h18 acc 2009 jö end - boku · "contributions to managerial economics in forestry" by ......

Contributions

to

ACCOUNTING IN FORESTRY

Reader

Essays based on contributions to IUFRO conferences

Accompanying reader to Volume 12 "Contributions to Managerial Economics in Forestry"

by

Hans A. Jöbstl

Schriftenreihe Berichte aus der Abteilung für Rechnungswesen und forstliche Marktlehre

des Instituts für Sozioökonomik der Forst- und Holzwirtschaft an der Universität für Bodenkultur in Wien

Heft 18

Universität für Bodenkultur Wien

2009

Jöbstl, Hans: Contributions to Accounting in Forestry Reader Hans A. Jöbstl. – Wien: Universität für Boden-kultur, 2009 (Berichte aus der Abteilung für Rechnungswesen und forstliche Marktlehre des Instituts für Sozioökonomik der Forst- und Holzwirtschaft an der Universität für Bodenkultur Wien) ISBN: 978-3-900962-83-8

ISBN 978-3-900962-83-8

Copyright © 2009 by Hans A. Jöbstl All Rights Reserved.

Series editor: Univ.-Prof. Hans A. Jöbstl, Chair for Business Economics of the Forest Sector, Department of Economics and Social Sciences, University of Natural Resources and Applied

Life Sciences, Feistmantelstraße 4, A-1180 Vienna, Austria

Foreword 3

Foreword

Accounting is a multifaceted and increasingly important issue for the forest sector. It has been used for ages in management as a tool for gaining informa-tion, supporting control and decision-making both internally and externally. New external and internal demands in addition to developments in information technology and controlling have advanced the role of accounting in the last 40 years. Traditional (i.e. financial and cost) accounting has been successively en-larged by including social, environmental and national accounting.

Forestry accounting, however, has major deficiencies: Periodic changes in forest assets are not recorded, and other achievements, especially with respect to the environment in a wider sense, are not shown adequately, with the consequence that the results are incomplete, incorrect, and, thus, potentially misleading.

New developments in accounting and related topics with a focus on perform-ance measurement, management control and environmental aspects were pre-sented and discussed in several conferences within the framework of IUFRO. However, there is evidence of a widening gap between research and teaching activities and professional practice in accounting and management.

This volume in English contains a number of congress contributions by the author on different topics pertaining to forestry accounting in its widest sense. The collection of these contributions in one volume allows better access to an other-wise limited number of available proceedings in different editions from several countries.

In addition to various essays in English, English summaries of some German articles have also been included as well as background material from meetings of the IUFRO Units "Managerial Economics in Forestry" and "Managerial, So-cial and Environmental Accounting".

The book can be seen as an accompanying reader to Volume 12 "Contributions to Managerial Economics in Forestry", that was published in 1995.

Vienna, 2009 Hans A. Jöbstl

4 Forestry accounting JÖBSTL 2009

Contents

Page

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Presentation of the IUFRO Units "Managerial Economics" and "Managerial, Social and Environmental Accounting" Hans A. Jöbstl, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

E S S A Y S

On the State of Forestry Accounting in Some European Countries Hans A. Jöbstl and James N. Hogg, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Developments in Forestry Business Accounting and Reporting: An International Study James N. Hogg and Hans A. Jöbstl, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Innovations in Forestry Accounting: Integration of Forest Assets and Non-market Environmental Benefits into Management and National Accounting and Reporting Hans A. Jöbstl, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Medium-Term Performance Analysis in Forest Enterprises – A Calculatory Approach Hans A. Jöbstl , 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Dynamic Transition Model – A Concept and Tool for Forestry Planning and Valuation Hans A. Jöbstl, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Forest Assets and Environmental Benefits in Management Accounting Hans A. Jöbstl, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Incorporating Non-market Values into the Accounting Systems of Publicly and Privately-owned Forest Enterprises: An Operative Stepwise Approach Maurizio Merlo and Hans A. Jöbstl, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Can Traditional Forestry Accounting Contribute to Measuring the Sustainability of a Forest Enterprise? Hans A. Jöbstl, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

From Theory to Practice – Gaps and Solutions in Managerial Economics and Accounting in Forestry Hans A. Jöbstl and Maurizio Merlo, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

A N N E X E S

English Abstracts and Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

IUFRO Units on Managerial Economics and Accounting - Meetings and Proceedings 1995 - 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Publication series of the Division for Accounting and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . 123

Nancy 1997 Presentation of IUFRO groups 5

PRESENTATION OF THE IUFRO UNITS "MANAGERIAL ECONOMICS" AND "MANAGERIAL, SOCIAL AND ENVIRONMENTAL ACCOUNTING"*

Hans A. JÖBSTL

IUFRO as the International Union of Forest Research Organisations was founded in 1892 and is now 105 years of age. It is an inde-pendent NGO comprising 724 member ins-titutions from 115 countries around the globe (data end-1996). Its main objective was and is to promote research in forestry sciences around the world. Every 5 years a world con-gress brings together, some 4.000 forest scientists. The latest congress was held in 1995 in Tampere (Finland), while the next congress in 2000 will bring the congress for

the first time to a developing country – Malay-sia. In the inter-congress period the divisions and working units carry out everyday work. Today IUFRO is organised in 8 Divisions – from Silviculture (D1) over Inventory, Growth, Yield, Quantitative and Management Scien-ces (D4) through to Forest Environment (D8) – and these are again subdivided into over-all 63 research groups and 203 working parties (Table 1). Furthermore 5 task forces are addressing interdivisional issues of currently high importance (IUFRO, 1997).

Table 1: IUFRO's divisional structure

Following are some essential remarks on the aims and tasks of IUFRO, which are conse-quently also objectives of the two working units (BUCKMAN, 1995): • to promote international cooperation in forestry related scientific studies, • to facilitate exchanges of information and ideas globally among individual scientists, • to encourage establishment of common research programs and cooperation, • to promote the dissemination and appli-cation of research findings, • to assist forestry research and application in developing countries, and enhance the ca-pacity to conduct such research, * Accounting and Managerial Economics for an En-

vironmentally-Friendly Forestry. Proceedings of the IUFRO-Symposium in Nancy, 20-23 April 1997, Actes et Communications, No. 15 - Versailles 1998, pp. 9-14

• to work toward uniformity of nomen-clature and standardisation in matters such as information storage and retrieval.

Among others, the subsequent means seem particularly suitable to achieve these objec-tives: • Encouragement of communication, • Distribution of newsletters in various forms (with the Internet being a powerful tool for this purpose), • Organisation of periodic conferences and study tours on a variety of scientific and tech-nical subjects, • Publication of conference proceedings, • Fund-raising to assist active participa-tion from developing countries, • Establishment of common research pro-grammes.

IUFRO Division

Research groups

Working parties

D1 Silviculture 9 31 D2 Physiology and Genetics 6 29 D3 Forest Operations and Techniques 9 20 D4 Inventory, Growth, Yield, Quantitative and Management Sciences 6 21 D5 Forest Products 11 24 D6 Social, Economic, Information and Policy Sciences 11 23 D7 Forest Health 4 28 D8 Forest Environment 7 27

Total 63 203


The working group Managerial Economics, which already exists since 1981, has – be-sides being a forum for the exchange of scientific ideas, findings and experiences within the international research communi-ty – the aim to take up present issues of for-est economics, to encourage their discus-sion and thereby to contribute to the solu-tion of economic problems in forestry. A particular mission is assisting the countries in transition in their efforts. The function as bridge between east and west was always of high relevance. Alternating conferences were organised in east and west. Nearly every year a successful meeting took place (Table 2).

The first chairman, Prof. Ruprich, came from Czechoslovakia. The first convention was organised in 1985 in Brno (now Czech Republic) – as contacts between east and west were still very difficult. Easterners could not travel to the West due to political and financial constraints. Particularly some Westerners thought the differences be-tween managerial economics in the eastern planned economies and in the western mar-ket economies were so different, that there

could be virtually no mutual inspiration and understanding. The situation has changed considerably since 1990.

The issues addressed so far and the venues of conferences are also shown in Table 2. We started off in 1985 in Brno with a kind of survey of technical problems and current research efforts, had the first meeting in the West in Austria in 1988 on the evaluation of forest damage. In 1990 considerable west-ern participation could already be recog-nised in the East and finally in 1995 the sessions on accounting established the be-ginning of the new research group account-ing. All the time we dealt with current is-sues: • Planning models and decision support sys-tems • EDP in management and administration • Evaluation of forest damage • Evaluation of non-market benefits • Marketing • Accounting.

More information can be found in the book "Contributions to Managerial Economics in Forestry" (JÖBSTL, 1995).

Table 2: IUFRO S4.04-02 and 4.13.00 – Meetings and Publications

Year Country Title of the meeting / publication

1985 Czechoslovakia Current Problems of Managerial Economics in Forestry 1986 Yugoslavia Monitoring of Environmental Impacts by Forest Management

Planning 1987 Czechoslovakia Production Possibilities of Forests, their Optimal Utilization and

Management of Forest Enterprises 1988 Austria Economic Assessment of the Damage Caused to Forestry by Air

Pollutants / Forest Decline 1989 Hungary Computer-Based Automated Management Systems in Forestry 1990 German Demo-

cratic Republic The Interlacement of Enterprise Management and Forest Management Planning in Forest Enterprises

1991 Germany Evaluation of the Unpriced Social Benefits Provided by Forest Enterprises

1992 Germany Forest Management Planning and Management Science – Guarantors of Sustainability

1993 Russia Forest Product Marketing and Non-market Usage of Forests 1994 Poland Marketing in Forest Enterprises 1995 Finland Accounting and Finance in Forestry and Timber Industries 1996 Scotland Non-Market Benefits of Forestry 1997 France Recent Developments in Accounting and Managerial Economics for

an Environmentally-Friendly Forestry

Nancy 1997 Presentation of IUFRO groups 7

So far the history, and now some words about the future: • Institutional aspects of managerial eco-nomics in forestry, • Managerial economics of forests within nature parks or • Managerial economics in plantation forestry have been defined as prospective topics for the Managerial Economics group by the cur-rent coordinator Prof. M. Merlo. While earlier the members of the group came mainly from Central, Eastern and Northern Europe, it is Prof. Merlo's merit, that the romanic coun-tries of the Mediterranean region and also of South-America are now included and in-volved in the activities of IUFRO working party 4.04.02.

The research group Accounting strives to resume the international activities in for-estry accounting, after some thirty years of inactivity in this field, following the last initiative in the sixties by the successful IUFRO group around Prof. Brabänder. Es-pecially the manifold developments in so-cial and environmental accounting need to be examined, but also the unsolved prob-lem of the valuation of the growing stock or decision oriented accounting issues re-quire further attention.

This group is interdisciplinary and en-compasses essentially the four fields of ex-panded management accounting shown in Figure 1: financial accounting, cost account-ing, social and environmental accounting, and also national accounting.

According to this expansive field it is inten-ded to subdivide the research group into four working parties: Management Accounting, Financial reporting and Tax Accounting, Environmental (and Social) Accounting National Accounting.

Details on the plans and projects and the structure of the group can be seen in the Internet (under the URL: http://iufro.boku. ac.at/iufronet/d4/wu41300/ab41300.htm).

The most important results so far are the current survey on the state of accounting in Europe (and world wide).

It is obvious, that the circumstances in the different countries are highly diverse, espe-cially concerning the legal situation and the manifold influence factors on accounting and the information needs, such as type of ownership, size of forest holdings, organi-sational forms of the enterprises, etc. All this has a major effect on official account-ing. Furthermore the economic situation – the enterprise being profit-oriented or sub-sidised – has considerable impact. In inter-nal accounting there are some common feat-ures, and there we consider that calculatory and decision-oriented accounting, but also reports to the general public, should gain

Figure 1: Components of extended management accounting

Accounting

Financial Accounting Social AccountingEnvironmental

AccountingCost Accounting

Cost Accounting Cost-type Accounting Cost-centre Accounting Cost-unit Accounting Job-order Costing Process Costing Budgeting Standard Costing Supplementary Calculations Key Figures, Internal Statistics

Social Reports Social Balance Sheet Achievement Reports Human Resource Accounting Corporate Social Audit Social Indicator Systems Statement of Net-Value Added Income Distribution Statement

Eco-Accounting Eco-Balance Sheets Life Cycle Analysis Eco-Audit Environmental Reporting Eco-Costing Environmental Impact Analysis Natural Capital Accounting Accounting for Public Benefits

Double-entry Book-keeping Balance Sheet Income Statement Parliamentary Accounting Single-entry Book-keeping Cash Accounting Cash Flow Account Supplementary Books Key Figures, Internal Statistics

Management Accounting


greater importance and be dealt with in the context of international cooperation.

A very important issue – a prerequisite – is the harmonisation in the field of termino-logy. A very important and indispensable starting-point is to ensure that we are talk-ing about the same objects and matters. The standardisation of terminology is also obli-gatory to be able to compare economic data.

In a questionnaire directed to all mem-bers of IUFRO 4.13.00 the members were asked to state their views concerning the fu-ture research programme of the group. As of April 1997 37 members have stated their views so far.

The ranking according to what the mem-bers consider to be topics of particular im-portance and in need of further research at-tention is presented in Table 3.

According to the willingness to actively participate in joint research activities of the research group the topics shown in Table 4 can be considered most important.

A joint research project should essen-tially deal with "Accounting as tool for for-est management", a topic that was favoured by most of the members.

After the joint foundation session in Tampere 1995, both groups have now con-

ducted two meetings together – one in Edinburgh 1996 on non-market benefits and accounting and in 1997 in Nancy – and will also continue the close collaboration in the future. In this year's meeting we are going to discuss recent developments in ac-counting and managerial economics for an environmentally-friendly forestry.

In this sense I hope that this meeting will get us somewhat further and enables us to distinguish the main topics for our future work. I look forward to a fruitful congress and wish you all a pleasant stay in Nancy.

References

Buckman, R.E. (1995): A Guide to IUFRO – The development of the union over the last quarter of the XX century. IUFRO, Wien. 36 p.

IUFRO (1997): IUFRO Annual Report 1996. IUFRO, Wien. 40 p.

IUFRO 4.13.00 "Managerial, social and envi-ronmental accounting" (Internet Homepage) URL: http://iufro.boku.ac.at/iufronet/d4/hp 41300.htm

Jöbstl, H.A. (1995): Contributions to Manage-rial Economics in Forestry. Universität für Bodenkultur, Wien. 119 p.

Table 3: Topics of interest to members of IUFRO 4.13.00

Ranking Topics of interest Importance (0 - max. 5)

1 Cost accounting (Group of topics) 3.82 2 Environmental and social accounting (Group of topics) 3.76 3 Environmental damage and non-market benefits in national accounting 3.71 4 Non-wood forest products and services in accounting 3.69 5 Key-figure systems, ratio analyses 3.57

Table 4: Topics with willingness to collaborate within IUFRO 4.13.00

Place Topics with interest for active collaboration Frequency

1 Non-wood forest products and services in accounting 11 2 Environmental damage and non-market benefits in national accounting 10 3 Assessment of the contribution of forestry to the GDP 8 Reporting accomplishments of forestry 8

5 Performance analysis, performance accounting 7 Recording and valuing changes in growing stock 7 Calculatory assessment of success 7 Eco-balance, eco-auditing, etc. 7

Section 1

ESSAYS

Nancy 1997 On the state of forestry accounting 11

ON THE STATE OF FORESTRY ACCOUNTING IN SOME EUROPEAN COUNTRIES*

Hans A. JÖBSTL and James N. HOGG

Abstract

A survey on the present state of forestry ac-counting in a number of European coun-tries shows disparities mainly in the field of financial accounting/reporting due to a mul-titude of external factors, beginning with the legal environment right through to struc-tural characteristics of forestry in a particu-lar country. The sizes and ownership types of the forest enterprises, their legal forms and taxation of income from forestry are the most important determinants.

Cost accounting as a major internal in-formation source is, in principle however, more homogenous, as the subjective infor-mation needs display greater similarities in the various European countries. Different stages of development have been achieved within the branches of management account-ing. Many forest enterprises do not have any cost accounting, some none beyond that for retrospective statistical information from annual cost and profit accounting, as is fre-quently carried out for accounting data net-works. Prospective, planning and decision-oriented cost accounting and controlling are reported in very few cases.

New demands on information needs lead to new branches of accounting, using estab-lished as well as new tools. Due to these changes, the efficiency of traditional man-agement accounting, where applied, is con-sidered to be decreasing. The variety of pro- * Accounting and Managerial Economics for an En-

vironmentally-Friendly Forestry. Proceedings of the IUFRO-Symposium in Nancy, 20-23 April 1997, Actes et Communications, No. 15 - Versailles 1998, pp. 17-40

1 PELLETER was a member of a working group on book-keeping, installed by the in the Austrian For-est Society in 1931, that tried to give general recommendations for accounting and book-keeping in forestry.

2 WEEBER wrote in 1923: "The person who succeeds in finding a uniform book-keeping and control sys-tem that could be taught as a standard system in schools and universities and be introduced in most of the enterprises, should receive immortal credit. This, however, is not likely to be feasible, due to the great variety in forestry." [translated from the German].

ducts in multifunctional forestry, altered stra-tegic success factors and additional con-straints require modified information tech-nology, as the production process and the interchange relations to the business envi-ronment are getting more complex.

Key words: forestry, financial accounting, cost ac-counting

1 Introduction

Following repeated requests for general re-commendations on forestry accounting (e.g. WEEBER, 19231; PELLETER, 19332), and some initial assays, the first major attempts to harmonise forestry accounting date from the 1950s. Starting at national level, recom-mendations for uniform charts of accounts (e.g. the first recommendation for a chart of accounts adapted for forest enterprises in Austria was published in 1962) and cost centre frameworks were intended to pro-vide a minimum of standardisation, which in the 1960s was also transferred onto the European level. The aim of these efforts to-wards harmonisation was the comparability of profitability data, which was used in reporting on the economic situation of for-estry, and the promotion of accounting tools and cost awareness in forest enterprises.

The IUFRO working group Forest Ac-countancy of former Section 31 (Forest Eco-nomics) was the main driving force behind this initial striving for harmonisation in for-estry accounting, primarily dealing with ter-minology, the conception of forestry charts of accounts and performance accounting (BRABÄNDER, 1996). Also in the 1960s, a group of European forest economists drafted a report on the cost and revenue situation of forestry in seven countries (STRIDSBERG and ALGVERE, 1967).

A new surge in international coopera-tion in the field of forestry accounting was initiated with the sessions of IUFRO S 4.04-02 (Managerial Economics) during the World Congress at Tampere in 1995, which resul-ted in the establishment of a discussion fo-


rum. The problems of forestry accounting will be studied by this newly installed re-search group 4.13.00 (Managerial, social and environmental accounting). Objectives of the group are the exchange of experience, im-provement and, in parts, harmonisation of accounting in forest enterprises.

A prerequisite for this undertaking is seen in an analysis of the present situation in the various countries. This paper will at-tempt to describe briefly the state of forestry accounting in some European countries, to compare important characteristics and in-fluence factors, and to emphasise new devel-opments and advances towards new meth-ods and instruments.

As compared to externally oriented and legally determined financial accounting, which is comparatively well documented and provided most of the material in the survey, management accounting – decision-oriented preparation of economic information – which is the main concern of the ongoing efforts, has been somewhat neglected up to the pre-sent. Particular attention is given to the treat-

ment of growing stock and consideration of growing stock changes in forestry account-ing.

Besides the analysis of the current state, the harmonisation or accordation of termi-nology (earlier attempts by IUFRO; ABETZ, 1963) – as basis for any joint work, further comparisons and harmonisation of profit-ability surveys – is going to be one of the issues the new IUFRO research group will have to deal with. Due to the structure of for-est holdings with many small and medium sized forest enterprises and few companies, a harmonisation or even standardisation of financial reporting in forestry is of little rele-vance for forest business economics. From the viewpoint of managerial economics the improvement and development of tools and techniques in forestry accounting are issues of greater significance for activities involv-ing international cooperation. It should be possible to improve accounting by observ-ing how other countries are reacting to prob-lems, which may not differ markedly from the situation in the observer's home country.

2 Overview on forestry accounting

In order to be able to describe and analyse the present situation of forestry accounting in different countries a comprehensive mo-del with four principle branches of manage-ment accounting, shown in Figure 1, was

devised as the ideal and visionary concep-tion. In addition to the traditional compo-nents of management accounting – finan-cial and cost accounting –, this broad con-ception includes recently much discussed

Figure 1: Components of extended management accounting

Accounting






Double-entry Book-keeping Balance Sheet Income Statement Parliamentary Accounting Single-entry Book-keeping Cash Accounting Cash Flow Account Supplementary Books Key Figures, Internal Statistics



social and environmental accounting. This (ideal) model was the yardstick

used in the questionnaire of the survey on the state of forestry accounting in 21 coun-tries in 1996. Coming straight to one of the general conclusions, only a few elements and instruments specified under cost, social or environmental accounting were found to be in operation in forestry enterprises.

3 Materials and Methods

The following elements created the basis for studying the current situation of forestry accounting in the different countries3: • Survey – essentially based on the ques-tionnaire Starting from the comprehensive view of management accounting mentioned above, basic data on forestry accounting from 21 countries (world-wide) was recorded by means of the questionnaire distributed. • Survey of literature The survey of relevant literature is limited to publications that are written in for us comprehensible languages (essentially pub-lications in German, English or French) and available (either directly in Austria or, in isolated cases, supplied by members of the research group). Due to the business economics tradition, the material in Ger-man is comparatively extensive, whereas, for example, Anglo-American economists are traditionally largely involved in micro- and macro-economics. • "Research on-the-spot" – Case studies Many aspects cannot be explained by solely studying the available literature and analysing the results of the questionnaire. Visits to study solutions on the spot and discuss situation and concepts with experts and users of accounting informa-tion are indispensable.

4 Comparative aspects in forestry accounting

If forestry accounting were identical in all countries of the world, there would be little point in studying the comparative, interna-tional issues of forestry accounting. The fact is that this is not the case and this consti-tutes the raison d'être for the following analysis of influence factors, state and im-plications of the present diversity in for-estry accounting.

4.1 Analysis of important influence factors on the organisation of accounting

According to NOBES and PARKER (1995) general accounting identifies four groups of influence factors and reasons for interna-tional differences in accounting:

The differences in accounting are hence not accidents of history, but induced by dispari-ties in the economic, legal and social envi-ronment. The variance can therefore be de-scribed by referring to the socio-economic context (MACHARZINA, 1981; NOBES and PARKER, 1995). Among others, the influ-ence factors shown in Overview 1 can be identified in detail.

4.2 Influence factors on the organisation of forestry accounting

For forestry accounting we consider the fol-lowing influence factors particularly relevant and significant for characteristic variances be-tween different countries (see also Figure 2):

ForestryAccounting

Forestrytradition

Law Generalaccounting

Ownershipstructure

Forestry –

Wood industry

Sizes of for-estry holdings

Figure 2: Influence factors on forestry accounting

Influence factors and reasons for international differences in accounting

• Culture and historical development • Politics• Legal system• Economy

3 This research is partly integrated into

our contribution to an international HCM-project on "Economics of marginal and mountainous areas and forest-timber environment systems", where our sub-project "New solutions in accounting of forest enterprises" is funded externally by the Austrian FWF (Fonds zur Förde-rung der wissenschaftlichen For-schung).


Significant influence factors on forestry accounting

• Ownership structure – Categories of owners – Legal types of business organisation • Size of forestry holdings (general structure, joint ownership, …) • Forestry tradition (sustainability, investment, forest enterprise – silviculture enterprise, ...) • Development of national economy (importance of forestry for the national economy, …) • Forestry – Timber Industries (integration, delimitation, sale of cut or standing timber, …) • Law (esp. accounting law and tax law) • General accounting (tradition, basic accounting principles, ...)

Important influence factors on forestry ac-counting as shown in Figure 2 include the structure of forest ownership and the size structure of forestry holdings as well as other features of the socio-economic environment, in this context especially the development of the national economy, business econo-mics and forestry tradition and relevant de-crees and laws.

It is important to note that from the 45 countries in Europe only general data on forest area, standing volume and annual re-movals are available from all countries (UN-ECE/FAO, 1992; KUUSELA, 1994). Socio-economic data on characteristics, such as forest ownership, number and size of forest enterprises, are lacking from many states. Only from six European countries (Aus-tria, Finland, France, Germany, Great Bri-tain, Switzerland) do we possess sufficient data on relevant influence factors and de-tailed information on forestry accounting and from a further 10 European countries

we have some information. The following analysis will therefore be essentially based on those six countries yielding adequate information and will give more general overviews concerning the other countries.

Actual figures for some of the influence factors mentioned, such as the relative pro-portion of forest area, the forest ownership structure and the size structure of forest holdings, are shown in Figures 3-5. The il-lustrated criteria are only indicators, as the relevant data on the effective influence fac-tors – for example, for the obligation to keep books, the rateable [tax] value, turn-over or profit – are not available.

Figure 3 shows the percentage of forest land in regard to total land area for the six countries analysed in this paper. The UK with merely 9 % forest cover is one of Europe's tail-lights concerning forest percentage, while Finland with 66 % is at the other end of the scale Europe's relatively richest land concerning percentage of forest cover.

Overview 1: Influence factors on general accounting (expanded and modified, NOBES and PARKER, 1995)

General influence factors on accounting

Culture Politics Law Economics

Historical development Government intervention

Legal system (statute – common law)

Planned economy – Market economy

Attitude towards accounting

International unions and treaties

Institution for standard-setting

Accounting theory

Status of accounting in public

Influence spheres (former colonies, ...)

Accounting law Sources of finance

Property – forms of ownership

Centralism, Dirigism Tax law Position of information addressees

Acceptance of state interference

Type of business organisation (law)

Accounting education


Figure 3: Percentage of forest land in regard to total land area in six European countries (KUUSELA, 1994)

The forest ownership structure of the six countries reviewed is shown in Figure 4. Whereas in Switzerland 68 % of the forest area is owned by the state, local communi-

ties or other regional authorities, this per-centage of publicly owned forests drops to 58 % in Germany, to 43 % in the United Kingdom, to 27 % in France, to 26 % in

Figure 4: Forest ownership structure in six European countries (KUUSELA, 1994)

57%

73%

32%42%

82%

65% 62%

45%

3%

6%

43%

27%

68%58%

18%26%

34%49%

9%

0%

20%

40%

60%

80%

100%

UK France SwitzerlandGermany Austria Finland Average 6 Europe(excl. Ex-

SU)

Pe

rce

nta

ge

of

tota

l fo

rest

are

a

Private forests % Industrial forests % Public forests %

Country

9%

23%28% 30%

47%

66%

33%

27%

0%

10%

20%

30%

40%

50%

60%

70%

UK France SwitzerlandGermany Austria Finland Average 6 Europe(excl. Ex-

SU)Country

Per

cen

tag

e o

f to

tal

lan

d a

rea

14,1

41,4

69,9

31,7

6,66,52,7 3,1 4,09,5

1,50

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

Netherlands France* Luxemburg Portugal* Austria Norway

0

10

20

30

40

50

60

70

<5 ha 5-20 ha 21-50 ha 51-100 ha 100-500 ha >500 ha Average size of private (incl. industrial) forest holdings

*Partly regrouped

Av. size of private forest holding [ha]1000 ha

Switzerland Belgium Germany* Denmark* Finland Sweden

Figure 5: Size of forestry holdings in European private forestry (UN-ECE/FAO, 1992)


Finland and finally to only 18 % in Austria. Therefore on average more than 60 % of the forest area in the six countries is pri-vately owned.

Figure 5 shows data on the size of pri-vate (incl. industrial) forestry holdings for all European countries, where such infor-mation is made available. Considering the average size, the Scandinavian countries have the largest entities, while the Nether-lands and Switzerland have the smallest. En-terprises larger than 500 ha comprise a con-siderable proportion of forest land in Swe-den, Finland and Austria.

5 Analysis of specific aspects/character-istics of forestry accounting in differ-ent countries

As mentioned above, the six countries (Austria, Finland, France, Germany, Great Britain, Switzerland) that will be compared in the following sections and tables have been chosen due to accessible and – com-paratively – well prepared information on forestry accounting. Apart from Finland, forestry in these countries is characterised by a general absence of industrial forest ownership characteristic for North America, Australia and other parts of the world. Re-garding other aspects, such as forest area, yield, ownership structure, size of forestry holdings and forestry accounting, the six countries are diverse. 5.1 General

Starting from a more general description of the influencing factors, certain characteris-tics of forestry accounting are described. In the section dealing with financial account-ing (accounting as prescribed by law), spe-cial reference is made to the aspects of le-gal obligations for accounting, forestry spe-cific recommendations for charts of accounts, methods of financial accounting used in for-est enterprises, the treatment of growing stock and its changes according to law, and some other relevant and specific aspects of financial accounting.

The focus of the research is, however, in the field of the internal information sys-tem. Due to the more harmonic information needs in forest enterprises across Europe the situation of cost accounting corresponds more closely than that of financial account-

ing. Nevertheless, there are some differences in methods and instruments, due to diver-gent business economics traditions or dif-fering characteristics of forestry.

In nearly all countries social accounting and especially environmental accounting are regarded with increasing interest and are becoming more and more relevant for forestry. Besides adapting concepts applied in accounting of industrial enterprises, spe-cific methods for integrating the non-mar-ket outputs of forest enterprises are being developed (e.g. MERLO and JÖBSTL, 1997).

5.2 Forest environment and general accounting

Overview 2 contains some key figures char-acterising forestry in the six European countries with emphasis on those characte-ristics that are considered important in re-spect to forestry accounting. In addition, Overview 2 outlines the distinctive attributes of general accounting.

Criteria describing the relevant aspects of forestry are the forest area, growing stock, annual increment, ownership structure, ave-rage size of private forestry holding, and the number of private forest holdings larger 100 ha and their relative proportion of the overall forest area. Due to the data prob-lems caused by, for economic purposes, in-sufficient statistics, the factors compared in Overview 2 are only indirect criteria for those value or turn-over related determinants influencing accounting directly.

The features of general accounting are described under the headers: "principles", "charts of accounts", "relationship of ac-counting and business economics", and "stan-dard-setting institution".

Principal differences can be seen, in particular, between the German-Austrian (or even continental) approach to account-ing and the Anglo-American approach. The emphasis of the various accounting princip-les is entirely different: prudence vs. true and fair, form vs. substance, etc. (NAIR and FRANK, 1980).

Overview 3 shows that the principles of financial accounting and the professional and legal environment of accounting are very similar in Austria and Germany, due to much of the basic legislation originating from the 1930s and 1940s. France's finan-cial environment was also influenced strongly


Infl

uen

ce F

acto

rs

Asp

ect

Au

stri

a F

inla

nd

F

ranc

e G

erm

any

Gre

at B

rita

in

Swit

zerl

and

K

EY

FIG

UR

ES

/ I

NF

LU

EN

CE

FA

CT

OR

S –

FO

RE

ST

RY

F

ores

t ar

ea [

m h

a, %

] 3.

9

(47

%)

20.1

(6

6 %

)13

.1

(23

%)

10.5

(3

0 %

) 2.

4

(9 %

)1.

2

(29

%)

Gro

win

g st

ock

[m

³/ha

] 29

0 76

13

9 27

0 92

33

3 In

crem

ent

[m³/

ha/a

] 6.

6 3.

6 5.

5 6.

5 5.

1 5.

5 P

ub

lic f

ores

ts [

%]

18 %

26

%

27 %

55

%

43 %

68

%

Ind

ust

rial

for

ests

[%

] 0

%

9 %

0

%

0 %

0

%

0 %

P

riva

te f

ores

ts [

%]

82 %

65

%

73 %

45

%

57 %

32

%

Av.

Pri

vate

hol

din

g [h

a]

14.1

28

.0

2.6

6.5

n.a.

1.

5 P

riva

te e

stat

es >

100

ha

[Num

ber,

% o

f pr

iv. e

stat

es;

m h

a, %

of

priv

ate

fore

sts]

2,

750

(1

.2 %

) 1.

8

(57

%)

17,0

00

(6.2

%)

2.7

(2

3 %

)

9,

300

(0

.3 %

) 2.

4

(25

%)

2,

450

(0

.6 %

) 1.

3

(35

%)

n.a.

