1. Global Forest Resources Assessment (FRA) Concepts and classifications related to the valuation of forests

2. FRA - background FAO has a mandate to carry out periodic assessments of the worlds forest resources First assessment 1946, latest assessment 2005. The scope has gradually become wider and classification systems and definitions have evolved over time FRA covers both current status and recent trends (FRA 2010 will cover the period 1990-2010)

3. Current classifications and definitions that relate to valuation Forest, Other wooded land and Other land Forest designation and management Forest characteristics Forest stocks (volume, biomass, carbon) FRA covers both current status and recent trends

4. Forest - definition Current definition is a combination of tree cover and land use. Definition has been stable since 2000 and is now globally accepted. Note that there may be a considerable amount of trees growing on land that is not classified as forest. Land spanning more than 0.5 hectares with trees higher than 5 meters and a canopy cover of more than 10 percent, or trees able to reach these thresholds in situ. It does not include land that is predominantly under agricultural or urban land use.

5. Other wooded land Shrubs and bushes and sub-arctic and mountain dwarf-tree formations Not primarily used for agriculture (e.g. grazing) Do not produce timber, but in some areas provides substantial amount of fuelwood

6. Other land Agricultural and urban areas, barren land May have tree cover – when the tree cover fulfils the threshold values in the Forest definition, it is reported as Other land with tree cover Other land with tree cover may produce timber, fuelwood and wood for other purposes

7. Forest designation and management Designated for production Designated for protection of soil and water Designated for conservation of biodiversity Designated for social services Designated for multiple use Area of Permanent Forest Estate Forest area within protected areas Forest area under sustainable forest management Forest area with management plan

8. Forest characteristics Naturally regenerated forests – Primary forests – Other (with signs of human impact)...of which of introduced species Planted forests...of which of introduced species NOTE, the concept of semi-natural forests have been dropped, as it was mostly suited to European conditions

9. Forest stocks Growing stock (volume of living trees) Biomass stock (above- and below-ground) Carbon stock – in biomass – in dead organic matter – in soil Carbon and biomass stock estimates based on 2006 IPCC Guidelines

10. Specific issues Forest types – has been discussed whether to include or not – difficult to establish a global classification scheme Forest area available for wood supply – was part of FRA 2000 and the European assessments – discarded in FRA 2005 and FRA 2010 as it is very difficult to apply in developing countries, particularly in the tropics.

11. More information… More information and documentation of definitions, classifications, etc. can be found at: www.fao.org/forestry/fra

12. Forest Valuation Issues

13. Classification issues Forest and other wooded landCultivated? Planted forestYes Naturally regenerated forest - Other (with sign of human impact)Yes - Primary forestNo Other wooded landMostly not relevant for timber value Trees outside forestMostly, yes. Statistics on Forest available for wood supply are not collected and are, anyway, largely irrelevant for valuation. Any forest where there has been some human intervention is essentially cultivated and should be treated as such. Primary forest is not cultivated and, as such, currently has no timber value.

14. What can be quantified? FlowsStock QuantityValueQuantityValue TimberYes Yes (with care) CarbonMaybe?Yes? Biodiversityn.a. Maybe (surrogates) ? NWFP (including wildlife)Yes (weak) ?Probably not Landn.a. YesYes (with care)

15. Valuation methodology Market value or expectation (NPV) approach: - Value per ha x number of ha (micro approach) -Will work for countries with good information, developed forest economy, near full production For others (Russia, Congo, Indonesia, Brazil): - Must use a macro approach based on timber harvesting scenarios (which are available) -Vast areas of these forests have no foreseeable timber value Valuation of forest land is largely irrelevant