1. Study on Green GDP of Forest Accounting in Hainan Island in China Dr. Prof. Zhang Ying College of Economics and Management, Beijing Forestry University Tel:+86-10-62338840 Fax:+86-10-62337674 E-mail:zhangyin@bjfu.edu.cn

2. OUTLINE 1. Introduction 2. Status of Forest Resources in Hainan Island 3. Classification of Assets in Accounting 4. Physical Accounts for Accounting 5. Monetary Accounts for Accounting 6. The Green GDP Accounting for Forests 7. Results 8. Conclusion

3. 1 Introduction

4. 2 Status of Forest Resources in Hainan Island

5. 2.1 Forest Land Resource Hainan Island has a tota1 land area of 3392373.3 ha. According to the data of 1996, it has land for forest 1,820,8423 ha, accounting for 53.7% of the total land area. 2.2 Volumes of Tropical Forests (1) Commercial Forest Among the total volume of commercia1 forest, 16.657 million m 3 are timber forest (98.5%), and the timber vo1ume of fuel wood is only l.5%.

6. (2) Ecological Forest The total area is over 870,000 ha, accounting for 25.67o of the tota1 1and area of Hainan. The standing timber volume is 70.896 million m 3, accounting for 78.5% of the province’s tota1 stock. (3) Economic Forest Hainan province has about 6700 ha rubber plantations need to be regenerated, yielding about 400,000 m 3 rubber wood. (4) Tropical Plantation Forest At present, 27,000 ha and coconut plantations and 93,000 ha of pulp wood plantations were established.

7. 3 Classification of Assets in Accounting I Forested land and standing volume 4.Non-stocked forest land 1.Forested land and standing volume 5. 4-side planting (1)Natural forest6. Scattered trees (2) PlantationII Die-back trees 2.Shrub landIII Non-forested land 3. Nurseries

8. 4 Physical Accounts for Accounting Item forest resourcesForest assetsNon Forest assets AreaVolumeAreaVolumeAreaVolume 1.1Forested land and Standing Volume 224,261987,538130,426251,30087,892647,893 1.2 Shrub land34,140 1.3 Nurseries145 1.4 Non-stocked forested land 5,567 1.5 4-side plantings10,534 1.6 Scattered trees19,743 1.7 Statistical errors 2 Die-back trees 3 Non-forested land 235,745188,59647,149

9. 5 Monetary Accounts for Accounting 5.1 Valuation Methods 5.1.1 Standing timber (1) Stumpage value method (2) Consumption value method (3) Net present value method 5.1.2 Forest land Market prices 5.1.3 Non-timber forest goods Local market prices of same product Price of close substitute product Production cost

10. 5.1.4 Forest services (1) Livestock grazing Price of close substitute product /Production cost (2) Recreation and tourism Travel cost /Hedonic price of land /Contingent valuation method/conjoint analysis 5.1.5 Forest environmental protection services (1) Carbon storage :Carbon tax /Carbon emission permit trading price (2) Biodiversity and habitat preservation :Contingent valuation method, conjoint analysis (3) Protective services for water, soil, etc. :Damage cost /Damage prevention costs /Contingent valuation method

11. 5.2 Monetary Accounts for Accounting Item forest resourcesForest assetsNon Forest assets AreaVolumeAreaVolumeAreaVolume 1.1Forested land and Standing Volume 411,7532,710,434224,258679,805170,2261,738,656 1.2 Shrub land13,929 1.3 Nurseries225 1.4 Non-stocked forested land 1,988 1.5 4-side plantings28,601 1.6 Scattered trees53,603 1.7 Statistical errors 2 Die-back trees 3 Non-forested land 1,568,5031,254,803313,701

12. 6 The Green GDP Accounting for Forests GDPInclude production of non- market forest goods and services previously omitted from national accounts NDPInclude changes (depreciation/appreciation) of natural forests National wealthInclude value of natural forest assets and carbon storage National saving and comprehensive saving Include changes (depreciation/appreciation) of natural forests

13. (1) In Hainan, the adjusted formula for GDP and Net Capital Formation is as follows: EDP = =C+ CF – CFC – ECh + X – M Where, EVAi is environmentally adjusted net value added for industry i, is EVAi = Oi – ICi – CFCi – ECi = NVAi – ECi Where, Oi, ICi, CFCi,and ECi denote output, intermediate consumption, consumption of fixed capital, and environmental costs of industry i. NVAi is unadjusted net value added. ECh is environmental cost generated by households, C, CF, X, and M denote consumption, capital formation, export and import. (2) Environmentally adjusted Net Capital Formation is ECF = (CF – CFC) – ECc Where, ECc is Natural capital consumption.

14. 7 Results 1 GDP(by production method,or income method) 518.48 1.1 Output of forest cultivation assets 18.58 1.2 Cost of forest assets exhaustion 19.32 1.3 Cost of forest environmental assets degradation 47.98 1.4 GeGDP 517.74 1.5 EDP 469.76 2 GDP (by expenditure method ) 517.73 2.1 Net accumulation of forest assets -3.21 2.2 Net accumulation of forest environmental assets -5.81 2.3 GeGDP 514.52 2.4 EDP 508.71

15. (1) Both of the ratios of cost of forest environmental assets degradation to GDP and forest assets exhaustion to GDP were 3.73% and 9.25% respectively. (2) The ratio of GeGDP to GDP was 99.86. (3) The ratio of EDP to GDP was 90.60%. (4) The ratio of net accumulation of forest assets to GDP was –0.62%. (5) The ratio of net accumulation of forest environmental assets to GDP was –1.12%. (6) The ratio of the cost of forests, which the total cost of forest assets exhaustion and forest environmental assets degradation to GDP was 12.98%.

16. 8 Conclusion (1)It is clear that the depreciation of the forest resources in Hainan Island for a high percentage of the gross domestic product (GDP), was 12.98%. (2)It also proves to be significant to the ratio of GeGDP to GDP in 2000 was 99.86. (3)The net accumulation of forest assets should be raised the to maintain sustainable development. (4)The depreciation in forest resources should be reduced in Hainan Island. (5)some measures should be taken to improve the forest management level and hence to raise the ratio of GeGDP to GDP in Hainan Island in China.

17. Thanks a lot.