Integrating Forest Resource and Carbon Accounting into the Calculation of Gross Regional Domestic Product of Forestry Sector of Blora Regency

Abstract

Forestry sector plays an important role in the economic of Blora Regency.During 2003-2010 period, this sector made significant contribution to the regional economic in term of income, average 14,48% of Gross Regional Domestic Product (GDRP). This figure doesn’t reflect the true contribution of forest resource to regional income and wellbeing because this measure excluded the depletion of the resources to generate the amount of value of product as stated in conventional account using standart and existing accounting framework. The main objective of this study is to develop and use a forest resources accounting framework to correct indicator of economic performance derived from the System of National Account for the true contribution of forestry sector GRDP in Blora Regency, Central Java Province. This study address two components of value creation in forest: timber production and carbon storage. To estimate the value of timber assetss this study applied two valuation methods: the net price and El Serafy user cost methods. The valuation of benefit of forest for carbon sequestration in this study using the damage cost approach, that’s the estimation of the global damage from climate change averted by reducing. The study showed that accounting for net accumulation of timber and carbon stock in forested land was approximately 20,24% of contribution from forestry sector to GRDP during 2003-2010 period. By including the value of timber and carbon depreciation, forestry sector’s share was corrected about 2,87% lower than conventional account.