Updating the Woodland Valuation Tool: A review of recent literature on the non-market values of woodlands

Abstract

Woodlands and forests constitute arguably the most diverse environments on earth; diverse not only in terms of the plethora of characteristics and habitats they embrace, but also in terms of the variety of benefits which they offer to people. For centuries forests have been valued as a source of timber for the fibre, construction and fuel industries. However, recent decades have seen a growing appreciation of the value of woodlands, as a source of a much wider array of benefits. Forests are important assets for the sequestration and storage of carbon and, therefore, they play a role in climate change mitigation. Woodlands also contribute to air filtration more generally, removing airborne pollutants and reducing related health risks. Similarly, woodlands help to improve the water environment, providing water purification (enhancing water quality and reducing the costs of treatment) and water regulation (including the reduction of flood risks). Forests also offer highly valued landscapes and views and superb recreational opportunities, in turn generating physical and mental health benefits to visitors. Woodland environments also provide habitat for many of the country’s most treasured flora and fauna, thereby supporting biological diversity, which in turn both enhances the quality of recreational visits and generates benefits for woodland users and non-users, by ensuring the continued existence of species. While this diversity of benefits is widely recognised, incorporating these values into decisions regarding the management and extension of woodland remains a challenge. While the value of some forest products, such as timber, is readily reflected within market prices, this is the exception rather than the rule. Most of the goods and services provided by woodlands have characteristics of public goods. To a large extent, they are not traded through markets and remain therefore unpriced. Benefits such as the removal of pollutants from air and water, flood control, or the provision of biodiversity and habitats are all delivered without the intervention of markets. While these non-market values have been shown to be very substantial, they are not reflected in market prices and, therefore, can easily be omitted from decision-making. The provision of public goods, and in particular their funding from the public purse, has become of central importance to the policy process in recent years. Longstanding recognition of the principle of “public money for public goods” (H.M. Treasury, 2018)1 combined with the regulatory opportunities afforded by Brexit, have resulted in this principle being incorporated into the UK Government’s 25 Year Environment Plan (H.M. Government, 2018)2 and its preparations for a forthcoming Agriculture 2 H.M. Government (2018) A Green Future: Our 25 Year Plan to Improve the Environment, H.M. Government, London, available at www.gov.uk/government/publications and directly at: 3 1 H.M. Treasury (2018) The Green Book: Central Government Guidance on Appraisal and Evaluation, H.M. Treasury, London, available at www.gov.uk/government/publications or directly at: https://www.gov.uk/government/publications/the-green- book-appraisal-and-evaluation-in-central-governent Bill (Defra, 2018)3. While much of the immediate focus of these changes is upon agriculture, the consequences of these changes are likely to have very significant impact upon woodland in the UK. Shifting agricultural support and towards public goods may provide opportunities for farm woodlands, and raise the profile of the woodlands as a major supplier of public goods. As the emphasis upon public goods has risen up the policy agenda, so has interest in the measurement and valuation of those goods. The past five decades have seen the development of a range of methods for estimating the economic value of non-market benefits. These developments have been accompanied by a rapid growth in their empirical application across a range of non-market goods and services. One of the most common foci for such studies has been the valuation of woodland benefits and a substantial, if diverse, literature has accumulated around the world. The UK Forestry Commission has long played a substantial part in the development of this work and in 2015 commissioned a team of researchers to gather together and systematically review relevant studies of the economic value of non-market benefits of woodland (Binner et al. 2015)4. To enhance the use of this review within practical decision-making, the researchers brought the reviewed literature together as a ‘Woodland Valuation Tool’, a spreadsheet-based decision support tool, allowing decision makers to interrogate an assembled database of studies across a substantial range of dimensions designed to inform forest management across the UK. The present report presents an update to that previous work. Specifically, it provides a review of the new literature concerning the economic value of non-market woodland benefits arising since the publication of the 2015 Binner et al. report. This e most recent review of literature has also been integrated into the Binner et al. (2017) report, to produce a more substantive document discussing the most current literature available (Binner et al., 2018). Additionally, an update of the Woodland Valuation Tool is provided, merging these new studies with those reviewed in the previous report. In combination, this is intended to provide up to date decision support for those involved in the management and extension of woodland, who wish to ensure that decisions are based upon an appraisal of the full gamut of benefits, which forests provide.