proach, but allows for the possibility that forest managers may deviate from ideal wealth-maximizing behavior. This approach is described in detail in Appendix C. A review of available data indicates that the approach can be readily implemented for the United States using data maintained by the U.S. Forest Service.

Conclusions on Forest Resources

BEA has initiated a useful effort to recognize the economic contributions of forests in the NIPA. Doing so is consistent with a wide international interest in such accounts. The data and methods employed by BEA to date are reasonably consistent with the body of international work in this area. At the same time, data are available for U.S. forestlands that can enable much more complete estimates of net timber accumulation than either those developed to date by BEA or those available in the literature for other countries. BEA could fruitfully work with the U.S. Forest Service in developing annual estimates of net timber accumulation using these data.

This work could also be related to other important values of the forest, particularly recreation and other nonmarket activities. While the data and analytical methods are not yet adequate to provide precise estimates of the value of all forest-sector flows to the economy, nonmarket forest values for the nation as a whole appear to exceed the value of timber by a substantial amount. Many of these forest values (such as recreation or self-produced fuel wood) are best understood conceptually in the context of household production. The household combines specific aspects of the forest resource with household capital and labor to produce valuable nonmarket goods and services. Viewed in this context, forests present many of the same challenges for national accounting as do such important products and services as home-cooked meals and in-home education or childcare. It is therefore logical for BEA to consider these aspects of environmental accounting as part of the larger problem of valuing the contributions of nonmarket activity to economic well-being.

In conclusion, constructing a set of forest accounts is a natural next step in developing integrated economic and environmental accounts. At the same time, it must be recognized that there are many thorny problems involved in forest accounting. Given the available data and methods, the panel concludes that this accounting is a useful next step in developing the IEESA.

Air Quality: A Public Environmental Good

Air quality is one of the most important examples of a public environmental good and thus should be among the top priorities for inclusion in



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