kenya proposal

8/6/2019 Kenya Proposal

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NATURAL RESOURCE ACCOUNTING.NATURAL RESOURCE ACCOUNTING.

A CASE STUDY OF FORESTRY SECTORA CASE STUDY OF FORESTRY SECTOR((Research proposal)Research proposal)

By By Collins Omondi Collins Omondi

University of Nairobi University of Nairobi

KENYAKENYA


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TopicsTopics

Chapter 1 Introduction

Statement of the problem Objectives of the study Justification of the study Background of the Kenyan forests


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TopicsTopics

Chapter 2 Theoretical framework

Empirical literature Overview of the literature


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TopicsTopics

Chapter 3 Conceptual framework

The model Data sources Limitation of study


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IntroductionIntroduction

Kenya economy is heavily dependent onits natural resource base of upto 30

percent of GDP.These includes:- Agriculture Fisheries Energy Water resources, wetlands & marines


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U se of natural resource has:

Enhanced economic growth

but

State of our natural resource and

environment is altered


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Reasons for natural resource depletionand environment degradation include:

-Growth in population-Economic factor

There is need to understand the linkbetween environment and economy


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Kenyas forest stocks generate a widerange of timber and non timber productsand services directly and indirectlybenefiting the population

However, the apparent depletion of somenatural resources has shifted the countryfocus towards sustainable development


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Statement of problemStatement of problemNational income accounting is very importantboth as an analytical and policy formulation tool.

On the other hand, information generated fromthe current national accounts misleads resourceand environmental policies, causingunderinvestment and mismanagement, which

endanger sustainable development.


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This captured data also do not contain acomprehensive valuation of the manynatural resource-based non-marketactivities, for example collection of woodfor household fuel in communal areas.


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The major objective of natural resourceand environmental accounting is todevelop a system of accounts that can

appropriately reflect more, if not allchanges in uses, roles, and capacities of natural resources and the environment interms of their possible effect onsustainable development.


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ObjectivesObjectives of the studyof the study

Study is to establish the value of forestresources in Kenya.


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Specifically the study will:-

To construct the physical resource accounts toaccess the stock, flow and use of the physicalforest assets in the country.

Construct monetary account for the assetaccount to establish values for the various entriesof the physical account.

Provide information on improved measures of economic performance and indicators of sustainable development to improve the designof long term development planning strategies andpolicy formulation.


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Significance of the studySignificance of the study

Will enhance an appreciation of the needto improve SNA by incorporating naturalresource degradation and depletionthrough coming up with the framework for the natural resource accounting in theforestry sector


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B ackground of forests in KenyaB ackground of forests in KenyaForests rank high among the Kenyas importantresources.Closed canopy forests were estimated by theKenya Indigenous Forest Conservationprogramme (KIFCON) of 1991-1994 to cover 1.24 million hectares (2.1 per cent of the totalland area).Recent estimates by U NEP indicate that againsta global forest cover of 21.43 per cent and anaverage for Africa of 9.25 per cent, Kenyasclosed forest cover stands at a critical 1.7 per cent


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Table 1: Vegetation and landTable 1: Vegetation and land- -use cover use cover Type of vegetation % of total area of KenyaIndigenous forests 2.1

Plantation 0.3

Woodland 3.7B ushland 42.9

Wooded Grassland 18.5Mangrove 0.1

Grassland 2.1

Desert 13.7

Farmland and UrbanDevelopment 16.5

Total 100


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Forest Reserves

Type of forest Coverage

-Indigenous 64 %-Non-forest vegetation 25%-Plantation forest 9%

(W ass 1995)


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Study by Price Waterhouse (1997)

Plantations are assumed to occupy not

less than an effective 120,000 hectares.


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Table2. Total Economic value of forestsTable2. Total Economic value of forests

USE VALUE NON-USEVALUE

Direct values Indirect values Option values Existence values

Output that canbe consumed

directly, such astimber, medicine,food, recreationetc

Ecologicalservices, such as

watershedprotection, floodcontrol, stormprotection,carbonsequestration,climatic control,etc

The premiumplaced on

maintainingresources andlandscapes forfuture possibledirect andindirect uses,some of whichmay not beknown now

The intrinsic valueof resources and

landscapes,irrespective of their use such ascultural, aesthetic,bequestsignificance, etc


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Contribution of forests to theContribution of forests to theNational EconomyNational Economy

Forest products and services contribute about11.0 billion shillings to the economy.

Employ 50,000 people directly and another 30,000 indirectly

Contributes about 1.3 percent of the GDP in themonetary sector and 13 percent in the non-

monetary sector ( Emerton and Karanja 2001)


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Direct use values in terms of timber,fuelwood and polewood are estimated atabout KShs 3.64 billion where timber alone accounts for 75 per cent of thevalue.


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It is estimated that 40 percent of largemammals, 30 percent of birds and 35 per cent of butterflies found in Kenya occur inforests ( W ass ( 1995) )

Forests in Kenya are important particularlythrough their linkage with agriculture andtourism, which are the mainstay of nationaleconomy.


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Forest ManagementForest Management

Forest reservesForests in National parks

Forest Gazetted as National monumentsForest on Trust landForest on private land


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Theoretical frameworkTheoretical framework

The idea of adjusting the system of nationalaccounts to incorporate the losses due to theuse of natural resources is closely related to the

concept of sustainability as an indicator of sustainable development.If some capital is used up and not replaced, the

possibilities of future production is decreased asis the case with natural capital which cannot becreated by mankind.