Publi

c for

ests

1,65

6

(43

%)

0.7

(9

0 %

) G

EN

ER

AL

AC

CO

UN

TIN

G

Acc

oun

tin

g p

rin

cip

les

(fol

low

ing

LA

WR

EN

CE,

1996

; NO

BE

S a

nd P

AR

KE

R,

1995

)

Princ

iples

of p

rope

r bo

ok-k

eepin

g (G

oB);

pr

uden

ce, u

nifor

mity

, co

nser

vativ

ism,

auth

orita

tiven

ess

("Maß

gebli

chke

it")

Auth

orita

tiven

ess:

de

pend

ence

of

taxa

tion

on co

m-

mer

cial a

ccou

nts;

inc

ome

state

men

t pr

edom

inant

Prud

ence

; ce

ntrali

sed,

focu

sed

towa

rds n

ation

al ac

-co

untin

g (m

odula

r SN

A);

unifo

rmity

Princ

iples

of p

rope

r bo

ok-k

eepin

g (G

oB);

pr

uden

ce, u

nifor

mity

, co

nser

vativ

ism,

autho

ritati

vene

ss

("Maß

gebli

chke

it")

Fairn

ess (

true

and

fa

ir vie

w), r

eleva

nce,

co

nsist

ency

, sub

s-ta

nce

over

form

; fle

xibilit

y

Flex

ibility

; fai

rnes

s (tru

e an

d

fair

view)

Bu

sin

ess

econ

omic

s

trad

itio

n (

ZA

MB

ON

, 199

6)

Stro

ng b

usine

ss

econ

omics

trad

ition;

clo

se re

lation

ship

ac

coun

ting

– bu

si-

ness

eco

nom

ics

For a

long

time

Ger-

man

influ

ence

pre

-do

mina

nt, n

ow A

nglo-

Amer

ican

influe

nce

Busin

ess E

cono

mics

Th

eory

; Exp

endit

ure-

Reve

nue-

Theo

ry

Relat

ive a

bsen

ce

Stro

ng b

usine

ss

econ

omics

trad

ition;

clo

se re

lation

ship

acco

untin

g –

busi-

ness

eco

nom

ics

Relat

ive a

bsen

ce;

indep

ende

nt d

evelo

p-m

ent o

f acc

ount

ing

(NAP

IER,

199

6);

acco

untin

g as

pro

-fe

ssion

Stro

ng b

usine

ss

econ

omics

trad

ition;

clo

se re

lation

ship

ac

coun

ting

– bu

si-ne

ss e

cono

mics

Rec

omm

end

atio

ns

for

char

ts o

f ac

cou

nts

(R

ICH

AR

D, 1

995a

, b)

ÖPW

Z (B

alanc

e

shee

t prin

ciple)

; re

sear

ch in

stitu

te

of a

udito

rs a

nd

acco

unta

nts (

Bal-

ance

shee

t prin

ciple)

No g

ener

al re

com

men

-da

tion,

char

ts m

ay

follo

w eit

her p

rincip

le;

form

at o

f inco

me

state

-m

ent is

stan

dard

ised

Plan

com

ptab

le gé

n-ér

al (P

CG, B

alanc

e sh

eet p

rincip

le); a

dap-

tatio

ns fo

r bra

nche

s of

indus

try (o

bliga

tory

)

Gem

einsc

hafts

kont

en-

rahm

en (G

KR,

Proc

ess p

rincip

le);

Indu

striek

onte

n-ra

hmen

(IKR

, Bala

nce

shee

t prin

ciple)

—

Proc

ess p

rincip

le

Sta

nd

ard

-set

tin

g

inst

itu

tion

Le

gislat

ion

(Par

liam

ent)

Legis

lation

(P

arlia

men

t) Le

gislat

ion

(Par

liam

ent),

na

tiona

l acc

ount

ing

coun

cil (C

NC)

Legis

lation

(P

arlia

men

t) Pr

ivate

stan

dard

se

tting

(acc

ount

ing

asso

ciatio

ns) a

nd

legisl

ation

Legis

lation

and

pr

ivate

org

anisa

tions

(a

ccou

nting

ass

ocia-

tions

)

O

verv

iew

2:

Fore

stry

and

ge

nera

l ac

co

untin

g


in this period and the striving to avoid an-other depression, as in the 1930s, led to a very centralised and strictly regulated ac-counting environment. Accounting in Fin-land – including the legal framework – was strongly influenced by accounting theories and, for a long time, in particular by Ger-man accounting theories. Switzerland has always aimed to provide a flexible financial environment in order to attract international companies. Similarly in Great Britain, where state interference was strongly resisted in the economic environment. (NOBES and PARKER, 1995)

The relative position of the six countries within the influence-triangle practice-legis-lation-business economics is shown in Fig-ure 6. On the one hand the difference be-tween the Continental European and the Anglo-American traditions can be discerned, on the other hand it is also obvious, that there are major differences within Continen-tal European accounting.

5.3 Financial accounting in forest enter-prises

5.3.1 Legal obligations for financial ac-counting

One of the most obvious distinguishing cri-teria of financial accounting in forestry en-

terprises is the differing influ-ence of account-ing law or tax law. As shown in Overview 4, European coun-tries can roughly be grouped in

two categories: Firstly, those countries where accounting for agricultural and forest enter-prises is regulated in specific sections of the tax legislation. Forest enterprises greater than a specified value or judged by turn-over re-lated criteria are here obliged to keep re-cords and larger ones to use double-entry book-keeping. The second group comprises a greater number of countries, where account-ing for forestry enterprises is not regulated differently from other business entities. In this latter group book-keeping is frequently only obligatory for those forest enterprises that are either owned by the public (state, regional authorities, …), commonly owned (jointly-owned forests) or are organised as a company.

Overview 5 shows the sources and re-gulations for financial accounting for forest enterprises in the six European countries dealt with in this study in detail. Frequently tax legislation is the primary source for re-gulating accounting in forest enterprises.

In both Germany and Austria there are specific criteria for recording and book-keeping requirements of forest enterprises. Although the criteria and the legislation are very similar, the category of forest enterpri-se, as related to surface area, affected by the book-keeping obligation is quite dis-tinct. While in Germany the book-keeping obligation for forest enterprises already commences with an area of 250 to 300 ha, the book-keeping obligation for Austrian forest enterprises does not start below 700 ha on average4. In Germany over 1.000 forest enterprises are obliged to keep books (SPEIDEL, 1981), whereas in Austria ap- 4 The higher limits have come into operation fol-

lowing the 1994 amendment of the Austrian federal tax law (Bundesabgabenordnung). Before 1994 the book-keeping limits in Austria were similar to the German limits, obliging forest enterprises from 250 - 300 ha upwards to keep books. Enterprises with a rateable [tax] value and turn-over beneath the book-keeping limits are obliged to keep records of receipts and payments.

Figure 6: Relative position of the six countries within the influence-triangle of accounting

Overview 3: Grouping/Ranking related to financial accounting

Authoritativeness Uniformity

Flexibility Fairness

Germany France Finland Switzerland Great Britain

Austria

Legalism Associationism


prox. 200 (reverse estimation from the rate-able [tax] value statistics published by ÖSTAT, 1993) are legally required to keep books.

In France and Great Britain a simple recording obligation is determined by the value-added tax legislation. The criterion to be registered for value-added tax is turn-over. Beyond this there are virtually no ob-ligations for forest enterprises owned by a sole proprietor. The latter is also true for forest enterprises in Switzerland, although, in order to be eligible for grant funding, re-cords must be maintained. In Finland all enterprises subject to the so-called "forest tax", which is levied on the surplus of re-ceipts, have to keep records on payments and receipts. In all countries there are addi-tional recording and book-keeping require-ments for companies, societies and other types of business organisation prescribed in the commercial code or in corresponding legislation (see Overview 5).

In certain countries (as shown in Over-view 6) accounting and taxation are closely interlinked, whereas in others they are strictly independent. Where accounting is regulated in tax legislation, the accounts will be drawn up according to tax laws, which frequently have rigid schedules for the computation of values, depreciation, etc., allow certain deductions, and are usually governed by a maximum expenditure and minimum income postulate. If the tax ac-counts and the commercial accounts are de-pendent (authoritativeness, "Maßgeblich-keit"), the commercial accounts will reflect the striving for low taxation and the eco-

nomic information of the statements of accounts will be limited. The accounting princi-ple of the "true and fair view" is severely impeded. Countries with such a dependence are essentially Ger-many and Austria, but also, less rigo-rously, Finland, France, Sweden and others.

Although ac-counting in forest enterprises may be re-gulated entirely in tax law, the general accounting legislation and the commercial code will have considerable influence on reporting principles, valuation matters, etc. and can hence be considered of subsidiary importance. This general framework is in-creasingly influenced by European and inter-national harmonisation. (KÜTING and HAYN, 1994)

Since the early 1970s the European Union has attempted to implement a certain degree of uniformity in the presentation of financial accounts of registered companies (SCHMITZ, 1988; NIEHUS, 1993). Means of this harmonisation were several directives5 that were implemented in the commercial and accounting laws of the European Union member states. These changes affect only few forest enterprises directly, but others will be influenced indirectly by the changed accounting environment (for example, a new recommendation for a chart of ac-counts, as in Austria). In future the Euro-pean Commission is going to collaborate closely with the International Accounting Standards Committee (IASC) to reach further harmonisation of company accounts.

5 Of altogether 13 EC-directives on companies the

4th directive from 1974, regulating format and rules of accounting, and the 7th directive from 1978, regulating consolidated accounting, are considered to be of greatest relevance for general accounting. The implementation in national legislation was car-ried out during the 1980s. A multitude of options in-sured the continuation of traditions and prevented a general standardisation.

Overview 4: Obligations for book-keeping in forest enterprises

Obligation to keep books in forest enterprises

Specific legal rulings regulating book-keeping in forest

enterprises – Additional rules for companies, etc.

Regulation solely by general accounting legislation; or book-

keeping obligatory only for companies, etc.

Austria Bulgaria (Netherlands) Finland Czech Republic Poland Germany Denmark Russia (France) Slovakia (Great Britain) Sweden Hungary Switzerland Italy

() In countries in brackets forest enterprises are usually not obliged to keep any books


O

verv

iew

5:

Ob

liga

tions

to k

ee

p re

co

rds

and

bo

oks

in s

ix Eu

rop

ea

n c

oun

trie

s

P

rim

ary

lega

l sou

rces

an

d r

egu

lati

ons

of r

ecor

din

g an

d b

ook

-kee

pin

g ob

liga

tion

s in

for

est

ente

rpri

ses

Tax

legi

slat

ion

Cou

ntr

y R

ecor

din

g ob

liga

tion

s B

ook

-kee

pin

g ob

ligat

ion

s C

omm

erci

al c

ode

Oth

er le

gal s

ourc

es

Au

stri

a Fo

r agr

icultu

ral o

r for

estry

en

terp

rises

: [L

ump-

sum

(< 9

00,0

00 A

TS

rate

able

[tax]

value

)] Re

gist

ratio

n of

Rec

eipts

and

Pa

ymen

ts (9

00,0

00 -

2 m

ATS

ra

teab

le [ta

x] va

lue)

For a

gricu

ltura

l or f

ores

try e

nter

-pr

ises,

doub

le-en

try b

ook-

keep

ing

abov

e:

Turn

-ove

r >

5,00

0,00

0 AT

SRa

teab

le [ta

x] va

lue >

2,0

00,0

00 A

TS(B

AO (§

125

))

For e

nter

prise

s ent

ered

in th

e

regis

ter o

f com

panie

s and

priv

ate

trusts

, dou

ble-e

ntry

boo

k-ke

eping

is

pres

cribe

d by

the

com

mer

cial c

ode

(HGB

). Th

e com

merci

al ac

coun

ts ar

e also

the

basis

for t

axat

ion (M

aßge

blich

keit)

(§

5 E

StG,

§ 1

24 B

AO)

Exte

nded

acc

ount

ing re

quire

men

ts

for j

oint s

tock

com

pani

es a

nd lim

ited

liabi

lity

com

pani

es

for c

oope

rativ

es: a

ct on

coop

erat

ives

for j

oint

ly-ow

ned

fore

sts:

gen

eral

statu

tory

obli

gatio

n to

keep

reco

rds

Fin

lan

d

Fore

st ta

x for

farm

ers a

nd sm

all

wood

lands

bas

ed o

n pa

ymen

ts

and

rece

ipts

C

omm

ercia

l cod

e Co

mm

ercia

l cod

e fo

r reg

ister

ed

com

panie

s and

trad

ers

For i

ndus

trial

fore

sts

com

mer

cial

code

, cor

pora

tion

tax a

ct (E

VL),

acco

untin

g ac

t (KP

A, K

PL) a

nd st

ock

com

pany

act

(OYL

) Jo

intly

-own

ed fo

rest

s: law

on

socie

ties

Fra

nce

Fo

r Valu

e Add

ed T

ax

(from

600

,000

FF)

Com

mer

cial c

ode

Com

mer

cial C

ode

Plan

Com

ptab

le Gé

néra

l (PCG

) Ac

coun

ting

law a

nd d

ecre

es;

join

tly-o

wned

fore

sts (

incl. i

n-ve

stmen

t for

ests)

: law

on so

cietie

s st

ate

fore

sts

(ONF

): ac

t con

cern

ing

state

-own

ed e

nter

prise

s (EP

IC)

Ger

man

y Fo

r agr

icultu

ral o

r for

estry

en

terp

rises

: [A

vera

ges (

§ 13

ESt

G)]

Regi

stra

tion

of R

eceip

ts a

nd

Paym

ents

(§ 4

(3) E

StG)

For a

gricu

ltura

l or f

ores

try e

nter

-pr

ises,

doub

le-en

try b

ook-

keep

ing

abov

e:

Turn

-ove

r >

500

,000

DM

Prof

it >

36,0

00 D

MRa

teab

le [ta

x] va

lue

> 40

,000

DM

AO (§

141

)

For e

nter

prise

s ent

ered

in th

e re

g-ist

er o

f com

panie

s, bo

oks a

nd re

-co

rds t

hat n

eed

to b

e ke

pt to

fulfil

ot

her l

egal

requ

irem

ents

(HGB

, )

are

also

the

basis

for t

axat

ion (M

aß-

gebli

chke

it)

(AO

§ 14

0)

For c

ompa

nies

: sto

ck-c

ompa

nies

act, l

imite

d lia

bility

com

panie

s act;

fo

r coo

pera

tives

: act

conc

ernin

g co

oper

ative

s; fo

r pub

lic fo

rest

ente

rpris

es:

budg

eting

laws

Gre

at B

rita

in

For s

ole tr

ader

s and

par

tner

ships

: fre

e ch

oice

of m

etho

d fo

r Valu

e Add

ed T

ax

(from

£ 4

5,00

0)

Fore

stry i

s ent

irely

outs

ide t

he

Inco

me a

nd C

orpo

ratio

n Ta

x sc

hedu

le;

O

ther

lega

l sou

rces

—

Fo

r com

pani

es: C

ompa

nies A

ct;

princ

iple

regu

lation

thro

ugh

ac-

coun

ting

stand

ards

issu

ed b

y the

pr

ofes

sion

Sw

itze

rlan

d

(For

gra

nts r

egist

ratio

n of

re

ceipt

s and

pay

men

ts)

C

omm

ercia

l cod

e Fo

r ent

erpr

ises e

nter

ed in

the

reg-

ister

of c

ompa

nies (

trade

rs, c

oop-

erat

ives,

...) f

ree

choic

e of

reco

rding

m

etho

d ac

cord

ing to

OR

(Cod

e of

ob

ligat

ions

)

For p

ublic

fore

st en

terp

rises

: fe

dera

l and

cant

onal

budg

eting

law

s; bu

dget

ing d

ecre

es o

f the

mun

icipa

lities


5.3.2 Organisation of financial accounting in forest enterprises

Overview 7 outlines further differences in organisation and substance of legally de-termined financial accounting in forest en-terprises for the six countries compared.

In nearly all countries – only excepting Great Britain and Ireland – charts of ac-counts are used as organisational frame-work in financial accounting, and are either arranged according to the process principle or the balance sheet principle (FLOWER, 1997, RICHARD, 1995a, b). The charts of accounts used in European countries, their organisation principle and existing ad-aptations for forestry are indicated in Over-view 8.

State owned forest estates, community forests and forests of other regional autho-rities are usually obliged by budgetary laws and guidelines to use parliamentary accoun-ting (government or resource accounting, Kameralistik). Frequently these parliamen-tary records of payments and receipts (ac-tual and target) in public forest estates are supplemented by a full commercial double-entry book-keeping system and cost-centre accounting.

There are justified scientific objections to double-entry book-keeping in forest en-terprises, as the main asset of the estates – the growing stock – is not included and variances are not accounted for. Doubts about the reasonableness of double-entry book-keeping in forest enterprises were raised as early as the late 19th century (e.g. GUTTENBERG, 1891) and are still valid to-day (e.g. MOOG, 1995). The meaningful-ness of the comparison of assets and stocks is consequently seriously reduced, and the

completeness of recorded data is

forfeited (JÖBSTL, 1997b).

Double-entry book-keeping is however being promoted in pub-lic enterprises due to the stronger engagement in the private sector or even possible privatisation and

also due to the ongoing European harmoni-sation of financial statements. Furthermore there are considerable advantages (flexi-bility, updating, …) through application of standard accounting software packages in connection with standard double-entry book-keeping.

In general, only companies are obliged to include values for the growing stock in their annual accounts (Overview 7). The val-uation methods and values used are fre-quently radically insufficient and mislead-ing. The information presented by the fi-nancial statements is rather diminished than improved by the inclusion of these values.

5.4 Internal information systems and new accounting branches

Overview 9 gives an impression of the ac-tual state of cost accounting and social and environmental accounting in the six coun-tries included in this study.

Frequently larger forest estates and pub-licly owned entities with an openminded management are using cost centre account-ing. Individual development and impor-tance in the internal information systems vary, however. Only very few use integral controlling concepts, including planning ele-ments and variance analysis (i.e. standard costing). In several forest enterprises, in-cluding those of some German Landesforst-verwaltungen as well as the Austrian Ös-terreichische Bundesforste (ÖBF-AG), con-trolling systems based on comprehensive cost and performance accounting are cur-rently being developed. Other instruments of cost accounting, such as the recently much discussed activity-based costing, have only been applied in individual case-studies.

Overview 6: Financial accounting and the authoritativeness principle – The influence of tax legislation on financial accounts ("Maßgeblichkeitsprinzip") (mo-dified; HOOGENDOORN, 1996)

Linkage of commercial accounting and tax accounting

Formal independence of accounting and taxation

(Strict) dependence of taxation on accounting (Authoritativeness and reverse authoritativeness principle)

Denmark Netherlands Austria GermanyGreat Britain Norway Belgium ItalyIreland (Spain) Finland Portugal France (Sweden)


Ove

rvie

w 7

: Fi

nanc

ial a

cc

oun

ting

in fo

rest

ent

erp

rise

s

Leg

ally

det

erm

ined

acc

oun

tin

g –

fin

anci

al a

ccou

nti

ng

in f

ores

t en

terp

rise

s A

spec

t A

ust

ria

Fin

lan

d

Fra

nce

Ger

man

y G

reat

Bri

tain

S

wit

zerl

and

L

egal

ob

liga

tion

for

fo

rest

en

terp

rise

s to

k

eep

boo

ks

(s

ee a

lso

Ove

rvie

w 5

)

Reco

rding

obli

gatio

n; ab

ove

certa

in ra

teab

le [ta

x] va

lue o

r tur

n-ov

er

doub

le-en

try b

ook-

keep

ing;

appr

ox. 2

50 p

rivat

e fo

rest

ente

rpris

es a

re

oblig

ed to

keep

boo

ks

Sing

le-en

try b

ook-

keep

ing co

mpu

lsory

; joi

ntly-

owne

d fo

rests

an

d co

mpa

nies a

re

gene

rally

obli

ged

to

have

dou

ble-e

ntry

bo

ok-k

eepin

g

Reco

rding

obli

gatio

n fo

r join

tly-o

wned

for-

ests

(spe

cial le

gislat

ion

for i

nves

tmen

t for

ests)

; bo

ok-k

eepin

g ob

liga-

tion

for c

ompa

nies

Reco

rding

obli

gatio

n; ab

ove

certa

in ra

teab

le va

lue, t

urn-

over

or p

ro-

fit do

uble-

entry

boo

k-ke

eping

; app

rox.

1,00

0 pr

ivate

fore

st en

terp

rises

(< 0

.5 %

) ar

e ob

liged

to ke

ep

book

s

Only

com

panie

s are

ob

liged

to ke

ep b

ooks

; alt

oget

her o

nly fe

w es

tate

s are

obli

ged

to

keep

boo

ks (f

ores

try is

ou

tside

inco

me

tax)

; (H

OGG,

199

5) si

ngle-

circu

it sys

tem

s

Only

com

panie

s are

ob

liged

to ke

ep b

ooks

; m

any p

ublic

fore

st en

terp

rises

with

boo

k-ke

eping

obli

gatio

n

Rec

omm

end

atio

ns

for

usi

ng

fore

stry

ch

arts

of

acco

un

ts

(see

als

o O

verv

iew

8)

By H

VLF

(196

2, re

-vis

ed 1

974)

; bala

nce

shee

t prin

ciple

base

d on

the

ÖPW

Z ch

art o

f ac

coun

ts (1

951)

Proc

ess p

rincip

le ch

art

of a

ccou

nts f

or th

ose

ente

rpris

es p

artic

ipat-

ing in

acc

ount

ing n

et-

work

—

By D

FWR

follo

wing

the

proc

ess p

rincip

le co

r-re

spon

ding

to IU

FRO

prop

osal

I —

Proc

ess p

rincip

le;

spec

ial re

com

men

-da

tions

for m

unici

pal

fore

sts

Fin

anci

al a

ccou

nt-

ing

in p

ub

lic f

ores

t en

terp

rise

s

From

199

7 th

e fe

dera

l fo

rest

ente

rpris

e (Ö

BF)

is a

joint

-sto

ck co

m-

pany

with

corre

spon

d-ing

lega

l obli

gatio

ns to

ha

ve d

ouble

-ent

ry

book

-kee

ping.

ot

her p

ublic

fore

sts:

budg

eting

regu

lation

s –

usua

lly g

over

nmen

t ac

coun

ts an

d do

uble-

entry

boo

k-ke

eping

; (Z

IMME

L, 19

96)

Appli

catio

n of

Bus

iness

Ec

onom

ics T

heor

y co

ncep

ts in

state

fo

rest

ente

rpris

e;

gove

rnm

enta

l ac-

coun

ting

(bud

get)

an

d do

uble-

entry

bo

ok-k

eepin

g

Stat

e fo

rest

ente

rpris

e

is su

bjecte

d to

dirig

ism;

by la

w sa

me

acco

untin

g sy

stem

as

othe

r ind

ustri

al sta

te

ente

rpris

es (d

ouble

-en

try b

ook-

keep

ing a

nd

budg

et a

ccou

nting

; m

unici

pal fo

rests

inc

luded

in m

unici

pal

acco

untin

g sy

stem

s

In st

ate

fore

sts

(Lan

desfo

rst-

verw

altun

gen)

ac

cord

ing to

bud

getin

g re

gulat

ions;

gove

rnm

ent

acco

untin

g;

mun

icipa

l fore

sts

includ

ed in

mun

icipa

l ac

coun

ting

syste

ms

Doub

le-en

try b

ook-

keep

ing (s

ingle

circu

it)

and

reso

urce

acc

ount

-ing

(bud

get)

Fede

ral a

nd ca

nton

al bu

dget

ing re

gulat

ions,

mun

icipa

l dec

rees

; sp

ecial

reco

mm

en-

datio

n fo

r cha

rt of

ac-

coun

ts;

mun

icipa

l fore

sts

includ

ed in

mun

icipa

l ac

coun

ting

syste

ms

Gro

win

g st

ock

in

fin

anci

al a

ccou

nti

ng

Inclu

sion

of g

rowi

ng

stock

in fin

ancia

l sta

te-

men

ts on

ly fo

r com

pa-

nies a

nd st

ate

fore

sts

oblig

ator

y (fre

quen

tly

insuf

ficien

t and

mis-

leadin

g va

lues)

Lega

l obli

gatio

n on

ly fo

r com

panie

s and

joi

ntly-

owne

d fo

rests

; us

ually

cost

of a

c-qu

isitio

n is

used

as

value

; sta

te fo

rests

inc

lude

the

aver

age

of

mar

ket v

alue

and

rate

able

tax v

alue

in

their

acc

ount

s

Lega

l obli

gatio

n on

ly

for i

nves

tmen

t for

ests

adm

iniste

red

by b

anks

or

insu

ranc

e co

mpa

nies;

value

s use

d ar

e ins

uffic

ient f

or fin

ancia

l or

inte

rnal

repo

rting

(h

istor

ical c

osts)

Lega

l obli

gatio

n on

ly

for c

ompa

nies a

nd

state

fore

sts (f

requ

ently

ins

uffic

ient a

nd

misl

eadin

g va

lues)

Com

panie

s and

stat

e fo

rests

lega

l obli

gatio

n;

state

fore

st inc

lude

op

en m

arke

t valu

e es

-ta

blish

ed b

y a g

roup

of

valua

tion

expe

rts (r

e-va

luatio

n ev

ery 3

-5

year

s);

com

panie

s use

ex

pecta

tion

value

or

histo

rical

costs

No le

gal o

bliga

tion

to

includ

e gr

owing

stoc

k in

finan

cial a

ccou

nting


The public forest estates and connected forest administration frequently have to ad-dress multiple objectives (timber produc-tion, forest authority, general welfare, re-creation resort, ...) leading to problems in overhead allocation. Cost allocation is here frequently in the focus of interest (e.g. BITTER et al., 1994). For some time there has been considerable interest to separate expenditures and revenues of the forest en-terprise as timber producer from the expen-ditures incurred by providing goods and services to the general public without ade-quate remuneration. The main objective of this differentiation has been to show better economic results.

Although social and environmental ac-counting are discussed frequently in the scientific community, only very few appli-cations, usually in the state forests, have been undertaken and published (see MERLO, 1996, MERLO and JÖBSTL, 1997). As shown in Overview 9, the most common form is a report on providing non-market benefits to the general public. In regions where fores-try is profitable, the focus will usually be on efficiency and profitability information and hence in the field of traditional cost accounting, whereas in those regions where forestry runs at a financial loss the accent is more on reporting social and environmental benefits provided by forestry.

Overview 10 attempts to group the six countries in relation to the business econo-mics tradition and the role and organisation

of cost ac-counting. The group includ-ing Germany, Austria and

Switzerland has a strong

relationship through com-mon language and traditions and is, in re-spect to the orientation of business eco-nomics, closely interlinked. In-struments and tools used in cost account-

ing of the three countries are very similar. New advances originating once here and once there, depending on research and de-velopment objectives and needs. Finland's business economics and cost accounting are strongly influenced by theories of business economics, most recently by the Anglo-American theories. In cost accounting for forest enterprises, however, the advanced instruments used in the Central European countries have been studied closely and been adapted for use in Finland. Both Great Britain and France have in common that micro-economics rather than business economics constitutes the focus of forest eco-nomics. Cost accounting in forestry is often copied and adapted from industrial man-agement accounting, with few forestry-spe-cific developments.

Forestry accounting data networks of various European countries are specified in Overview 11. Their value as internal infor-mation for those enterprises participating in the survey is diverse and largely based on the application of cost centre accounting and a cost distribution sheet.

6 Conclusions and outlook

At present these results of the survey pro-vide a reflection of our currently existing information status and the development demands in accounting of forest enterpri-ses. In regard to the information status there is still considerable need for further research, as there are many countries which

Overview 8: Charts of accounts and forestry specific adaptations in Europe

Charts of accounts Process principle Balance sheet principle None

Bulgaria Austria (Denmark*)Czech Republic (Belgium) (Great Britain)(Denmark* – formerly) Finland (Ireland)Finland (France (obligatory)) (Netherlands*)Germany (GKR) Germany (IKR)(Hungary) (Greece (obligatory))(Netherlands* – formerly) (Italy) (Norway) (Portugal (obligatory))Russia Slovakia (9+10 internal)(Sweden) (Spain (obligatory))Switzerland (0+9 internal)

() In countries in brackets, no adaptations for forestry have been reported. * In Denmark and the Netherlands charts of accounts were used during periods of orientation towards – or directly by – German accounting.


Ove

rvie

w 9

: C

ost

ac

co

untin

g a

nd a

cc

oun

ting

for n

on-

ma

rke

t out

put

s in

fore

st e

nte

rpris

es

(Pa

rt 1)

Cos

t ac

cou

nti

ng

Asp

ect

Au

stri

a F

inla

nd

F

ranc

e G

erm

any

Gre

at B

rita

in

Swit

zerl

and

C

ost

acc

ou

nti

ng

C

ost

cen

tre

ac

cou

nti

ng

In la

rger

fore

st en

terp

rises

; ha

rmon

ised

syste

m

for t

hose

ent

erpr

ises

parti

cipat

ing in

the

acco

untin

g ne

twor

k (J

ÖBST

L, 19

81)

In e

nter

prise

s par

tici-

patin

g in

cost

surv

ey;

but f

ocus

is o

n inc

ome

state

men

t

Spar

sely;

pr

imitiv

e int

erna

l ac

coun

ting

in inv

est-

men

t for

ests;

sil

vicult

ure

rath

er th

an

fore

st en

terp

rises

In la

rger

fore

st en

terp

rises

; re

com

men

datio

ns

by D

eutsc

her F

orst-

wirts

chaf

tsrat

(DFW

R)

Deta

iled

and

of m

ajor

impo

rtanc

e (m

anag

e-m

ent a

ccou

nting

, sing

le cir

cuit)

; in la

rger

esta

tes

a gr

eat v

ariet

y of c

ost-

ing u

nits

In fo

rest

ente

rpris

es

partic

ipatin

g in

the

fore

stry

acco

untin

g ne

twor

k (BA

R)

Sta

nd

ard

cos

tin

g –

Con

trol

lin

g

Appli

catio

n: ve

ry fe

w es

tate

s Ap

art f

rom

the

con-

trollin

g sy

stem

in st

ate

fore

sts o

nly ve

ry fe

w ap

plica

tions

Appli

catio

n: ve

ry fe

w es

tate

s Fe

w ap

plica

tions

; co

ncep

ts fo

r con

trollin

g in

state

fore

sts a

nd in

fe

w lar

ge p

rivat

e es

tate

s

Appli

catio

n: ve

ry fe

w es

tate

s Ap

plica

tion:

very

few

esta

tes

Exa

mp

les

of c

on-

cep

ts in

th

e fi

eld

of

man

agem

ent

ac

cou

nti

ng

for

fo

rest

en

terp

rise

s

e.g.

Pe

rform

ance

ana

lysis

(J

ÖBST

L, 19

81, 1

987,

19

97) M

odels

, sim

ulatio

n (J

ÖBST

L, 19

73, 1

978,

198

7) Jo

b (o

pera

tion)

calcu

lation

(F

LACH

BERG

ER, 1

982)

e.g.

Pe

rform

ance

ana

lysis

(KEL

TIKA

NGAS

V.,

1938

) In

vestm

ent a

nd

prof

itabil

ity a

nalys

es

(SAA

RI, 1

953;

KE

LTIK

ANGA

S V.,

1969

; KE

LTIK

ANGA

S M.,

1969

; PE

NTTI

NEN

et a

l. 199

2-95

)

e.

g.

Perfo

rman

ce a

nalys

is

(KRI

EGER

, 192

9; JÄ

CKLE

, 19

34; L

EMM

EL, 1

956;

HE

NNE,

1973

) Cos

t-unit

ac

coun

ting

(SPE

IDEL

, 19

62) C

ontri

butio

n m

ar-

gin ca

lculat

ion (K

EUFF

EL,

1980

) Acti

vity-

base

d co

sting

(MOO

G, 1

994)

e.g.

In

vestm

ent a

ppra

isal

(e.g

. PRI

CE, 1

993)

e.g.

Pr

oduc

t calc

ulatio

n (T

ROM

P, 19

46)

Perfo

rman

ce a

nalys

is (C

HAPP

UIS,

1954

) M

odels

, sim

ulatio

n (L

EMM

/ERN

I, 199

1, 1

995)

Cos

t ac

cou

nti

ng

in

pu

bli

c fo

rest

en

ter-

pri

ses

Fede

ral fo

rest

ente

r-pr

ise: c

ost c

entre

ac-

coun

ting

(sam

e m

odel

as p

rivat

e fo

rest

ente

r-pr

ises)

; job

(ope

ratio

n)

calcu

lation

s; in

mun

i-cip

al fo

rests

: ofte

n on

ly ru

dimen

tary

cost

ac-

coun

ting

(ZIM

MEL

, 199

6)

Cost

cent

re a

ccou

nting

;in

state

fore

sts a

con-

trollin

g sy

stem

usin

g a

cata

logue

of in

dicat

ors

base

d on

cost

and

reso

urce

acc

ount

ing

is in

oper

ation

Cost

cent

re a

ccou

nting

sin

ce 1

989

– du

al

circu

it sys

tem

with

bé

néfic

iaire

s as p

rimar

y co

st ce

ntre

s; co

mpa

rativ

ely a

dvan

ced

job co

sting

syste

m

(Dev

is –

Trav

aux –

Fa

ctura

tion,

DTF

)

Cost

cent

re a

ccou

nting

; pr

oblem

of o

verh

ead

alloc

ation

in st

ate

fore

sts

(unit

y of f

ores

t ent

erpr

ise

and

fore

st au

thor

ity; e

.g.

BITT

ER e

t al.,

1994

); co

ntroll

ing co

ncep

ts in

deve

lop-m

ent

Deta

iled

cost

cent

re

acco

untin

g;

job (o

pera

tion)

costi

ng

for s

ingle

oper

ation

s

Cost

cent

re a

ccou

nting

in

man

y mun

icipa

l fo

rests

par

ticipa

ting

in th

e ac

coun

ting

netw

ork

(BAR

)

Cos

t an

d r

even

ue

surv

eys

– A

ccou

nt-

ing

dat

a n

etw

ork

s (s

ee a

lso

Ove

rvie

w 1

1)

Seve

ral n

etwo

rks:

large

r priv

ate

esta

tes

(sinc

e 19

63, b

ased

on

harm

onise

d co

st dis

tribu

tion

shee

t; JÖ

BSTL

198

1), jo

intly

owne

d fo

rests

, far

m

fore

stry

Rece

nt d

evelo

pmen

t of

fore

stry a

ccou

nting

da

ta n

etwo

rks f

ollow

-ing

Cen

tral E

urop

ean

mod

els; s

ince

1962

sim

ple n

etwo

rk o

n

farm

fore

stry w

ithin

agric

ultur

al da

ta

netw

ork

—

Seve

ral a

ccou

nting

da

ta n

etwo

rks f

or

fore

stry (

farm

fore

stry,

fore

st en

terp

rises

and

pu

blic f

ores

ts); p

artly

ba

sed

on h

arm

onise

d co

st dis

tribu

tion

shee

ts,

partl

y only

stat

istica

l inf

orm

ation

Stat

istica

l sur

vey o

f co

sts o

f ope

ratio

ns

and

surv

ey o

f inco

me

and

expe

nditu

re ca

rried

ou

t by u

niver

sities

(n

ow d

iscon

tinue

d)

Fore

stry a

ccou

nting

da

ta n

etwo

rk w

ith B

AR

cost

distri

butio

n m

odel

in

appr

ox. 7

00 m

ainly

publi

c for

est e

nter

prise

s; cu

rrent

ly un

der r

evisi

on


Ove

rvie

w 9

: C

ost

ac

co

untin

g a

nd a

cc

oun

ting

for n

on-

ma

rke

t out

put

s in

fore

st e

nte

rpris

es

(Pa

rt 2)

Gro

win

g st

ock

in in

tern

al a

ccou

nti

ng

– S

ocia

l an

d e

nvir

onm

enta

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were so far unable to furnish information or data. Concerning the state of forestry ac-counting, it is evident that many forest en-terprises do not engage in any accounting or, if they do, their records are designed to merely fulfil the rather modest legal re-quirements for financial accounting. Larger forest enterprises frequently maintain retro-spective cost accounting, but no prospec-tive management accounting. Modern con-trolling systems integrating planning are only to be found in a few progressive enterprises.

