The Contribution of Forest Ecosystems to the Economies of Africa Dr Thierry Oliveira Lead Economist UN Environment Nairobi, Kenya Thierry.Oliveira@unep.org Mr Samuel Muriithi Lead Forest Economist Kenya Forest Services Nairobi, Kenya smuriithi2000@yahoo.co.uk Dr Jackie Crafford Prime Africa Consultants Technical support to UNEP Pretoria, South Africa j.crafford@primeafrica.net

A glance into the application of environmental economic accounts

History Since 2013, working in partnership with Ministries and Statistical Agencies within the following countries: Kenya Morocco Gabon Cote d’Ivoire Nigeria Uganda

Objective To provide technical support to relevant country Ministries and Statistical Agencies: 1. To demonstrate how key economic sectors as well as human well-being are dependent on forests and forest ecosystem services in general, and 2. More specifically the contribution of these particular services to the real economy.

Activities Linking ecosystem services, especially regulating services, to the economy and demonstrating that these services provide direct and indirect benefits to economic sectors Conduct a forest ecosystem services (especially regulating services) valuation. This activity will result in the quantification of intermediate input of ecosystems into the economy. Specific sub-activities include: Strengthen national institutional capacities to construct and manage Input-Output tables , and carry out data collection and ecosystem services valuation. Develop economic and planning models.

Outputs Technical Papers on an economic case for valuing selected critical regulating services made through the setting-up of production function tables Excel based forest and forest ecosystem services accounts Hybrid input-output table and economic planning model including quantitative (cost-benefit) analysis of selected policy instruments.

Background to Forest Accounts and Methodology Measuring economic activity Measuring ecosystem benefits - Millennium Assessment: Ecosystem Services Linking ecosystems and the economy

Economic Analysis Framework Production Economic Consumption Household Input-Output Table

Millennium Assessment Ecosystem Services Analysis Framework Millennium Assessment Ecosystems

Cultural Ecosystem Services Linking the Frameworks Production Economic Consumption Household Inputs / Final Consumption Provisioning Ecosystem Services Cultural Ecosystem Services Ecosystems

Regulating Ecosystem Services Cultural Ecosystem Services Linking the Frameworks Production Economic Consumption Household Inputs / Final Consumption resilience Provisioning Ecosystem Services inputs Regulating Ecosystem Services Cultural Ecosystem Services Ecosystems

Ecosystem Services: Classification Systems Millennium Ecosystem Assessment (http://www.millenniumassessment.org/en/Index-2.html) The Economics of Ecosystems and Biodiversity(TEEB) (http://www.teebweb.org/) International Classification of Ecosystem Services(CICES) (http://cices.eu/) United States final ecosystem goods and services(US-FEGS) (http://unstats.un.org/unsd/envaccounting/seeaRev/meeting2013/EG13-3-FEGS.pdf)

Provisioning Services Examples of economic sectors (energy, fisheries, agriculture, water and health, public administration and defense, tourism) Food (crops, livestock, fisheries, aquaculture, wild food) Fish Fiber (timber, cotton, hemp, silk, firewood) Loss of forest stocks; overexploitation Genetic Resources Rare high-risk species Cultural Services Examples of economic sectors (energy, fisheries, agriculture, water and health, public administration and defense, tourism) Spiritual and Religious Values Habitat Aesthetic Values Recreation and Ecotourism

Regulation Services Examples of economic sectors (energy, fisheries, agriculture, water and health, public administration and defense, tourism) Climate Regulation Carbon loss, effects on the micro-climate Water Regulation Risks to water resources, Hydro-electricity Water Purification and Waste Treatment Agricultural production losses and cost of raising water and waste Erosion Regulation Loss of nutrients, impact on fish resources Disease Control Malaria increase Natural disaster mitigation Tsunami mitigation by mangrove swamps

Examples of Economic Sectors Change in ecosystem services Ecosystem impacted Examples of Economic Sectors 0100 Agriculture 0210 Silviculture 0230 Gathering of non-wood forest products 3510 Electricity power generation 3600 Water collection, treatment and supply 5590 Accommodation (tourism) 8400 Public administration 8600 Human health activities Hazards / Impacts Forests Change in ecosystem services ? Wood harvest Seasonal flow Microclimate Climate regulation Erosion regulation Water purification and treatment of sediment Water regulation

Sector (Direct Impact) Change in ecosystem services Ecosystem impacted Production impacted Sector (Direct Impact) 0100 Agriculture 0210 Silviculture 0230 Gathering of non-wood forest products 3510 Electricity power generation 3600 Water collection, treatment and supply 5590 Accommodation (tourism) 8400 Public administration 8600 Human health activities Hazards / Impacts Changing the level of available water Forests Change in ecosystem services Change in forest products/ Impacts on industries Wood harvest Impacts on fishing Seasonal flow Impact on electricity Microclimate Effets Multipliers Change in the cost of water treatment Climate regulation Provision of habitat for single species Erosion regulation Carbon sequestration Water purification and treatment of sediment Natural disaster mitigation (mangroves) Water regulation Impact on health (the risk of malaria)

