Eurostat

Team of Specialists on Sustainable Forest Management 4-5 November 2015

EU Forest Accounts – A framework for valuation

Marilise Wolf-Crowther, Eurostat

Eurostat

Context

• What does valuation mean?

• Two international references for environmental accounting published in 2014 as

the System of Environmental-Economic Accounting 2012

• SEEA - Central Framework (SEEA 2012), a standard

• SEEA - Experimental Ecosystem Accounting (SEEA EEA), not a standard

• Classifications

• SEEA 2012 uses national accounts (NACE Rev.2, CPA 2008, ESA 2010)

• SEEA EEA uses the CICES classification of ecosystem services

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Eurostat

How do forest accounts fit into SEEA EEA?

• Provisioning services = the marketed goods and services covered by national

accounts

• Regulating services = the non-marketed goods and services provides for free by

nature

• Cultural services = also non-marketed; most are difficult to assess, except tourism

• Slides produced in 2014 by the European Forest Institute show the fit well

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Forest Ecosystem

Services Forest

Benefits

Provisioning

services

timber timber

firewood/

charcoal wood-based

energy

NTFP food, fodder,

medicine

genetic material product

development

grazing livestock

production

Regulating

services

pollination agricultural

production water flow

regulation hydro-power

production soil retention

and formation sedimentation

control

water cycle

regulation (drinking) water

supply

climate

regulation carbon storage/

sequestration

Cultural

Services

recreation tourism

information and

knowledge research/

education

spiritual &

symbolic

cultural

heritage,

identity,

spiritual/

religious

functions

non-use existence/

bequest

SNA

Production

Account Asset

Account

market benefits:

market goods

produced by

forest activities

directly

measured

through forest

based (i)

market-

production, (ii)

production of

goods for own

final use

directly

measured

through forest-

based cultivated

or non-cultivated

biological

resources that

have an

economic

value

quasi-market

benefits:

contribute to the

production of

market goods in

other economic

activities

indirectly

measured

through non-

forest

(i) market-

production

(ii) production of

goods for own

final use

indirectly

measured

through non-

forest natural

resources (incl

land) that have

an economic

value or other

economic

activities

non-market

benefits: do not

contribute to

goods/ services

traded at

markets

not included not included

SEEA CF

Flow

Account Asset

Account directly

measured

through forest

based (i)

market-

production

(sale/barter), (ii)

all production

of goods &

services on

own account

directly

measured

through timber

resources

directly

measured

through

biological

resources

indirectly

measured

through non-

forest sector

(i) market-

production,

(ii) all

production of

goods &

services on

own account

indirectly

measured

through non-

forest natural

resources (incl

land) that have

an economic

value or other

economic

activities

not included not included

SE

EA

EE

A

Forest accounts in the different systems

Eurostat

Current state of EU forest accounts (IEEAF)

• Conceptual framework (1990s), built on economic accounts for forestry EAF

• Only economic aggregates well reported (since 1986)

• Review for modernisation and streamlining (since 2013) based on policy

developments:

o EU Forest Strategy 2013: new demands on forests due to policy changes

o Council conclusions confirm new demands, plus:

• Improve data on key ecological, economic and social parameters

• Integrate the value of forest ecosystem services in decision-making, and

• Better co-ordination of MS' harmonised forest information

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Eurostat

Revised IEEAF questionnaires: data for many purposes

• Economic aggregates of the forestry and logging industry (e.g. output, gross value

added, etc.)

• Up-to-date, complete estimates of EU wooded area and timber resources, covering all wood fibre

• National accounts need the physical data as a basis for monetary estimates of

• Value of cultivated wooded land, without the value of the trees, required as of

2017

• Value of cultivated growing stock and timber removals

• Physical and monetary supply and use of wood and non-wood forest products

• Output of the forestry and logging industry by type (market, non-market, etc.) and

institutional sector (households, non-financial corporations, government, etc.)

• Carbon stocks and flows of forest ecosystems' biomass and soil 8

Eurostat

Pilot study for new forest accounts

• Deadline 15 October 2015 for the economic aggregates of the forestry and logging

industry; so far 15 EU MS and 5 other countries; lots of questions from MS

• Deadline 15 December for all other tables

• Meeting of the Task Force on 16-17 March 2016

• New ideas to discuss, e.g. defoliation estimates; forecast of wood removed

annually from wooded land

• Document covering all the concepts, to bring together people from different backgrounds and create a common understanding of the national accounting terminology

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Eurostat

Outlook for forest accounts

• Directors of environmental statistics (June 2015) refused to include forest

accounts in Regulation No 691/2011 on European environmental-economic

accounting for now

• Forest accounts work should continue on a voluntary basis

• Raises issues of completeness of reporting

• Relationship to Eurostat's LUCAS field survey on land use and land cover: chance

to compare results

• LUCAS data on wooded land are needed for harmonised carbon reporting on Land

Use, Land Use Change and Forestry (LULUCF) to UNFCCC by the Member States

and the EU.

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Eurostat

Forest accounts are part of forest ecosystem services accounts

• Carbon stocks and flows of forest ecosystems biomass and soil are in the pilot.

Other regulating services that could be added are

• Regulating the flow of water

• Supplying drinking water

• Soil protection, protection against mudslides or avalanches

• Climate regulation, removal of air pollutants

Estimates of the monetary value of regulating services will be challenging.

Many more uncertainties attached.

Eurostat proposes to begin with the provisioning services and to collect data using Eurostat's forest accounts.

