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What are Rainforests Worth?

What are Rainforests Worth?

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and why it makes economic sense to keep them standing
March 2008

According to the Millennium Ecosystem Assessment, ecosystem services are the “benefits that people obtain from ecosystems”. Forests are like giant utilities providing ecosystem services to the world that we all benefit from but we don’t pay for. Apart from carbon storage and sequestration, they include water storage, rainfall generation, climate buffering, biodiversity, soil stabilisation and more.

Forests are cleared due in part to poverty, but increasingly due to the demands for land to produce commodities like beef, soy and palm oil. Globally, deforestation results in the annual loss of rainforest biodiversity and ecosystem services worth as much as the London stock exchange. Is this loss greater than the value of the alternative uses of the land?

This GCP report assesses the latest information on the value of rainforest biodiversity and ecosystem services and shows that in most cases rainforests are worth more alive than dead.
and why it makes economic sense to keep them standing
March 2008

According to the Millennium Ecosystem Assessment, ecosystem services are the “benefits that people obtain from ecosystems”. Forests are like giant utilities providing ecosystem services to the world that we all benefit from but we don’t pay for. Apart from carbon storage and sequestration, they include water storage, rainfall generation, climate buffering, biodiversity, soil stabilisation and more.

Forests are cleared due in part to poverty, but increasingly due to the demands for land to produce commodities like beef, soy and palm oil. Globally, deforestation results in the annual loss of rainforest biodiversity and ecosystem services worth as much as the London stock exchange. Is this loss greater than the value of the alternative uses of the land?

This GCP report assesses the latest information on the value of rainforest biodiversity and ecosystem services and shows that in most cases rainforests are worth more alive than dead.

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Published by: Global Canopy Programme on Aug 25, 2008
Copyright:Attribution Non-commercial

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In this section we briefly consider more localised ecosystem services, which tend to
be of more direct use to people and so have been the focus of a large body of
literature. Much of the information in this section is taken from Pearce and Pearce
(2001).

3.1. Non-Timber Forests Products (NTFPs)

KEY MESSAGE: Many NTFPs do not enter markets but represent a ‘natural subsidy’
to livelihoods and food security, helping people cope with stresses such as crop
failures. Some, however, generate large revenues when marketed. For instance, the
international trade in NTFPs such as Brazil nuts and rattan is worth $7.5–9 billion per
year, with another estimated $108 billion in processed medicines and medicinal
plants.

The very fact that NTFPs are defined by what they are ‘not’ is indicative of the wide
range of potential products they encompass (Belcher, 2003). A great number of
NTFPs are of importance to people in virtually every forest ecosystem and elsewhere.
These products contribute directly to the livelihoods of an estimated 400 million
people worldwide and indirectly to those of more than a billion (World Bank, 2004).
They include foods, fibres (Box 2), medicinal products, dyes, minerals, latex, and
ornamentals among others. NTFPs can be used directly in consumption or sold to fill
cash gaps.

Box 2. Rattan

Rattan is a scaly, fruited climbing palm that needs tall trees for support. There are around 600 different
species of rattan, of which 20% are of any commercial value. The most important product of rattan
palms is cane from the stem stripped of leaf sheaths. The range of indigenous uses of rattan canes is
vast—from bridges to baskets, fish traps to furniture, crossbow strings to yam ties.

Rattans are almost exclusively harvested from the wild tropical forests of South and Southeast Asia,
parts of the South Pacific (particularly Papua New Guinea), and West Africa. Much of the world’s stock
of rattan grows in over 5 million hectares of forest in Indonesia. Other Southeast Asian countries, such
as the Philippines and Laos, have less rattan but have been relatively self-sufficient due to the
appropriate size of their processing sector.

In the last 20 years, the international trade in rattan has undergone rapid expansion. The trade is
dominated by Southeast Asia, and by the late 1980s the combined annual value of exports of Indonesia,
Philippines, Thailand, and Malaysia had risen to almost $400 million, with Indonesia accounting for
50% of this trade. Worldwide, over 700 million people trade in or use rattan. Domestic trade and
subsistence use of rattan are estimated to be worth $2.5 billion per year. Global exports of rattan
generate another $4 billion.

Indonesia has a clear advantage over other countries, with its overwhelming supply of wild and
cultivated rattan (80% of the world’s raw material), and rattan contributes about $300 million to
Indonesia’s foreign exchange and is an important vehicle for rural development. It also raises the value
of standing forests, as rattan is the most valuable of the non-wood forest products in the country,
earning 90% of total export earnings from such products.

Sampson et al. (2005)

30

The total value of international trade in NTFPs is $7.5–9 billion per year, with another
estimated $108 billion in processed medicines and medicinal plants (Simula, 1999).
Domestic markets for NTFPs are many times larger (e.g. domestic consumption
accounted for 94% of the global output of fresh tropical fruits in 1995-2000).
Although caution must be exercised in drawing conclusions from local studies, NTFP
net values cluster around a few dollars per hectare per annum up to around $100.
However, since there is no way to know at this time how much total area of tropical
forests receives financial benefits from these markets (Scherr et al., 2004), it would be
a serious error to extrapolate these benchmark values to all forest (Pearce and Pearce,
2001). Typically, the higher values relate to readily accessible forest and values for
non-accessible forest would be close to zero in net terms due to the costs of access
and extraction (Pearce and Pearce, 2001).

While such values on their own will not ‘compete’ with many land conversion values,
the importance of NTFPs lies more in the role they play in supporting local
community incomes (Pearce and Pearce, 2001). Vedeld and others (2007) conducted a
meta-review of 54 case studies that measured income from forest products. The
studies are not a representative sample, so their data are merely indicative. Forest
income (averaging $678 a year, adjusted for purchasing power parity) accounted for
about a fifth of household income in the sample – a significant contribution,
particularly for families near the survival line. Wild food and fuelwood were the most
important products, accounting for 70 percent of forest income (although some
products, such as fodder, were probably underreported in the sample). In developing
countries, agricultural crops face many risks and NTFP extraction can provide
insurance against unexpected losses, such as price shocks, seasonal flooding,
unpredictable soil quality, pests, crop diseases, or illnesses (Delacote, 2007). Hence,
NTFPs can play an important role in reducing communities’ vulnerability to climate
change.

Belcher and Schreckenberg (2007) concluded that, “In general, NTFP
commercialisation is less likely to be successful primarily as a means of achieving
conservation. However, it remains a useful means of contributing to improved
livelihoods, particularly of the marginalised forest-dependent poor.”

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