Sector (Direct Impact) Change in ecosystem services Resource impacted Production impacted Sector (Direct Impact) 0100 Agriculture 0210 Silviculture 0230 Gathering of non-wood forest products 3510 Electricity power generation 3600 Water collection, treatment and supply 5590 Accommodation (tourism) 8400 Public administration 8600 Human health activities Conversion to other land uses Changing the level of available water Pd4 Forest Pd1 Change in ecosystem services Change in forest products/ Impacts on industries Pd2 Wood harvest Pd9 Impacts on fishing Seasonal flow Impact on electricity Pd10 Microclimate Effets Multipliers Change in the cost of water treatment Pd5 Climate regulation Provision of habitat for single species Pd8 Erosion regulation Pd3 Carbon sequestration Water purification and treatment of sediment Natural disaster mitigation (mangroves) Pd7 Water regulation Impact on health (the risk of malaria) Pd6

Sector (Direct Impact) Change in ecosystem services Resource impacted Production impacted Sector (Direct Impact) 0100 Agriculture 0210 Silviculture 0230 Gathering of non-wood forest products 3510 Electricity power generation 3600 Water collection, treatment and supply 5590 Accommodation (tourism) 8400 Public administration 8600 Human health activities Conversion to other land uses Changing the level of available water Pd4 Forest Pd1 Change in ecosystem services Change in forest products/ Impacts on industries Pd2 Wood harvest Pd9 Impacts on fishing Seasonal flow Impact on electricity Pd10 Microclimate Effets Multipliers Change in the cost of water treatment Pd5 Climate regulation Provision of habitat for single species Pd8 Erosion regulation Pd3 Carbon sequestration Water purification and treatment of sediment Natural disaster mitigation (mangroves) Pd7 Water regulation Impact on health (the risk of malaria) Pd6

Forest Accounts (SEEA Methods) Forest Area Forest Accounts (SEEA Methods) Production Pd1, Pd2 Change in Forest Area Accumulation

Sector (Direct Impact) Change in ecosystem services Resource impacted Production impacted Sector (Direct Impact) 0100 Agriculture 0210 Silviculture 0230 Gathering of non-wood forest products 3510 Electricity power generation 3600 Water collection, treatment and supply 5590 Accommodation (tourism) 8400 Public administration 8600 Human health activities Conversion to other land uses Changing the level of available water Pd4 Forest Pd1 Change in ecosystem services Change in forest products/ Impacts on industries Pd2 Wood harvest Pd9 Impacts on fishing Seasonal flow Impact on electricity Pd10 Microclimate Effets Multipliers Change in the cost of water treatment Pd5 Climate regulation Provision of habitat for single species Pd8 Erosion regulation Pd3 Carbon sequestration Water purification and treatment of sediment Natural disaster mitigation (mangroves) Pd7 Water regulation Impact on health (the risk of malaria) Pd6

Pd3: Carbon sequestration example IPCC Carbon Calculator

Pd4: Water Flow and Nutrient Flow example

Pd5: Water Treatment example

Pd6: Health: Malaria example

Pd7: Natural disaster mitigation example

Pd8: Species / habitat example

Pd9: Fishing example

Pd9: Hydroelectricity example

Environmental Entry-Exit Table: Forest ?

User-friendly interface

What do we use these tools for?

Forest loss has negative consequences Forest loss comes at a cost to natural ecosystems Natural ecosystems produce valuable ecosystem services that have real economic value for present and future generations In the case of deforestation, some of the key forest ecosystem services are lost: Carbon stock, water purification, reduction of water yield due to sedimentation of dams, reduction of fish production, loss of habitat for species, and increased risk of diseases such as malaria. This results in negative economic consequences (externalities) for: The present generation And future generations

Key Questions What is the real contribution of forests to the Economy? - (e.g. Informal economy use of fuel wood; ecosystem services benefits; insurance value) How do we incorporate this value in the National Accounts? What risks are forests facing in the future? - (e.g. climate change, deforestation) How to mitigate these risks? - (i.e. policy instruments) How can we optimise benefits? - (i.e. investments)

UN-REDD + has developed a mechanism based on carbon capture - and uses incentives to internalize such damage. However, the benefits of deforestation far outweigh the benefits of carbon capture, and therefore the carbon mechanism alone is not sufficient to change behavior of land owners. Additional / complimentary policy instruments are required

Examples of forest policy instruments Carbon trade Certified plantation forestry Agroforestry Value addition through industrialization and conservation of biodiversity Eco-tourism Payment for ecosystem services It is to be noted that these policy options are not mutually exclusive, but may be applied in an integrated manner.

A word from KFS Mr Samuel Muriithi – Lead Forest Economist, KFS

Thank You