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Eurostat

Forest accounts and other Eurostat projects

• Exploring a knowledge innovation project (KIP) for an integrated system for natural capital and ecosystem services accounting based on policies:

• EU Biodiversity Strategy:

– Integrate natural capital into accounting and reporting systems (valuation)

• EU 7th Environmental Action Programme:

– Objective 1: 'protect, conserve and enhance the European Union’s natural capital'

– Objective 5: build environmental knowledge base

• Environment Knowledge Community at EU level to support knowledge base -> EU project on natural capital and ecosystem services

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Eurostat

What do we need for the accounting for ecosystems in the EU?

• We need biophysical accounts

• for direct use

• as a basis for valuation studies, upscaling

• We need an EU data layer of accounts

• reference frame for countries

• data foundation for responding to EU policies

• We need stepwise approach towards a common methodology

=> Knowledge Innovation Project on ‘accounting for natural capital and ecosystem services’

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Eurostat

Working assumptions

• A lot of data are available but not immediately fit for purpose

• Issues are harmonisation, scale and scope, reference dates

• Member States information is currently not always available and would take too long to create

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Eurostat

What is the idea behind INCA?

• The EU needs a data platform to describe the extent, condition, trends in ecosystems and their services

• INCA uses a fit-for-purpose approach based on existing, EU wide data collections (LUCAS, Copernicus, MAES, environmental reporting)

• INCA integrates all available data and makes sure new data fit into the system (-> permanent improvement)

• INCA accounts should be integrated with other accounting systems such as SEEA and SNA

• Member States can link their national systems into INCA

• INCA to respect UN standards

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Eurostat

What is the challenge?

Many different & separate & expensive data collections but not really tailored towards mapping and assessing ecosystems

LUCAS (ground observation)

COPERNICUS (satellite images)

Farm Structure Survey (agricultural census)

Corine Land Cover

Natura 2000 data

Biodiversity monitoring

Forest statistics

Et cetera

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Eurostat

What is the potential solution ?

• A system of nested and connected data sets within a common frame

• Use of models to transfer data into accounts and fill data gaps

FSS

Forest stats

Copernicus Land monitoring In situ coordination

LUCAS Natura 2000/CDDA

Ecosystem mapping (extent)

Ecosystem condition (state)

Biodiversity assessments (monitoring)

Land use/cover data

Ecosystem data

Environmental reporting

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Eurostat

The INCA approach is iterative!

• SEEA-EEA for the methodology

• MAES as important concept and data input

• SEEA and NSA for accounting standards

• Experiments, modelling and stepwise approach

• Over time better adjustment of existing data to ecosystem accounting requirements

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Eurostat

Structure of the INCA project

• Project owner is the Environment Knowledge Community EKC

• EKC is an EU inter-services group involving key environmental data users and providers, i.e. DG ENV, DG CLIMA, DG JRC, DG ESTAT, DG RTD and EEA to strengthen the knowledge base for the 7th EAP

• Knowledge Innovation Projects KIPs have the ambition to close gaps in environmental knowledge adopting an innovate approach

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Eurostat

Timing

• Two phases:

• Phase 1: Feasibility and design phase (mid 2015 – mid 2016)

• Phase 2: Implementation phase (2016 – 2020)

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Eurostat

Tasks of Phase 1

• Data

• Review existing and planned EU wide data collections

• Test the integration of these data sources

• Propose changes to existing data collections and models

• Define minimum data quality standards (e.g. scale and scope)

• System design

• Test modelling approaches

• Understanding the uncertainties incl. error propagation, reducing complexity

• Design a prototype system of (physical) ecosystem accounts in line with UN standards

• Make a plan for an integrated accounting system, to be presented to the EKC for approval for the implementation phase from 2016 until 2020

• Secure the necessary resources from all stakeholders

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Eurostat

What do we want to achieve by the end of Phase 1?

• A blueprint for the future INCA including its limits

• A dialogue with Member States, researchers, policy makers, other users … (MAES delivery workshop in December 2015)

• A reliable estimate of the necessary resources

• A implementation plan until 2020

• A plan for improving the data sources

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Eurostat

Summing up

• Data integration allows making use of existing data

• Expertise and data available with key partners, incl. accounting, monitoring, analysis and modelling

• Gradual adjustment of existing data collections (such as LUCAS 2018) towards a better contribution to ecosystem accounting

• EU level data sets are integrated by EU level bodies – no extra work for MS but opportunity to plug in

• INCA is the EU response to clear EU policy targets of the 7th EAP and international developments

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Eurostat

Questions

• Is there work on integrating different geo-statistical data sets in your country? -> Calibration of INCA

• How do we best integrate MAES with the other EU wide data collections?

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Eurostat

References

• CICES Version 4.3 Common classification of ecosystem services (2013)

• Council conclusions on the new EU forest strategy (2014)

• CPA 2008 Classification of products by activity in the EEC

• ESA 2010 European System of Accounts

• Eurostat-OECD compilation guide on land estimation – 2015 edition

• Innovating for Sustainable Growth: A Bioeconomy for Europe. Communication

from the Commission, 2012

• MAES Mapping and Assessment of Ecosystems and their Services (2014)

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Eurostat

References

• NACE Rev. 2 Classification of economic activities in the EC (2008)

• New EU forest strategy (2013)

• Regulation (EU) No 691/2011 on European environmental economic accounts

(consolidated version)

• SEEA 2012; SEEA-CF System of Environmental-Economic Accounting 2012 –

Central Framework

• SEEA EEA System of Environmental-Economic Accounting 2012 – Experimental

Ecosystem Accounting

• 2008 SNA System of National Accounts 2008

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