Economic Valuation of India’s Forest Ecosystem Services

Why in News?

A recent study titled "Contribution of forest ecosystem services in India using a meta-regression approach" has, for the first time, quantified the actual aggregate worth of India’s forests on a national scale.

Key Findings

• Forest Value Distribution - The study estimates that Indian forests deliver ecosystem services worth an average of US$31,001 per hectare per year.

• Service-Type Valuation Hierarchy - Ecosystem services are classified into different categories.
  • Cultural Services (Highest Average Value)- Ecotourism, spiritual and aesthetic value, and recreation.
  • Provisioning Services - Direct material outputs such as Non-Timber Forest Products (NTFPs like medicinal plants, bamboo, honey) generating an estimated Rs. 1.75 lakh crore annually.
  • Regulating Services - Water regulation (priced at Rs. 20,000 crores annually), carbon sequestration, and soil erosion prevention.

Core Challenges

• The study's statistical model reveals that a 1% increase in local population density is associated with an 11.3% decrease in the value of forest ecosystem services.
• Standard national forest statistics treat monoculture timber plantations and natural mixed-species forests equally.
• However, monoculture stands deliver only a tiny fraction of the ecological services (such as water regulation and biodiversity support) compared to natural forests.
• Current compensation metrics, like the Net Present Value (NPV) used during the diversion of forest land for non-forest activities, under-represent the full economic cost of lost regulating and cultural services.
• These massive environmental contributions are completely missing from India's national accounts (GDP calculation), leading to policy decisions that systematically under-price the destruction of natural capital.

Key Recommendations

• Strengthen the Compensatory Afforestation Fund Management and Planning Authority (CAMPA)
• Payment for Ecosystem Services (PES).
• Adopt Green Accounting

Reference

Times of India | Contribution of forest ecosystem services in India