The practical application or the general utilisation of devised, and partly already tested, tools and concepts – especially con-cerning performance accounting, recogni-

tion of growing stock changes and non-market outputs in for-estry accounting, but also in re-gard to instru-ments for im-proved decision-making, such as cost accounting

or controlling – will be major tasks in the future.

In the international arena of financial accounting, following the experiences of New Zealand (DAVY, 1987), Australia (ROBERTS et al., 1995) and certain other countries with major industrial forests, the International Accounting Standards Com-mittee is preparing an accounting standard on Biological Assets that might also lead to further consideration of forest assets in an-nual accounts of companies (IASC, 1996). Similar to the harmonisation efforts of the European Union, no direct influence on the typical, small or medium-sized European forest enterprises is to be expected.

Overview 10: Grouping/Ranking related to business economics tradition and cost accounting in forestry

Business economics Micro-economics

Germany Great Britain Austria Finland

Switzerland France

Forestry specific Industry adaptation

Overview 11: Cost and revenue surveys – Profitability/Accounting data networks

Profitability/Accounting data networksCountry Network

Austria Private forest estates > 500 ha Jointly-owned forests in Tyrol and Vorarlberg (discontinued?) Farm forestry (additional data from state forests ÖBF)Denmark Private forests – Regnskabsoversigter for dansk privatskovbrug

Finland Profitability of non-industrial private forestry (NIPF) Farm forestry Germany Private forests Westphalia-Lippe Farm forests Baden-Württemberg BML-accounting network for agriculture (separate analysis for farms with forests) BML-accounting network forestry (approx. 300 private and public forest enterprises) State forests Great Britain

Economic Survey of Private Forestry – Income and Expenditure (discontinued) Survey of Private Woodlands Costs (The Private Woodlands Survey) (discontinued)

Netherlands Private and public forest enterprises – Bedrijfsuitkomsten in de Nederlandse particuliere bosbouw

Norway Accounting for Norway's agriculture and forestry – Regnskapsresultater

Switzerland BAR – mainly forests of municipalities

Europe European Confederation of Agriculture (CEA) Farm Accounting Data Network (FADN) University of Bangor EU-Project (Analysing costs and revenues of private forestry in the EC) Small-scale forestry: EU-FAIR-Harmonisation Project MOSEFA (coordinated by EFI)


There are efforts to supplement the national surveys on costs and revenues in forestry (see Overview 10; also ROCHOT, 1984) with a European network or to improve ex-isting networks (FADN, CEA). A prerequi-site for reliable and utilisable data is the practical application of cost accounting concepts nationally and a harmonisation of terminology and data collecting procedures.

The new IUFRO research group 4.13.00 "Managerial, Social and Environmental Ac-counting" (JÖBSTL, 1996a, 1997a) is ex-pected to deal with forestry accounting in a comprehensive way, thereby promoting forestry accounting and giving guidance for further research. The international coopera-tion will inspire research and promote new developments and practical applications in forestry accounting. One or more interna-tional research projects should provide the frame for the development of new instru-ments and the improvement of the present mechanisms of forestry accounting.

In the process of designing a manage-ment accounting system the concentration on providing decision-relevant information is vital rather than registration of all data. Recent developments in the European con-text, however, seem to focus on enhanced comparability of statistical profitability data provided by accounting data networks, rather than conceptual improvements, new tools or empirical applications of theoretical meth-ods.

It is a matter of fact that forestry ac-counting is frequently seen as scarcely po-pular, disregarded or even as a despised subject by forestry students, foresters and even forest economists (BRABÄNDER, 1996). Yet, the problems encountered and the ever growing need for information should be reason enough for more colleagues to be-come involved in this comprehensive and important topic. Ongoing research activities may succeed in attracting more scholars to this interesting field of forest economics, to make them well disposed to forestry ac-counting, or even to fascinate them suffi-ciently to immerse themselves in the subject.

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DEVELOPMENTS IN FORESTRY BUSINESS ACCOUNTING AND REPORTING: AN INTERNATIONAL STUDY*

James N. HOGG and Hans A. JÖBSTL

Abstract

Accounting is not a new but a multifaceted and increasingly important issue for the for-est sector. It has been used in management as a tool for gaining information, supporting control and decision-making both internally and externally for ages. New external and internal demands in addition to develop-ments in information technology and control-ling have advanced the role of accounting in the last 35 years. Internationally there are large differences in accounting methods and intensities depending on the region, size structure or forest ownership. The re-cognition of the forest asset is the common core weakness of accounting in forest enter-prises. Due to the high proportion of small-scale holdings only a small part of forest management units utilise comprehensive ac-counting to support decision-making and in-formation. By and large, accounting is not yet fully developed nor sufficiently utilised to support management.

History demonstrates interesting trends in focus and research intensity which differ regionally and over time depending on the context. The IUFRO-Group "Managerial, Social and Environmental Accounting", es-tablished in 1995, started its work with a study on forestry accounting in Europe and worldwide. Research was carried out with the working hypothesis that differences in business culture and operating environment around the world have a significant impact on forest business accounting and related as-pects of business management in forest enter-prises. This encompasses historical trends as well as current activities.

This paper analyses – starting from a historic overview on the development of for-estry accounting – and compares the key differences in forestry accounting and the main influences on its systems by means of * Centralblatt für das gesamte Forstwesen 125 (2008),

4, 219-250. Revised contribution to IUFRO Sympo-sium on "Managerial economics and accounting in an evolving paradigm of forest management", Rot-tenburg/Germany, 17-20 May 2006.

literature and case studies focusing on six regions. The paper concludes that the com-ing years will bring increased attention to forestry accounting as internationalisation and harmonisation continue. Future chal-lenges lie in increasing the application of research to practice and in developing new methods and solutions. Without doubt, the three key areas of research will first include the recognition of forest assets and their val-ue changes in financial and cost account-ing, secondly the integration of perform-ance measures for non-market benefits, and lastly the extension and improvement of sustainability reporting.

Keywords: accounting system, harmonisation, ac-counting standards, forestry accounting history

1 Introduction

Accounting is not a new and very promi-nent topic but a multifaceted and increas-ingly important issue for the forest sector. Forest business accounting has long been a central element in forest management (e.g. WESSELY, 1870). Documents of forestry accounting date back into the middle ages. The last two centuries saw significant efforts of forest economics research invested into systematising and improving this science (e.g. ABETZ, 1959; BRABÄNDER, 1961; IUFRO, 1966). The objective of forestry ac-counting has always been to provide man-agement with relevant, reliable, consistent and comparable information on status and flows in forest enterprises.

More so than ever before in its history, forest business accounting has now emerged from its specialist reputation. The unique-ness of its business means – the self-gen-erating forest resource – has gained atten-tion also in general financial accounting and bookkeeping. This reflects the trend that more and more forest holdings are listed on public stock exchanges as part of forest in-dustry corporations or standalone invest-ments. The listing and reporting processes require accuracy and transparency in moni-

Rottenburg 2006 Developments in forestry business accounting and reporting 31

toring value and value changes of all assets including standing timber, representing the main asset in forestry. Standardisation and international harmonisation of forest account-ing practices have aimed to improve trans-parency, distribution, comparability and reli-ability of the financial forest information pre-sented to shareholders. Public stakeholders increasingly hold their state or local govern-ment owned forest operations accountable.

Beyond its use for external reporting, for-est business accounting fulfils a key role in internal control, operational management and strategic planning for forest enterprises. Smaller and privately owned forest compa-nies utilise accounting practices more focused on their internal needs. In these smaller en-tities the external reporting functions are primarily addressed to tax authorities there-by generating a totally different objective for external representation (URBAN, 2000).

The international dimension of account-ing is becoming increasingly important. It is impacting not only the multinationals (e.g. assetisation trend in Europe and North Ame-rica), but also forest enterprises as account-ing harmonisation and internationalisation of the capital markets are progressing.

This paper attempts – starting from a historic overview on the development of forestry accounting and based on different research activities – to analyse the interde-pendencies of forestry accounting systems

with respect to the business environment or the "forest culture" of a country or region. Forestry accounting is defined here as forms of monetary business accounting including social and environmental accounting as op-posed to national accounting or non-mone-tary resource accounting practices (Figure 1). The framework underlying this analysis is the forest enterprise as an economic entity, ignoring the policy or (inter)governmental levels of national economics which are not relevant to the forest companies’ business accounting. The working hypothesis is that differences in business culture and operat-ing environment around the world have a significant impact on forest business ac-counting and related aspects of business management in forest enterprises.

2 Historical development of forestry accounting according to literature

History shows some interesting trends in fo-cus and research intensity. The significance and developmental tendencies of account-ing in certain regions are reflected in the accounting subjects in literature and inter-national activities.

Figure 2 gives a first impression. It de-picts the enormous growth in the number of publications in German since 1800 and the emergence of the most important subjects and keywords in accounting over time.

Accounting



Cost Accounting Cost-type Accounting Cost-centre Accounting Cost-unit Accounting Job-order Costing Process Costing Budgeting Standard Costing Supplementary Calculations

Key Figures, Internal Statistics



Double-entry Bookkeeping Balance Sheet Income Statement Parliamentary Accounting Single-entry Bookkeeping Cash Accounting Cash Flow Account Supplementary Books

Key Figures, Internal Statistics


Figure 1: Components of extended management accounting (JÖBSTL and HOGG, 1998)


In earlier forestry compendia, the forest ad-ministration duties from the accounting point of view were described as materials account-ing and stringent separation between mate-rials accounting and monetary accounting. There was a large number and range of pub-lished forms and instructions for accounting procedures, and there were efforts to apply bookkeeping for purposes of control and safeguard against disloyalty and disorder.

ABETZ (1931) considers the separation between materials and monetary account-ing spheres in different federal forest ad-ministrations (more stringent than in private forest management) an important reason for the late engagement in forestry bookkeep-ing matters and the relative backlog of for-estry accounting in comparison with other business sectors that were just caught up in the second half of the twentieth century. Earlier, a central goal was to find an ideal bookkeeping system. Financial and physical information were typically handled sepa-rately. Many historical sources also addres-sed the difficulties in measuring changes in forest assets by using balance sheets and performance accounting. The second half of the twentieth century put growing pressure

on economisation, reduced the economic importance of wood production and in-creased environmental awareness, leading to greater societal influence on forestry. This led to a variety of new tasks in accounting that had to be solved using innovative ap-proaches and new technical means. Interna-tional activities were initiated differing from region to region.

2.1 Main developments of forestry accounting in Central Europe

The development of forestry accounting in Central Europe can be divided into five pe-riods each characterised by specific issues: 1) period until 1870 (stock accounting, cam-eralistic), 2) period from 1870 to World War I (performance accounting, beginning of dou-ble-entry bookkeeping in forestry), 3) peri-od between World Wars I and II (discussion about cameralistic and double-entry book-keeping, increased application of double-entry bookkeeping, asset valuation), and 4) period from 1938 to 1965 (performance and cost accounting). The fifth period from 1965 till now is characterised by electronic data processing and its applications in for-estry accounting (e.g. financial and cost ac-

Controlling

Data networks

200519801960194019201900 1880 1860 1840 18201800

Accounting in general

Performance accounting

Forest assets

Management ratios

Cost accounting

Electronic data processing

Forest valuation

Bookkeeping M

ain

keyw

ords

Operating statement

Non-market benefits

Information systems

Operational statistics

Appearance of main keywords in accounting publications

lapse of time

0

100

200

300

400

500

600

700

800

900

1800 1820 1840 1860 1880 1900 1920 1940 1960 1980

Books and articles in booksArticles in journals

815

323

6951

2622103 2 5

184018201800 1860 1880 1900 1920 1940 1960 1980 2005

Numbers of publications on accounting and accounting related issues

lapse of time Figure 2: Appearance of main keywords (subjects) in German publications on account-ing (left) and numbers of publications on accounting and accounting related subjects in German language media (right) in lapse of time from 1800 to 2005 (Source: Forestry Accounting Literature Database by SOUCEK, 1998, and FALTEJSEK, 2001, updated in 2006)


counting). Forestry performance accounting was often part of the scientific discussion in the 1960’s and in the 1990’s. Data bases, models, forest asset valuation, performance reports etc. were in the scientific focus. In addition to controlling in forestry account-ing, environmental and social aspects started becoming important during the last decade.

2.2 Main developments of forestry account-ing outside of Central Europe

Figure 3 illustrates the trends outside Europe. In the plantation forestry areas cost estima-tion was key and in later days environmen-tal accounting has been up and coming. Plan economies had few real developments and they are now transitioning mainly to the Anglo-American model. Scandinavia de-veloped much in parallel to Central Europe but has shown stronger leanings to the Anglo-American model recently.

The concern in North America during the last 35 years has been focused on taxes in accounting along with cost estimation. In most recent years, the focus has shifted to

standard costing and environmental account-ing.

In Eastern Europe and Russia, account-ing was developed according to the require-ments of a 'central planned economy'. Since the upheaval, a comprehensive orientation to western standards has become common.

Japan was mostly engaged with the or-ganisational aspects of forestry accounting and performance reporting. In Australia and New Zealand, research on forestry account-ing blossomed during the 1980s, when cost accounting methods were introduced and the foundations of up-to-date guidelines for eval-uation of forest assets in financial reporting were developed.

2.3 International activities

The first attempts to internationally harmo-nise subjects related to forestry accounting were tackled in the mid-1950s by a IUFRO-group. The group was focused primarily on international communication and comparabil-ity through terminology, providing impor-tant contributions, including systems of ac-

British Isles Period until 1945

Materials accounting, financial accounting, organisation, forms

British Isles1945-1960

Double-entry bookkeeping, organisation

Scandinavia Period between World War I and II

Accounting systems, asset valuation,

performance accounting

Scandinavia1938 until 1965

Performance accounting, cost accounting

Japan1960 until 1980

Organisation of forestry account-ing, performance accounting

Scandinavia until 1918

Financial accounting, organisation

North America until 1980

Cost estimation, taxes in accounting

Oceania 1975 till now

Cost accounting, cost estimation, valuation, performance accounting, recognition of forest assets in the balance sheet

North America 1980 till now

Cost estimation, standard costing, taxes, environmental accounting

Scandinavia1965 till now

Cost accounting, performance accounting, environmental accounting

British Isles1960 till now

Cost estimation, taxes in accounting, investment evaluation,

environmental accounting

Figure 3: Main steps in the development of forestry accounting outside of Central Europe as reflected by corresponding literature


counts, cost types and cost centre account-ing, cost estimation and the evaluation of growing stock in combination with per-formance accounting. It also discussed fun-damental problems surrounding evaluation and recommended solutions. After the mid-1980s (keywords: forest damage, privatisa-tion of public forest enterprises, internatio-nalisation, etc.) accounting related subjects were sometimes presented at conferences of the "Forest management planning" group. Later, these subjects were also presented at conferences organised by the group "Site types and management targets", which was founded in 1981, and renamed to "Manage-rial economics in forestry" in 1990. New tasks and subjects, especially evaluation of non-market benefits, business management and macro-economic aspects of social and environmental accounting and other diverse valuation tasks led to the establishment of an interdisciplinary accounting group in IUFRO in 1995, named "Managerial, social and environmental accounting". It made rele-vant contributions to the analysis of the status and further development of accounting. Its main activities consisted of the systematic study of forestry accounting in Central Europe and the rest of the world, along with annual organisation of conferences. Results of the study, based on the 4-area model (Figure 1), were presented in various publications and at the 14 yearly conferences (HOGG and JÖBSTL, 1997; JÖBSTL and HOGG, 1998; HOGG, 2000), in which a total of 140 pre-sentations with accounting subjects were held.

The themes at the conferences and the titles of the presentations reflect the actual focal points of forestry accounting: • evaluation of growing stock, forest asset evaluation and performance accounting • information systems and controlling • non-market benefits of forests (NMB), corresponding evaluation and incorporation into accounting • environmental accounting, total economic value • international regulation in financial re-porting, standardisation, harmonisation • internal management accounting and re-porting • inter-company comparison, accounting data networks • national accounting

Central career themes and concepts inclu-ded multiple use, NMB, performance ac-counting, growing stock/forest asset evalua-tion, accounting data network, national ac-counting.

Besides, other IUFRO-groups (i.e.: Small scale forestry) and especially more regional economic circles, for example Scandinavian society of forest economics, German for-estry economics colloquium, as well as in-ternational organisations (FAO, EUROSTAT, IASB) dealt with supra-regionally relevant themes in forestry accounting.

3 Components of the business environ-ment impacting the forest accounting system

Culture is a complex phenomenon under-stood as a common set of ideas, beliefs and values shared by a group. It affects how a society organises itself, which affects busi-nesses and accounting in a variety of ways (HOFSTEDE, 1984). An analysis of the diffe-rent underlying dimensions, aspects and com-ponents can provide improved understand-ing of the cultural dimension and its impact on forestry accounting.

Business and management culture in forest enterprises encompasses several rele-vant components as illustrated in Figure 4, which shape forestry accounting in particu-lar. Management accounting as a tool to support management in its strategic decision-making as well as facilitating the making of choices in everyday operational decisions faced by the management of forest enterpri-ses interacts strongly with different manage-rial cultures around the globe. Varying levels of importance or substance of the influence factors between countries are therefore the reason for differing accounting systems and practices around the globe (Figure 5). Busi-ness culture shapes forestry accounting and vice versa.

Forest traditions and practices including the nature of the resource (i.e. virgin, natural or plantation forests) are a key factor shap-ing forestry accounting. The idea of sustain-able forest management, which is largely based on a constant forest area and more or less constant volume of the growing stock, has shaped forestry accounting in most parts of Central and Northern Europe. In North America and the tropical and subtropical areas forest practices have for a long time


been tailored to the utilisation of old growth forest and their conversion to secondary forests or non forest lands. Today the em-phasis is generally shifting towards planta-tions and shorter rotation but also to more constant cover ‘natural’ forests. Together with Oceania the subtropics and tropics have some of the world’s most productive plantation areas utilising modern forest man-agement techniques in all their facets.

In forestry, the time horizon is closely in-terlinked with forest management practices, silviculture regimes and growth area. The duration of the rotation has been a key fea-ture of forestry distinguishing it from other businesses. Annual accounting and report-ing has found it difficult to capture the na-tural growth processes through the length of a rotation, which may well exceed 100 years. Differences in average rotation cycles around the world depend on the timber species, cli-mate and growth area impact the time ele-ment relevant to accounting and thereby for-estry accounting. Cost recording practices, which are suitable and accurate for 10 or 20-year rotations such as fast growing eucalyp-tus plantations, are inconceivable in the pro-duction of high value oak logs for veneers over a rotation exceeding 200 years.

Resource ownership is another key deter-minant for forest accounting practices. Third parties manage large tracks of the world’s for-

ests as licensees or con-cessionaires. The perspec-tives of such concession-aires vary considerably from the resource owner and require a different treatment in accounting, as the contractual agree-ment is the asset and not the resource.

Beside resource own-ership, the legal ownership form of the forest en-terprise is highly signifi-cant for the accounting system, as different legal forms require different systems and levels of fi-nancial accounting. Re-quirements differ from country to country, but in general an increasing number of owners increase

the onus of financial accounting. Single pri-vate owners, such as farmers, large forest corporations and the public sector all have different perspectives. Joint-stock companies wishing to raise capital through public ex-changes face additional requirements imposed through the listing criteria of these stock exchanges. They also face scrutiny of insti-tutional and private investors. Different ac-counting systems and practices frequently go hand in hand with the legal ownership form.

The size (i.e. area, timber volume and turnover) of forest holdings around the world is significant in predetermining the level of accounting system and information. The re-finement level of the forestry accounting system is, to a large extent, dependent on the size of the forest enterprise and, there-fore also dependent on the cost vs. benefit of accounting information.

The role of forestry in the national eco-nomy is relevant in determining the impor-tance of the forest sector and the public at-tention it receives. The likelihood that spe-cific guidelines and conventions will be de-veloped specifically for dealing with for-estry is higher in regions where it plays a larger role in the economy. The level of co-dification is usually higher in countries where forestry has a high profile.

Financial and tax legislation has a con-siderable impact on financial accounting.

Ownership

Financial and TaxLegislation

Forestry Traditionand Practice

GeneralAccounting

ResourceOwnership

Time Horizonof Forestry

Supply Chain andIntegration

Role of Forestryin the Economy

Size of ForestHolding

Research andTraining

Forestry Accounting

Business andManagement Culture

Figure 4: Influence factors from the business environment on forestry

accounting


The structure and content of forest accounting infor-mation is also important. Depending on the size and legal structure of the for-est enterprise, income or corporation tax are fre-quently key recipients of accounting information and the financial accounts form part of the tax decla-ration. The dilemma of satisfying the need for ob-jective information (true and fair view) while avoid-ing a high tax burden is evident. In some cases (e.g. in Central Europe) account-ing malpractices have been codified de-facto through tax measures and levels.

In many countries fi-nancial accounting has to fulfil external in-formation requirements beyond taxation. With the opening of borders, the develop-ment of multinational companies, global trade, and the internationalisation of the fi-nancial markets legislation and accounting, standard setting has become the subject of increasing harmonisation efforts to promote the development of free markets and ensure their transparency. The development of In-ternational Accounting and Reporting Stan-dards (IAS, IFRS) by the International Ac-counting Standards Board (IASB, formerly IASC) and the European Union directives on accounting matters are prominent among these harmonisation efforts. Unlike the EU directives, the IASB aims to take up specific challenges posed by forestry in accounting. The IASB standards intend to address pri-mary forestry-specific issues regarding the treatment of the growing stock in a certain standard, thereby having only indirectly shaped forestry accounting.

Forestry accounting as a specialist branch is largely embedded in the framework of gen-eral accounting. Much work has been done in analysing the different schools and ap-proaches in general accounting (e.g. NOBES and PARKER, 1995). JÖBSTL and HOGG (1998) have analysed the interrelationship between general and forestry accounting in some de-tail and shown that general accounting is a key determinant for forestry accounting.

Most accounting conventions used in for-estry accounting in specific countries are de-termined by general business accounting in the corresponding countries. The treatment of growing stock is the only key feature dis-tinguishing forestry from other businesses covered in general accounting.

In recent years the rapid growth of stock markets has given rise to the Anglo-Ameri-can approach to general accounting (Figure 5), characterised by professional regulation and standard setting. It also places a strong em-phasis on investor information and the key principles of "true and fair" and relevance. This has resulted in a much bolder and prag-matic approach to provide relevant investor information. This has also led to the exten-sion of the establishment of comparable val-ues for forests in financial accounts. How-ever, some methodical problems may be pushed aside for the sake of providing a comprehensive and relevant picture of the forest enterprises financial status and per-formance. The IAS embrace this approach with all its opportunities and shortcomings.

Within forest corporations in all parts of the world, the supply chain and role of for-estry within as an either independent or in-tegrated element of the supply chain plays a key role in understanding the role of forests and forestry. Processing industries such as pulp and paper can be the main business dri-ver, making forests to raw material feeds

Traditional PrincipalAccounting Systems

Micro-commerical(Fair, Relevance)

Macro-uniform(Conservatism, Tax)

Key ProponentsAustraliaCanadaIreland

MalaysiaNew ZealandSouth Africa

United KingdomUSA

Key ProponentsAustriaFinlandFrance

GermanyItaly

SpainSweden

Switzerland

Harmonisation

Harmonisation

Figure 5: Taxonomy of general accounting systems and the impact

of recent harmonisation


with no own profit responsibility and there-by little incentivisation and accountability. The transfer pricing rules between the dif-ferent business areas (forest, harvesting, saw milling, pulp, paper, etc.) render any transparency or comparability on a business division or supply chain level useless. In the absence of a sufficient internal manage-ment accounting system, controlling of the forest operations is mostly based on non-monetary and market-unrelated perform-ance measures (JÖBSTL, 1981a, 2000; BOR-CHERS, 1999; KARISCH, 2000, 2003).

Related to this issue of forestry outputs, many public forest enterprises are partially abandoning economic accountability of tim-ber production for the less measurable image of the environmental and social benefits of forestry. With rising concern over environ-mental issues and material balance of the Earth, interest has grown in developing a better understanding of environment-rela-ted costs and benefits. Advances in social and environmental accounting have so far been evaluated in a narrative manner. This describes a qualitative character that can be focused on the monetary evaluation of the positive benefits or externalities. Attempts to a comparable consolidation with existing management accounting information have been rare (MERLO and JÖBSTL, 1999). Most other attempts in valuing non-market bene-fits have remained outside the four distinct approaches identified in BARTOLOMEO et al.’s (2000) taxonomy of environmental ac-counting: external financial reporting, social accountability reporting, energy and materi-als accounting and environmental manage-ment accounting. In the future, increasing public and market pressures are likely to boost the need for environmental account-ing information beyond the mention of ton-nes of carbon stored in the growing stock and amenity facilities provided in many cor-porate environmental reports.

The level of research and education in forestry accounting shapes the everyday ac-counting practices to a significant extent. Research determines what refined accounting theories and models are and what practical adaptations have been developed. Educa-tion is required to transform research into practice. HOGG (2000) showed the substantial differences in the extent and content of for-estry accounting education offered to under-

graduates at European forestry universities and colleges. Where forestry specific ac-counting education is insufficient, general accounting will fill the gap at the cost of understanding the forest business and cater-ing for its specific needs. In the case that general accounting is dominant, the interre-lationship of forest business management and forestry accounting is limited and the two are more parallel than forming part of an in-tegrated system.

As outlined above, the socio-economic business environment plays a unique role in shaping forestry accounting. For the coun-tries covered in the case studies some of the key features and differences in the business environment shaping forestry accounting are summarised in Table 1 on a general level. The interaction between these factors shapes the business and management culture, which in turn affects forestry accounting as part of this culture. Differences in the European sphere have been analysed in detail by JÖBSTL and HOGG (1998) and in the following more emphasis will be put on the most relevant feature – the self-generating forest resource – but in a global context.

4 Establishment of performance measures for forest enterprises

Forest stands are the key asset of the forest enterprise frequently representing over 80 % of all assets. The computation of annual re-sults reflecting the performance of the en-terprise is one of the key elements of account-ing. Meaningful performance measures for forestry cannot be based solely on annual returns (in terms of earnings and invest-ments), but must take the value added in the forest stands into account. The measurement of these value changes has been one of the long-standing problems in forest economics (LEMMEL, 1956; FRAUENDORFER, 1958; ABETZ, 1959; BRABÄNDER, 1965; JÖBSTL, 1981a; KARISCH, 2003) and a simple yet ac-curate solution has so far proven elusive. The most discussed methods are summa-rised in Figure 6 including the more recent extension that also captures the non-market externalities of forestry within the perform-ance assessment.

The objective of performance account-ing is to measure and control performance including deviations from management plans


or the equilibrium status (sustainability as more far-reaching going-concern principle). These deviations have a direct impact on current and future asset value and revenue streams of the forest enterprise. The com-plexity of these value changes deriving from natural growth, non-linear price/size relation-ships, quality/grades, market price fluctua-tions of timber and other factors has so far led forestry practice to shy away from full accountability. Conventions are slowly being introduced to abate this main shortcoming of forestry accounting. The conventions to include realistic forest values in financial re-porting (e.g. DAVY, 1987; ROBERTS et al., 1995; BORCHERS, 1999; IASC, 1999; HER-BOHN, 2005) give rise to discussion about the accuracy and value-relevance of inventories (GIERER, 2000), yield models or evalua-tions and the separation of different influence factors to determine management achieve-ment.

5 Case studies illustrating the interna-tional interdependencies between forestry accounting and the business environment

In the following case studies we aim to select illustrative examples, which are used to describe the impact of the business envi-ronment on forestry accounting and the existing interdependencies between forest

management and ac-counting. As they are all rooted in their local or regional cul-tural context they do not purport any eva-luation or recom-mendations.

Classifications have been a key ele-ment in understand-ing differences and ultimately lead to harmonisation (ROB-ERTS et al., 1998). A detailed comparison of differences be-tween accounting le-gislation and prac-tices in European countries has been part of earlier work (HOGG and JÖBSTL,

1997). Systematisation of the different ap-proaches to forestry accounting has been at-tempted by HOGG (2000) using a classifica-tion scheme with key criteria relevant to forestry accounting. Key results from the following case studies are summarised in Figure 7 and Table 1.

Central European forest enterprises

Across Central Europe forestry accounting, like general accounting has traditionally been using a two circuit approach differentiating between taxation-oriented financial accoun-ting and management-oriented cost account-ing. Tradition in forestry accounting is well rooted in the forest economics of German speaking countries, with many noteworthy scholars dedicating research efforts to this subject (e.g. Abetz, Brabänder, Frauendor-fer, Guttenberg, Jöbstl, Lemmel).

Smallholders represent the majority of the forest owners but also a high share of the forest area. By law these smallholdings require only a minimum of accounting in-formation.

For the larger forest enterprises there is a clear distinction between those in private and those in local or national government ownership. The larger private forest enter-prises – i.e. those with holdings above 500-1,000 ha – use the two-circuit approach where tax is dominant in external financial

Management & Time

Performance Measurement

with valuation of the forest asset

without valuation of the forest asset

Cost valueReplacement

cost valueLiquidation/Market value

Expectation value

Growth method

Allowable cutmethod

Externalities

Non-market benefitvaluation

Management & Time

Performance Measurement

with valuation of the forest asset

without valuation of the forest asset

Cost valueReplacement

cost valueLiquidation/Market value

Expectation value

Growth method

Allowable cutmethod

Externalities

Non-market benefitvaluation

Figure 6: Principle methods for performance evaluation in forestry

(extended according to BRABÄNDER, 1965)


accounting. In accordance with principles of (volume) sustainable forest management, conservatism and protection of creditors and tax legislation, the growing stock (i.e. stand-ing trees) is generally not accounted for in the financial accounts.

The growing stock represents an impor-tant hidden reserve which, when uncovered through calamities or utilisation above sus-tainable averages, requires exceptional treat-ments in taxation (URBAN, 2000). The con-vention of ignoring the growing stock and its changes over time renders the financial accounts virtually useless for purposes of evaluating the financial position and deter-mining the profitability of a forest enter-prise. Classical ratios such as return on as-sets cannot be correctly applied and make comparisons to other industries impossible.

The development of a voluntary cost/pro-fitability data network for larger private for-est enterprises has led to much improved cost centre/cost type accounting with allo-cation of costs to the main activities in the forest enterprise (e.g. JÖBSTL, 1981b, 2000). Unfortunately, only in rare cases the inter-nal cost accounting circuit, which should support management in its decision-mak-ing, provides useful information on the sta-tus and changes in the growing stock. Phy-sical volume maintenance through compari-sons of the undifferentiated allowable cut vs. the actual cut is widely used to gauge the sustainability equilibrium. However, this pro-vides inadequate insights into the value main-tenance. Suitable adaptations of the forest inventory and cost accounting methods have only been made in few exceptions (JÖBSTL, 1987, 1996).

Many publicly owned forests follow government accounting rules and practices ("Kameralistik"). Recently increasing auto-nomy and accountability of the public for-est administrations has led to growing inte-rest in developing reporting methods that incorporate value creation from a holistic perspective including both the growing stock and externalities such as recreation, biodi-versity or protection from natural disasters. While interest and research are widespread, practical advances have been made in this di-rection especially in Bavaria and Rhine-land-Palatinate (e.g. DEISENROTH, 2005).

Forest processing industries such as the manufacturing of pulp and paper, sawn wood

or wood-based panels are rarely linked di-rectly to forest ownership. Only few pub-licly listed companies have notable forest holdings that require financial reporting on the growing stock. The implications of IAS (now IFRS, International Financial Report-ing Standards) for forest holdings are at best indirect and long-term. In line with tradition, advances are more likely to come through tax legislation, research or education.

Private and state-owned forest enterprises in the British Isles

Several key principles of general account-ing shape forestry accounting in the British Isles, where self-regulation is dominated by the established tradition of a strong account-ing profession. The principles of true and fair view and relevance have been domi-nant in general accounting. The IAS is fully accepted in financial reporting and account-ing is more loosely linked with taxation than in Central Europe. This relative inde-pendence from tax has also given room to facilitate the use of a single circuit account-ing system where cost accounting is an ex-tension of the financial accounting system, widely used in private forest enterprises. For private forest estates, the use of single circuit systems with focus on relevant infor-mation is further facilitated by the enduring preferential treatment of forestry in taxation instigated by the very low forest cover.

In larger private forest enterprises the is-sue of accounting for the growing stock and its changes has been discussed repeatedly since the 1950s. Recommendations have changed and developed significantly over time (HOGG, 1995), but only few private forest enterprises have traditionally included growing stock-variations in their accounts. Reluctance is based on the perceived com-plexity of the issue and the absence of re-liable inventory data or (localised) yield mo-dels.

The public sector has been keen to de-monstrate its achievements in planting vast tracts of land and achieving government set hurdle rates on financial returns. This agenda has coincided with the development or adop-tion of new methods including the assess-ment of non-market benefits. Since the 1970s the two main approaches to forest eval-uation for accounting purposes have been the market value assessment based on the


net present value (NPV) and the stand cost evaluation, which have increasingly been used together. The inherent problems of complexity and volume of compartment/stand accounts, infrequent re-evaluations, choice of interest rate or transition from cost to expectation value have recently led to the promotion of open market evaluation based on expert assessment of comparable sales on a stand basis. This open market value is reassessed in intervals of several years and readjusted annually by felling, sales or ac-quisitions.

Public sector accountability for profit-making activities outside the government department’s mandate has increased signifi-cantly and the financial reporting standards reflect this change by adopting private sector standards and formats. While the UK Forest Enterprise has adopted the aforementioned expert panel open market value assessment approach for the forest asset, the Irish For-estry Board Coillte uses a different combi-nation of historical cost and value approach. Due to the absence of appropriate standards covering the special nature of the forest asset within the reporting requirements (FRS 3) the Irish state forests Coillte have opted to show only historic cost of plantations in their accounts and to clarify the value of the growing stock and its changes in notes and a statement of change in forest asset. The Northern Ireland Forest Service on the other hand is proposing to use replacement cost based on value to substitute the pre-vious NPV based method (HARLEY, 2000). In future the majority of the forests in the British Isles – if they remain under full state ownership or are privatised in some form – are expected to be accounted for under the IAS regime.

