ties of such valuation should not be underestimated. In other cases, the valuation problems go far beyond the results of current research.

The interactions among these three sources of forest value—private marketed goods, private nonmarketed goods, and public goods—can be complex. For example, cutting trees leads to increases in manufacturing activity. This in turn might cause an increase in water yields and thereby reduce the costs of industrial and household production. It might also cause a shift of species diversity away from late-seral-stage organisms, such as spotted owls, and toward early-seral-stage ones, such as elk. It would lead to an immediate release of carbon associated with logging and forest products manufacturing, but might result in a long-term increase in carbon sequestration with forest growth if the wood products were sequestered in long-lived furniture or houses. Given the site-specific nature of such production relationships and the lack of current scientific understanding of many of the underlying ecological processes, there is currently an insufficient scientific basis for specifying a full set of such linkages in supplemental accounts.

Incorporation of Forest Values in the National Economic Accounts8

To be most useful, the economic accounts would identify the separable contributions of forests to the national economy. It is convenient to discuss the problems involved in incorporating forest values in the U.S. national economic accounts first for the production accounts and then for the asset accounts.

Adjustments to Production Accounts

A full treatment of forests in the production accounts would involve the following adjustments to national income and product.

Timber income.

Sales of timber are already included, although some are recorded as part of personal income, some as part of manufacturing income, and some as part of government receipts. The principal difficulty is ascribing these income streams to the forest sector; in this respect, the issues are very similar to those encountered in the treatment of mineral incomes discussed in Chapter 3. Ordinary production costs associated with forest production activities are similarly covered by the current NIPA, but may not be easily associated with the forests themselves, rather than forest-products manufacturing. Problems remain with the alloca-


The discussion in this section draws heavily on the recent comprehensive treatment of the subject by Vincent and Hartwick (1997).

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