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Economic theory gives two differentapproaches that looks at how much of thenatural capital productive base can beused sustainably. These are:-

-Hartwick Rule

-Weizman (1976) on NDP


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Hartwick ruleHartwick rule

He showed that so long as the capitalstock of an economy did not decline over time, then non-declining consumption waspossible.


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Then net investment is given by

Net investment is greater than or equal tozero, the country can at least sustain itsactual consumption level

Therefore if a country produces a non-renewable resource, non-declining

consumption is possible by reinvesting allHotellings rents from the exhaustibleresources in physical capital

dt dR

dt dK t t N

t !-


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Assumptions Assumptions

Close substitution between the physicalcapital and the natural capital.

The model assumes that an individual onlyderives utility from the consumption of goods and not directly from theenvironment.


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Weitzman (1976) approachWeitzman (1976) approach

We define NDP for an economy with balancedtrade as,

Weitzman proved that (NNP) in any year t isgiven by:

NNP ( t) = W( t)

N t t t I C NDP !


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He argued that a true measure of NDPshould include the value of changes inresource stocks.

The net investment should be definedtaking into account the depreciation in alltypes of capital.


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Assumptions Assumptions

A countrys growth path is optimal

social welfare equals consumption.


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Theoretical approaches toTheoretical approaches toaccount for depletionaccount for depletion

a) The Change in Value Method

b) Total Hotelling Rent as Depreciation

c) The Net Price Method (NPM)

d) The El Serafy Method (ESM)

e) Vincent and Hartwick Approach


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THEORETICAL LITERAT U RETHEORETICAL LITERAT U RESome of the literature reviewed includes:-

Hartwick J (1989) treatment of the nationalaccounts to incorporate exhaustible resourcesas distinct capital goods.El Serafy (1989) critism to the depreciationmethod and instead proposes an alternativeapproach

Andres Gomez (2001) comparison between thenet price method and user cost approach.


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EMPERICAL REVIEWEMPERICAL REVIEW

Mabugu, et al (1998) application to thenatural resource accounting methods in acase study of fuelwood consumption inZimbabwe.

An environmentally-sensitive growthaccounting framework developed andapplied to Ghanas system of nationalincome accounts for the period 1970 to1987 by Baytas A and Rezvani F. (1993).


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EMPERICAL REVIEWEMPERICAL REVIEWHassan et al (2002) study to attempt toaccount for true contribution of forest andwoodland resources to economic well

being in Swaziland using the naturalresource and environmental accountingapproach.


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EMPERICAL REVIEWEMPERICAL REVIEWMabugu and Chitiga (2002) applied someof the theoretical adjustments suggestedin the natural resource accounting

literature to the forest sector in Zimbabwe.


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EMPERICAL REVIEWEMPERICAL REVIEW

Lange G and Wright M (2002) looks at theprocess of wealth transformation for Botswanaas they describe the environmental accounts

which were constructed for Botswana to assesthe value of its mineral assets.

Haripriya (2001) study to incorporate the forestresources into the national accounts for all thestates in India.


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MethodologyMethodology

The structure of the forest resourcesaccounts

a) Physical reso u rce acco unt s Asset accounts

Flow accounts.b ) Mo n e t ary reso u rces acco unt s


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Physical reso u rce acco unt sPhysical reso u rce acco unt s

Asset Account

Provide information about changes andtrends in the state and utilization of forestresources over the period of inquiry.


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Physical reso u rce acco unt sPhysical reso u rce acco unt sClosing Stocks = Opening Stocks net physical

change in standing Timber

Net Physical Change in Timber stocks = Additions

subtractions

Additions = Natural growth and regeneration +New afforestration

Subtraction = economic use (harvesting) + Other reductions in volume (damage factors such asfire, health stress, etc)


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Physical reso u rce acco unt sPhysical reso u rce acco unt s

Flow accounts.Show the flow of the goods and services

provided by forests and woodlands to therest of the economy


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Mon e t ary reso u rces acco unt sMon e t ary reso u rces acco unt sEstablish values for the various entries of the physical and determine the magnitudeof the monetary contributions and state of forest resources

NB: Asset valuation methods are usedrather than the market prices ruling at thetime of transaction which are used to valueflows of costs and benefits.


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D a t a t ype a nd so u rcesD a t a t ype a nd so u rces

Secondary data will be used in this research.The main source of data will be:-

Central Bureau of Statistics (CBS)Forestry department

Kenya Forestry Research Institute (KEFRI)International U nion for Conservation of Nature(IU CN)World Resource Institute (WRI)

ICRAFNational Environmental Management Authority

(NEMA)


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L imi t a t ion s of t he s tud y L imi t a t ion s of t he s tud y

Huge data requirements, which is missingin developing countries.

Environmental accounting needs a morelocalized approach.Valuation of natural assets is also aproblem as many methods exist with noperfect one.


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WorkplanWorkplan Activity Mar Apr May Jun Jul Aug

i). Preparation of proposal

ii). Presentation of proposaliii). Data collection

iv). Data Analysis

v). Report writing


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BudgetBudgetA. StationeryQuantity Unit cost Total cost (KShs.)

i). Laser papers 5 Reams 400.00 2,000.00

ii). Writing pads 10 80.00 800.00iii).Pens 20 10.00 200.00iv). Diskettes 1 packet 200.00 200.00v). Flashdisk 2 1,500.00 3,000.00vi).Photocopying serv. 5,000.00

Total 11,200.00

B . Allowancesi). Research team

2 Research Assistants @1,000 for 20 days 40,000.001 Supervisor @1,500 for 30 days 45,000.00

ii). Transport expenses 10,000.00Total 95,000.00C. Miscellaneous expenses 10,000.00

TOTAL 116,200.00


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T hank you T hank you

kenya proposal

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