Nordic forest corporations

The Nordic accounting tradition resembles the main two neighbouring interest spheres. Nordic accounting used to be shaped ac-cording to the Central European model. The Nordic model later shifted to follow the British Isles/American model as it became stronger. Finnish accounting standards have a high compliance with IAS standards. Seve-ral forest corporations provide references to IAS standards in their annual reports or have adopted IAS as reporting standard for the consolidated group accounts. While the

Swedish accounting standards remain distinct from the IAS, many of the Swedish forest corporations (e.g. Assidomän) refer to IAS standards in their statements of account.

The treatment of growing stock in fi-nancial accounts has been less of an issue in the Nordic countries than in the British Isles or Oceania. This is understandable re-garding the long tradition of sustainable for-est management and the equilibrium status, which is by and large maintained. The user of these financial statements is, however, deprived from assessing the actual (annual) performance of forest management other than in physical volume terms, which is fre-quently part of the annual review.

The Swedish forest corporations showed the forest value at book value (i.e. original acquisition value) in their accounts. This value bears little resemblance to the actual value of the forest estate. The usually higher tax assessment value is also shown in the notes to the accounts, but still underestimates the value of the forest asset. Felling rights (e.g. SCA) are shown as inventories. Up until recently StoraEnso, Europe’s largest forest corporation, or UPM-Kymmene did not even specify the value of their subs-tantive Nordic forests separately in the an-nual statements of accounts, now they have adopted the IAS fully. Forests are part of the non-depreciating land and water assets. Norway’s Norske Skog used to state the book value of the forest properties and its "write-up" in the analysis of value estimates, but now has also fallen in line with the IAS 41.

North American forest corporations

For small North American forest holdings tax – in particular income tax – is a major driver in forestry accounting, while the lar-ger forest holdings are owned either by the federal states or provinces, the central gov-ernment or forest corporations.

All joint-stock companies follow the US or Canadian Generally Accepted Accounting Principles (GAAP). IAS can be used with reconciliation to the US or Canadian GAAP, but very few companies do so and IAS is not an issue in the forest sector currently. The general accounting practices and busi-ness culture resembles the British Com-monwealth system (used in the British Isles and former British colonies), but the impor-tance of the forest sector in North America


is higher and forest ownership is dominated more by large private forest industry cor-porations.

Many forest industry corporations man-age both their own timberland in addition to forests belonging to public authorities. The majority of plantation owning compa-nies in North America capitalise their tim-berland purchases and reforestation costs. These costs can include original acquisition cost, real estate taxes, lease payments, road construction costs, site preparation and reforestation costs including planning. The timberland cost stands unamortised in the accounts and is eliminated at harvest (unit of production method representing the ac-cumulated depletion). The exact scope of capitalised and non-capitalised, annually charged costs varies between companies.

The cost of harvested timber is based on its market value, the capitalised cost and the total timber volume estimated to be avail-able over the growth cycle. Gains on tim-berlands sales are reflected as a reduction of the cost of sales in the profit and loss ac-count. In the balance sheet, forest forms part of fixed asset and in most occasions the value of the timber and timberlands can be seen in either the balance sheet or notes. Timber rights on the other hand are recorded as intangible assets and depreciated on a straight-line basis.

There appears to be very little change occurring in the shift from the now widely used cost-based approach to forest evalua-tions in accounting. The developments oc-curring in Europe and Oceania, however, will ultimately impact North America as a key financial market and arena for consoli-dation of the global forest industry. The on-going assetisation trend is fuelling the need for annual performance measurement at 'true and fair' values.

Latin American forest corporations Due to the financial links with the United States, most large Latin American forest corporations follow North American ac-counting practices. Many of these large com-panies are also quoted on North American stock exchanges and follow the generally ac-cepted accounting principles of the United States (US GAAP) as basis of presentation. This allows all foreign companies to report in US Dollars rather than local currency,

reducing the direct impact of inflation. Reconciliation to local accounting practices is frequently required (e.g. Argentina, Brazil, Chile1). The acceptance for the IAS is in-creasing from a low base, depending on whether it develops in a European or North American fashion. Often timber resources are stated at cost, less accumulated deple-tion on a production unit (stand) basis.

South East Asian plantation and conces-sion forest holdings Malaysia or Singapore’s accounting system largely follows the British Commonwealth model and many of the accounting stan-dards are based on the IAS with modifica-tions to reflect the particular local situation. The latter is also true for Indonesian and Thai accounting standards. In general one accounting circuit is used for both financial and cost information.

There are significant differences between the forest management practices in virgin/na-tural tropical forests and plantation forests (esp. rubber wood). For the natural forests the existing forest inventories can only provide very limited input for value-based assessments of the forest resource. The time horizon with respect to "rotations" is largely undefined. Most of the region’s natural for-ests remain in state ownership and are li-censed to concessionaires for harvesting and management over a licence period. Forest operations that have forest asset value, ac-count for this value as a part of their other assets. The timber concessionaires include the rights in timber licences or land use rights at cost as a separate category under the fixed assets. These timber licences or land use rights are depreciated using the straight-line method over the lifetime of the licence. If their duration is unlimited they are not depreciated.

For the increasing areas under plantation, rubber wood and fast growing species such as Acacia for pulpwood, inventories and management plans exist in some detail. Plantations are treated as fixed assets, which are capitalised at cost of its initial establish-ment. Formerly most of these assets were not amortised, but written-off to the profit and loss account at harvest. The Malaysian 1 Note: Chile is going for a gradual convergence to full

IFRS over a three-year period from 2009 to 2011 as the first Latin American Country.


Accounting Standards Statement No. 8 from 1997 requires all plantation cost to be capitalised and amortised over the useful life,

which is relevant to rubber wood and oil-palm plantations where timber or fibre is only a by-product.

Table 1: Summary table of the regional comparison including reference to the International Accounting

Standard for Agriculture

Central Europe

Northern Europe

British Isles

North America

South East Asia Oceania IAS (IFRS) 41

Importance of forest sector

Medium-High

High Low Medium High Medium Diverse

Principle accounting system

Two circuit (financial, cost)

Two circuit (financial, cost) – moving to single

Single circuit

Single circuit

Single circuit

Single circuit

Single circuit

Main drivers on financial accounting

Tax Conserva-tism; speci-fic legisla-tion in tax code

Conserva-tism Tax

True and fair Relevance


True and fair Conserva-tism

True and fair Conserva-tism


Main drivers in internal cost accounting

Decision-making for management

Decision-making for management

Extension to financial accounting to facilitate manage-ment deci-sions

Extension to financial accounting to facilitate manage-ment deci-sions

Extension to financial accounting to facilitate management decisions

Extension to financial accounting to facilitate management decisions

--

Growing stock in accounting of private non-listed entities

Largely not recognised; actual vs. allowable cut com-parison to monitor sustain-ability wide-spread

Largely not recognised; actual vs. allowable cut com-parison to monitor sustain-ability

Recognised at cost (at stand level); NPV inter-nal


Only recog-nised for plantations at cost


Recognition at net market value – in-direct impact via legislation changes only

Growing stock in accounting of stock listed entities

Rare; Recognised at different values (very conserva-tive values)

Recognised at cost

-- Recognised at cost

Only recognised for planta-tions at cost

Traditionally recognised at cost but shift towards evaluation (net market value)

Recognition at net market value (market evaluation or NPV assessment), cost for estab-lishment phase

Growing stock in public forest enterprises (incl. com-mercial operations in public ownership)

Not recog-nised or re-cognised only at his-toric cost; increasingly recognised with evalua-tions

Recognised at cost; increasingly recognised with evalua-tions

Recognition based on cost less de-pletion or on expert eva-luation of net market value; Changes in forest asset are shown separately, but not booked as profit/loss

Traditionally recognised at cost but shift towards evaluation (net market value)

Recognition at net market value (market evaluation or NPV assessment); cost for estab-lishment phase

Remarks Improved models for performance accounting available as extension to cost accounting

Issue is attracting attention especially also regard-ing the assetisation of forest assets

Forests are shown as a separate tangible asset with no deprecia-tion other than deple-tion and sales

Many forest corporations operate through tim-ber licences; Assetisation has been an issue

Natural forest is largely in ownership of the states who license it to timber companies for manage-ment

Oceania has been driving the develop-ment of full inclusion of forest assets in financial reporting

Experiences mixed; reviews on-going; level of adop-tion regionally varied


Oceania forest corporations

General accounting in Australia and New Zealand follows the British Commonwealth accounting model, reflecting the dominance of the accounting professions and the prag-matism underlying key accounting princi-ples. Taxation and fiscal rules have little or no impact on accounting profits and finan-cial reporting. The Australian Accounting Standards (AAS) and the New Zealand Equi-valents to International Financial Reporting Standards (NZ IFRS) are very close to the IFRS. Due to the importance of the forest sector in Oceania the standard development specific to forestry has advanced further than elsewhere.

Australia and New Zealand still have significant natural forest areas and an im-portant and growing plantation resource in-cluding fast growing pine species and euca-lypts. For the private and state owned forest enterprises in the region the inclusion of values of growing stock in the financial ac-counts has become important in understand-ing returns to the shareholders (ADAMS, 1994; ROBERTS et al., 1995; MCBRIDE and PEIRSON, 1996).

Most of the productive forest estate has been planted in recent years, with significant pro-portions of the forestland only coming into full production during the next years. This is important for understanding some of the accounting practices. Up to now a variety of measurement bases and techniques have been employed. These range from historic cost to market value estimations (HARGREAVES, 1980; DAVY, 1987). The forest asset has equally been treated differently in the balance sheet, where it was sometimes entered as current inventory, fixed asset or special re-generative asset. These values are not nec-essarily also used for stand-based manage-ment, which utilises an extension to the main accounting circuit to control stand related performance.

New Zealand’s large forest corporations (e.g. Fletcher Challenge Forests or Carter Holt Harvey) have traditionally shown a carrying value of plantation forest crop at the original acquisition/establishment cost of the standing forests plus capitalised costs for each stand until it is mature for harvest-ing. According to this approach, the capita-lised costs of each stand are written off to the profit and loss account at the time of

Figure 7: Tentative morphology for forestry accounting


harvesting. Cost capitalisation and carrying value are limited such that the total cost ca-pitalised cannot exceed the estimated recov-erable amount of the stand assets. This takes age, condition, location, intended end use and management regime into account. Revenues from harvesting are taken into the profit and loss account when realised and the related capitalised costs are then written off to the profit and loss account as depletions. In some cases there is a distinction between de-velopment forests (i.e. no substantial harvest to date), where all cost is capitalised and production forests (i.e. after the first com-mercial harvest) where all costs of harvest-ing and re-establishment are taken directly to the profit and loss account. Until re-cently the Australian practices of account-ing for forest assets have been similar.

Limitations to the cost-based approach such as the indifference to price changes and value accretion in the growing stock have rendered the results of this accounting ap-proach irrelevant to many accounting infor-mation users. In New Zealand the additio-nal disclosure of NPV calculations has only partly been able to address scepticism. To-day substantial annexes with supplemen-tary forest information aim to address the assumptions and sensitivities of the used evaluation approaches.

In recent years Australia has been at the forefront of capturing the forest asset and its changes in the financial statements of for-est enterprises. The attempt to find a prag-matic solution providing relevant and com-parable information on the performance of forest management has led to a paradigm change. Most of the large forest corpora-tions and different state forests had largely adopted a historical cost approach to the forest assets. This is now being replaced by a net market value established through eval-uation on the basis of comparable transac-tions or, if that is not possible, using the NPV method. The forest assets are shown in the balance sheet as a special category of assets. The unrealised gains and losses con-nected with changes in the forest asset are equally recognised.

Australia has developed an accounting standard for self-generating and regenerat-ing assets (Australian Accounting Standard AASB 1037). The formulation of standar-dised practices can, however, not solve the fundamental problems of evaluation and un-

certainty in absence of readily available net market values. The envisaged operative date has been deferred due to the realisation of the above outlined problems. The transition phase has its own problems where value dif-ferences between historic cost of forest as-sets and net market value are distorting pro-fit measures considerably.

The State Forests of New South Wales use this evaluation-based approach in their annual accounts. Softwood plantations are valued annually using a market evaluation model that calculates the net change in value resulting from price and volume movements. Plantations younger than 12 years, or before first commercial operations are valued on the basis of establishment cost. The native forests under sustainable management are also recognised in the accounts at market value. Sample inventories are carried out with a five-year interval to check the model-led growth estimates. Adjustments to the growing stock value are recognised in the balance sheet under the separate category for Self-Generating and Regenerating As-sets. Market value increment/decrement is recognised in the profit and loss account as a correction to the operating profit. In 1998, the size of the important market value de-crement was roughly twice the size of the operating profit. This showed the possible impact of such an evaluation approach.

The distinction of market-driven value ad-justments due to price fluctuations (booked as reserve changes) and the wealth-creating effects of biological growth (booked as re-venue) are important in the new approach for the physical capital maintenance concept. Value changes due to changing market con-ditions have sometimes proven to be sub-stantial and transitory.

International Accounting Standard 41 Agriculture The development of an International Ac-counting Standard (IAS) covering forest as-sets resulted in the release of the Internatio-nal Accounting Standard (IAS) 41 'Agricul-ture' by the International Accounting Stan-dards Board (IASB)2. It changed agricultu- 2 Note: In 2001, the International Accounting Stan-

dards Board (IASB) assumed accounting standard-setting responsibilities from its predecessor body, the International Accounting Standards Committee (IASC). The International Accounting Standards (IAS) were recently renamed as IFRS (International Fi-nancial Reporting Standards).


ral accounting from a domestic issue dealt with by individual countries to a global is-sue. As part of international harmonisation, International Financial Reporting Standards (IFRS) are to be adopted by all listed com-panies within the European Union from January 2005, regulators in Australia re-quire international standards for the statu-tory accounts of all domestic companies from January 2005, and New Zealand has followed in 2007. A survey by DELOITTE AND TOUCHE (2003) suggests that more than 90 countries will either require or per-mit IFRS for listed companies by 2005 (HERBOHN, 2005).

The standard largely follows the devel-opments in Oceania (IASC, 1996, 1999, 2001; ELAD, 2004). The familiar key prob-lem is the evaluation and the distinction of realised and unrealised gains or losses re-sulting from increments, harvest and mar-ket value fluctuations in the forest stands, which has long been discussed in forestry accounting (JÄCKLE, 1934; BRABÄNDER, 1965). The requirements for interim reports on a quarterly basis only exacerbate the prob-lem. These require market price changes in cyclical industries such as the forest indus-try to be examined with significant care.

Under IAS 41, biological assets relating to agricultural activity are to be measured at fair value3 less estimated point-of-sale costs on initial recognition, and at each reporting date. Gains or losses on initial recognition and from a change in fair value of a biolo-gical asset are to be included in profit or loss for the period in which they arise. In addition, a gain or loss on initial recogni-tion of agricultural produce harvested from a biological asset less point-of-sale costs is to be included in profit or loss for the peri-od in which it arises. Alternate evaluation methods are permitted under IAS 41 if an active market does not exist for a biological asset. Fair value can be determined with re-ference to the most recent market transac-tion price, market prices for similar assets, sector benchmarks, or the present value of expected net cash flows. In circumstances where there is little biological transforma-tion, or the impact of biological transforma-

3 Fair value is the amount for which an asset could be

exchanged, or a liability settled, between knowledge-able, willing parties in an arm’s length transaction.

tion on price is not expected to be material, cost can be used to approximate fair value (HERBOHN, 2005).

The standard also requires the disclosure of physical quantities in the annual report, reinforcing the need for improved inven-tory schedules and growth models that are constantly recalibrated for the respective inter-inventory period. This "return" to phy-sical quantities and the envisaged require-ment for a sensitivity analysis of the net market value underlines both difficulties in measurement and reliability of forest asset information. The latter is the main short-coming of the pragmatic solution.

6 Conclusions

• Considerable differences in the business environment and cultures around the globe are reflected in forestry accounting prac-tices. • Forests and forestry are perceived very differently around the globe. Accounting in-formation management is organised diffe-rently; depending on the way information is presented stakeholders understand forests differently. • Forestry accounting also shapes the per-spective society has on forestry and forests. Accounting not only provides a tool sup-porting management in its decision-mak-ing, but also makes information available to external addressees. • For small holdings, tax and legislation are usually the most relevant influence fac-tors shaping forestry accounting, while for the larger entities the framework becomes wider and the network of influences affect-ing forestry accounting is more complex. • The evaluation and accounting treatment of forest assets remain the core problem for forestry accounting, also reflecting the larg-est differences in systems utilised and perspectives taken. • The main forestry-related issue for for-estry accounting revolves around valuing the self-generating and appreciating asset of the forest stands. In most cases the in-complete inclusion of the forest assets in the accounting system ends up being more confusing than helpful in measuring and re-porting performance of the forest enter-prise. Cost-based approaches are still wide-spread, but in terms of relevant information


on the performance of forest enterprises these measures have to be considered as largely useless. Values reflecting some his-toric value or a tax value are equally mis-leading for external users. The striving for (market) value-based measures of perform-ance including stocks and flows of the for-est enterprises main productive asset – the forest stands – is beneficial to improving comparability and relevance of accounting information. • The development of multinational forest holdings through rapid globalisation of the forest industry requires practical conven-tions to present the forest holdings in their entirety – i.e. including the value fluctua-tions of the worth of the growing stock – to investors and to a management which will be in less contact with everyday develop-ments on the ground. • Existing harmonisation efforts, includ-ing the IFRS, do not take the different busi-ness environment and forest management practices into account sufficiently. Account-ing practices, which may appear practical, relevant and reliable in one place, cannot be transposed one to one around the world. Adaptations to local circumstances are nec-essary – e.g. highly productive plantation forests, multifunctional temperate natural forests or tropical concession forestry – to provide both management and other stake-holders with meaningful information. • The IAS 41 covering self-generating and regenerating assets such as forests has in-creased awareness and discussion, but has certainly not brought a scientific solution nor is it likely to bring – due to limited coverage (e.g. in the Americas) – a com-mon global approach to the longstanding problem of forest assets in accounting. • The quality of inventories remains the most crucial element in all value-based ap-proaches to include forest assets in account-ing and thereby performance measurement. The ongoing downsizing efforts effecting in-ventories in particular, also increase the need to improve the dynamic modelling of for-ests. • The identified differences in forestry ac-counting systems and practices together with the significance of the shortcomings in most systems proof that there is still significant need for further international research.

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Brisbane 2005 Innovations in forestry accounting 49

INNOVATIONS IN FORESTRY ACCOUNTING Integration of forest assets and non-market environmental benefits

into management and national accounting and reporting*

Hans A. JÖBSTL

Abstract

Accounting is a multifaceted and important issue for the forest sector. Its role as a man-agement tool has become critical since so-ciety has shifted their values and expecta-tions of the forest. The consideration of a broader area of environmental, economical and social objectives requires monetary as well as physical accounting of timber and non-timber assets of forest resources. Ac-counting, on the one hand, provides the basis for decision-making and internal control-ling; on the other hand, it is needed for re-porting to external stakeholders and inform-ing them about both the economic situation and the social (non-market) services of for-estry. Notwithstanding, forestry accounting has its main deficiencies in realistically re-porting on market and non-market forest assets, including the social and environ-mental benefits of forests. These problems, which are partly centuries old and partly new, constitute diverse research areas that were addressed at the last IUFRO World Congress in Australia.

Keywords: forest accountancy, performance mea-surement, forest assets valuation, green accounting

Introduction to the subject

Management of forests – for whatever pur-poses – requires a variety of information. The central element for providing this in-formation is the accounting system, which fulfils internal as well as external functions. On the one hand, it provides the basis for decision-making and internal controlling; on the other hand, it is needed for reporting to external stakeholders and informing about both the economic situation and the social (non-market) services of forestry. Criteria of sustainability related to the environment * Austrian Journal of Forest Science 126 (2009), 1/2,

1-4. Introduction to session "Innovations in forestry accounting: integration of forest assets and non-mar-ket environmental benefits into management and national accounting and reporting". XXII IUFRO World Congress, 8-13 August 2005, Brisbane, Australia.

are increasingly gaining importance in the reporting process. National accounting is becoming ever more important in the politi-cal context. Several organizations are ela-borating proposals of procedures that aim at standardization, harmonization and, thus, comparability.

Traditionally, accounting of enterprises can broadly be classified into financial, cost and management accounting. While man-agement accounting comprises all account-ing activities aimed at providing data rele-vant for management purposes – its core element being cost accounting – an en-larged accounting system should also in-clude social accounting that aims at extend-ing traditional accounting by considering qualitative aspects such as quality of living and welfare, and environmental accounting that reports the enterprises' use of the natu-ral environment, which is both a provider of environmental goods (material and energy flows of all kinds) and a receiver of the en-terprises’ pollution or undesired outputs such as material and energy residues of all kinds. In the case of forestry, environmental ac-counting primarily deals with positive exter-nalities. It must be noticed that today envi-ronmental accounting is taking over more and more topics from social accounting.

Forestry accounting, however, has major deficiencies: periodic changes in forest as-sets are not recorded, and other achieve-ments, especially with respect to the environ-ment in a wider sense, are not shown ade-quately, with the consequence that the re-sults are incomplete, incorrect, and, thus, potentially misleading.

Whereas there are hardly any legal re-gulations concerning forest asset records in external accounting, it is indispensable for internal purposes to have correct records of forest assets and to examine if targets have been reached. With regard to the environ-mental benefits that cannot actually be as-sessed with a monetary system, so-called per-formance reports that show primarily phy-sical factors are being examined.


While many approaches have been proposed over time to consider changes in forest as-sets, none of them has been established in practice so far. Currently, there are several new approaches and proposals promising to improve the controlling process of an enter-prise with regard to forest assets and social benefits, and to allow a more comprehen-sive reporting and an improved representa-tion of forestry. A central issue is the inte-gration of non-market products and the so-called green accounting. There, the empha-sis is placed on physical factors, satellite accounts and performance reports that are partially complemented by monetary fac-tors. The integration of financial, social and environmental aspects into a comprehen-sive sustainability report is one of the latest developments.

The changed social environment of for-estry, especially the need for evaluation of non-market benefits, improved business management and macro-economic aspects of social and environmental accounting and other diverse valuation tasks led in 1995 to the establishment of an interdisciplinary ac-counting group in IUFRO, named "Mana-gerial, social and environmental account-ing", chaired by the author. It has made relevant contributions to the analysis of the status and further development of account-ing in forestry. Its main activities comprise the systematic study of forestry accounting in Central Europe and the rest of the world (see e.g. HOGG and JÖBSTL, 1997, 2008), along with the annual organization of con-ferences.

New developments in accounting and related topics with a focus on performance measurement and management control were recently presented and discussed during a session at the XXII IUFRO World Congress

2005 including two state-of-the-art papers on micro and macro levels, 4 complemen-tary oral and 8 poster presentations. The full texts of the revised and partially up-dated invited papers are included in this special issue of the Austrian Journal of For-est Science. In six presentations, new ap-proaches to management accounting and green national accounting and reporting are introduced. Three papers deal with the problems related to changes in forest assets and to non-market benefits at the enterprise level (management accounting and report-ing), and the three other papers focus on environmental accounting at the regional and national levels, respectively (green na-tional accounting and reporting).

All contributions show that traditional forestry (i.e. mainly timber selling) is just one aspect of the economic forest perfor-mance, and that it is important and neces-sary to focus more on the assessment of non-market benefits. However, they also indicate that it is still a long way towards the total economic value of forestry (see e.g. MERLO and CROITORU, 2005).

Literature cited

Hogg, J.N. and Jöbstl, H. (1997) Zum Stand des forstlichen Rechnungswesens in eini-gen europäischen Ländern. Austrian Jour-nal of Forest Science 114(2/3):73-95.

Hogg, J.N. and Jöbstl, H. (2008) Developments in forestry business accounting and report-ing: an international study. Austrian Journal of Forest Science 125(4):219-250.

Merlo, M. and Croitoru, L. (eds.) (2005) Valu-ing mediterranean forests. Towards total economic value. CABI Publishing, Wal-lingford, UK, 407 p.

Tampere 1995 Medium-term performance analysis 51

MEDIUM-TERM PERFORMANCE ANALYSIS IN FOREST ENTERPRISES

A Calculatory Approach (Findings from applications in practice)*

Hans A. JÖBSTL

Abstract

The assessment of periodical performance is an old and still unsolved problem of for-estry accounting. The main problem is that the changes in forest assets cannot be taken into account at all or only very inadequately. The difficulties of forest asset valuation for financial statements (balance sheet, profit and loss account), and therefore the ascertain-ment of the annual profit, has neither been solved in terms of theory nor of practical ap-plication and a solution is not in sight (BRA-BÄNDER, 1965; HENNE, 1973; TZSCHUPKE, 1992). The calculatory approach presented here as a proxy solution lies outside the scope of bookkeeping. A concept in three steps developed by the author (JÖBSTL 1980, 1981, 1987a) was tested recently in respect of its feasibility in several forest enterpri-ses. In the following a short description of the concept, extracts from the results of its application in an existing forest enterprise, and some findings from practical applica-tions will be presented.

Key words: Forest accounting, assessment of per-formance, changes in forest assets, comparison be-tween actual and target (standard) values, forecast of the business development

Problem definition

Starting points of the study were: • the impossibility of registering changes in forest assets through conventional accounting, • the common, although most insufficient, procedure in forest operational accounting (cost and profit account), wherein those po-sitive and negative profit components result-ing from changes in forest assets are elimi-nated from the annual profit account by re-lating expenses (harvesting costs) and returns * The Finnish Journal of Business Economics, 45

(1996), 1, 65-77. Contribution to session "Account-ing and finance in forestry and timber industries". XX IUFRO World Congress, 6-12 August 1995, Tampere, Finland.

that depend on the quantity of timber har-vested to a sustained cutting quantity, and the • inefficiency in the practice of conduct-ing forest inventories.

As early as 1980 the author presented an overall concept as an approach to a distinct solution (JÖBSTL, 1980): firstly, the annual profit and cost statements were to be im-proved by relating the expenses and returns to a differentiated allowable cut and silvi-culture programme; and secondly, a com-prehensive analysis of performance should be achieved in connection with the forest inventory and medium term planning. In order to assess the practical feasibility of this approach the concept was tested in a research project funded by the Austrian government.

The basic ideas are that every compari-son of assets requires inventories (in for-estry these are carried out only at greater intervals in the course of forest manage-ment planning) and that harvesting the allow-able cut, provided that it represents the an-nual production capacity correctly, leads to no changes in forest assets. Silvicultural measures maintain the production capacity. The production capacity represented by the allowable cut can only be kept up to the extent to which the necessary silvicultural measures are taken. Deviations from the plan (target) lead to a decrease (reduced in-put) or increase (increased input) of forest assets. These deviations, as well as those of the actual cut, have to be recorded in detail (i.e. split into tree species, assortment, har-vesting sites, treatment types etc.) and val-ued. Furthermore, the chosen allowable cut also influences forest assets in the long run. This has to be integrated into the performance assessment as an additional differential.

The process concept for medium-term performance analysis

(see figures pp. 52 and 53) is essentially based on the fundamental ideas of an actual-ac-tual- and a target-actual-comparison as well


as an analysis of deviations and causes, and comprises the following components: Comparison of two consecutive inven-tories (Actual − Actual; Target − Actual) Analysis of the past medium-term plan-ning period (period analysis) Plan assessment and long-term develop-ment preview (forecasting)

Part 1: Comparison of two inventories (Actual-Actual; Target-Actual)

The comparison of actual states based on two consecutive inventories is carried out with the help of a series of characteristic in-dices (e.g. age class structure, tree species composition, volume, damage, performance value, etc.). Absolute and relative differences are determined (see example on page 57). The changes of physical quantitative indices should at least allow a verbal qualitative as-sessment of changes in forest assets which, ideally, is supported by monetary values. The prerequisites for the comparison of "ac-tual-actual" are carefully planned and de-tailed data recording and especially unifor-mity within the inventories in order to en-sure comparability of the determined indices.

In addition, a comparison of target and actual states is carried out for specific as-pects (e.g. growing stock, state of tending

and regeneration). The actual state of the forest is compared with a target state, to be obtained by the activities planned for the medium-term period, and deviations are determined. The reasons for deviations are essentially analysed in Part 2 (period analy-sis). In addition to planning errors and un-foreseeable natural disasters, in the first place differences between actual and planned measures have to be considered.

Part 2: Analysis of the past medium-term planning period (Period Analysis) In Part 2, harvesting and silvicultural ope-rations and the financial results of the past medium-term period are processed and ana-lysed. The harvesting and silviculture acti-vities as well as the financial results are re-presented in time series and as total of the period or as annual average. The difference between the actual execution of measures and the target is valued according to stan-dard costs (representing the normal costs for this operation), and serves as a means of correcting the annual operational results. Another correction factor is derived from determining the deviations between actual cut and allowable cut, both sub-divided into tree species, timber assortments, and har-vesting sites, and valuing them with timber prices and harvesting costs. The financial

Figure 1: Outline of the Medium-Term Performance Analysis Concept (JÖBSTL, 1987). Basic Idea: Com-paring Actual (HISTORICAL) values to STANDARDS (TARGETS)

Forest inventory Forest inventory

CONTROL

Input, OutputCONSUMPTION, PRODUCTS, (STOCK),

COSTS, REVENUES, (FINANCE)

MeasuresFOREST CROPPING, RESTOCKING,

CULTIVATION, PROTECTION

EXECUTION

MID-TERM PLAN FORESTTARGET

LONG-TERM PREVIEW

CharactersStructure of age Structure of growing

stockComposition of speciesSite classesRestocking (area)State of cultivationDamages

FORESTACTUAL

CharactersStructure of age

Composition of speciesSite classesRestocking (area)State of cultivationDamages

FORESTACTUAL

State of forestat t + p

State of forestat t

begin of planning period

Lapse of time

(PERIOD OF PLANNING AND EXECUTION (p))

Accounting

Permanent random sampling

Structure of growingstock


results are shown as tables and graphs over time and can hence be interpreted in connection with the tendencies of timber prices, pur-chasing power, labour cost per hour, and other influencing factors.

Part 3: Plan assessment and long-term development preview

The third part of the concept is concerned with medium and long-term planning and its effects on the long-term changes in forest as-sets and on the sustainable produc-tion capacity of the enterprise. This comprises the two following com-ponents: the prospective investigation of the long-term trends in forest as-sets (increase or reduction). the estimation of the relation of the medium-term (period 1) econo-mic output to the long-term average.

The differences derived from these two comparisons (long-term increase or decrease of forest assets on the one hand; and deviations of the first medium-term planning period from the long-term average on the other hand) are then positive or ne-gative correctives in performance ascertainment.

Overall assessment The results and correctives derived from the above-mentioned three parts of the concept can be used to improve the quite problematic pro-cess of traditional profit and loss accounting by taking the changes in forest assets into consideration. In this manner, a more reliable as-sessment of the management can be reached.

The medium-term plan (ex-pressed as detailed allowable cut and silvicultural programme) and its deviations from the long-term performance potential are both basic references for an improved annual profit and loss assessment (correction by means of the allow-able annual cut divided into the various species, timber assortments

1. DETERMINATION OF FOREST STATE AND CHANGES (Comparison of inventory – related on fixed day)

2. ANALYSIS OF PLAN EXECUTION AND RESULTS (Variance-analysis – related on period of time)

3. PLAN ASSESSMENT – DEVELOPMENT PREVIEW

Figure 2: Medium-Term Performance Analysis Concept

COMPARISON OF ACTUAL STATES OF FOREST

Age class structure Tree species compositionPerformance value Production value Income value

Absolute values: total and per hectar Alterations: absolute and relative

STATE OF FORESTActualActual Characters

COMPARISON OF TARGET STATE AND ACTUAL STATE OF FOREST

Regeneration Damages State of cultivation . .

STATE OF FORESTActualTarget Characters

1.2

1.1

Type of activity ACTIVITIES

PlanActual

CONTROL OF PLAN EXECUTION

Restocking Cultivation Harvesting . .

2.2 ANALYSIS OF FINANCIAL RESULTS

Factors of influence

2.1

Characters per cost center Actual

Costs Revenues Productivity

SHORT-TERM (ANNUAL) PROFIT AND LOSS ACCOUNT- Harvesting regarding assortment and felling-site

- Silviculture (activities; standard costs) related to average derived from medium-term plan

3.1 FORECASTING OF LONG-TERM DEVELOPMENTAnalysis of sustained yield regulation

Preview of forest state situation and results Simulation - course inspection

- Income value (N.D.R.) - Performance capacity

Long-term effects of medium-term plan 3.2

Harvesting (quantities, revenues, costs) Silviculture and other activities (quantities, costs)

MEDIUM-TERM PLAN EVALUATION Comparison of planned outcome to long-term average


and harvesting sites, and an evaluation of the deviations from the silviculture plan; see JÖBSTL, 1995, p. 17 ff).

Application of the concept in Austrian forest enterprises

The study was conducted in 4 private Aus-trian forest enterprises (including 5 organi-sationally autonomous units) in: the Waldviertel, Lower Austria (4000 ha), the Styrian Central Alps (8000 ha), the eastern fringe of the Alps in Styria (5000 ha) the Weinviertel, Lower Austria (includ-ing high, coppice, coppice with standards, and swamp forests (2000 ha)) and the Wiener-wald (700 ha).

A precondition for including a forest enter-prise in the study was a forthcoming forest inventory, the design (random sample in-ventory) of which could be influenced (ela-borated or improved) by the concept origi-nator.

Three projects concerning inventory com-parison and period analysis were finished in the first phase of the study, lasting from 1988 − 1990. (authors: DAMM, FÜRST, STRASSER). For the period analysis, these 3 studies were able to draw on annual key figures from the annual master summary sheet (operational accounting) that had been prepared and arranged by the author for decades. (These key figures include costs, revenues, cost influencing factors as well as production and performance data) (JÖBSTL, 1981). To support value calculations an EDP-program (applying SUPERCALC 4) for forest-related calculations of Norway spruce (FLASCH) was developed. Now a more powerful, flexible and user-friendly version programmed in C is available (JÖBSTL, 1995).

Two further projects were finished in the second phase (HÖBARTH and MATITZ). They deal with the most diverse forest enterprise (swampwood, coppice forest, and low-pro-duction high forest − two separate organi-sational units). Difficulties in this forest en-terprise did not only arise from the great number of different tree species − an espe-cially high percentage of broad-leaved trees − but also from the fact that the time series of operational accounting (BAB) were not available and the related indices had to be

put together from various sources with great expenditure of time.

