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production, they should be interpreted with caution. First, they include only land managed by the U.S. Forest Service, which is not representative of all forestland. By contrast, on private lands that are intensively managed for timber production, much of the value is due to timber harvesting. Second these estimates do not include all nonmarket values; for example, they omit the potential value of carbon sequestration. A recent estimate is that U.S. forests sequestered 211 million metric tons of carbon in 1992 (Birdsey and Heath, 1995). At $10 per ton, a value consistent with the Intergovernmental Panel on Climate Change (IPCC) estimates of the marginal value of emission reductions (see Bruce et al., 1996), the annual value of carbon sequestration in all U.S. forests would be $2.1 billion; the numbers could be an order of magnitude larger if the U.S. adopted stringent emission controls under the Kyoto Protocol of 1997. Third, the Forest Service presents different types of estimates for the value of forest services, market-clearing prices being only one of these.9
Forests Asset Accounting
A key conceptual problem with the present NIPA is the lack of any accounting for changes in asset values of U.S. forests. Accomplishing this task was part of the Phase II work outlined by BEA (see Chapter 2). We address this issue in some detail for two reasons. First, from a conceptual standpoint, natural-resource assets should be treated consistently with produced capital assets, adding net accumulation or subtracting net decumulation from gross domestic product (GDP) to arrive at a measure of net national product (NNP) more closely associated with a sustainable-income concept. Second, the capacity exists to rectify this omission with respect to the value of forests that is linked to marketed production.
While adjustments in an asset account are conceptually similar to net investment of "made assets," for forests it is more precise to call the change in asset values net accumulation to reflect the fact that, even at constant prices, the asset value of a forest can either increase or decrease. Most generally, net accumulation is defined as the change in an asset
USDA Forest Service (1995) also present estimates based on fees collected (which show much lower value overall and relatively less for recreation and wildlife); willingness to pay, including consumer surplus (which show higher overall values and greater importance for recreation and wildlife); and income generated, including that generated by downstream activities such as lodging and equipment rentals related to forestland recreation (which show the highest overall value). From the perspective of comparability with the current national economic accounts, the methods associated with the discussion in the text are preferable to the other three methods.