Adjusted forest accounts for China

So far there is no unified rule on the incorporation of degradation of envi ronmental capital into national income accounting procedure. Net national p roduct is currently derived by deducting from gross product the depreciatio n of man-made capital only. Deducting depreciation of natural capital in na tional income can provide a better indicator of the 'green' net national pr oduct. The contribution of this paper is to show how one can use two method ologies in deriving 'green' net national product. This paper estimates the depreciation of forest resources in national accounts for China from 1976 t o 1992. The procedure of calculation is described in the paper by valuing t he changes of forest resources. Two alternative approaches are used: the ne t price approach and the user cost approach. By using the net price approac h both physical and monetary accounts are computed to derive forest depreci ation. In the user cost approach 0, 5 and 10% discount rates an used to der ive the depreciation. Measuring sustainability is proceeded by the level of net investment. Both approaches show that the development of the forest se ctor is not sustainable due to the negative net investment. (C) 1998 Elsevi er Science B.V. All rights reserved.