The last project of this kind was carried out in another Styrian forest enterprise in 1993 and had to be finished with intermedi-ate results only (PIRCHER), which have since been refined in a number of relevant points. Peculiarities of that enterprise were that the previous inventory was hardly usable, and that we could not influence the design of the new inventory directly.

The catalogue of indices for the inventory comparison

Focal element and basis of all projects is a catalogue of indices created for the phase of the inventory comparison, where predo-minantly non-monetary quantity components are included, which, ultimately, will lead to monetary values (see page 57). The overall total of indices allows a general quantitative and verbally qualitative assessment of chan-ges in forest state and (financial) perform-ance capacity.

Three types of monetary values1 provid-ing compact information on changes in for-est assets, are derived in the calculation:

The stumpage value, as market value (tim-ber sales revenue minus harvesting and re-planting costs) of the growing stock of all stands over 60 years, supplemented by the production value of the younger stands, the expectation value as discounted net revenue (determined in the long-term forecasting) and the sustainable production capacity, as long-term average of the expected annual reve-nues. Standard prices and standard costs are used in order to separate (eliminate) influ-ences (deviations) due to changes in timber prices or factor prices as well as cost reduc-tions in consequence of improved technical methods. The differences of the monetary values (from two set dates) are compact in-dicators of changes in forest assets.

1 In a sustainably managed forest enterprise, where

there is no intention to sell the entity or parts of it, open market values of forests are of little use and can hardly be determined from the small number of transactions (sales). Furthermore they do not allow conclusions on changes in value caused by good/ bad management. Cost values on the other hand are equally unsuitable for judging performance as there is no measure for the appropriateness of in-puts (costs). In the last consequence, the market price of goods and services is the benchmark for economic objects.


The changes in the forest assets can be de-duced directly from the differences of the monetary values.

Most important findings and criticism of prac-ticed forest management planning and accounting

Inspite of various problems this approach has stood the test in practice. The difficul-ties in the practical application − not con-sidering the relatively high amount of work and the requirement for improved tools − are nearly exclusively due to quantatively and especially qualitatively insufficient data and records from the past.

Because of inferior past inventories, exe-cution records and planning that were not sufficient for planning, valuation and con-trol purposes, parts of the concept could not yet be completed, at least not entirely. Above all, a lack of assessment-related data from past inventories is evident. The main prob-lem, however, is the relative impossibility of comparing data from different invento-ries, one reason being that documentation of the procedures of data survey, the data processing and the analysis of data is poor (e.g. there is a lack of information from for-mer inventories on measuring height, ap-plied stem-form models, treatment of col-lected field data etc.).

Faults in the available data Faults concerning former inventories can be summarized as follows: inconsistent data-recording in successive inventories and, as a consequence, limited comparability, insufficient attention paid to value-related criteria (not recorded or not sufficiently de-tailed; recorded but not analysed and inter-preted), blurred definition of features or indices, so that room for discretion was too large al-lowing different assessments of one and the same situation. Freedom of choice within the assignment of specified characteristics, for example, in case of multiple damage on one single stem, is an evident consequence of badly defined surveying instructions, lack of detailed, comprehensive docu-mentation on how forest inventory recording and/or data analysis was carried out. Igno-rance of the fact that the procedures applied in the two inventories to be compared were

different, automatically leads to misunder-standings, and consequently, to mistakes in interpretation (regarding heights, volumes, site classes), inexact recording instructions and/or lack of documentation of abnormal or unusual characteristics or of deviations from given procedures (insufficient reports, or lack of reports regarding inventory design).

In the case of enterprises with several (three or more) main tree species, the analysis proved to be very labour-consuming. There is a lack of support from the forest manage-ment planning and the growth and yield sciences. Growth models and yield tables, which are now available, have so far only been prepared for monocultural stands (pri-marily for spruce).

Faults concerning accounting data (non-monetary and monetary) predominantly com-prise: missing data, faults in recording, insufficient differentiation of data, lacking compilation in time series (en-terprises participating in the Austrian cost survey project (JÖBSTL, 1981) have better do-cumentation than other forest enterprises).

Accordingly, the possibilities and validity of time series analysis (performance analy-sis for the previous planning period) were reduced. Nevertheless, this part of the scheme provided important results and insights; and it provided an essential improvement upon former financial statements and economic assessments. The latter serve as important fundamentals for planning.

Assessment of the concept and the results

Under the conditions given in practice, with insufficient data recording, the most impor-tant benefits of this study for the individual forest enterprise were: the purpose-oriented design of the sampling instructions; the goal-oriented formulation of the necessities for a demand-oriented forest inventory; and, the determination of the requirements to be covered by book-keeping (recording of phy-sical and financial quantities).

The new inventory, in combination with the recording concept, ensures an informa-tive achievement analysis and forest state comparison for the forthcoming period. Thus, the prerequisites for the future application


of the procedure are created. They are as follows: • a target-, decision-, planning- and evalu-ation-oriented forest inventory • current recording of cost and (monetary) performance data as well as the documen-tation of relevant influence factors.

Conclusion

The trials have clearly confirmed the suit-ability of the approach for practical use as well as the usefulness of the approach as such. For the general practical application of the concept, however, there is still need for further research and development: further research on stand growth models and yield tables for specific situations (e.g. mixed species stands), improvement of forest-related computer-aided calculation models, training of foresters in demand-related in-ventory procedures (goal-oriented thinking etc.), finally, the development of forest-stand-based, computer-aided comprehensive in-formation systems (including GIS).

Whereas item 1 is a research request for the colleagues in growth and yield science, managerial economists and forest management planners will have to become engaged in items 2 − 4 (see above) in the future.

It is not necessarily the supreme target of the application of the proposed concept to ensure complete and detailed numerical implementation of single components, but rather to make foresters familiar with a use-ful thinking scheme, by which their work is guided and the results are examined. The basic ideas of the concept comprise valu-able guidelines/gauges, outlines and a frame-work for a comprehensive consideration of forest operational management planning and controlling.

Thinking in terms of the concept and deriving (recording, analysing, comparing) a few central key values (indices) already constitutes a big step towards consideration of forest assets and their sustainable per-formance capacity within economic reflec-tions.

So, the main purpose of the concept framework is to integrate forest assets into

the forester's pattern of thinking, rather than its complete realization in a computer-aided calculatory program.

Bearing these goals in mind, the fruit-fulness and usefulness of the approach are clearly proven.

References

Brabänder, H.D. (1965): Stand, Möglichkeiten und Grenzen der forstlichen Erfolgsrech-nung. Schriftenreihe der Forstlichen Abtei-lung der Universität Freiburg i. Br., Band 4, pp. 156-171.

Henne, A. (1973): Forsteinrichtung als be-triebswirtschaftliche Planung und Kontrol-le. Mitteilungen der Hessischen Land- und Forstverwaltung, Band 11, 79 p.

Jöbstl, H. (1980): Periodische Erfolgsbeurtei-lung des Holzproduktionsbetriebes. In: Bei-träge zum IUFRO-Symposium "Forest Man-agement planning and managerial econo-mics", 1.-5. Juni 1980, Gdansk (Polen) 1980, pp. 5 - 11.

Jöbstl, H. (1981): Kosten- und Leistungsrech-nung in Forstbetrieben. Eine Anleitung für die Betriebsabrechnung mit dem EDV-Pro-grammpaket der Universität für Bodenkul-tur mit einer einführenden Grundlegung. FOWI-Schriften, Band 6. Österr. Agrarver-lag, Wien, 168 p.

Jöbstl, H. (1987a): Mittelfristige Erfolgsanalyse des Forstwirtschaftsbetriebes auf der Grund-lage der Forsteinrichtungsinventur und der Vollzugsnachweise. Allgemeine Forstzeit-schrift 42:433-436.

Jöbstl, H. (1987b): Erfassung und Bewertung von Waldschäden im Rahmen der Forstein-richtung. Österreichische Forstzeitung 98:2: 22-26.

Jöbstl, H. (1995): Contributions to Managerial Economics in Forestry. Reader. Österr. Agrarverlag, Wien, 118 p.

Jöbstl H. (1996): Umtriebszeit der Fichte unter geänderten Marktbedingungen. Projekt-Ab-schlußbericht (unpublished), Wien, 105 p.

Tzschupke, W. (1992): Die forstliche peri-odische Erfolgskontrolle in der Bundesrepub-lik Deutschland – Eine Darstellung ihrer geschichtlichen und theoretischen Grund-lagen sowie ihrer gegenwärtigen Praxis mit Vorschlägen für ihre Weiterentwicklung. Schriftenreihe der Fachhochschule für Forst-wirtschaft Nr.02, Rottenburg a. N., 211 p.


Example Excerpts from application of the concept to an Austrian forest estate

I. Catalog of indices of forest state − Comparison of two forest inventories

Random Sample Inventory for Forest Estate "High Forest" 1990 Comparison of some characteristics 1990 to 1974

Characteristics 1974 1990

Alterations to 1974 absolute relative (%)

1. Forest area (hectares) 571 561 - 10 - 2 2. Growing stock total

(solid cubic metres)95,400 58,700 - 36,700 - 38

3. Growing stock per hectare (solid cubic metres)

167 105 - 62 - 37

4. Final mean annual increment (s.c.m.)

1,643 1,480 - 163 - 10

5. Stocking index 0.82 0.76 - 0.06 - 7 6. Yield class (mean annual

increment at age 100 years)

Pine 5.8 5.5 - 0.3 - 5 Spruce 6.6 9.1 + 2.5 + 38 Other Coniferous 5.2 5.0 - 0.2 - 4 Oak 4.9 4.4 - 0.5 - 10 Other Broadleaves 4.8 4.5 - 0.3 - 6

7. Percentage portion of species area

Pine 62.0 37.2 - 24.8 - 40 Spruce 3.0 3.6 + 0.6 + 20 Other Coniferous 6.0 4.1 - 1.9 - 32 Oak 16.0 14.5 - 1.5 - 9 Quercus cerris 5.0 18.0 + 13.0 + 260 Other Broadleaves 8.0 22.6 + 14.6 + 182

8. Average age of stands (years) 47 49 + 2 + 4 9. Unstocked area (hectares) 74 18 - 56 - 76

10. Regeneration under cover (in stands > 60 years old) (hectares)

n.a. 34 ? ? n.a. = not available

Remarks: ad 6: 1974: Yield tables by Frauendorfer 1990: Yield tables by Marschall (Spruce Bavaria; white-pine-

tables for black pine) Explanations (argumentation): . . . . .

11. Damages: Area of damaged stands in % of total forest area ([:] = Table) [:] 12. Bark peeling (damages) in stands ≤ 60 years (in percentage of stems) [:] 13. Damages: Stem characteristics in age class III+ (% of growing stock) [:] 14. Area (hectare) and yield class (EKL) of main tree species by age classes [:] 15. Growing stock per hectare (solid m³) and stocking-degree by age classes [:] 16. Diameter at breast height (cm) and average age (years) by age classes [:] 17. Damage situation (areal characteristics) in % of area by age classes [:] 18. Damage situation (stem-related) in % of growing stock by age classes [:] 19. Stand density (stem number per hectare) (BHD ≥ 4 resp. 8 cm) by age classes [:] 20. Tending state and required measures (in hectare) by age classes [:]


21. Comparison of forest assets (values in million AS)

Value types 1974 1990 Alterations to 1974 absolute relative

a) Annual performance (value) (Sustained Output Capacity) 0.90 0.77 - 0.13 - 14

b) Production- / Stumpage value (Linear Model Jöbstl 1978, p. 169) 41.0 28.5 - 12.5 - 30

c) N.D.R. 4 % (Net Discounted Revenue: contribution II minus overhead) 7.4 4.8 - 2.6 - 35

The presentations of results are supported by graphic charts. The following show some ex-amples from the "High Forest" Estate:

Comparison of forest inventories by age classes

1974 TREE SPECIES

DAMAGES

Bark-Peeling (BP)

Mist. + Log. + BP

Mistletoe (Mist.)

Mist. + Log.

Logging (Log.)

Browse

None

0

50

100

150

200

Clearing I II III IV V VI VII+

Age Class

Area (ha)

Other Broad Leaf

Clearing

Oak (Q. cerris)

Oak (other)

Black Pine

Scotch Pine

European Larch

Spruce, Fir

1990

0

50

100

150

200


Age Class

Area (ha)

GROWING STOCK

Clearing

Other Broad Leaf

Oak (Q. cerris)

Oak (other)

Black Pine

Scotch Pine

European Larch

Spruce, Fir

0

5

10

15

20

25

30


Growing stock (Thousand m³)

Age Class

10

15

20

25

30

0

5


Growing stock (Thousand m³)

Age Class

0

50

100

150

200


Area (ha)

Age Class 0

50

100

150

200


Area (ha) Data not available

Bias: Same percentages as in 1990

Age Class


II. Analysis of execution and results − some selected figures

III. Plan assessment and long-term development preview

0

1

2

3

4

5

6

7

75 77 79 81 83 85 87 89

1000 s.c.m. of harvested timber

Final Felling Intermediate Felling Mean Actual Cut Prescribed Cut

0

10

20

30

40

50

60

75 77 79 81 83 85 87 89

Area in Hectare

Afforestation Meadow Afforestation Reinforcement Planting Thinning Selection Clear Cutting

Average

Prescribed

0 2 4 6 8

10

12

76 78 80 82 84 86 88 90

1000 Austrian Schillings (ATS)

Cost data from theexamined forest enterprise are only available from 1980. Forest surveys were carried out in the

Overhead costsincl silviculture

Annual Net ResultsMaster Summary Sheet

Harvesting costs

Operating result

Due to reductionin forest assets

Average

Operating Result per Hectarrelated on actual feeling quantity

Periods from 1990

FOBSI Simulation – Result Parameters 1000 s.c.m. of timber Million Austrian Schillings (ATS)

Cutting Control Silviculture Control

FOBSI Simulation – State Parameters 1000 s.c.m. of timber Million Austrian Schillings (ATS)

Years

Growing Stock [scm] Gr. Stock Value [ATS] N.D.R. (4 %) [ATS] Felling Quantity [scm] Contribution [ATS]


Ad I catalogue of forest state indices

For the period 1974−1990 (16 years) the Actual-Actual comparison of the analysed forest enterprise shows major shifts in the species composition from more valuable (pine, oak) to less valuable species (Q. cerris, other broad-leaved trees). Furthermore, it documents a considerable decrease in forest assets: 38 % in volume, 30 % in stumpage value, 14 % in sustained output capacity and 35 % in net discounted revenue (N.D.R.). This means a reduction in stumpage value of ATS 1,400.− per hectare and year.

The Target-Actual comparison shows strong negative deviations in stocking den-sity, growing stock, tree species composi-tion, age class structure and tending condi-tion. The preview from 1974 into the future was carried out ex post. The set allowable annual cut was sustainable (inspite of a 4 % reduction in growing stock) the monetary value of the allowable cut (contribution mar-gin) lay 9 % over the long-term average.

Ad II period analysis

The period analysis shows an overcutting (mainly caused by calamities) of nearly 100 % of the allowable cut. The deviation of

the final cutting area is +61 %, of the inter-mediate felling area it is +240 %, and in sil-viculture activities it is +70 %. In monetary terms the actual cutting exceeds the target by 80 % (including not-incurred expenses). Of the book-keeping profit (related to the actual cut) of ATS 1,990.− on average per hectare and year, ATS 1,720.− result from excess cutting and neglected silvicultural measures (i.e. reduction of growing stock value). Hence the true profit is ATS 270.− per hectare and year.

Ad III development preview

The long-term preview shows a sustainable output potential of ATS 0.77 million per year, an increase in growing stock of 5 %, and a further reduction of stumpage value of 40 %. The 1990 N.D.R. (4 %) is 12 % above the long-term average.

The plan for the next medium-term peri-od includes an allowable cut, which is sus-tainable regarding volume, but has a contri-bution margin that is 33 % higher than the long-term production capacity. This diffe-rence has to be attributed as a corrective (reduction in growing stock value) to the allowable cut results of period 1.

Executive summary

Medium-Term Performance Analysis in Forest Enterprises - A Calculatory Approach*

Traditional accounting is not able to deter-mine the periodic performance of a forest enterprise correctly. The registration and val-uation of periodic changes in forest assets face both theoretical and practical problems (i.e. accuracy and costs of inventory, fore-casts, valuation approach, money values, inflation etc.). Not even computer models and computer-aided forest stand databases allow a sufficiently reliable determination of those changes in value that could be rele-vant to taxation. In any case, the consequen-ces of stockpiling for the income tax of the forest owner would not be at all justifiable.

* The Finnish Journal of Business Economics, 45

(1996), 1, pp. 9-10

Even without the liability to render account or present tax statements the managers will require information about the effects of their management on forest assets (e.g. for purposes of planning, control, comparison between the planned and the actual states of the forest). Normally, this information is obtained by calculations that are not part of bookkeeping. Usually, the results from the operating account are translated into the allowable cut in order to determine those parts of the profit shown in the balance sheet that are a consequence of changes in assets. This simple calculation is not more than a first step, which has to be followed by a transla-tion into the detailed allowable cut (in re-gard to the structure of tree species, wood as-


sortment, harvesting sites) as a second step. Silvicultural activities must then be consid-ered in yet another calculation (comparing the planned and actual results of the measures).

The author has developed a method for the medium-term analysis, which has been tested in several forest enterprises. In com-bination with the forest inventory, a compa-rison of the states of the forest (actual state − actual state), a comparison between the planned state and the actual state of the for-est, an examination of the sustained perform-ance capacity on the basis of a long-term forecast of the business development, and an assessment of the medium-term plan with regard to its long-term effects on assets, are carried out. The measures defined in the me-dium-term plan (wood harvesting, silvicul-ture etc.) are compared with the actual situ-ation (execution), and the variances are val-ued by means of standard costs.

The results of the analyses are a cata-logue of physical and monetary characte-

ristics of the forest state and the periodic results (absolute, relative and differential figures). Their combination allows an as-sessment of the asset-creating effects of the expired period. As far as possible and rea-sonable, the physical data will be comple-mented by monetary values. This approach is supported by a set of calculation and dev-elopment simulation models.

In addition to its practical use, this con-cept can also render useful services to im-prove the (forest-related) thinking of both eco-nomists and foresters.

The paper submitted briefly describes this concept and informs about experiences and conclusions from case studies. The most important prerequisite for its application in practice is the improvement of data record-ing in the course of forest inventories and current accounting. Here further steps have to be made. Proposals as to how to do this are an important intermediate result of this study.


DYNAMIC TRANSITION MODEL

A concept and tool for forestry planning and valuation*

Hans A. JÖBSTL

Abstract

This paper introduces the dynamic transi-tion model, a conceptual approach to describ-ing and representing the temporal dimen-sions of a forest enterprise or management class, initially formulated in 1972 (JÖBSTL, 1972, 1973) and developed further in recent years (JÖBSTL, 1997).

Analysts can use the model to evaluate alternative management strategies, carry out yield prognoses and valuations, and study changes and transitions in forest states. Re-sults obtained from the model are a meas-ure for the performance of the individual for-est enterprise.

Keywords: Transition model, long-term simulation, forest asset valuation, sustainable performance ca-pacity, forest regulation, normal forest and target forest, measures of performance.

1 Introduction

In economics, models are of major theoreti-cal and practical importance. They help to formulate and clarify theories and are es-sential for establishing forecasts and assess-ments. In practical decision making, the main purpose of models is to analyse and evalu-ate alternatives by anticipatory determina-tion of possible consequences. In addition, they are of major significance in teaching, i.e. thinking in terms of systems and inter-relations.

From a business point of view, a model that includes forest assets could be based on the following concept of a forest enterprise. Factors of production, such as land, grow-ing stock (forest stands), forest roads, ma-chinery, equipment, labour, services, and tech-nology are invested, combined and trans-formed into products and services with the help of nature. The resulting outputs are either external output and as such sold on the mar-ket (timber, minor forest products, services)

* SOR'97. Proceedings of the 4th International Sym-

posium on Operations Research, Preddvor/Slovenia, 1-3 October 1997, Ljubljana 1997, pp. 273-278.

or consumed by society free of charge (non-market benefits), or internal output which is reinvested as long-lived assets, such as growing stock, buildings and roads, which in turn become an input for the following pe-riod. Time is the most important dimen-sion. Processes need to be seen in relation-ship to time, which is divided into time seg-ments called also time periods. Plans, re-ports on the implementation of activities, physical and financial statements of account and inventories are given for the time seg-ments. In business management, the usual time horizon is one year, and in forest man-agement planning, medium and long-term plans frequently cover a period of ten years and more. Short, medium and long-term plans are closely interconnected.

Activities in forestry are economic in nature and are, therefore, principally goal-oriented. We may distinguish between for-est state objectives and output objectives. The latter are the business management objec-tives in the narrower sense. However these objectives are multiple and interlinked. Out-put objectives have an impact on forest state objectives and vice versa. This is true regard-ing short, medium and long-term perspec-tives. Timber production involves a lengthy span of time between input and output. Tra-ditional accounting systems deal inadequately with forest-related changes and actual-state parameters.

As targets concern the future, forecasts are of vital importance. The future perform-ance of a forest estate (e.g. increment, yields, etc.) is mainly determined by the forest struc-ture, and by the future management activi-ties. The forest structure is characterised by age-class distribution, volume of growing timber, species, site class, stocking index, state of health, etc.

Because of the long time span between input and resultant output, any economic evaluation of a forest enterprise or of silvi-cultural measures and strategies must be seen from a long-term perspective. Input/output relations have to be considered explicitly.

Preddvor 1997 Dynamic transition model 63

2 Materials and Methods

Fig. 1 outlines the actual state of a manage-ment unit, a distant target state and, in bet-ween, the transition period, consisting of sev-eral time periods, each characterized by its periodical results or output objectives. Ana-logously, interim forest state targets can be defined for the end of each time period. The ACTUAL state is determined by forest inventories, the TARGET is predetermined by establishing objectives and plans; thus ensuring OUTPUT results of the transition period.

The figure illustrates a conceptual frame-work for developing the "forest estate" sys-tem over time. Instruments for its quanti-fied computation are mathematical program-ming and simulation (see e.g. DYKSTRA, 1984; JÖBSTL, 1978; LEUSCHNER, 1990). The so-called "utilization plan" is of central impor-tance since it embraces the advance and fi-nal fellings in the course of time and all other production measures and is reflected in parameters, such as size of area to be treated, volume of timber harvested, labour and machinery requirements, returns, ex-penditure, and profit contribution.

2.1 Models and calculation experiments

Objectives are the guidelines that provide orientation. The task is to find means by

which the objectives can be attained. Con-ceptually the question is "What happens, if..." (IF-THEN). Basically, there are two types of questions to be distinguished: • Type 1. Given (IF): actual state plus stra-tegies/measures. To be determined (THEN): target state plus external output. • Type 2. Given (IF): actual state plus tar-get state. To be determined (THEN): the means (measures and external output) re-quired to arrive at the aim.

The target state can be studied statically in its structure and sustainable future output by means of the normal forest model or its modified forms, designed as target model, which have been adapted to reality (JÖBSTL, 1987; KIRALY, 1986; KURTH et al., 1978; SUZUKI, 1983). This study provides infor-mation on average values of growing stock, annual increment, fellings (yields), contri-bution margins, and net income per hectare. These parameters are measures for the sus-tained output capacity of a forest manage-ment class (see e.g. Table 1; Note: Exam-ples are included in this text to illustrate the function of the model and to show how re-sults can be presented in graphs and tables. The actual figures are of minor importance in this context).

In practice one is hardly ever confronted with a normal forest, but with real ones sub-

ACTUAL- I N P U T / O U T P U T TARGET- state state

Objectives per Time Segment (Balance of Receipts and Expenditure; relative Share in Overall Financial Excess; Volume of Timber Felled)

REAL Additional Constraints (Upper Limit of Regeneration Felling, DESIRED specific Lower Limits of the Average Age and the Asset Value of Structure of Management Unit the Forest, Minimum of Infrastructural Benefits) Management Unit

Figure 1: Scheme of a sustained yield model in forest management (JÖBSTL, 1973)

TRANSITION PERIODTime Segments

Time


jected to dynamic changes. Seen in terms of business management, the transition period, its management activities and economic re-sults (woodflow, costs, revenues, etc.) are, therefore, of primary interest. Consequently, additional tools are needed. The problem of modelling the transition period has been ad-dressed by several authors in the past three decades (e.g., GEROLD, 1989; JÖBSTL, 1973, 1978; KOUBA, 1989; KURTH et al., 1978; MÖHRING, 1986; NAVON, 1971). The transi-tion phase, i.e. the phase from existing for-est to desired future forest is to be analysed dynamically over time, as for instance in the sense of dynamic programming (ZADNIK, 1990). It is characterized by an original state and different transitional situations (states, events, interferences) and as well as the chan-ges thereby effected. The results allow for the development of objectives and manage-ment patterns over time.

The output and, consequently the eco-nomic value of an individual forest enterprise or management class, are determined from the combined results of both analyses that have been introduced. The actual value of a management class is determined by forth-coming results during the period of transi-tion, on the one hand, and by the results of

the normal forest model, on the other.

Total output Otot is calculated as:

Otot = O(N) + O(T), where

O(N) is sustained output after at the end of si-mulation (derived from normal forest model) and O(T) is output of transition period (derived from dynamic transition model).

Depending on the course of graphs of the relevant parameters and on the given time preferences (rate of interest), different for-est values will may result (see for example, Table 2). By means of a simulation model, the values of the relevant parameters (phy-sical and monetary, actual-state and output) can be determined in the transition period. Table 2 shows, for example, several results of two computation variants for an actual forest enterprise in Austria, created with help of the model "FOBSI" (Acronym for the German word FOrstBetriebsklassenSI-mulator, meaning forest management class simulator).

2.2 Long-term simulation model FOBSI

Basically, FOBSI consists of a module for inventory, one for strategy and one for up-

Table 1: Normal forest management class (Rotation period = 110 years) - Results of two variants:

[W] with and [R] without game damage

Age class structure

Variant Loss due to damage*

Parameters (values per hectare) WITH

DAMAGE [W]WITHOUT

DAMAGE [R] Abs. Rel.

GROWING STOCK m3 u.b. 245 257 12 5

INCREMENT / year m3 u.b. 7.0 7.1 0.1 1

Final Felling Volume / year m3 u.b. 4.6 4.7 0.1 2 Advance Felling Volume / year m3 u.b. 2.4 2.4 - - TOTAL FELLING VOLUME / year m3 u.b. 7.0 7.1 0.1 1

Contribution Margin Final Cut / year ATS 2,732 3,024 292 10 Contribution Margin Advance Cut / year ATS 399 645 246 38 TOTAL CONTRIBUTION MARGIN / year ATS 3,131 3,669 538 15

NET INCOME / year ATS 1,131 1,669 538 32

VALUE of GROWING STOCK (stumpage) ATS 89,000 104,000 15,000 14 PRESENT VALUE of NET INCOME (4%) ATS 28,275 41,725 13,450 32

* In this example of a forest enterprise, a high percentage of stems were damaged by game. As a consequence of bark-peeling by red deer in young and middle-aged stands, rot frequently occurs, stems are devaluated, stability is re-duced and stocking is diminished. Along with problems in regeneration this leads to increased costs and decreased revenues.

1 Euro = 13.7603 ATS


dating. Management strategies, growth mo-dels and a time controller change the present state of the management class in the direc-tion of the target state (JÖBSTL, 1978, 1987, 1995). The procedure is roughly as follows. Based on the forest inventory, describing the ac-tual state of the forest, and by simultaneously respecting the constraints (representing peri-odic targets and restrictions), the mature stands are "harvested" unit by unit (0,1 hec-tare each), applying certain priority rules (e.g., distribution pattern of final felling age, transition probabilities, eldest stands to be felled first, value increment related prefe-rences). Then, the economic consequences of the "felling", the connected activities (e.g., silvicultural measures) and economic results (timber, costs, revenues) as well as the result-ing changes in the forest states are calcu-lated. At the end of each time period, the stands are updated by one decade, and a cal-culatory inventory is carried out. This in-ventory is the starting point for the next time period, and the felling rules are ap-plied to the new inventory. This procedure is carried out repeatedly.

The conditions and economic results of the transition period are described by a set of indicators and are presented graphically and in tables. These results, in combination with the results of the target forest, are a measure for the actual asset value of the real management class, and as such, an as-sessment based on expected future results (type and volume of activities, costs, returns).

2.3 Development of parameters according to time, and the present worth (NPV)

The development curves of the parameters over time are taken as the basis for valua-tion and assessment of alternatives. The val-ues of the output parameters are then trans-formed into average values as characteristic figures of a partial period. Furthermore those output parameters, which have been evalu-ated in monetary terms are used to calculate net present values by means of discounting (interest rate as an expression of time prefe-rence of the owner). [Attributing monetary values (value ratios) to physical state and output variables is necessary in order to render different timber species, grades and quali-ties etc. comparable, and thereby addable, al-though future prices, costs etc. are unknown.] The discounted value represents the present value of forest returns, assuming stability of price and costs over time. The curves of the financial contribution margin and its discounted value show notable differences.

Fig. 2 gives examples for question type 2 (see paragraph Models and calculation ex-periments), pertaining to different ways, re-presented by three different felling rate for-mulas, of attaining a predetermined target. Note that all three variants lead to sustain-ability in the long run. Although the total results in the overall transition period are almost equal, the felling strategy of variant 3 reaches only 77% of the discounted pre-sent value of forest returns in variant 1. The differences are the consequence of diverg-ing occurrence of receipts and payments

Table 2: Transition model (Transition period = 120 years) - Results of 2 variants from a forest enter-prise: [W] with continuing infliction of damage (continued damage) and [R] after reducing the game population (reduced damage)

Variant Difference

Parameters (values in ATS per hectare) CONTINUEDDAMAGE [W]

REDUCED DAMAGE [R]

Absolute (ATS)

Relative (%)

AVERAGE FINANCIAL TRANSITION years 1 - 40 3,347 3,337 -10 - CONTRIBUTION PERIOD (T) years 1 - 120 3,227 3,448 221 6 MARGIN (F.C.M.) after T (t=120) normal forest 3,131 3,669 538 15 PRESENT VALUE OF FUTURE F.C.M.

t0 Interest rate (I.R.)(time preference)

4 %2 %

83,874164,300

84,684171,200

810 6,900

1 4

(dynamic sum accor-ding to KRIEGER, 1966)

t120 Interest rate (I.R.) (time preference)

4 %2 %

78,275156,550

91,725183,450

13,450 26,900

15 15

COEFFICIENT of sustainable PERFORMANCE CAPACITY

Interest rate (I.R.) (time preference)

4 %2 %

3,3553,286

3,387 3,424

32 138

1 4

1 Euro = 13,7603 ATS


over the course of time and the chosen in-terest rate, expressing the time preference of the owner. The lower the interest rate is, the smaller is the difference. By using a computer, models can be calcu-lated in several variations. It is, for instance, possible to account for uncertainties and risks such as calamities, timber price variations, forest damage, etc. in the simulations. Cala-mity variables can be estimated on the basis of historical data; and risks can be deline-ated by calculating optimistic, probable and pessimistic variants.

3 Conclusion and Discussion

The model presented allows for a wide range of applications, and is particularly useful for analysing alterations, changes and transi-tions of a forest estate which should only be done dynamically. Therefore, it is espe-cially of benefit for: Forest valuation: valuation of the actual forest state on the basis of future output, that is, discounting of the financial yield series plus additional evaluation of other target com-ponents according to their long-term develop-ment. Evaluation of plans as a basis for deci-sions making: design of alternative utiliza-tion plans and their evaluation as a basis of medium and long-term planning; analysis of long-term strategies; examination of plans as to sustained yield; complex regulation to ensure sustained yield while taking a vari-ety of factors into account. Other manage-ment functions (purchasing, funding) and forest social benefits can - at least partly -

be included, evaluated and accounted for as constraints. Identification and specification of objec-tives: apart from evaluating plans and long-term strategies as for example game and peeling damages, identification and specifi-cation of objectives are facilitated. Devel-opments and correlations (cause-effect) are clearly depicted, which paves the way for a decision as to which aims and results are to be striven for (sustained financial yield, supply, reserves, growing stock, etc.). Providing foresters with a better under-standing of the forest enterprise (thinking in terms of systems and long-term cause-ef-fect relationships): such models illustrate the relationship of forest and business man-agement in an enterprise and their relation to other management functions such as the effects of different felling rate formulas on growing stock, increment, harvest, forest value; the problems of short-term budget-oriented thinking (implementation or omis-sion of cultivation and tending measures, damage inflicted to forests, over-cutting and under-cutting) and their long-term economic effects. Such illustrations promote long-term thinking in terms of sustained yield which is geared to the needs of a forest enterprise. Regional forestry scenario analyses: ex-amples include examining certain effects of damage caused by air pollutants; investi-gating the long-term consequences of chan-ges in production objectives and rotation periods (e.g. timber of large versus small di-mension); analysing the market potential of increased intermediate felling.

Figure 2: Comparison of three simulation variants created by FOBSI (different felling rate strate-gies, identical actual and target state)

FINANCIAL CONTRIBUTION MARGIN (FCM)

10-year Periods

ATS/ha/year

PRESENT VALUE OF FCM (4 %)

Time from Present (years)

1.000 ATS/ha


Retrospective medium-term performance analysis of the forest enterprise: determina-tion of medium-term alteration in forest state by means of two forest state inventories (original at t1 and actual at t0); comparison of physical and monetary performance ca-pacities of the two inventories; comparison of planned and actual performance capacity of the forest; identification of deviations and analysis of causes.

In the practice of Central-european forest en-terprises medium and long-term forest man-agement planning - dealing exclusively with physical terms - and business management – taking up monetary values - are customary more or less separated fields of enterprise management with little connection and co-ordination. From a system point of view, however, they are interconnected in medi-um and long-term targeting, planning, and performance evaluation. The specifying of objectives and the ensuring of a sustained yield require a prospective analysis of pos-sible future enterprise developments through long-term simulation of operations. Static and dynamic sustained-yield models for man-agement classes are thereby the key element.

