Abd. Ghani, Awang Noor

Hussin, Mohamed Zakaria

Ibrahim, Faridah Hanum

Mohamed, Shukri

Mohd, Rusli

Mohd. Noor, Khamaruddin

Muhammed Idris, Mohd Azmi

Othman, Mohd Shahwahid

Universiti Putra Malaysia Institutional Repository

UPM Research Report 1997-2000, Vol II,Section 2-ExtendedAbstractsEconomic Valuation And Accounting Of Forest Resources In MalaysiaAwang Noor Ava. Ghani. Moha. 5hahwahld HJ.Othman. RU511Mohd. 5hukrl Mohamed. Farldah Hanum lbrahlm, MohamedZakarla HU551n.Khamuruddln Mohd. Noor. Mohd Azml Muhammed Idrl5Facultyof ForestryUniversiti Putra Malaysia43400 UPM, Serdang, SelangorMalaysiaTelephoneNumber of Corresponding Author: 03-8946 7167E-mailolCorrespondingAuthor:awang@farr.upll1.edu.myKey words: Economic valuation, resource accounting, nonmarket goods and services, sustainable forestmanagement, rent captureIntroductionForest resources provide multitude of direct and indirect benefits to human such as timber, rattan, bamboo, clean environment,amenity, biological diversity, eco-tourism opportunities, water, wildlife, and so forth. The extent and magnitude of thesebenefits, particularly indirect benefits are still largely unknown or undervalued in terms of monetary terms. This is due to non-existence of conventional market to price the indirect benefits. As such, it is commonly believed that tropical forests areundervalued or underestimate of its potential resource rent (Gillis, 1980; Page, Pearson, and Leland, 1976; Vincent, 1992;Awang Noor, 1994; Repetto and Gillis, 1988; Ruzicka, 1979; liED, 1997). Studies in Malaysia regarding economic valuationof Malaysian forest goods and services are still lacking although many attempts have been made in the past (Awang Noor,Vincent, and Yusuf, 1992; Awang Noor and Mohd. Shahwahid, 1997; Vincent, 1990; Benson, Chee, and Chin, 1996).Undervaluation of Malaysian forest will result the followings: (I) less revenue to the government, (2) unequal distribution ofresource rent, (3) bias against conservation, and (4) increase environmental damage and resource depletion. The estimate ofeconomic value of forest goods and services is one of the important tasks in many applications such as Assessment ofBiological Diversity, Sustainable Forest Management, Resource Accounting, and Project Planning & Appraisal. This will alsofacilitate an analysis of trade-off between alternative forest landuse options (liED, 1997) and in conducting comprehensiveenvironmental economic study for development projects as required in environmental impact assessment (EIA).Materials and MethodsThe methods used in this study involved four main stages: (I) literature review on previous studies and valuation methods, (2)development of theoretical framework and problem formulation, (3) identification of research site and ranking of forest goodsand services, and (4) data collection and analysis. Literature review on previous studies and collection of literature related tothe study was conducted to get basic information on the link between the roles of forest ecosystem and its impact on theenvironment and economic. Relevant secondary data were also identified and collected. The framework of the study was doneto determine in order to approach needed. In this study, the total economic valuation framework was adopted. However,impact analysis was also included as part of the model development. The research sites for this study include several areas: AirHitam Forest Reserve (AHFR), Selangor; Frasers Hill, Pahang; and Kedah. Data collection was carried out using surveytechnique. The quantitative estimates of economic values was carried out based on the type of forest goods and servicesidentified at these sites using appropriate valuation method.Results and DiscussionResults of the study comprise three main projects: (1) Conservation value of Frasers Hill for Bird Watching Activities. Thestudy was conducted in Frasers Hill which is one of the most famous highland areas for bird watching activities. The areaconsists of more than 900 species of seed plants belonging to 120 families. It also includes 36 endemic species. In terms ofavifauna, more than 260 species of birds representing 41% of the peninsula's total have been recorded. The contingentvaluation method (CVM) was adopted and carried out on 209 respondents who visit Frasers Hill using a structuredquestionnaire developed in this study. The willingness to pay (WTP) was solicited from the respondents based on doublebounded dichotomous choice elicitation format. The results show that the majority of the respondents were middle age (meanage 34 years old) with average income of RM2,993 per month. This shows that the respondents (bird watchers) were mostlyfrom the middle-income level. The respondents also were mostly professionals, having college or university education. Theresults ofCVM indicate that the WTP of the visit is RMl2/visiti/year. Based on 49.910 visitors/year, the economic value isestimated at RM574,920.year and the net present value (NPV) is RM5.5 million.