What does it mean to be worth something? What is the dollar value of a river, forest, or reef? It mean when one report says the Great Barrier Reef is worth A$56billion and another states that it is practically priceless?

This contrast shows fundamentally different ideas of value. To better balance competing priorities in resource management, environmental accounting allows you to recognize and compare multiple sources of value.

It is often crude in practice, but it has been standardise internationally. The scope of its benefits is expanding to include intrinsic, social, and cultural benefits.

We have used environmental accounting to examine the tall, humid forests in Victoria’s Central Highlands. This has allowed us to evaluate the economic arguments for both continuing the native timber harvesting and the creation of a Great Forest National Park. We’ll first explain what environmental accounting is and how it prices trees.

What Value Matters

Environmental accounting is essentially the identification of the environmental contributions to the economy. This is summarize as gross domestic product (GDP). The Australian Bureau of Statistics in Australia standardises these contributions and reports them in the System of National Accounts. The Bureau also produces environmental accounting that provide additional information, such as: water, energy and greenhouse gas emissions.

There are many other things that have value and should be include in calculations, such as positive social and environmental outcomes. This framework allows researchers to examine the value of various ecosystem services, which are the contributions of ecosystems and our wellbeing. It is not limited to goods and services that are include in national or environmental accounts.

Businesses and homeowners pay a fee for water delivery. However, the supplier does not pay for water that enters the dam. Water is an ecosystem service that forests and the environment provide. We can calculate the ecosystem service value of water provisioning by assessing the costs of the water supply industry.

Victoria’s Central Highlands Value Are Worth It

The Central Highlands of Victoria are under attack. There are many claims and counter-claims between those who support native timber production and those concerned about the impact of logging on water supply and climate change.

For the first time, our research has directly compared the environmental and economic values of this ecosystem. It is clear that the creation of a Great Forest National Park is a better investment.

There will be benefits and losses for different groups and people with any changes in land management. These trade-offs can be difficult to assess, especially with inconsistent and patchy data.

We analyzed all available data and calculated the annual contribution of each industry to GDP through careful accounting. These figures were calculate for 2013-14. (There is no market for carbon in Australia’s native forests – more details in a moment.

This is far more than the A$12million native timber production. Timber production is an old industry, but its contribution to regional economies is small.

Primary production is define as agriculture, forestry, and water supply. This classification covers all economic activities and is mutually exclusive. There is no overlap between categories. The downstream uses of products from agriculture, forest, and water supply are important to be consider for all industries. However, they are not included in ecosystem accounts.

The Older Forests Are More Valuable

Clear fell harvesting is used to remove the majority of trees from the site. Slash burning uses high-intensity fires to burn logging residue, and create an ash bed for the regeneration. Regenerating forests are younger and all trees are the same age as before, and they have lower species diversity.

These young forests are less important for biodiversity, carbon storage and water supply, as well as recreation. This means that harvesting native timber will require a compromise between the conflicting activities.

More than 60% of the Central Highlands’ native timber is used as pulp. Plantations with a higher efficiency and greater use of recycled paper can replace this. Both hardwood and softwood plantations can supply substitute sawlogs.

Native forest harvesting would be eliminated, and the losses of A$12million per year to the industry would be offset by increases in water supply value and carbon storage. It would most likely also increase profits in the tourism and plantation timber industries.

Older trees require less water than younger regrowth. Allowing native forests to age would increase supply to Melbourne’s main reservoirs by approximately 10.5 gigalitres annually. This is worth A$8million per year. With projected drops in rainfall and streamflow, security of water supply to Melbourne’s growing population is a concern.

Regrowth Forests Value

Older forests store more carbon than regrowth forests. Although the federal government does not recognize native forest management as a valid activity for carbon trading under its Emission Reduction Fund, carbon credits could be earned by forests worth A$13million per year if they are. This would allow for an affordable and ongoing source of carbon abatement. The money could then use by Australia to reduce its emissions targets. Meanwhile, the Victorian government could benefit from the money to help the industry transition.

Economic benefit is one way to look at land. The Central Highlands are home to a unique flora, fauna and geology that can’t be duplicate (and is in danger). However, careful environmental accounting can help to clearly define the trade-offs between different activities.

This is especially important for legacy industries such as native timber harvesting, which are no longer economically or environmentally sustainable. Accounting reveals the current mix benefits and costs. This allows for a rethink in management.