The actual forest state is compared or conceptually related to the normal forest model or its sub-forms, which have been adapted to reality through positively skewed age-class distribution, varying stocking den-sity, different species distribution and yield classes. By means of normal forest model calculations it is possible to analyse man-agement alternatives such as rotation cyc-les, cultivation measures, thinning intensi-ties, game densities, etc., to establish yield forecasts and to perform evaluations. The transition phase from the current forest state to the normal or target state can be illustra-ted and calculated in the dynamic transition model. (Note: It is appropriate to attribute monetary values to physical actual-state or output parameters, in order to correctly de-pict the economically-relevant relationships between different objects relative to the ob-jectives). The results derived from the tran-sition period are both the basis of and meas-ure for plan evaluations and management valuations. The "normal" and the "transition" models, taken together, supply data for stra-tegic decision making, planning alternatives and forecasts of their impact as well as and

evaluating management, forest estates, etc. The dynamic transition model illustrates

most clearly the relationship between forest management planning, usually focused on physical parameters, and forest business management, which uses evaluation criteria based on economic rationality and financial targets. Business management considera-tions that fail to include the resultant chan-ges in the structure of a forest do not make sense and will lead to misdirected judge-ments. The model helps to overcome the problem of inadequate accounting for the most important forest asset, i.e. forest stands, in book-keeping. However, forest manage-ment planning can only be part of medium and long-term economic planning in for-estry. This ranking of subjects is not a ques-tion of delimiting disciplines and their re-presentatives. It is a question of holistic think-ing and global approaches from a system-oriented perspective. As subjects, both dis-ciplines are equally legitimate and impor-tant. In practice, however, they must not be dealt with or implemented independently of each other.

4 References

Dykstra, D.P. (1984): Mathematical Program-ming for Natural Resource Management. McGraw-Hill, 318 p.

Gerold, D. (1989): Simulation als Grundlage komplexer Nachhaltsregelung. Sozialisti-sche Forstwirtschaft 39: 116 - 120.

Jöbstl, H. (1972): Die Modellanalyse im Ent-scheidungsprozeß. In: 100 Jahre Hochschu-le für Bodenkultur in Wien, Vol. 4, pp. 31 - 47.

Jöbstl, H. (1973): Ein Modell des Forstbetriebes. Österr. Agrarverlag, Wien, 208 p.

Jöbstl, H. (1978): Unternehmungsplanung in der Forstwirtschaft. Österr. Agrarverlag, Wien, 212 p.

Jöbstl, H. (1987): Betriebsklassensimulationsmo-dell FOBSI. Ö. Agrarverlag, Wien, 112 p.

Jöbstl, H. (1995): Contributions to Managerial Economics in Forestry. Österr. Agrarverlag, Wien, 118 p.

Jöbstl, H. (1997): Umtriebszeit der Fichte unter geänderten Marktverhältnissen – Simula-tionsmodelle FOWISIM und FOBSI. Eigen-verlag, Wien, 128 p.

Kiraly, L. (1986): Modelle für Waldfondspro-gnose und Ertragsregelung. In: Wissenschaft-liche Tagung in Tharandt 1986, Vol. 2, pp. 170 - 187.


Kouba, J. (1989): Control of the Conversion Pro-cess towards the Stochastically Defined Normal

Forest by the Linear and Stochastic Program-ming. Lesnictvi, 35: 1025 - 1040.

Krieger, H. (1966): Grundgedanken der forst-lichen Betriebswirtschaftslehre. Schaper, Hannover, 164 pp.

Kurth, H. und Gerold, D. (1978): Simulations-modelle für die Nachhaltsregelung. Beiträ-ge für die Forstwirtschaft 12: 51-54.

Leuschner, W.A. (1990): Forest Regulation, Harvest Scheduling, and Planning Techni-ques. J. Wiley & Sons Inc., Toronto, 281 p.

Möhring, B. (1986): Dynamische Betriebsklas-sensimulation - Ein Hilfsmittel für die Wald-schadensbewertung und Entscheidungsfin-dung im Forstbetrieb. Berichte des For-

schungszentrums Waldökosysteme/Wald-sterben der Universität Göttingen, 268 p.

Navon, D.I. (1971): Timber-RAM ... A Long-Range Planning Method for Commercial Timber Lands under Multiple-Use Manage-ment. USDA Forest Service Research Pa-per PSW-70, Berkeley, 22 p.

Suzuki, T. (1983): Gentan-Wahrscheinlichkeit – Vorhersagemodelle für die Entwicklung des Normalwaldes und für die Planung des Holzaufkommens. In: Schriften aus der Forstlichen Fakultät der Universität Göttin-gen, Vol. 76, Frankfurt/Main, pp. 7 - 22.

Zadnik Stirn, L. (1990): Adaptive Dynamic Mo-del for Optimal Forest Management. Forest Ecology and Management, 31: 167 - 188.

Brisbane 2005 Forest assets and environmental benefits in management accounting 69

FOREST ASSETS AND ENVIRONMENTAL BENEFITS IN MANAGEMENT ACCOUNTING*

Hans A. JÖBSTL

Abstract

Management of forests takes place in the institutional framework of forest enter-prises and requires a variety of information. The core instrument of information supply is the accounting system. It provides the basis for decisions and internal controlling, and it is needed for reporting to external stakeholders on economic and social aspects of the forestry operation. Forestry account-ing also has major deficiencies; periodic changes in forest assets are insufficiently recorded, and other achievements, especially with respect to the environment, are not shown adequately. Many approaches have been proposed over time to consider chan-ges in forest assets, but none of them has been accepted in practice. Whereas there are hardly any legal regulations concerning forest asset records in external accounting, it is indispensable for internal accounting to have correct records and examine if targets have been reached. With regard to the envi-ronmental benefits that cannot actually be assessed with a monetary system, so-called performance reports and sustainability re-ports that show primarily physical factors are being examined. On a higher level these performance reports are partially comple-mented by monetary factors. An overview of new developments and related topics with a focus on performance measurement and management control shall be presented and discussed in this paper. Keywords: forest accountancy, sustainability con-trol, performance measurement, forest assets, man-agement accounting

1 Introduction

Rational forest management requires a vari-ety of information from internal as well as * Austrian Journal of Forest Science 126 (2009), 1/2, 5-

19. Revised contribution to session "Innovations in forestry accounting: integration of forest assets and non-market environmental benefits into management and national accounting and reporting". XXII IUFRO World Congress, 8-13 August 2005, Brisbane, Aus-tralia.

external sources. The core instrument of in-formation supply is the accounting system, which fulfills internal as well as external functions. Its primary task is to represent the relevant economic reality (states and flows of goods, services and money) correctly and completely. On the one hand, it provides the basis for decisions and internal controlling; on the other hand, it is needed for reporting to external stakeholders and informing about both the economic situation and the social (non-market) services of forestry (public re-lations); it provides the basis for taxation, etc. Criteria of sustainability related to the envi-ronment are increasingly gaining importance in the reporting process.

Branches of management accounting

Accounting is a comprehensive system com-prising financial, cost and management ac-counting – the latter has been recently ex-panded to include social and environmental accounting (Figure 1).

Financial accounting records flows of money, goods and services from and to the enterprise in monetary terms, and the re-sulting state and changes in assets and li-abilities. Monetary profit is the basic meas-ure of results. Financial accounting is com-pulsory and regulated by law in the case of larger firms according to their legal status. Usually smaller business units do not have any sophisticated or methodical accounting, while medium-sized ones often keep formal records of receipts and payments that are not well suited for management purposes. Financial accounting of the larger estates is on the whole well developed in many Euro-pean countries.

Cost accounting analyzes internal pro-cesses, factor consumptions and perform-ances in detail, and is characterized by effi-ciency criteria. It is well developed in many larger enterprises and delivers many indivi-dual data on profitability in certain fields.

Both systems of accounting cover the production of goods and the provision of services as far as they contribute to mone-tary profit.


Social accounting aims at extending tradi-tional accounting by considering qualitative aspects such as quality of living and welfare.

Environmental accounting reports the enterprises' use of the natural environment, which is both a provider of environmental goods (material and energy flows of all kinds) and a receiver of the enterprises' pol-lution or undesired outputs such as material and energy residues of all kinds. In the case of sustainable forest enterprises the provi-sion of environmental goods and services (e.g. non-market outputs of forestry) is in the focus of environmental accounting.

Management accounting comprises all accounting activities aimed at providing data relevant for management purposes. Its core element is cost accounting.

Recent developments in accounting

There have been several activities in the de-velopment of forestry accounting in the past fifty years. At the national level, especially for specific types of enterprises (private, state-owned, small-sized, etc.): Proposals for financial and cost accounting, establishing of forest accountancy data networks, bench-marking and interfirm comparisons. At the international level e.g. the • IASB (International Accounting Stan-dards Board): IFRS (International Financial Reporting Standards) (IAS PLUS, 2005), mainly

in the field of financial accounting for listed companies, see paper K. HERBOHN (2009). • IUFRO (International Union of Forest Research Organizations): Proposals and recommendations of account frameworks (IUFRO, 1966), cost center accounting, for-ests assets valuation (at the end of the 1950s). Cost accounting, forest assets valuation, for-est performance accounting; environmental accounting; studies on the situation of for-est accounting worldwide (in the 1990s).

In Austria, the proposed approaches for cost center accounting, expense distribution sheets etc. are widely used. The Austrian forestry accounting data network, for instance, has provided an abundance of data from finan-cial and cost accounting of forest enter-prises for 40 years, but their shortcoming is the lack of non consideration of the chan-ges in forest assets. As a first step, the so-called adjustment to the allowable cut has been practically introduced.

Shortcomings of forestry accounting

Consequently, main shortcomings of for-estry accounting are: • neglecting or incorrectly registering any changes in growing stock. • not or inadequately representing other achievements, especially with respect to the environment in a wider sense.

Figure 1: Components of extended management accounting (JÖBSTL and HOGG, 1998)


As a consequence, the results shown by ac-counting are to a certain extent incomplete or wrong.

The main concern of forestry account-ing is in any case the specific element of forestry: the forest, the forest stands, the forest assets and the forest performances. All other aspects belong to general accounting.

There is an ethic commitment of the for-est owner to sustainability (long-term plan-ning and acting) which also means to moni-tor the management and its long-term re-sults, and there is an obligation of the forest manager to report to the stakeholders. There-fore the accounting system has to be im-proved by integrating changes in forest as-sets and enlarged by including social and environmental aspects.

The main problem in forestry perform-ance accounting is (e)valuation • Many approaches have been proposed over time to evaluate forest assets and to consider changes in forest assets, but none of them has been accepted in practice so far. Currently, there are several new and promising approaches to solve these prob-lems. Whereas there are hardly any legal regulations concerning forest asset records in external accounting, it is indispensable for internal accounting to have correct re-cords of forest assets and to examine if tar-gets have been reached. • With regard to the non-market or envi-ronmental benefits that cannot actually be assessed with a monetary system, so-called

performance reports that show primarily physical factors are being examined.

2 The valuation of forest assets

The valuation of forest assets faces a num-ber of practical problems, e.g. • method of evaluation, • forest survey (costs, accuracy), • prices of products and input factors, • forecasting of future development and re-sults.

Principally, the value of any asset is the dis-counted present value of the economic be-nefits it will generate in future years.

The approaches can e.g. be roughly clas-sified into balance sheet (inventory, …) and calculatory approaches.

From the viewpoint of periodic performance assessment one can differentiate between (Figure 2) • approaches with and without monetary valuation • approaches with and without valuation of forest assets.

Several new approaches and proposals pro-mise to improve the controlling process of an enterprise with regard to forest assets and social benefits, and set a focus on perform-ance measurement and management control.

Another central issue is the integration of non-market products and the so-called green accounting. The emphasis is placed on physical factors, satellite accounts and

Figure 2: Classification of methods for integrating forest assets (JÖBSTL and KARISCH, 2001)


performance reports that are partially com-plemented by monetary factors. Conse-quently, we put the focus on performance measurement (i.e. considering changes in forest assets and including non-market bene-fits (NMB)).

3 Approaches for periodical perform-ance assessment considering changes in forest assets

As already mentioned, balance sheet and calculatory approaches are applicable.

Balance approaches try to quantify changes in forest assets in the balance sheet or profit and loss account. They are known from public forest enterprises in Great Bri-tain, New Zealand etc. Recently, scientists from Central Europe have also attempted to fully integrate forest assets into financial accounting. The approach of a German re-search group (BORCHERS, 2000) has been developed on the basis of IAS (Internatio-nal Accounting Standards) and the local commercial law. Forest assets appear as “growing stock” in the balance sheet, but not their periodical changes as revenue/ex-penses in the income statement. A similar study was recently presented for Scandina-vian forest enterprises (PENTTINNEN et al., 2004). Joint-stock companies that are pub-licly quoted are to show forest assets in their balance sheets. Enterprises run by state and pro-vincial govern-ments also strive towards this goal.

In principle, we recommend not to load fi-nancial accounts with this infor-mation but to use the notes for more or less de-tailed descrip-tions. Here it turns out that calculatory ap-proaches can be handled more easily; they set a

framework and out of this framework indi-vidual or all parts can be implemented and performance accounting can, thus, be im-proved step by step. For smaller forest en-terprises, however, it is in any case more reasonable to opt for calculatory approaches that avoid the evaluation of assets.

A calculatory approach to improved periodi-cal performance assessment

In the following, the outline of a calcula-tory approach for the periodical perform-ance assessment shall be presented that con-siders changes in forest assets, avoids the problem of forest assets valuation, and inte-grates environmental services.

Generally adopted by Central European larger forest enterprises is the so called allow-able cut based calculation. The allowable cut is used instead of annual increment as a mea-sure and benchmark of the sustainable pro-duction potential. Deviations between allow-able and actual cut are considered to be an expression of changes in the value of grow-ing stock.

However, this calculation is solely a step in the right direction, and has to be improved by other means, for the following reasons: • problematic derivation of allowable cut (e.g. average of different formula subjective)

Figure 3: Calculatory approach to improved periodical performance

assessment


• re-calculation on the total felling quanti-ty - disregarding tree species, quality, logging site etc. • lacking consideration of the execution of silvicultural measures • proof of changes only in relation to the management plan (allowable cut)

In order to improve this calculation, a cal-culatory approach for a better periodic per-formance assessment was developed by JÖBSTL (e.g. 2000b, 2000c) – starting from balance sheet and income statement.

A model for improving the economic per-formance account by avoiding an assessment of forest assets could look as follows (Fig-ure 3).

Starting from the profit and loss and the cost center accounts with adjustment to allow-able cut, further steps are taken to analyze the silvicultural measures (planned and ac-tual), assess in detail the deviations of ac-tual harvest from the allowable cut, record and assess other aspects such as damage, and describe non-market services. Finally, a medium-term analysis of success is carried out together with the next forest inventory.

Short-term performance accounting

Short-term performance accounting com-prises – advancing from the allowable cut method – the assessment of the following components: • Deviation of allowable from actual cut

sub-divided into tree species, assortments, logging sites, etc. • Deviation of planned and actual silvicul-tural measures • Changes in the state of young stands and tending areas • Damages by calamities and game • Maintenance of forest roads and build-ings • Effects of allowable cut on forest assets • Loss of timber production due to hunt-ing, recreation, etc.

To eliminate or separate the influence of fluctuations in market prices standard prices and standard costs are used.

Expenditures and receipts from infra-structural (non-timber) services are sepa-rated by proper cost center accounting and adequately loaded with overhead costs. Losses and damages caused by calamities, game, and the provision of infrastructural services are calculated on the basis of op-portunity costs. Techniques to estimate the value of non-market goods and forest servi-ces are difficult to apply and in their cur-rent form usually not useful at the enter-prise level.

Medium-term performance analysis

In combination with the forest inventory a comparison of the states of the forest (ac-tual state to - actual state t1) and further ana-lyses can be carried out (Figure 4).

Figure 4: Medium-term performance analysis concept outline


The process concept for medium-term per-formance analysis is essentially based on the fundamental ideas of an actual-actual- and a target-actual-comparison as well as an analysis of deviations and causes. It compri-ses the following components (JÖBSTL, 1996):

Comparison of two consecutive inven-tories (Actual – Actual; Target – Actual) Analysis of the past medium-term plan-ning period – period analysis (control of plan execution and analysis of financial results) Medium-term plan assessment and long-term development preview (forecasting)

Preconditions for this approach are a pur-pose-oriented design of the forest inventory, derived from a carefully created evaluation model, and the determination of the requi-rements to be covered by book-keeping (re-cording of physical and financial quantities).

The results of the analyses are a catalo-gue of physical and monetary characteristics of the forest state and the periodic results (absolute, relative and differential figures). Their combination allows an assessment of the value-creating effects of the expired per-iod. As far as possible and reasonable, the physical data will be complemented by mo-netary values. This approach is supported by a set of calculation and development simula-tion models.

Future perspective (JÖBSTL and KARISCH, 2001)

A possible future solu-tion for the continuous internal control of for-est assets changes has been developed by KARISCH (2003) – a forest stand data base with annual updating of forest inventory data. Combined with plan-actual comparisons for harvesting and tending, simulation of forest stand development as well as monetary valu-ations the annual ob-servation of forest as-sets development should be enabled.

Environmental accounting

Whereas on the international level, several guidelines/proposals to adjust the national accounts in order to provide data on the real social costs and benefits of forestry for society were provided (SNA, SEEA, EEAF) (see paper LANGE and PEYRON, 2005) there are only few proposals for the enterprise level in forestry, namely:

Merlo's step-wise approach to enterprise en-vironmental accounting (MERLO, 1996; MERLO and JÖBSTL, 1999)

Merlo’s approach to environmental account-ing on the enterprise level in forestry and agriculture (Table 1) starts with conven-tional financial statements: balance sheet, profit and loss account of the forest en-terprise following conventional accounting principles. In a second step it separates en-vironmental/recreational activities from conventional ones, i.e. agricultural products and timber from recreational environmental services. In the third step it outlines near market values as perceived by the entrepre-neurs (changes in growing stock, risks due to natural hazards, …) and in the last step it aims at incorporating non-market benefits and costs (externalities), or, at least, provid-ing a framework for their incorporation, as far as they can be shown in monetary terms,

Table 1: Merlo's step-wise approach to enterprise environmental ac-counting

Steps or

levels

Items included in the financial statement

Accounting objectives

Type of profit and loss

1 Financial receipts and expenditures

Private Financial profit and loss

2

Financial receipts and expenditures separated accord-ing to ordinary and

environmental activities

Private with separation of ordi-nary and environ-mental activities

Financial profit and loss separate between ordinary and environmen-

tal activities

3

Incorporation of non-monetary

costs and benefits concerning the en-

terprise alone (hidden values)

Private with consideration of hidden (environ-

mental) costs and benefits

Financial profit and loss plus non-monetary private

profit and loss

4

Incorporation of non-monetary

costs and benefits concerning the

society as a whole

Public Social profit – welfare


or by other means. Satellite accounts and ad-denda including physical/biological aspects can therefore be used.

Jöbstl’s improved short-term performance ac-counting (MERLO and JÖBSTL, 1999; JÖBSTL, 2000c)

This approach is similar to step 1-3 of Merlo's approach, but works without mone-tary evaluation of NMB and infrastructural services. However, a quantitative and quali-tative description of environmentally rele-vant facilities and services of the forest hold-ing is proposed to be presented in a sepa-rate sheet (headers in Table 2).

Table 2: Headers of a catalogue of environmen-tally and socially relevant characteristics

• General characteristics of the forest estate • Forest roads and buildings • Management activities in current period • Marketable non-timber production and

services • Protection, recreation and welfare activities

and facilities • Employment • Negative external effects

Sustainability reporting

Several publicly owned enterprises, e.g. the Austrian federal forest estate, are con-cerned with the elaboration and publication of so called "Environmental Performance Reports", which have recently been expan-ded to Sustainability Reports, including dif-ferent aspects of sustainable forest manage-ment (SFM).

4 Results and conclusions

Finally, it has to be admitted that the tradi-tional accounting system is not even able to provide sufficient information for the Sus-tainable Timber Yield Management and that adequate further developments with re-gard to forest resources are needed. The profit & loss and management performance figures shown by financial accounting are incorrect or misleading, therefore useless for assessing sustainability. While financial ac-counting hardly contributes to forest man-agement, a well developed cost accounting system, however, is an important aid to − continually supervise and control the costs; − examine efficiency in individual areas, projects and processes;

− supervise the processes and results by comparing actual and target values and inter-firm comparisons; − guiding management … and, consequently, guaranteeing sustainability.

Thus, it serves to support the achievement of the sustainability goals but not to meas-ure sustainability, because cost accounting does not consider the changes in forest as-sets either and does, therefore, not permit a correct performance and profit and loss ac-counting.

The traditional accounting system can-not contribute to the new major challenges of SFM such as recording other forest servi-ces apart from providing information about expenses, costs and direct revenues. There-fore, it needs to be complemented by new approaches: − For forest assets valuation, balance ap-proaches und calculatory approaches are un-der discussion. Whereas balance approaches are primarily discussed for enterprises quoted on the stock exchange, for joint stock com-panies and for state-owned enterprises, smal-ler enterprises should consider calculatory approaches. − Forest assets and non-market services are ideally described in annexes without burdening the accounts.

In this context, forest inventory plays a cen-tral role. Currently, there is a lack of data, especially of those that allow a monetary assessment. Forest inventories are planned inadequately. More intellectual input is needed. However, it is a fact that data col-lection and processing are expensive and not feasible for small enterprises. Models and calculation aids are missing. Financing the further development of existing models has a very low priority in practice, since they do not seem to be indispensable for the current management.

Only very few enterprises try to deter-mine the changes in forest assets, most en-terprises do not consider this important or interesting, partly because it is expensive and complicated, and partly because they do not want to know about the facts.

Nevertheless, further efforts are neces-sary, since the provision of information about the state of the forest, forest services and economic outcomes relevant for sus-tainability is the manager’s duty, whereas the


stakeholder needs to go and get the informa-tion. Calculatory methods and sustainability reports are most likely the solutions in the future.

References

Borchers, J. (2000) Überlegungen zur Einbin-dung des aufstockenden Holzes in den Jah-resabschluss von Forstbetrieben vor dem Hintergrund des Paradigmenwechsels inter-nationaler Bilanzierungskonventionen. In: Jöbstl, H.A. (ed.), pp. 37-42.

Herbohn, K. (2009) A preliminary investigation of the reporting of forest assets under Inter-national Financial Reporting Standards. Aus-trian Journal of Forest Science 126(1/2):21-37.

Innes, J.L., Edwards, I.K. and Wilford, D.J. (eds.) (2005) Forests in the Balance: Linking Tra-dition and Technology, XXII. IUFRO World Congress, 8.-13. August 2005, Brisbane, Australia. International Forestry Review 7(5), 414 p.

IAS Plus (2005) IFRS. http://www.iasplus.de/ standards/standards.php

IUFRO (1966) Kontenrahmen für Forstbetriebe. Accounting Systems for Forestry Enter-prises. Plans comptables pour entreprises forestières. Munich, 116 p.

Jöbstl, H.A. (1996) Medium-Term Performance Analysis in Forest Enterprises - A Calcula-tory Approach. The Finnish Journal of Busi-ness Economics 45(1):65-77.

Jöbstl, H.A. (ed.) (2000a) Waldvermögensbe-wertung - Forstliche Erfolgsrechnung. FOWI-Berichte, 15, Eigenverlag, Universität für Bodenkultur Wien, 178 p.

Jöbstl, H.A. (2000b) Grundprobleme der Wald-vermögensbewertung und forstlichen Erfolgs-rechnung. In: Jöbstl, H.A. (ed.), pp. 7-17.

Jöbstl, H.A. (2000c) Verbesserte Erfolgsrechnung unter Einbeziehung der Waldvermögensän-derungen und der Umweltleistungen der Forst-betriebe. In: Jöbstl, H.A. (ed.), pp. 157-171.

Jöbstl, H.A. and Hogg, J.N. (1998) On the State of Forestry Accounting in Some European Countries. Actes et Communications, No. 17, INRA, Paris, pp. 17-40.

Jöbstl, H.A. and Karisch, G. (2001) Waldvermö-gensbewertung für Zwecke der forstlichen Erfolgsrechnung. Forst und Holz 56(23/24): 770-776.

Karisch G. (2003) Berücksichtigung des Wald-vermögens im forstlichen Rechnungswesen. FOWI-Berichte 16. Eigenverlag Universität für Bodenkultur, Wien, 200 p.

Lange, G.-M. and Peyron, J.-L. (2005) Envi-ronmental, social and economic accounting for forestry at national and international lev-els. In: Innes et al. (eds.), 299.

Merlo, M. (1996) Non-Market environmental val-ues in forest management accounting. The Finnish Journal of Business Economics 45(1):29-47.

Merlo, M. and Jöbstl, H.A. (1999) Incorporat-ing non-market outputs into the accounting systems of publicly and privately-owned forest enterprises: an operative stepwise ap-proach. In: Roper, C.S. and Park, A. (eds.), The Living Forest - Non-Market Benefits of Forestry. Proceedings of an International Symposium on the Non-market Benefits of Forests, Edinburgh, 24-28 June 1996, The Stationery Office, London, pp. 341-372.

Müller, D.M. (2000) Bilanzierung des Wald-vermögens im betrieblichen Rechnungswe-sen. Schriften zur Forstökonomie, Band 21, Sauerländer, Frankfurt am Main, 267 p.

Penttinen, M., Latukka, A., Meriläinen, H. and Salminen, O. (2004) IAS fair value and for-est evaluation on farm forestry. In: Pajuoja, H. and Karppinen, H. (eds.), Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, Vantaa, Fin-land, 12th - 15th May, 2004. Scandinavian Forest Economics 40:67-80.

Edinburgh 1996 Incorporating non-market values into the accounting systems 77

INCORPORATING NON-MARKET VALUES INTO THE ACCOUNTING SYSTEMS OF PUBLICLY AND PRIVATELY-OWNED FOREST ENTERPRISES:

AN OPERATIVE STEPWISE APPROACH*

Maurizio MERLO1 and Hans A. JÖBSTL

Abstract

This paper shows that financial accounting is mainly used in large private forest enter-prises (e.g. Austria, Germany, Finland) and also in public forest estates. Sometimes, cost-centre accounting is also implemented. Al-most no accounts for forestry activities are kept in farm accounting systems (e.g. EU-FADN). Meanwhile, 'parliamentary' accounts apply to public forests in several countries. Without adaptation, these accounts are not particularly useful for management deci-sion-making. In any case, little attention is paid to 'environmental accounting', which is a fairly new concept, or even to separat-ing expenditures for stewardship practices like landscape and environmental mainten-ance from timber production.

The paper will propose a framework to improve forest accounting including envi-ronmental non-market values. Several op-tions can be advanced which represent pro-gressive steps: identification of direct environmental ex-penditures; addition of hidden environmental liabil-ities/assets together with the imputed and/or the opportunity costs to provide en-vironmental goods and services; consideration of non-market goods and services, valued also through consumer sur-plus measures.

The steps for environmental accounting should be reflected in both the balance sheets and the profit and loss accounts, though the most advanced steps can be shown by 'sat-ellite' accounts and/or addenda rather than * The living forest - non-market benefits of forestry.

Proceedings of the International Symposium on the Non-market Benefits of Forests, Edinburgh/Great Britain, 24-28 June 1996, The Stationery Office, London 1999, pp. 341-372.

1 Maurizio Merlo acknowledges suggestions and help from Edi De Francesco and Stefano Destro. The Venetian Azienda Regionale Foreste (ARF) has kindly provided data and information. Further elabo-rations, including several estimates, are however his responsibility.

being integrated into the traditional account-ing system. In this context the valuation of forest assets, including natural resources stock, should be linked to forest inventories, extended to cover factors such as biodiver-sity and landscape qualities.

The conclusions of the paper show how a functioning system of environmental acc-ounts at forest level can become an instru-ment for the marketing of 'non-market' goods and services. Additionally, it can assist the design of public forest measures, such as incentives and compensation, which do not give undue consumers’ or producers’ rents. The appendix to the paper shows examples of the approach from a public forest in Northern Italy and a private forest enterprise in Austria.

Keywords: forestry, environment, accounting

1 The state of the art in forestry accounting

Management of forests – for whatever pur-poses – requires a variety of information. The central element for providing this in-formation is the accounting system. Hence accounting is a means necessary for man-aging businesses (planning, decision-mak-ing, controlling), for reporting to the econo-mic and social environment (owners, tax of-fice, etc.), and for policy-making. Data pro-vided by accounting are not only important for the individual business, but also at wider levels: regional, national, super-national.

Schematically a forest enterprise can be represented by states, flows (input and out-put), and transformation processes (Figure 1), which need to be controlled according to goals. Production factors, such as land and labour, are employed and transformed into output. Among the outputs one must distin-guish: marketable goods and services (tim-ber, other forest products), non-marketable goods and those not-for-sale (increase in growing stock), and non-market benefits like recreation and protection. The concept of positive and negative externalities may


be emphasized in this context. Incidentally the latter could be treated as an input. The task of accounting is to give a quantitative picture of stocks and flows – in physical or monetary terms. Evaluations have to be carried out in cases where the goods are not, or cannot, be priced by the market.

From the business organisation's point of view, it is imperative to record all the relevant inputs and outputs and their rela-tionships. Of course non-market outputs have to be included as well as changes in forest stands. This issue has always been, and still is, a weak point in forestry account-

ing systems. Input-output relationships (e.g. asset-profit, cost-benefit) are a most impor-tant measure of performance.

Various branches of accounting have evolved to suit the different subjects, aims, tasks and perspectives, as well as legal re-quirements. Specific systems have to be set up and different methods need to be used. The size of the business plays a key role, as there are size-dependant legal obligations for book-keeping in many European coun-tries. Traditionally, accounting can broadly be classified into financial, cost and manage-ment accounting (Figure 2).

Figure 2: Enlarged classification of accounting

OUTPUT INPUT

RECEIPTS Deposits

Loans

EXPENDITUREWithdrawals

L. Repayment

FUNDING

Forest Firm

PRODUCTION

Combination of Factors Transformation of Input to Output

Sales Market

SALE

(= Returns)

Acquisition Market

ACQUISITION

(= Expenditure)

FOREST STANDS, BUILDINGS, ROADS,

Machinery, Technology

Timber Minor Forest Produce Services Social Benefits (Protection, Recreation, ...)

Labour Material Physical Resources (Machinery, Equipment, ...) Services

Cash Cash

CashCash

Figure 1: Stock, flows and transformation processes of a forest enterprise (JÖBSTL, 1973)

Accounting

Financial Accounting Social AccountingCost Accounting

Double-entry Book-keeping Balance Sheet Income Statement Cash Flow Statement Single-entry Book-keeping Parliamentary Accounting Budgeting Cash Accounting Supplementary Books Key Figures, Internal Statistics


Environmental Accounting


Social Reports Social Balance Sheet Achievement Reports Human Resource Accounting Corporate Social Audit Social Indicator Systems Statement of Net-Value Added Income Distribution Statement National Accounting- -SNA



Financial accounting records flows of mo-ney, goods and services from and to the en-terprise in monetary terms, and the result-ing state and changes in assets and liabili-ties. Monetary profit is the basic measure of results. Cost accounting analyses inter-nal processes, factor consumptions and per-formances in detail, and is characterized by efficiency criteria. Both systems of account-ing cover the production of goods and the provision of services as far as they contri-bute to monetary profit. Management ac-counting comprises all accounting activities aimed at providing data relevant for man-agement purposes. Its core element is cost accounting.

Financial accounting is compulsory and regulated by law in the case of larger firms according to their legal status. Usually smal-ler business units do not have any account-ing, while medium-sized ones often keep records of receipts and payments. Public for-est enterprises commonly apply parliamen-tary accounts according to government rules. Receipts and payments are registered and compared with the budget. Parliamentary accounts, as well as book-keeping based on receipts and payments, are not well suited for management purposes. Financial account-ing of the larger estates is on the whole well developed in several European countries. A major shortcoming, however, is neglecting or incorrect registration of changes in grow-ing stock. Reductions in forest assets as a consequence of overcutting or neglecting necessary maintenance, lead to higher ‘book’ profit, whereas building up forest assets re-duces profit. In some countries the open-market value is used, which is also proble-matic. Consequently balance sheet and pro-fit and loss accounts are incomplete or in-correct. Some 30 years ago, an internatio-nal working group of IUFRO (1967) looked for a common solution and tried to achieve harmonisation. The results, however, were limited, as it was difficult even to agree upon common terminology. The problem is still there and should hopefully be dealt with by joint European forestry research efforts. Management accounting is carried out in the majority of larger forest enterprises, in-cluding some which are publicly owned. It is important for detailed reporting and eco-nomic efficiency analysis, and frequently includes cost-centre accounting, cost-unit

accounting, product calculations, job-order costing, budgeting, and sometimes standard costing, process costing, etc.

Forest assets recording is part of natural resource accounting. Inventories are carried out usually at 10-year intervals. Book-keep-ing needs annual data. Although EDP-data bases and computer-based models allow for continued recalculation and consequent up-dating of forest-related data, in practice this has not been applied so far. Due to prob-lems of measurement, evaluation, and the conservative attitude of forest owners, chan-ges in forest assets are often considered in separate calculations. In central European countries the allowable (sustainable) cut – being the expression of the performance capacity of the forest enterprise – is used as a reference measure for carrying out simple corrections of the book profit outside of fi-nancial accounting.

Some decades ago, social accounting, and more recently environmental accounting, were added as new categories of accounting (Fig-ure 2). Social accounting aims at extending traditional accounting by considering quali-tative aspects such as quality of living and welfare. Usually it consists of a social re-port, value-added statement and social bal-ance sheet (MÜLLER, 1995). Originally, so-cial accounting included employees’ work-ing conditions, services provided, residen-tial houses, sports facilities, nurseries, etc2. Accounts for welfare expenditures can al-ready be found in a publication from 1920 (HOFFMANN). Environmental accounting reports enterprises’ use of the natural envi-ronment which is a provider of environmen-tal goods (material and energy flows of all kinds), and a receiver of enterprises’ pollu-tion or undesired outputs – material and en-ergy residues of all kinds. It must be no-ticed that today environmental accounting is taking over more and more topics from social accounting.

