Because most of the values it provides are not bought and sold in the market, it can be cut down, either for the wood or to use the land on which a forest stands for agriculture. Either action leads to externalities -- economic impacts occurring when those taking the decision (to chop or change land-use) do not bear all the costs of their action. When a piece of forest land is ploughed, for example, the conversion makes sense to the land owner, but also damages fisheries downstream, increases flooding and chokes rivers and dams with sediment, so creating costs for others. Moreover such actions actually reduce, and not add to, a country's total wealth. "The assumption is that more development projects correspond to greater benefits. But, in fact, benefits are often lower than costs," says Kanchan Chopra, Institute of Economic Growth, adding: "This is especially true if one takes into account the actual value of forests and costs borne by local communities for loss of forests."
The loss of a forest is fundamentally economic in nature. So it is that its conservation needs to be addressed in economic terms. For forests to be conserved, they need to be perceived as being more valuable than the usual, standard, utilities they provide. Once these other benefits are given a value that people can use to compare with other uses, the cost of cutting a forest becomes huge. This is what valuation does: by expressing the other benefits in terms of money, it assigns a value to forests most people can understand. Such valuation then provides those protecting a forest -- be it states maintaining the forest cover or local communities protecting a forest, thus providing all its services for whomsoever it may concern -- an empirical platform to negotiate a price for its actions.
Consider Himachal Pradesh, or Uttaranchal, following the former's footsteps. Their efforts to protect Himalayan biodiversity are now enumerated. They have now begun asking for payments for the benefits their forests provide -- freshwater for drinking or irrigation, controlling silt, watershed protection, checking glacier melt -- to downstream states. Uttaranchal has even calculated the value of added carbon content due to the recent net increase in its forest cover -- a global benefit -- as ranging from Rs 66 crore to Rs 86 crore.
Fortunately today, toting up the ecological benefits of a forest is an established branch of economics. In India, there exist studies that use a variety of methods whereby the benefits of a forest can be calculated. Everyone directly or indirectly dependent on a forest -- forest dwellers, state governments, a nation, international conservation groups, member-countries of global environmental treaties -- figures in such a calculation. Economists prefer to use a combination of methods. For two reasons, point out Kanchan Chopra, and Gopal Kadekodi of the Institute for Social and Economic Change: one, forests are heterogeneous, with types and sub-types, and each has a unique set of goods and services. Two, each forest has a range of functions; while some can be attributed market values, others cannot, and need to be estimated. Broadly, the methodologies follow two principles -- revealed or indirect values, and stated or direct preference values. Both are based on the value perceived by stakeholders. (see box:
Ways of evaluation). Even the Supreme Court has made feeble steps towards valuation (see box:
Courting NPV).
Valuation makes a case for increasing allocation to the forestry sector so that more money can be spent on protection and regeneration. A sensible approach would lead to the capture of this value by local communities, in the form of payment for the benefits from forests they protect -- where tribal, or forest-dependant, communities in forest-rich states would be paid for their standing trees, not cut ones.
