare measurements) yielded by environmental val-
uation techniques. To overcome this difficulty we
have tried to estimate exchange values for these public
environmental values (mainly free access recreation).
That is, we have tried to measure the output that could
be produced in the forest if public access would have
a price (a single price for all visitors, not their max-
imum willingness to pay). That is, we have used
environmental valuations techniques to know the de-
mand function (assuming no wealth effect) and have
assumed that the owner will set a single price. Once
more, the uncertainty surrounding this hypothetical
marketing of environmental services advised to give
an interval for the result.
Nevertheless, assuming the existence of markets
that actually do not exist implies counting money in
the forestry sector that was actually spent somewhere
else. That is, visitors would have paid the price as-
sumed (according to the information provided by the
contingent valuation studies), but they actually did not
and thus spend it somewhere else. That is, bthe chal-
lenge is to utilize non-market values in the forest
sector, which are estimated in the macroeconomic or
general equilibrium context of analysis. The value
must be consistent and comparable with market values
in the large system (FAO, 1998, p. 4).Q However, thisproblem applies as well to the imputed owner’s con-
sumption of real estate property rent in conventional
national accounting (SNA/ESA). That is, as happens
already in conventional accounting, if the method
proposed in this paper would be followed nationwide
a part of national income would not be brealQ money,
and the same part of national consumption would also
not be paid with brealQ money. But, in any case,
homogeneity with real exchange values would be
pushed as far as possible, and homogeneity with the
solution proposed in current national accounts for
values such as the rent of your own house would be
almost complete (at least in the case of owner’s self-
consumption of environmental values). In other
words, there are other exceptions in conventional
national accounting that depart from observable mar-
ket prices in the SNA framework, and ba rigorous
restriction of the SNA to market transactions would
seriously limit its analytical power (Bartelmus, 1998,
p. 269).Q
P. Campos, A. Caparros / Ecological Economics 57 (2006) 545–557556
5. Conclusions
This paper has presented and applied a methodol-
ogy that allows for uniform comparison of private and
social incomes generated by multiple-use forests. We
have made commercial and non-commercial measure-
ments, both for cork oak forests of Monfrague shire
and pine forests of the Guadarrama mountain range.
For non-commercial goods and services, we measured
four environmental values in each region, three by the
contingent valuation technique (public access recrea-
tion, conservation and owners self-consumption of
environmental services) and one by applying on-site
market prices (mushrooms).
The results show that public environmental bene-
fits make a very substantial contribution to social
total income in the case of the Guadarrama pine
forests. Public non-commercial benefits are relatively
less important, however, in the case of the Monfra-
gue cork oak dehesas. In both cases, environmental
self-consumption by landowners is high, especially
in the case of Guadarrama, and explains a substantial
part of the market price of the forests; hence the
estimation of these benefits should be a priority for
future research.
Concerning the green national accounting debate,
the main conclusion to be drawn from these applica-
tions is that incorporating environmental values (es-
pecially free access recreational values and owner’s
self-consumption of environmental services) can be
done in an applied framework using information
from non-market valuation techniques and adapting
rules currently under use in conventional national
accounting.
As expected, when the relative importance of the
environmental values is low, as compared to commer-
cial values, conventional national accounting approx-
imates good the true total income generated in the
forest, while the opposite is true if environmental
values are important. The exchange values for these
environmental goods and services, obtained simulat-
ing markets, have proven to be relatively very impor-
tant (as compared to commercial values) in one of the
case-studies under consideration (Guadarrama) and
not so important in the other case (the dehesas).
These results probably do not match a priori percep-
tions in Spain, especially concerning the relative im-
portance of commercial values in dehesas, so that a
systematic application of these kinds of methodolo-
gies can prove to be very useful for rigorous public
forestry policy making.
Acknowledgements
The preparation of this paper has benefited from
the projects CICYT-AMB99-1161 and F096-040,
funded by the Comision Interministerial de Ciencia
y Tecnologıa. We have also received support under the
Convenio entre el CSIC y la Sociedad Anonima Belga
de los Pinares de El Paular.We thank the useful
comments from anonymous referees to the first ver-
sion of this article. The authors are solely responsible
for the information and analysis presented.
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