To promote forestry accounting, IUFRO recently established a working unit on ‘mana-gerial, social and environmental account-ing’. Of course, registering non-market benefits in forestry accounting is only at an early stage. Cost-centre accounting can, how- 2 On a higher level other social issues like income dis-

tribution in a certain region are to be considered. Following national accounting, it could also include national resource accounting.


ever, record the expenditures and revenues of non-market benefits and other non-tim-ber activities, separating them from those directly linked to timber production. Allo-cation of administrative overheads to vari-ous business fields is possible, as well as calculation of the forest enterprise’s real re-sult based on the allowable cut. Besides the changes in forest assets, the revenues fore-gone caused by providing non-market bene-fits can be assessed by means of separate calculations.

This is the present state of forestry ac-counting in some European countries. There is, however, a clear demand to proceed to incorporation of non-market values, even those measurable only through consumer's surplus such as landscape quality and free recreation. Environmentally adapted reports on forest enterprise performance are also required. Of course, in any case, it is neces-sary to question the purpose of accounting: what are the advantages for the enterprise managing the forest resources? Accounting is a tool to assess efficiency and profitabili-ty. Consequently accounting activities them-selves have to be appraised. In other words the cost of obtaining information must not exceed the likely advantages.

To be realistic, however, one must con-sider the state of forestry accounting in many countries, and often this is lacking. Even the EU-FADN (European Union Farm Ac-counting Data Network) in several coun-tries does not take account of forestry under-taken within farms. In these cases, for ex-ample, growing stock inventories are not reported. Often accounting is limited to pub-lic forests where financial control predomi-nates over managerial objectives. The sub-stantial lack of traditional accounting cer-tainly does not favour its enlargement to non-market values. However, public interest in the non-market values of forestry in recent years has been such that new methods of environmental valuation have been accepted and promoted. Quite paradoxically, this may be the main reason for starting traditional forestry accounting where it is still lacking.

2 Developments in environmental ac-counting: relationship with forestry

The issue of including the environment in en-terprise accounting has only arisen recently. Previously it was thought that non-market

public 'goods' and 'bads', being part of so-cial welfare, should have been considered in national accounts at a macrolevel rather than in individual enterprises. However, the growing awareness that environmental prob-lems should be tackled at the base (indivi-dual production and consumption sites) has encouraged the development of micro-envi-ronmental accounting – at the firm or area scale. The market itself (green consumer-ism) appears to be pushing in this direction. Legislative support comes from European Union (EU) Regulations for eco-labels (Reg. 880/92) and eco-auditing (Reg. 1836/93), or from recent proposals for stewardship certi-fication in forestry (e.g. FOREST STEWARD-SHIP COUNCIL, 1995). Additionally, environ-mental auditing is now considered to be an essential condition for all enterprises aim-ing to maintain the confidence of sharehold-ers, customers, financial institutions, insur-ance companies, and the general public (CLUB DE BRUXELLES, 1993). Competitive advan-tages seem to arise for economic systems and companies adopting environmentally friendly codes of practices (PORTER, 1991). There is also a debate on introducing tax de-claration schemes able to identify the envi-ronmental impact of economic activities.

It is rather interesting to note that the development from traditional to environ-mental enterprise accounting has followed the same path as national accounts3 and as cost-benefit analysis (CBA)4. More specifi-cally, traditional net income is transformed into environmental adjusted net income. This process could be stepwise, initially includ-ing identification of environmental costs, then extended to resource accounting and to imputed costs, and finally considering off-site and non-market costs and benefits.

With reference to existing literature, e.g. the recent proposal by FEEM (1995a), the following four approaches to environmen-tal accounting, ranging from 'mild' to 'dark green', according to GRAY's definition (1993), could be mentioned: 3 Systems of National Accounting (SNAs) have deve-

lopped into Systems of integrated Environment and Economic Accounting (SEEAs). SINISCALCO (1995) underlines the striking similarities of environmental accounting undertaken both at national and enter-prise scale.

4 CBA initially based on market prices adjusment to reflect social values has been 'extended' to non-market environmental values.


Identification and reclassification of en-vironmentally aimed expenditures, already present in traditional accounting. Separate records are kept of expenditures undertaken for environmental improvements (new plants, mitigation, stewardship, conservation, etc.), paying environmental fines and taxes, meet-ing standards or coping with conflicts pro-moted by green movements. This approach – strictly based on market values – only calls for adjustment of existing accounting systems in line with a 'mild green' option. Of course the approach is helped by the creation of specific cost centres where each type of environmental expenditure must be grouped. Identification of hidden environmental liabilities/assets, such as future expenses for restoration, to meet more stringent legisla-tion or to prevent future environmental dam-age, as well as the imputed costs necessary to provide environmental goods and ser-vices. This approach highlights possible los-ses in natural capital (depletion and/or de-gradation), but also gains (e.g. increased growing stock), which have monetary val-ue.5

The approach can require some use of 'satellite' accounts and/or addenda to tradi-tional book-keeping. Both the balance sheet and profit and loss account can be modi-fied, directly or indirectly, by values linked to the market. 5 Of course rapid and obvious depletion and degra-

dation of natural assets (e.g. forest fires or drama-tic cases of pollution), being immediately expressed by market values, are generally included in traditio-nal accounts. Meanwhile less evident non-market depletion (such as gradual acquifer use) and de-gradation of natural assets (e.g. water pollution) or improvement of natural assets (e.g. a fallow year, green manure production and increase of forest growing stock) should be included in satellite ac-counts (DESTRO and OLSON, 1995).

6 Accounting can also be supplemented by produc-tion process accounts, such as Ökobilanz and life cycle assessment, including records of a product's environmental impact, from extraction of the raw material to its abandonment or recycling.

7 It is quite interesting to note that satellite accounts and the various possible addenda can be to a cer-tain extent assimilated to the memorandum accounts foreseen by EU Directive IV n. 660/78, including risks, obligations and warrants affecting the enter-prise's assets (BRUNETTI, 1989). Memorandum ac-counts are therefore supplementary to balance sheets and should highlight items that do not affect the profit and loss account but are important for the overall impact and image of the firm.

8 See VICTOR's (1991) distinction between weak and strong sustainability.

Inclusion of non-market values, as na-tural stock depletion/degradation shown by forest inventories enlarged to quality of stands, biodiversity, landscape impacts, etc. Also welfare variations measured through consumer surplus can be taken into ac-count. Satellite accounts and addenda be-come essential because non-market values are not generally acceptable and integrable into the accounting systems.6 The physical and/or monetary information are therefore attached to the accounting system mainly through addenda and/or satellite accounts which supplement traditional accounting, without altering its structure.7 This approach has the inherent advantage of ensuring con-tinuity of traditional accounting systems and the relative information system. How-ever, it must be clear that managerial objec-tives are extended to include a public view of forestry. Full integration of environmental and financial data, where an integrated infor-mation system aimed at complete environ-mental valuation of the enterprise is set up according to a 'strong' sustainability.8 In practice, this calls for complete readjustment of accounting procedures and is the most radical, or 'dark green', approach. However, approach can lead to the same results, whenever account is taken of natural capi-tal depletion/degradation, along with envi-ronmental damage, as well as benefits.

Alongside the options mentioned, the realisation of a system of environmental ac-counting could include an 'environmental report', i.e. a commentary, containing quali-tative information and a presentation of the most important items regarding the rela-tionships between the firm and the environ-ment' (FEEM, 1995b). This report can be compared to the standard annual report where the financial statement is accompanied by a description of the enterprise's policies, pro-grammes and objectives.

2.1 Natural resources depletion/degrada-tion as the main focus of environmental ac-counting: peculiarities of forestry

Reviewing the most recent developments in environmental accounting both at national and at enterprise level, however, it is clear that environmental 'bads' are the main issue: i.e. depletion and degradation of natural resources with all their non-market and/or


off-site negative effects. This focus is justi-fied by the environmental impact of many modern processes of production and con-sumption. Little or no emphasis is placed on environmental goods and services, which are taken for granted according to existing property rights. At most they are mentioned when they become a scarce resource.

The fact that environmental accounting largely deals with the negative effects of production/consumption processes places forestry in a rather peculiar situation. Stan-dard environmental accounting applies when depletion/degradation of natural capital is involved: e.g. deforestation or pollutant re-lease and harm to biodiversity as in the case of plantation forestry. However, for-estry began centuries ago9 in order to face the problem of timber depletion. The corre-spondence between timber as a product and its main production factor meant that, more than any other activity, forestry had to take account of a natural resource, i.e. the grow-ing stock or timber capital. The so-called 'normal' forest requires conservation of the resource itself, along with sustainable tim-ber production. The problem of 'living off your capital' as expressed by REPETTO et al. (1990) and modern environmental econo-mists, was solved by maintaining detailed inventories, what is now called satellite ac-counts. The best balance between harvest and timber capital, and the relative manage-ment schemes, has always been a major is-sue in forestry theory and practice. Of course, it may be claimed that this constitutes envi-ronmental accounting to the extent that the growing stock is a real natural stock – as is the case with nature-oriented forestry.10 It has been therefore proposed to enlarge tra-ditional forest inventories to variables such as biodiversity, landscape quality, etc.

Another aspect making forestry an ex-ception is the size of non-market and off-site benefits. These benefits, until recently ig-nored, are now appreciated since they are becoming in demand and scarce. Services such as watershed management, recreation, carbon dioxide sequestration, soil protec-tion, and maintenance of biodiversity can be valued and accounted for.11 However, it is surprising how these services are not al-ways attributed to the forest ecosystems ac-tually performing them, e.g. plantation for-estry (producing negative externalities) and

nature-oriented forestry (producing positive environmental externalities) often appear to be confused with one another, and existing statistics often support such misunderstand-ings. Certainly consideration of the different services provided by forests is not an easy task. The many re-elaborations by well-known economists of the optimum stocking prob-lem through the Faustman formula, origi-nally referring to even-aged stands, are per-haps significant of the difficulties in under-standing the real environmental role of for-estry (HARTMAN, 1976; SAMUELSON, 1976; HARTWICK, 1993; VAN KOOTEN, et al. 1995).

It may therefore be claimed that envi-ronmental accounting finds forestry in a rather peculiar situation, quite a special case, for the following reasons: For centuries account has been taken of depletion/degradation of natural capital, gen-erally quantified by inventories in terms of area and growing stock. There are problems in valuating and ac-counting off-site non-market benefits that have always been intrinsic to multipurpose forestry. The benefits, at least in nature-oriented forestry, largely exceed the costs, therefore 9 At least since forests have been considered a re-

newable rather than a non-renewable resource. Historical origins date back to the Italian Renais-sance, especially in the Venetian Republic, to the forest policies applied in France in the era of Colbert, and above all to the German and Middle European Schools of Forestry (DEVÈZE, 1973).

10 Quite obviously there are contexts outside devel-oped countries, and this means the majority of the earth's forests, where the depletion of timber capi-tal as such is still a serious issue, involving prob-lems of accounting that are comparable with 19th-century Europe. In this regard certain misunder-standings found in recent approaches to national environmental accounting appear surprising. For instance, the United Nations Handbook of Natio-nal Accounting (1993) refers to wild biota set pro-duction equalling consumption without considering natural growth, off-take or stock. Natural growth in excess of off-take is not regarded as production, but neither is any allowance made for off-take in excess of natural growth. 'The manifest error in this assumption' is underlined by HARRISON (1993), 'especially with regard to tropical rain forest'.

11 In identifying the non-market value of such bene-fits, forestry has played a pioneer role. Methodolo-gies such as travel cost, contingent valuation and hedonic pricing, have often seen forests at the fo-cus of the valuations. It should be pointed out, how-ever, that though these methods have become wide-spread in recent years, they have not had an impact in forest management accounting, being mainly con-fined to CBA of investments and policies.


environmental accounting, unlike many other productions, generally gives more favourable results than traditional financial accounting.

2.2 To what extent traditional forest man-agement accounting can include non-market values

It may be interesting to examine how the tra-ditional procedures of forest management ac-counting may respond, or be adapted, to the four different approaches to environmental accounting, outlined above: Identification and reclassification of en-vironmentally aimed expenditures. Regard-ing this first approach, aimed at pointing out the forest firm's costs for conserving/im-proving the environment, it may be noted that many forest enterprises, particularly pub-lic ones, now generally distinguish between the expenditure connected with environ-mental maintenance and the provision of recreational facilities, from those directly linked to timber production. Under certain legislations for mountain areas, there is an obligation to reinvest a part of the revenue from timber sales in works aimed at im-proving the forest's protective function. Con-sequently there is an obvious need to keep separate accounts. An example of separate accounts is reported by BARTELHEIMER (1991) who calculates in Alpine forestry the costs stemming from recreational and pro-tective functions as 35 ECU per ha. Speci-fic cost-centres and the related methodo-logy are not however always applied, and this certainly does not help the process. Identification of hidden environmental liabilities/assets and imputed costs. Regard-ing the second approach, it has always been emphasised by forest management with re-spect to timber capital. Forest inventories have been developed, making it possible to value changes in timber capital as varia-tions in capital assets that can be registered as a plus/minus value in the profit and loss account, rather than a typical revenue/cost.12 However, the state of the art is such that variations often remain relegated to inven-tories, or satellite accounts, which are not reflected in the accounting system. It should be pointed out, in any case, that depletion 12 Incidentally this logic, referring to all items of the

profit and loss account, has been confirmed by EU Directive (IV), n. 660/78, and (VII), n. 349/83, con-cerning company balance sheets.

or degradation of smaller amounts over the short term, such as the loss of biodiversity due to plantation forestry, has not been given emphasis. Rather, these aspects have been ignored as they do not have sure, immediate market effects on timber production. Forest deperishment – which has become evident over the past 20 years – and the apparent scarcity of goods and services connected with forestry, make it advisable, however, to take account of hidden environmental val-ues in the balance sheet. The problem may be dealt with, for instance, in terms of in-creased value in growing stock and risk of its collapse and related costs, as well as an-nual insurance to cover the costs of forest restoration. The relative values should be ac-counted even if an actual specific fund is not operative. Inclusion of non-market values. At this stage satellite accounts and/or various ad-denda alongside traditional book-keeping be-come essential. Actually these supplements have always been reflected to some extent in inventories and records of annual varia-tions as far as timber capital was concerned. This may also apply to works of country-side stewardship, often recorded as separate items, such as wildlife, game and other as-sets like watershed works, roads, and recrea-tion facilities that do not have direct pro-ductive purposes but are nevertheless con-sidered part of forest management. As al-ready mentioned, these satellite accounts are not generally explicitly integrated with-in accounting systems. Incidentally account-ing has a one-year time horizon while in-ventories take place every decade or so. To bridge this gap, accounting and physical in-ventories can find a compromise time span in quinquennial balance sheets, as done by the Forestry Commission (NAO, 1986).

Also welfare measures of non-market an-nual flow of goods and services could be reported as addenda in book-keeping. Such information, whenever available, is now in-cluded in reports showing the number of visitors, and the related benefits especially in public forests and parks. There is, how-ever, a clear tendency to attach them to ac-counting, through satellite accounts (en-larged inventories) and/or addenda supple-menting balance sheets and profit and loss account. Specific comprehensive informa-tion about multipurpose forestry could there-


fore be provided. There is still controversy about the possible degree of satellite accounts and addenda integration within book-kee-ping, balance sheets and profit and loss ac-counts. At the present time in forestry man-agerial economics there is a clear reluc-tance to this approach. Nevertheless, there is also a clear demand for comprehensive information able to relate financial data to environmental-recreational values. Possible solutions contemplate the development of financial-economic-environmental ratios and performance indicators, commented upon in the already quoted environmental report, without altering traditional account-ing. Things are, however, developing fast in public forestry and 'statutory' integration could also be required for private forest management whenever there are compensa-tion or subsidies. What seems to be unani-mously rejected is the fourth approach – i.e. full integration of environmental and finan-cial data which incidentally has not yet been applied in any economic activity. It repre-sents a radical option, mixing financial and environmental aspects, and therefore caus-ing problems of valuation, integration and interpretation of information on the part of management, the authorities and the gene-ral public. As already stressed, it may be that the previous approach based on satel-lite accounts, addenda and ratios is more practical and easier to implement, assuring in the meantime continuity of existing in-formation systems.

3 Attempts toward a stepwise inclusion of non-market values in forest management accounting

In order to exemplify the above approaches to environmental forestry accounting, two applications are reported in appendixes 1 and 2. The first refers to a public multi-purpose forest: the Cansiglio in Veneto Re-gion (North-Eastern Italy), while the second concerns a private forest in Styria (Central Austria). In the first case, management ob-jectives favour recreation and nature con-servation rather than traditional timber pro-duction, while in the second the timber pro-duction objective is predominant.

In both cases the applications are reported following a stepwise procedure of sequen-tial balance sheets and profit and loss ac-

counts, reflecting growing attention to en-vironmental issues.

3.1 Application to Cansiglio public forest

The values shown in the sequence of bal-ance sheets and profit and loss account (Appendix 1) have as a starting point the existing accounting system, which is based on parliamentary accounting. This requires numerous estimates from the first step on-wards, not to mention non-market natural stocks and flow valuations in the most ad-vanced steps. In practice the existing ac-counting system has been shifted from pub-lic to private, and then to environmental ac-counting.13 Of course there is room for de-bate and discussion, especially with regard to the most advanced steps which are heavily based on the public objectives of forestry and on non-market values expressed in mo-netary terms.

In particular Table 1 gives the traditio-nal financial accounting while the follow-ing Tables 2, 3 and 4 modify and enlarge the balance sheets and the profit and loss accounts adopting the first three approaches mentioned above, ranging from 'mild' to 'dark' green. The first balance sheet and profit and loss account (Table 1) refer simply to finan-cial data and are closely connected to the existing public accounting system. Never-theless, substantial modifications have been made. Firstly, a private approach has been followed requiring a balance sheet record-ing assets and liabilities. Valuations have been made with reference to real markets; values, however, are rather conservative (al-most half the market price) given the public property status of all the assets. Secondly, a complete reclassification of revenue and expenditure items has been made in order to follow EU rules, posing at the same time the basis of the new environmental account-ing, i.e. a distinction between the traditional activity (timber production) and the new production of environmental goods and ser-vices. From the balance sheet of Table 1 one can see that the assets, mainly given by forest stands (11 million ECU), create an 13 The application must be intended as an exemplifi-

cation of issues and problems to define a structure for environmental accounting, rather than an 'ex-act' operative approach specifically referring to the case study.


annual production value: timber and market services largely lower than management cost as shown by the profit and loss. The result is very negative, with a loss of around 0.6 million ECU, and only scarcely improved by the increased value of fixed assets, growing stock and estate value. The profit and loss account is, however, balanced by what are called compensations, i.e. various contribu-tions coming mainly from the regional ad-ministration, justified on the ground that the forest provides a large amount of free public goods contributing to people's wel-fare. It must be remarked, however, that the profit and loss account of Table 1, although reclassified, does not allow a clear distinc-tion between the traditional activity (timber production) and the new recreational-envi-ronmental products that are now the domi-nant feature of the forest management. This is largely due to the lack of a proper cost-centre accounting, a development badly needed both for traditional accounting and the new environmental accounting. The balance sheet and profit and loss ac-count (shown by Table 2), refer to the first approach where the traditional activity (tim-ber) is separated from recreation and envi-ronmental functions. It should be noticed that the approach does not require new val-ues external to the existing accounting sys-tem, being based just on a different aggre-gation of revenue and expenditures. Never-theless, it must be remarked that the new approach implies a revision of the account-ing system where ordinary accounting is accompanied by a sort of cost-centre ac-counting that should represent the first step toward management accounting (JÖBSTL, 1995). Both results are negative. It is, how-ever, possible to distinguish the heavy los-ses due to recreation and environmental ac-tivities. On the contrary, the traditional ac-tivity presents a positive result whenever the increased value of 'cutable' growing stock is taken into account. The profit and loss account also shows that the negative finan-cial results of recreational-environmental ac-tivities are balanced mainly by public com-pensation. Marketing of environmental goods and services remains sporadic and scarce. The results, however, clearly pose the prob-lem in terms of forest management and mar-keting. It has also to be noticed that satellite accounts like forest inventories, although es-

sential, do not appear in any way in the bal-ance sheet. Table 3 expresses hidden environmental values; both positive and negative, and spe-cifically marked with . It requires more radical options compared to the previous schemes, according to a 'greener' approach. In particular the non-marketable increase of growing stock (35,000 ECU) – shown by forest inventories, mandatory according to environmental regulations – can be included in the balance sheet as a non-marketable fixed asset. Of course prudential valuation has been made. This increase also appears in the profit and loss account. Analogously, it is possible to show the risks affecting existing artificial stands of spruce, which are liable to disease in plantation forestry since they lack biodiversity and natural protection. The artifical stands risk, shown in the profit and loss account as an annual depreciation, should be covered by a speci-fic fund (artificial stands risk accrual) to be incorporated as a liability in the balance sheet. This fund should be used in case of actual collapse of the artificial stands. It should be noticed, however, that in this specific case the risk is also covered by an-nual management expenditures aimed at ar-tificial stands improvement, through plant-ing of indigenous broadleaved species like beech. The growing stock increase, imposed by management rules, can also be seen as the concrete realisation of a fund against the environmental risk of artificial stands collapse. The results of satellite accounts, namely in-ventories based on stand quality, appear in the balance sheet as shadowed values. The previous tables take into account for-est assets/liabilities and products that have a market or can be easily expressed in market values. Meanwhile Table 4 highlights non-market values, typically public goods. There-fore the balance sheet and the profit and loss account assume a public connotation open to welfare considerations. Public objectives are incorporated into the management ob-jectives. This means an enlargement of the balance sheet through new boxes addenda where natural resources received from soci-ety are indicated. Resources are reported both in assets (being factors employed to pro-duce public services) and liabilities (being public goods borrowed from society). These items are not quantified in monetary terms,


but only physically according to the satel-lite accounts logic. Another addendum inte-grates the profit and loss account of Table 4. It represents an adjusted (or enlarged) pro-fit able to account for the non-market and off-site flows of services. The operation seems acceptable to the extent that recrea-tion and watershed management increment social welfare, i.e. constitute a flow of utili-ties recorded in the time span covered by the profit and loss account. It should be no-ticed, however, that net social profit/loss calculated through addenda (and based on welfare estimation) derived from consumer surplus measures are reported as separated items in a specific box. In addition this flow of benefits is considered net of compensa-tion, and taken as an indemnity for the ex-penditures met to provide public goods and services. This implies a double entry of com-pensations in the profit and loss account: firstly as a sort of revenue to obtain net pro-fit/loss for the year, and secondly as expen-diture to be deduced from the total value of recreational-environmental services. This means that public compensations are omitted from the environmental-adjusted final net profit reported in Table 4. In this specific case the adjusted social profit is equal to around 0.6 million ECU, taken as an intrin-sic component of the social welfare func-tion. Registration of this value in the bal-ance sheet, although as an addendum, can cause perplexities at least as far as the amount is concerned. It seems, however, very important to include it, in order to show how the increased flow of services (annual welfare) contributes to society's capital, which in the end constitutes human capital. Some authors tend to argue that only wel-fare variations matter. For instance, LINDALL (1995) referring to Danish forestry, states that 'a wide range of unaccounted environ-mental resources is not a reason for includ-ing these benefits'; what counts is signifi-cant deterioration that can be avoided or enhancement that can be encouraged. On the opposite side, ADGER and WHITBY (1993) propose modifing British agricultural pro-ducts by adding the value of carbon fixa-tion and non-marketed service flows, while deducing defensive expenditures. The over-all results indicate a 20 % increase in net product.14 The arguments therefore are about consideration of total flows or limitation to

variations.15 Apart from arguments having a certain rationale at nationwide level, and for services provided by natural resources as such, it must be remarked that in the spe-cific case outlined in Table 4 inclusion of total yearly public benefits seems accept-able because they correspond not only to resources but to environmental goods and services that would be jeopardized by lack of forest management. Meanwhile variation of stocks necessary to provide these ser-vices is reported as assets variation in the balance sheets.

3.2 Application to a Styrian private forest

The private forest enterprise selected for this case study is situated on the eastern rim of the pre-Alps and high-Alps of the most densely forested province of Austria, Styria, with some 60 % of land covered by forests. Beside forestry the enterprise is also in-volved in several other businesses like saw-milling, letting houses, and quarries. It is situated near a medium-sized city and is spread out over 35 kilometres in length.

The estate belongs to a size-class 5,000 – 10,000 ha. The main species is spruce, mixed with some 15 % larch and pine, and 7 % broadleaves. Sustainable income and re-source conservation are the main objec-tives. As financial data is largely confiden-tial, reference has been made to a basis of 1,000 hectares of forest land. ATS has been converted to ECU (appendix 2). The starting point is the financial ac-counting system. As prescribed by law it is double-entry book-keeping with balance sheet and profit and loss account. The main shortcoming is that forest assets are not 14 This attempt has been, however, commented upon

as 'allow for the pleasure given by the green belt and national parks, and throw in something for the effect of tree planting on mopping up global warm-ing carbon dioxide and, presto, a sustainable net product is 25 % bigger than net product'. (The Economist, 18 January 1992)

15 A rather interesting point was made by Daly (1988) opposing Fisher's old national dividend approach to Keynes' national income: ' had the national ac-counts developed in accordance with Fischer's concepts, their extension to cover environmental services and ecological and geological capital de-pletion would have been obvious and easy, except for valuation problems for services without mar-kets. As it is now, incorporation of ecological servi-ces and natural capital must be very ad hoc, and in fact it may ultimately be necessary to adopt Fischer's approach'.


shown – or shown only by the purchase value of acquired areas. Consequently, chan-ges in forest assets are not recognised in the financial result – profit/loss. In contrast to the widely used approach, in this particular enterprise, however, financial reserves are formed from excess cuttings and special pro-visions are set aside for neglected mainten-ance and tending measures. Table 1 shows a balance sheet profit of 114,000 ECU which, by using the recently introduced total cost method – in accordance with EU regulations – can be split up into an operating result of 140,000 ECU, a financial result of 46,000 ECU, an extraordinary result of 103,000 ECU, and diverse allocations. 136,000 ECU revenues from land sales and excess cuttings were allocated to capital reserves. The result-ing net profit of the year is 152,000 ECU. After deduction of 14,000 ECU for timber and firewood supplied to owners and of 24,000 ECU in retained earnings, 114,000 ECU are distributed to the owners. Further splitting of the result is not possible, as the revenues are categorised by products, cost-incurring items, or types of revenue; whereas expendi-tures are shown by expenditure categories – types of input factors. Attribution of expen-ditures to specific products is lacking. So the performance of the different operations and/or fields of business such as sawmil-ling, farming, hunting, house-letting, servi-ces, non-market benefits etc. cannot be shown. The information value of these state-ments is therefore limited. In the notes to the balance sheet, timber volume, timber prices, timber deliveries to the owners, in-vestments, etc. are described. Excess- or under-cuttings are normally shown in phy-sical terms, but not as values. In our case the value is estimated at 31,500 ECU and added to the financial reserves from excess cutting. A market value for the land is stated in a footnote to the balance sheet. Further analyses require cost-centre ac-counting, where revenues and expenditures are assigned to cost-centres and allocated to cost-incurring items – products and ser-vices. Finally, ex-penditures are con-verted into costs. As a basis there are pro-posals for cost-centre

frameworks from 1962 and 1974 (HVLF) and an EDP-based operational accounting sys-tem (JÖBSTL, 1981). Cost-centre accounting allows registration of the expenditures for non-market benefits, separation of the ex-penditures and revenues of non-forest acti-vities from those of the forest enterprise, al-location of administrative overheads to the other business fields, and calculation of the real result of the forest enterprise based on the allowable cut. Some calculatory items are included in the operational accounts, as there is the replacement of tax allowances by calculatory depreciation, or the inclu-sion of the cost of the proprietor working in the company or calculatory interest. The re-sults of the expenditure-cost conversion and the allocation of costs to cost-centres are presented in the form of a master sum-mary sheet.

Assigning the revenues and expenditures to cost-centres (fields of operations) gives the following operating result (ECU): • Forest enterprise 63,800 • Other main activities

(sawmilling, letting) 60,300 • Net compensation for management

restrictions in protection forest 300 • Hunting 12,200 • Mushroom and berry picking 700 • Forest buildings let for recreation 6,100

The so-called allowable-cut correction (i.e. modification of profit/loss components due to changes in forest assets by relating ex-penses and returns dependent on the felling quantity to an allowable-cut quantity) gives an operating result of the forest enterprise of 32,300 ECU and a negative change in for-est assets of -31,500 ECU. This is the state of the art, as applied in numerous Austrian forest enterprises.

In Table 2 some further attributions are carried out. In the cost-centre of non-mar-ket benefits, direct expenditures (signs, fen-ces, closing of roads, cleaning, etc.) are re-corded. In a further step, overheads are to

Non-market benefits (recreation + environment). Summary table.

1. Direct expenditure 500 2. Overhead costs 1,200 3. Additional expenditure in road construction for the period 2,000

Total expenditure 3,700


be added and some other positions to be in-cluded. Essentially two items: an appropri-ate share of overhead costs allocated ac-cording to time records kept by the person-nel, and amounting to 1,200 ECU; and par-ticular additional expenditure for environ-mentally better adapted road building, green-ing of road embankments, environmentally friendly silviculture and logging technolo-gies (single stem harvesting, smaller clear cuts) etc., which is calculated to be 2,000 ECU. The total expenditure is 3,700 ECU.

Taking all recreational and environmen-tal activities together the overall operating result from recreation and environment is positive (15,600 ECU). In the next step hidden values and other imputed items are considered, in order to im-prove the performance analysis. The follow-ing refinements are calculatory in nature and only applied in a few, progressive forest estates like the one under scrutiny. These hidden changes in asset values and increased or decreased revenues are taken into account: • Changes in growing stock as a conse-quence of deviations from the structure of the allowable cut are determined by relat-ing expenses and returns to a detailed al-lowable cut differentiated by species, as-sortments, silvicultural systems, and logging sites. Generally, forest enterprises are quite flexible in structuring their actual annual cut – not only in terms of volume, but also as to species, assortments and logging sites. Obviously this has an impact on harvesting costs and timber revenues as well as on changes in forest assets. In the example more valuable assortments were harvested from easily accessible sites. The consequence on forest assets is a reduction of -14,000 ECU. • Changes in the state of the young stands and treatment areas (drop-out, losses, growth, quality of the thinnings, damages inflicted on the remaining stems) are registered per-manently by district forester (audit in natu-ral terms), and then need to be evaluated for the annual report. The changes in value are determined from comparisons with nor-mal-forest calculations. The result is a de-crease in forest assets of 900 ECU. • Damage caused by calamities, game, etc. is evaluated similarly by means of opportu-nity costs. This amounts to -2,200 ECU. An-other component is risk from damaged stands, i.e. 2,000 ECU per year.

• In a further step the allowable cut is evaluated against the long-term perform-ance capacity of the forest. This evaluation is done by means of a long-term simulation of the management class. The effects of the allowable cut on forest assets (positive or negative) have to be added to the operating result as a positive or negative corrective. As to volume, the allowable cut set for the period 1992-2001 is 6 % above the felling potential in the long run (i.e. the sustainable production capacity), whereas in terms of value it is only 1 % over the long-term ave-rage, equal to a minor reduction in growing stock value.

Over the same period an improved grow-ing stock structure and performance capa-city is aimed at obtaining a higher financial contribution margin from cuttings in the long run. Hence the reduction in growing stock volume and value during the current period is more than compensated for by the long-term enhancement of production capa-city. The changes in forest assets amount-ing to 0.5 % are equal to 7.5 ECU per hec-tare per year. • As far as necessary, maintenance and silviculture measures are not implemented, the resulting reduction in expenditure is to be considered as neglected costs – provi-sions. Meanwhile treatments carried out in excess of the plan are to be regarded as ad-ditional performance. The effect on forest assets is expressed as a rise in liabilities of 7,200 ECU.

The calculatory real operating result of the forest enterprise comes down to 15,500 ECU. Apart from opportunity costs, all the above corrections for hidden values are in-cluded in the balance sheet of Table 3. Op-portunity costs are only shown in the annex to the profit and loss account.

The valuation of damages caused by hunting takes two components into account:

(a) current losses affecting timber pro-duction caused by previously inflicted dam-ages;

(b) future losses as a result of damages occurring in the present period. A loss in the annual forest production capacity of 18,100 ECU is shown. Taken together with risk-costs and revenues forgone from ‘open-ings’ the result from hunting is consequently negative (-9,100 ECU).


When adding the loss in forest production caused by hunting as an opportunity cost to the result of the forest enterprise, the corrected operating result is consequently 36,800 ECU.

To depict the expenditures and revenues from providing non-market benefits correctly, the expenditures recorded so far (Table 2) have to be supplemented by reduced reve-nues in forest production – opportunity costs. Losses in timber production as a conse-quence of recreation-oriented species selec-tion, extended rotation period, reduced stock-ing density, etc. are also calculated on the basis of the normal management class. The estimated value is 3,800 ECU (68 hectares with special treatments, rotation period is ex-tended from 100 to 130 years, species selec-tion is 30 % beech, value difference per hectare is 56 ECU). The total amount of en-vironmental and recreation cost is 7,500 ECU.

Another – in this case negative – envi-ronmental aspect to be considered concerns the quarry. Provisions for environmental dam-age mitigation at the end of quarrying need to be calculated. This comes to -1,500 ECU per year. To complete the calculation of the annual result, the depletion in stock (-5,000) and the loss in timber production (-800) is added. Hence the real operating result of the quarry amounts to 19,200 ECU. Similar calculations are carried out for forest roads.

At this stage the calculations on an en-terprise level are completed. Outside of the area of the enterprise, but still a matter of managerial economics, is the evaluation of the protective function (erosion, landslides, torrents, avalanches, watersheds) in the vi-cinity and further afield. The protective value can be priced roughly with alternative costs for protective constructions.

Other functions are not evaluated. Ap-proaches using consumers’ surplus are not considered useful from the business econo-mics point of view as long as money is not paid by the consumers, tourist councils, bor-oughs, local governments, etc. However, in

order to show the achievements and services provided, a separate report lists the relevant charac-teristics of the forest enterprise as well as the various effects qualitatively and

quantitatively – carbon dioxide fixation, re-placement of protection constructions, etc. Values can only be incorporated as far as the necessary evaluations have been made and supplied by institutions outside the en-terprise. A short-cut catalogue of such indi-ces can be seen in Appendix 2, Table 4.

4 Some comments and conclusions

A number of comments concerning econo-mic, managerial and political issues may be drawn from the analysis and the tentative applications.

