1
More precisely, GDP is the sum of gross value added, plus taxes and minus subsidies on products not included in the value of output (Inter-Secretariat Working Group on National Accounts 1993, p. 6).2
If trade is not balanced, GDP equals the sum of final consumption, savings, and the net trade balance.3
By "economic welfare" (hereafter, "welfare"), we refer to the value, to an individual, household, or population (depending on the scale of analysis), of consumption of market and nonmarket, tangible and intangible, private and public goods and services.4
The distribution of income from forestry production varies from country to country depending on institutional arrangements. In many countries, especially those with government-owned forests, logging companies instead of forest owners capture a significant share of forest rent (stumpage value). Hence, value added in forestry appears unusually low, while value added in logging appears unusually high (operating surplus is inflated by the capture of stumpage value). Combining value added for the forestry and logging industries appears to be the best way to obtain a consistent cross-country measure of forestry production within the framework of the SNA.5
Even for those industries, net value added is not a perfect indicator of sustainability, as it does not reflect changes in human capital.6
By "asset accounts," we refer collectively to the balance sheets and the accumulation accounts in the SNA. The balance sheets indicate the value of a country's assets at the beginning and end of an accounting period, and the accumulation accounts provide detail on the factors responsible for changes in asset values.7
In the face of population growth, the total capital stock must be maintained on a per capita basis.8
See World Bank (1997) for estimates of the value of human-made, human, and natural capital stocks across countries and regions.9
This assumes balanced trade.10
Hence, our framework does not include the oxygen-producing function of forests, as oxygen is not in scarce supply.11
The national accounts contain a provision for imputing the value of consumption of goods of the sort included in (ii), but this provision is often not implemented.12
Note: these last four items added together equal the Change in value of forest capital13
The discounted future marginal rent that is forgone when a unit of a resource is extracted in the current period.14
Calculating the estimate from the net depletion method by using values in the last column of Table 4, instead of directly by subtracting growth from harvest (both equal to 37.9 m3) and multiplying by net price (RM70/m3), yields a value slightly less than zero. This is due to slight differences between growth rates calculated by the derivative of the growth function, q´(t), which is how they are calculated in Table 1, and growth rates calculated by the difference in standing volumes, q(t+1) - q(t). The sum is indeed zero if growth rates are calculated by the latter expression.15
The "net" in conventional NDP indicates that GDP has been adjusted so that net investment in human-made capital (gross investment minus the capital consumption allowance) appears in "consumption plus investment." The capital consumption allowance is frequently referred to as "depreciation" of human-made capital, K (machines, structures, infrastructure, etc.). We have ignored "wear and tear" in K, in order to focus attention on depreciation of the timber stock.16
Weitzman [1997] has provided a formalization for translating price in utils into price in dollars. This allows the analyst to move freely between the accounts, as in a SAM, and a formal growth model representation of the economy under analysis.17
Hartwick [1992] integrated the two terms (compressed them to one term) in one section.18
This approach differs from that in Hamilton [1997], our inspiration for this model.