(2) The economic value of medicinal plants, in particular tongkat ali (Eurycoma longifoliai was conducted in several areas inGunung Raya, Bukit Perak and Gunung Jerai Forest Reserves, Kedah. The Kedah and Terengganu, From the industrial andcollectors survey, the economic value of medicinal plants per hectare in Gung Raya., Bukit Perak and Gunung Jerai ForestReserve was estimated at RM7, 609, RMI6,945 and RM.4,335 perhare, respectively. The value was estimated using theresidual value technique. The economic value of tongkat ali was found to be RM I ,974, RM321 and RM210 per hectare inGunung Jerai, Gunung Raya and Bukit Perak, respectively. The results show that the economic value of medicinal plants issubstantial and maybe higher than the value of timber resources. The value also varies by site. (3) The conservation value of252Agricultural SciencesAHFR was estimated using CVM on 500 respondents living in various housing estates and villages in Puchong, Seri Serdangand Kinrara. The willingness to pay (WTP) was solicited from the respondents in these housing estates based on doublebounded dichotomous choice elicitation format. The results ofCVM indicate that the WTP to conserve AHFR was estimatedat RM 16 per person per year. The regression results show that the WTP depends on the level of education. Other variablesincluded in the model (income, race, and age) were not significant at the 5 percent level.ConclusionsThe economic value of forest goods and services is important for sustainable forest management and for making decision inthe alternative land use options. The results from this research reveal that the economic value of nonmarket forest goods andservices is substantial and significant. If these values are ignored in forest landuse planning, it might provide wrong decisionto policy makers and would result in policy failure. The failure of the market to reflect true economic value would underminethe growth and development of forestry sector for environmental protection. Future research should focus on how thedistribution of economic value of nonmarket goods and services be captured by various stakeholders.Benefits from the studyThe economic values of forest goods and services were determined and several methods for valuing these were or developed orimproved. This information can be used in project planning where the value of non market goods and medicinal plants aretaken into account in the benefit cost analysis. Currently these values are largely ignored in the preparation of cash flow inproject planning and benefit cost analysis.Patentes), if applicable :NilStage of Commercialization, if applicable:NilProject Publications in Refereed Journals:NilProject Publications in Conference Proceedingsl.Awang Noor, AG., Mohd. Shahwahid, HO, Rusli M, Shukri M, Faridah Hanum I, Mohamed Zakaria H. 2000. Economic valuation of forestgood and services or' Air Hitam Forest Reserve, Puchong, Selangor: Implications on landuse. In: Proceedings of the Langat Basin ResearchSymposium, 2000; p 84-102.2. Awang Noor, AG, Mohd Shahwahid HO, Mohd Azmi MI. 2000. Inventory methods and data needs for economic valuation of medicinalplants: preliminary results from two case studies. In: Proceedings of Medicinal Plants: Quality Herbal Products for Healthy Living, 2000.3. Awang Noor, AG. dan Khamuruddin, MN. 2003. Potensi Hasil Bukan Kayu Hutan Dalarn Progam Perhutanan Tani. In: P3ascasidangDimensi Bam Dalam Pertanian Negara, 2003; p 421-435.4. Awang Noor, A.G. and Mohd. Shahwahid, H.O. 2001. Economic valuation of watershed services. Paper Presented at the Workshop on Non-Timber Forest Products and Services, 1-2 November 200 I, Kuala Lumpur.5. Awang Noor Abd. Ghani. 2002. Conceptual and Analytical Framework for Economic Valuation of Reduced Impact Logging (RIL). PaperPresented at the Seminar on "Penyelidikan Sistem Penuaian Hutan," 17 July, 2002, Sandakan Sabah,6. Awang Noor, A.G. 2002. Managing Socio-Cultural and Economic Aspects Pertaining Usage of Forests. Paper Presented at the 7m AnnualConference on Asia Timber and Foretsry, 25-26 November, 2002, Kuala Lumpur.7. Awang Noor, A.G., Khamuruddin, M.N., Mohd. Shahwahid, H.O., and Rusli, M. 2001. Forestry and Environmental Management in theForestry Sector: Market-Based Instruments and Research Priorty Areas. Paper Presented at the Second Conference for Resource andEnvironmental Economists, Serernban, August 10-11,2001, Seremban, Negeri SembilanGraduate ResearchNameGraduateof Research Topic Field of Expertise Degree Awarded Graduation Year(e.g. (or expected)MSC/Ph.D.)253UPM Research Report 1997-2000, Vol II, Section 2-ExtendedAbstractsMohd Azmi Economic Forestry MSc 2003Muhammed Valuation of EconomicsIdris Eurycomalongofolia(Tongkat ali) andother medicinalplants inPeninsularMalaysia.Puan Chong Economic Wildlife MSc 2004Leong Valuation &perception ofVisitors onProtection ofFrasers Hill forWildlifeIRPA Project number: 01-02-04-0537UPM Research Cluster:AFF254

Economic valuation and accounting of forest resources in Malaysia

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Economic valuation and accounting of forest resources in Malaysia

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