At the economic level, it can be remarked that: • Environmental accounting allows inter-nalisation in the balance sheet of various near-market and non-market values con-nected with forestry. • Such internalisation may be achieved stepwise, producing sequential balance sheets and profit and loss accounts, ranging from 'mild' to 'dark green' options. • Options, however, can be separated al-lowing a clear demarcation between finan-cial and environmental accounting, adden-da to balance sheets and profit and loss ac-counts can be used to make clear differen-ces, while satellite accounts can supplement the accounting system. • In any case the various possible steps should reflect growing emphasis on envi-ronmental and social values connected with forestry, making it possible to account for use-, option- and non-use values, the so-called Total Economic Value. • In the most advanced step of environmen-tal accounting, assets borrowed from soci-ety and services provided to society can be highlighted within the logic of the most tra-ditional accounting system: the balance sheet and the profit and loss account.

At the managerial level: • A functioning environmental accounting could allow a comprehensive analysis of the

Corrected results from infrastructural services – marketable goods and ser-vices with remuneration. Summary table.

1. Hunting -9,100 2. Regulated forests with protective functions 300 3. Forest buildings let for recreation 6,100 4. Mushroom and berry picking permits 700

Result - 2,000


various aspects inherent to multipurpose forestry and the related management objec-tives: stewardship actions, including protec-tion and recreation. • Financial ratios, cost-centres and envi-ronmental indicators can be jointly devel-oped according to the same logic allowing appropriate scrutiny of the different outputs of forestry; in addition modern management techniques based on multicriterial optimisa-tion models can be better supported. • A complete listing of forest outputs with-in the same balance sheet and profit and loss account opens up an opportunity to ex-plore potential markets for near-market or non-market outputs. • The overall marketing strategy of the for-est enterprise can therefore be re-examined, suggesting the best measures to achieve re-muneration and/or compensations of all for-est benefits. • Amongst such measures, appropriate means to capture consumer surpluses (for-est products development) can also be de-vised, in order to take full advantage of 'green consumerism'. • The management of public forests and parks whose governing bodies consist of local authorities, amenities societies and various lobbies can be better informed in order to find compromise solutions. • Of course at management level it must be acknowledged that public and private for-est enterprises have different objectives – as shown by the two case studies – there-fore environmental issues may find diffe-rent places in the balance sheet and profit and loss account; nevertheless wide scope for environmentally oriented accounting re-main in both cases.

At the political and administrative level en-vironmental accounting: • Can improve public control of forestry and help give technical assistance to multi-purpose forestry. • Facilitates the definition of compensations, grants, and incentives such as those fore-seen by EU Regulations 2078 and 2080/92. • Can provide substantial support to the ap-plication of eco-label, eco-audit and stew-ardship certifications in forestry. • Can help define option and non-use val-ues, suggesting regulations and incentives for those forest services lacking any poten-

tial market and direct remuneration from the consumers. • Can contribute to better informed defini-tion and application of forest policies, also through consolidation of different balance sheets of forestry enterprises operating in a certain region.

Finally it should be remarked that bounda-ries between financial and environmental accounting (Figure 2) cannot be strictly de-fined. They overlap and have to be seen as continuous rather than discrete categories. Incidentally some environmental issues have always been incorporated to a certain ex-tent in financial accounting. This develop-ment from financial to environmental ac-counting can be seen, and accepted, at dif-ferent steps according to the private or pub-lic status and objectives of forest enterpri-ses. Institutional issues and the state of pro-perty rights also contribute to defining boundaries and steps. The real world devel-opment is such that environmental non-mar-ket outputs, and even traditional inputs to forestry like environmental maintenance, are now becoming market outputs as far as payments are made, or can be made, by con-sumers. Accounting broadly speaking has the task to register, to promote, and to sup-port this process.

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APPENDIX 1 – CANSIGLIO PUBLIC FOREST APPLICATION

Table 1: Financial report of Cansiglio Forest, 1992-94, average values (ECU)

BALANCE SHEET

ASSETS LIABILITIES

Fixed assets 10,796,500 Creditors 17,500 High standing forest ha 3,197 7,992,500 Provision for pensions 105,000 Meadows and pastures ha 550 825,000 Buildings 1,725,000 Technical equipment and machines 254,000 Capital and reserves 10,165,500 of which - Depreciation provisions of fixed assets 560,000 Net profit/loss for the year -30,000 Net fixed assets 10,236,500 Raw materials/finished goods 40,000 Debtors 6,000 Cash 5,500 Total net assets 10,288,000 Total liabilities 10,288,000

PROFIT AND LOSS ACCOUNT

A) Revenues 414,500 Timber 280,500 Hay and grazing 10,500 Mushroom picking permits 17,000 Rents from tourism buildings 21,500 Guided visits and green weeks 10,500 Building concessions and land rents 48,500 Increase/decrease in exploited timber 7,500 Others 18,500

B) Expenditures 1,073,000 Wages, salaries and social security 323,000 Consumption, materials and energy 37,500 Depreciation of fixed assets 79,500 Landscape maintenance/improvements, botanical gardens 167,500 Roads/hydraulic works maintenance/improvements 37,500 Buildings maintenance/improvement 138,500 Protection forest maintenance/improvements 172,500 Production forest maintenance/improvements 111,000 Risk depreciation (insurance) 6,000

OPERATING RESULT (A-B) -658,500

C) Financial expenditures and revenues -4,500

D) Increase/decrease market value of fixed assets 100,000 Growing stock 35,000 Estate value 65,000

PROFIT/LOSS PRE-TAXES/COMPENSATIONS (A-B±C±D) -563,000 - Compensations (grants, subsidies and incentives) 533,000

NET PROFIT/LOSS FOR THE YEAR -30,000


Table 2: Economic environmental report of Cansiglio Forest, 1992-94 average values (ECU)

Approach 1: Revenues/expenditures ordinary activity (timber) separated from recreation and environment

BALANCE SHEET

ASSETS LIABILITIES

Fixed assets 10,796,500 Creditors 17,500 High standing forest ha 3,077 7,992,500 Provision for pensions 105,000 Meadows and pastures ha 550 825,000 Buildings 1,725,000 Technical equipment and machines 254,000 Capital and reserves 10,165,500 of which - Depreciation provisions for fixed assets 560,000 Net profit/loss for the year -30,000

Net fixed assets 10,236,500 Raw materials/finished goods 40,000 Debtors 6,000 Cash 5,500 Total net assets 10,288,000 Total liabilities 10,288,000


A) Revenues from ordinary activity 347,000

B) Expenditures for ordinary activity 351,500

OPERATING RESULT FROM ORDINARY ACTIVITY (A-B) -4,500

C) Revenues from recreation and environment 67,500 Mushroom picking permits 17,000 Rents from tourism buildings 21,500 Guided visits and green weeks 10,500 Building concessions and land rents 18,500

D) Expenditures for recreation environment 721,500 Wages, salaries and social securities 200,000 Consumption, materials and energy 20,000 Depreciation 49,500 Landscape maintenance/improvements 167,500 Roads and hydraulic works maintenance/improvements 17,500 Buildings maintenance/improvements 88,500 Protection forest maintenance/improvements 172,500 Production forest maintenance/improvements 6,000

OPERATING RESULT FROM RECREATION AND ENVIRONMENT (C-D) -654,000

E) Financial expenditures and revenues -4,500 Interest and similar expenses (timber) 1,500 Interest and similar expenses (recreation and environment) 3,000

F) Increase/decrease of market value fixed assets 100,000

PROFIT/LOSS PRE-TAXES/COMPENSATIONS (A-B+C-D±E±F) -563,000 - Compensations (grants, subsidies and incentives) 533,000

NET PROFIT/LOSS FOR THE YEAR -30,000



Approach 2: Hidden environmental values (marked with )

BALANCE SHEET

ASSETS LIABILITIES

Fixed assets 10,796,500 Creditors 17,500

- Depreciation provisions of fixed assets 560,000 Provision for pensions 105,000

Provision for risk of artificial stands* 90,000

212,500

Net fixed assets 10,236,500

Non marketable fixed assets 35,000 Capital and reserves 10,110,500

Raw materials/finished goods 40,000 of which

Debtors 6,000 Net profit/loss for the year adjusted for hidden environmental values 500 Cash 5,500

Total net assets 10,323,000 Total liabilities 10,323,000


A) Revenues from ordinary activity 347,000

B) Expenditures for ordinary activity 351,500

OPERATING RESULT FROM ORDINARY ACTIVITY (A-B) -4,500

C) Revenues from recreation and environment 67,500

D) Expenditures for recreation and environment 721,500

OPERATING RESULT FROM RECREATION AND ENVIRONMENT (C-D) -654,000

E) Financial expenditures and revenues -4,500

F) Increase/decrease market value of fixed assets 100,000

PROFIT/LOSS PRE-TAXES/COMPENSATIONS (A-B+C-D±E±F) -563,000

- Compensations (grants, subsidies and incentives) 533,000

G) NET PROFIT/LOSS FOR THE YEAR -30,000

H) Risk of artificial stands depreciation -4,500

I) Non-marketable growing stock increase 35,000

NET PROFIT/LOSS FOR THE YEAR ADJUSTED FOR HIDDEN ENVIRONMENTAL VALUES (G-H+I) 500

* Provision for risk of artificial stands covers ha 300 of spruce artificial stands, even aged, 50 years old. Similar stands (ha 200) were attacked years ago by an insect (Cephalcia harvensis), making early felling necessary with a loss/ha of 1,500 ECU, early cut and plantation of a mixed forest. The probability of this occurrence within the next 20 years has been estimated at 20%, meaning that risk depreciation amounts to 1% (0.20:20= 0.01), so that the annual quota for ha 300 amounts to 1,500•0.01•ha 300 = 4,500 ECU annual risk deprecia-tion. Although not applied, the accrual can express the risk to existing stands due to the lack of biodiversity and natural protection.



Approach 3: Linkage of financial accounting to environmental values through addenda

BALANCE SHEET

ASSETS LIABILITIES

Net assets 10,236,500 Creditors 17,500 Non marketable fixed assets (growing stock increase) 35,000

Provision for pensions 105,000

Raw materials/finished goods 40,000 Debtors 6,000 Capital and reserves 10,110,500 Cash 5,500 of which Net profit/loss for the year adjusted

for hidden environmental values

500

Total net fixed assets 10,323,000 Total liabilities 10,323,000

ADDENDA

SOCIAL ASSETS SOCIAL LIABILITIES

Protection forest ha 160 Recreation forest ha 800 Wildlife (no of species/quantity) Game (no of head)

.....

.....

.....

.....

Environmental debts towards society (protection and recreation forests, wildlife, game, etc.) Net profit/loss for the year adjusted for non-market environmental benefits

.....

.....


A) Revenues from ordinary activity 347,000 B) Expenditures for ordinary activity 351,500 RESULT FROM ORDINARY ACTIVITY (A-B) -4,500 C) Revenues from recreation and environment 67,500 D) Expenditures for recreation and environment 721,500 RESULT FROM RECREATION AND ENVIRONMENT (C-D) -654,000 E) Financial expenditures and revenues -4,500 F) Increase/decrease market value of fixed assets 100,000 PROFIT/LOSS PRE TAXES/COMPENSATIONS (A-B+C-D±E±F) -563,000 Compensations (grants, subsidies and incentives) 533,000 G) NET PROFIT/LOSS FOR THE YEAR -30,000 H) Risk depreciation of artificial stands -4,500 I) Non-marketable growing stock increase 35,000 L) NET PROFIT/LOSS FOR THE YEAR ADJUSTED FOR

HIDDEN ENVIRONMENTAL VALUES (G+H+I) 500

ADDENDA

SOCIAL PROFIT AND LOSS ACCOUNT

M) Non-market benefits* net of compensations 649,000 Recreation (388,655 visits 5,000 lire) 971,500 Mushroom picking without permits 50,500 Protection ha 160 160,000 - Compensations -533,000 NET PROFIT/LOSS FOR THE YEAR ADJUSTED FOR NON-MARKET ENVIRONMENTAL BENEFITS (L+M)

649,500

* Non-market benefits have been valued since 1975 using travel cost and contingent valuation methods.


APPENDIX 2 – STYRIA PRIVATE FOREST APPLICATION

Table 1: Financial report of Styria Private Forest 1995 (ECU)16

BALANCE SHEET as at 31 December 1995

ASSETS LIABILITIES

Fixed assets* 940,500 Creditors 42,500High standing forest ha 1,000 325,900 Provision for pensions, etc. 267,000Meadows and pastures ha 62 15,000Road net 84,600Buildings 224,700 Capital and reserves 1,392,500Technical equipment and machines 69,600 of whichFinancial assets 220,700 Increase of capital reserves** 136,700

Net profit/loss for the year 151,900Raw materials/finished goods 32,500 of which Debtors 105,000 Retained earnings (free reserve) 23,700Cash 624,000 Timber + firewood supplied to owners 13,900 Profit to be distributed to owners 114,300 Total net assets 1,702,000 Total liabilities 1,702,000

* The open-market value of the forest and meadows can be indicated by a value of 9,000 ECU per hectare for high forest and 5,000 ECU for meadows and pastures. This would result in the following increase in assets and equity (presented as an additonal row of the balance-sheet):

Hidden net assets 8,969,000 Hidden capital reserves 8,969,000


A) Revenues from ordinary operating activities 666,400 Timber and other forest products 571,100 Quarry 28,700 Tenement buildings, land rents 40,400 Sawmill 1,100 Hunting 14,000 Increase /decrease in exploited timber 6,000 Others 5,100 B) Expenditures for ordinary operating activities -526,700 Wages, salaries and social security 221,400 Administration 25,500 Consumption, materials, energy 108,000 Services consumed 82,200 Depreciation of fixed assets 52,800 Allocation to provisions 18,600 Taxes 18,200 OPERATING RESULT (A-B) 139,700C) Financial result 45,600D) Extraordinary result 103,300 Sales of land 116,000 Book value of sold assets -10,800 Extraordinary expenditures -1,900 PROFIT/LOSS PRE ALLOCATION TO RESERVES (A-B±C±D) 288,600 Transfers to capital reserves (decreased market value of fixed assets)** -136,700PROFIT/LOSS PRE TAXES/COMPENSATIONS 151,900 - Compensations (grants, subsidies and incentives) NET PROFIT/LOSS FOR THE YEAR 151,900 Transfer to free capital reserve (Retained earnings) -23,700 Timber and firewood supplied to owners -13,900BALANCE-SHEET PROFIT - devoted to be paid to owners 114,300

** The transfer to capital reserves consists of three parts: (1) An increase from excess cutting (890 scm) amounting to 31,500 ECU (this equals a decrease of market value of growing stock). (2) An increase in reserve from land sales 105,200 ECU (this equals a decrease of market value of fixed assets). (3) An increase in free capital reserve 23,700 ECU. While items (1) and (2) reduce the net profit of the current year, (3) is a retained profit.

16 For reasons of confidentiality all values from the original balance sheet are related to 1,000 hectare of forest

land and converted from Austrian Schillings to ECU (1 ECU = 13.3 ATS).


Table 2: Economic environmental report of Styria Private Forest 1995 (ECU)

Approach 1: Revenues/expenditures ordinary activity (timber) separated from recreation & en-vironment


ASSETS LIABILITIES

Fixed assets 940,500 Creditors 42,500 High standing forest ha 1,000 325,900 Provision for pensions, etc. 267,000 Meadows and pastures ha 62 15,000 Road net 84,600 Buildings 224,700 Technical equipment and machines 69,600 Capital and reserves 1,392,500 Financial assets 220,700 of which

Profit/loss for the year 151,900 Raw materials/finished goods 32,500 Debtors 105,000 Cash 624,000



A) Revenues from timber and related activities 529,000 B) Expenditures for timber production and related activities 455,200 RESULT FROM ORDINARY ACTIVITY (A-B)* 63,800 C) Revenues from other main activities (sawmilling, letting, etc.) 122,100 D) Expenditures for other main activity 61,800 RESULT FROM OTHER MAIN ACTIVITY (C-D) 60,300 E) Hunting 12,200 Revenue 14,000 Expenditures 1,800 F) Mushroom and berry picking 700 Revenue 1,000 Expenditures 300 G) Forest buildings let for recreation 6,100 Revenue 8,900 Expenditures 2,800 H) Particularly regulated forests with protective function 300 Revenue 1,500 Expenditures 1,200 I) Non-market benefits -3,700 Revenue 0 Expenditures 3,700 OPERATING RESULT FROM RECREATION AND ENVIRONMENT (ΣE....I) 15,600 J) Financial result 45,600 K) Extraordinary result 103,300 PROFIT/LOSS FOR THE YEAR (A-B+C-D±E±F±G±H±I±J±K) 288,600 Transfers to capital reserves (decreased market value of fixed assets) -136,700 PROFIT/LOSS PRE TAXES/COMPENSATIONS 151,900 - Compensations (grants, subsidies and incentives) NET PROFIT/LOSS FOR THE YEAR 151,900 Transfers to free capital reserves (retained earnings) -23,700 Timber and firewood supplied to the owners -13,900

BALANCE-SHEET PROFIT - devoted to be paid to the owners 114,300

* The apparent operating result of the forest enterprise based on the actual cut (7,611 Scm) is 63,800 ECU. Taking the reduction of forest assets due to excess cutting of 31,500 ECU into account, the operating result based on the allowable cut (6,720 Scm) is 32,300 ECU.


Table 3: Economic environmental report of Styria Private Forest 1995 (ECU)

Approach 2: Hidden environmental values and other imputed items


ASSETS LIABILITIES

Fixed assets 940,500 Creditors 42,500

Provision for pensions, etc. 267,000

Not for sale marketable fixed assets* 20,400 Provisions for neglected silvic. measures 7,200

Damaged stand risk accrual 60,000

Raw materials/finished

goods 32,500

Debtors 105,000 Capital and reserves 1,345,700

Cash 624,000 of which

Profit/loss for the year adjusted for hidden values 133,100



A) Revenues from timber and related activities 529,000

B) Expenditures for timber production and related activities 455,200

RESULT FROM ORDINARY ACTIVITY (A-B) 63,800

C) Revenues from other main activities (sawmilling, letting, etc.) 122,100

D) Expenditures for other main activity 61,800

RESULT FROM OTHER MAIN ACTIVITY (C-D) 60,300

E) Hunting 12,200

F) Mushroom and berry picking 700

G) Forest buildings let for recreation 6,100

H) Particularly regulated forests with protective function 300

I) Non-market benefits -3,700

RESULT FROM RECREATION AND ENVIRONMENT (ΣE....I) 15,600

J) Financial result 45,600

K) Extraordinary result 103,300

PROFIT/LOSS FOR THE YEAR (A-B+C-D±E±F±G±H±I±J±K) 288,600 Transfers to capital reserves (decrease market value of fixed assets) -136,700

PROFIT/LOSS PRE-TAXES/COMPENSATION 151,900

NET PROFIT/LOSS FOR THE YEAR 151,900

Not-for sale growing stock increase/decrease -9,600

Risk of damaged stands depreciation -2,000

Provisions for neglected maintenance and silvicultural measures -7,200

NET PROFIT/LOSS FOR THE YEAR ADJUSTED FOR HIDDEN VALUES 133,100

* In the balance-sheet the annual rates of change in production capacity since the last forest inventory (1990) are summed up as a fixed asset accrual. Value at end of 1994: 30,000 ECU.


Annex to Profit and Loss Account

Improved estimation of performance (including report on environmental impacts)

A. Timber production

Operating result from forest production related to allowable cut 32,300

± Not-for-sale growing stock increase/decrease -9,600

1. Deviations in timber harvesting from structure of allowable cut -14,000

2. Deviations in state of young plantations from planned (based on physical survey) -900

3. Damages caused by calamities and game (based on physical survey) -2,200

4. Long-term effect of allowable cut on forest assets (increase/year) + 7,500

± Excess/Less expenditures (performance) from maintenance and silviculture measures - deviations from planned - Provisions to be added

-7,200

5. Neglected tending measures in silviculture -7,200

Calculatory real operating result of the forest enterprise 15,500

B. Hunting - Damage to forest (loss in timber production)

Operating result 12,200

± Losses in timber production capacity due to hunting (opportunity cost) + 19,300

Damage to forest stands old Loss in production capacity p.a. (140 ha high forest) 17,300 new Bark-peeling (6 ha at 113.-) + browsing (1 ha at 126.-) 800

Timber revenues foregone (3 ha open meadows, 7 ha low density stands) 1,200

± Risk depreciation (40 ha severe damaged stands; 50% risk/50 years; 0.4 x 4,600 ECU) 2,000

Real operating result of hunting -9,100

C. Non-market benefits (recreation + environment)

Operating result (expenditures) -3,700

- Imputed revenues foregone from timber production -3,800

Result on providing non-market benefits -7,500

D. Quarry

Operating result 26,500

- Loss in forest land (revenues foregone) -800

- Depletion of stock (depreciation) -5,000

- Provisions for landscape repair (greening etc.) after exhaustion of stock -1,500

Real operating result 19,200


Table 4: Environmentally and socially relevant characteristics of the forest enterprise and its manage-ment in the year 1995 [flow parameters (activities) and state parameters] - outline of a catalogue

A. General characteristics of forest assets Medium-term inventories

Forest area split up by functions (timber production, protection, recreation, etc.), age classes, tree species composition, growing stock, …

State of tended areas, state of young plantations, state of regeneration, …

Health condition, …

…

Catalogue of indices (JÖBSTL, 1995)

B. Forest roads and buildings

Forest roads (length, width), machine tracks and landings

Newly built forest roads in reporting period, greening of road cuts

C. Management activities in current period Technical book-keeping - permanent observation

Felling quantity divided by species, assortments, silviculture systems (intermediate and final felling), felling sites etc./actual felling quantity above or below allowable cut (detailed)

Cutting types: Clear cuts, natural regeneration (marginal strip cutting, group selection felling etc.) - number, areas

Tending measures and areas in tending (Target and Actual)

…

Catalogue of indices (JÖBSTL,1981)

D. Marketable non-timber production and services

Cycling routes (mountain-biking), cross-country skiing tracks, fitness parcours

Drinkable and other water (number of springs, m3 over time)

Forest houses

…

E. Protection, recreation and welfare activities and facilities

Recreation: Recreation forests, benches, paths, fitness parcours, cycling routes, resting mead-ows, shelters and refuge huts, playgrounds, meadows, biotopes (number and area) …

Protection: Protection forests, forests with regulated protective functions; torrents, avalanche strips (number, area) …

Nature conservation: Conservation areas, openings (fields, wetlands, etc.), national parks, virgin forest cells (area)

Sites of special scientific interest, natural heritage sites …

Water: Watersheds (non-market) of drinkable and other water (number of springs, m3 over time), water conservation areas with largely restricted forest management …

F. Employment

Employees, conditions of labour, facilities

G. Negative external effects

Environmental damage caused by the forest enterprise

Padova 2005 Measuring the sustainability of a forest enterprise 101

CAN TRADITIONAL FORESTRY ACCOUNTING CONTRIBUTE TO MEASURING THE SUSTAINABILITY OF A FOREST ENTERPRISE?*

Hans A. JÖBSTL

Abstract

Since Rio (1992) various sustainability pro-cesses on the international level have been aiming at securing sustainability on national and/or regional levels. Criteria and indica-tor indices for sustainable forest manage-ment, for instance, were established as a re-sult of the so-called Pan-European Process. As forest management takes place in the in-stitutional framework of forest enterprises, which have – at least in Central Europe – a long tradition of sustainability, it is neces-sary to define the indicators also at the op-erational level. Sustainability on the opera-tional level has always been focussed on re-sources; however, it has substantial deficits, in particular, with regard to the value as-pects of the forest assets and the non-mar-ket products.

Thus, the following questions arise: Which of the Pan-European indicators are of rele-vance for securing sustainability in an enter-prise, and which can be provided by the ac-counting system (being the fundamental in-strument for information supply and control-ling)? Which data does accounting supply? What can it contribute to? How would it have to be developed further?

A study at the Vienna Institute for Silvi-culture, including expert inquiries and case studies in forest enterprises in connection with the L2 project, assessed 43 indicators on the basis of different properties. Its outcome could be used to establish a catalogue of indicators for the individual company. The main prob-lem of an accounting system is the lack of consideration of annual changes in forest assets and the dissatisfactory recording of the environmental services. These problems are aggravated by serious weaknesses of forest surveys in practice. In this paper a list of operationally relevant criteria and indicators is presented, the shortcomings of the account-ing system are briefly addressed, and con-cepts for their overcoming are dealt with. * The Multifunctional Role of Forests – Policies, Meth-

ods and Case Studies, EFI Proceedings No. 55, Joensuu, Finland 2008, pp. 183-193.

Key words: forest accountancy; sustainability control; performance measurement; forest assets; management accounting

1 Introduction

Since the United Nations Conference on En-vironment and Development in Rio 1992, several processes have been initiated to de-velop indicator systems (C&I) for sustain-able development. The concept of sustain-ability in forestry, which had manifested it-self until then in the principle of not harvest-ing more timber than would regrow, has been extended decisively, and the integra-tion of social, economic and ecological ele-ments has been requested. In order to solve the problems of operationalisation that have arisen in this context, six criteria have been selected for the forest that cover both the classical sustainability as well as the social and economic aspects and ascribe an impor-tant role to the biological conditions of the forest ecosystem. The determination of indi-cators on the international level was followed by numerous studies on the national and re-gional levels. After all, it was a matter of narrowing down the criteria to the indivi-dual organisation unit of forest management: the enterprise. The enterprise level has hardly been thought over and covered so far, al-though it is originally the sole centre of sus-tainability. It is there where sustainable for-estry management is taking place – origi-nally with a view to the sustainable yield of timber, and today with a wider view consid-ering aspects of multiple use, etc.

2 Objective

Our deliberations are focussed on the forest enterprise, the requirements of management and the questions of what is needed by the individual enterprise to determine its goals, to operationalise them, and to implement them in practice, and what is needed to monitor the attainment of objectives and control it continuously.

The following questions need to be clari-fied: Which criteria of sustainable forest ma-nagement (SFM) are of interest to the indi-


vidual enterprise? Which criteria do forest and environmental policies want to have fulfilled on the enterprise level? Which data are needed from the enterprise for its man-agement and reporting tasks? Which data do the authorities require from the enterprise, which of these data can be provided by ac-counting? How can the fulfilment of the re-quirements for sustainability be proved? Operationalisation requires the definition of goals, the determination of criteria, the de-rivation of indicators, and the examination of the means necessary for obtaining the re-quired information. Thus, the questions arise as to what accounting can contribute and which improvements are necessary, or which possibilities do exist.

One can depart from the following assump-tions: • SFM takes place within the institutional framework of forest enterprises. • Enterprises should be managed in a tar-get-oriented way. Managerial decisions re-quire clear targets and operational criteria or indicators. • Targets and plans need to be controll-able and to be controlled. Measurability is necessary; where no quantifiable targets exist they need to be compensated by indicators. • The accounting system is the core in-strument of the internal information supply. • Reporting to the public gains increasingly in importance especially in connection with the concept of multiple use.

The following goals are aspired at: • Key figures as tools for sustainable man-agement of forest enterprises. • Correct statements about the success of management in any one period. • Reporting on sustainability by the forest enterprise (internally and externally).

These goals shall be achieved by the follow-ing means: • Establishment of a set of indicators on the basis of SFM criteria for the individual for-est enterprise from the point of view of the management while considering at the same time the expectation of the public. • Analysis of the state of data availability and of proposals for its improvement (ac-counting system, forest inventory). • Drafting of an internal sustainability re-port of the individual forest enterprise.

• Drafting of an external sustainability and performance report of the individual forest enterprise. • Analysis of the deficiencies/problems of the current annual accounting (profit & loss and operational statements) and reporting, and proposals for an improvement (change in forest assets). • Completion of existing studies in terms of managerial economics.

3 Criteria and indicators (C&I)

Indicators are used to measure the objectives defined by the criteria and are, thus, the operational elements of these criteria. They are a strong tool to collect and report infor-mation within a system (e.g., SFM), which is usually characterised by a lack of know-ledge, uncertainties and missing information about impacts, dependencies and feedbacks (RAMETSTEINER, 2001). The criteria catalogue of the Ministerial Conference on the Protec-tion of Forests in Europe (MCPFE) includes six criteria with 35 indicators in total. Each criterion is characterised by several indica-tors (MCPFE, 2003). They aim at the main-tenance (and enhancement) of forest ecosys-tems and their contributions to the quality of human life, and include forest resources, health and vitality, productive functions, bio-logical diversity, protective functions and socio-economic functions.

Based on these six criteria, the Pan-Euro-pean Operational Level Guidelines (PEOLG) have been elaborated to further promote sus-tainable forest management in Europe by translating the international commitments to the level of forest management planning and practices. They have also been adopted in the framework of Resolution L2. They re-present a common framework of recommen-dations to be used on a voluntary basis and as a complement to national and/or regional instruments to further promote sustainable forest management at the field level, on for-est areas in Europe (MCPFE, 1998). Within Resolution L2 European countries commit themselves, inter alia, to promote the PEOLG and to adapt them to the specific national, sub-national and local economic, ecologi-cal, social and cultural conditions.

Apart from these guidelines, there are sev-eral individual studies on an operational level such as the PEFC study and the L2 study of the Vienna Institute for Silviculture, in par-


ticular, and a case study by GIUGNI (2005). These studies form the basis for the establish-ment of the set of indicators.

The study at the Vienna Institute for Silvi-culture assessed 43 indicators on the basis of different properties. By means of a Delphi survey, an expert panel consisting of repre-sentatives from science, administration, for-est enterprises and non-governmental orga-nisations evaluated the C&I set with regard

to validity, practicality, relevance and im-portance of indicators. Possible threshold values for the quantitative indicators and the relative importance of the indicators had been derived from expert opinions. The results show that several indicators are easy to de-rive, but insignificant, whereas others are important but difficult to derive (see Table 1). Finally, a set of 12 key indicators has been selected from the whole list (see Table 2).

Table 1: List of indicators with expert ratings and results from three case studies (based on WOLFSLEHNER et al., 2004)

Delphi-Study Case studies

No. Indicator Crite-rion

Rele-vance

Practi-cality

Impor-tance

Availa-bility

Measur-ability

1 consideration of SFM in forest management objectives C 1 medium medium high high high 2 evaluation of forest management plans C 1 high high high high high 3 monitoring of forest resources C 1 high medium medium high high 4 mapping of forest resources C 1 high medium high high high 5 controlling of forest resources C 1 medium medium medium medium high 6 harvest plans and rotation period C 1 low medium medium high high 7 amount and change of growing stock C 1 medium high high medium medium 8 balance of growth and harvesting rates C 1 high high high medium medium 9 composition of tree species C 2 high medium high high high

10 use of suitable tree species C 2 medium medium high medium medium 11 use of soil-fertilizing methods C 2 low low low low medium 12 prevention of waste deposit C 2 medium low low low medium 13 amount of damaged wood C 2 low medium high high high 14 use of pesticides and herbicides C 2 medium low medium low medium 15 activities of biological pest prevention C 2 medium low low low medium 16 stems damaged by harvest C 2 medium medium medium high high 17 stems damaged by bark peeling C 2 medium medium low high high 18 impact of grazing C 2 high medium low low high 19 forest management practices causing bare forest soil C 3 medium medium low low medium 20 amount of full-tree harvesting C 3 low low low low high 21 net present value C 3 medium low high low low 22 returns from wood production C 3 low medium high high high 23 non-wood products and services C 3 low low medium medium medium 24 access to forests by forest roads C 3 medium high low high high 25 final opening up by skid tracks C 3 medium medium medium low medium 26 laying-out of drainages C 4 high medium low low medium 27 amount of natural regeneration C 4 high medium high low medium 28 use of local provenances C 4 high medium high medium medium 29 vertical structure within stands C 4 medium low medium medium medium 30 number of old trees C 4 medium medium low low low 31 percentage of coarse woody debris C 4 high medium low low low 32 consideration of key ecosystems in SFM C 4 high medium low low medium 33 consideration of rare species (trees, shrub) in SFM C 4 high medium low low low 34 damage of regeneration by browsing C 4 high medium medium medium medium 35 use of soil preparation methods C 5 low low medium medium low 36 quality of forest infrastructure C 5 medium medium medium low medium 37 training of staff with regard to SFM C 6 medium medium low medium medium 38 safe working conditions C 6 medium medium medium high high 39 willingness to join cooperations C 6 medium medium medium low medium 40 consideration of specific sites in forest management C 6 medium medium low low medium 41 use of traditional forest management practices C 6 medium medium low low medium 42 role of local staff for regional employment C 6 low medium medium medium medium 43 meet legal regulations C 6 medium high low medium high


4 Data sources and deficiencies

The central instruments of information in an enterprise are the accounting system and the forest inventory.

The accounting system is the principal quantitative information system in any com-pany. It can be broadly classified into finan-cial accounting, cost and management ac-counting. Financial accounting records flows of money, goods and services from and to the enterprise in monetary terms, and the re-sulting state and changes in assets and li-abilities. Monetary profit is the basic meas-ure of results. Cost accounting analyses in-ternal processes, factor consumption and per-formances in detail, and is characterised by efficiency criteria. Both systems of account-ing cover the production of goods and the provision of services as far as they contri-bute to monetary profit. Management ac-counting comprises all accounting activities aimed at providing data relevant for man-agement purposes. Environmental and so-cial accounting have emerged recently – all these facets of accounting together result in the so-called extended management-oriented accounting.

Forest inventory serves for recording the properties of forest stands relevant for plan-ning, controlling and assessing purposes. It is partly carried out as stand inventory, and partly as sampling inventory at larger intervals.

Accounting and forest inventory as meas-urement tools and control instruments of sus-tainability have to provide information on such criteria and indicators that are suitable for characterising sustainability.

In practice, the major part of the desired data for the representation and proof of sustain-able forest management is missing. There are weaknesses and deficits with regard to the condition of the forest (inventories), present and future performance (products and servi-ces) and the indicative figures. Apart from missing physical data to be provided by for-est inventory, there is a lack of adequate values for profit and forest assets in finan-cial accounting. In any case, the customary measure of the undifferentiated cubic meter over bark is insufficient without consider-ing tree species composition, timber quality, assortments, qualities and terrain conditions. Basically, financial accounting can only con-tribute to the certainly important sustainabil-ity goal of liquidity. However, forest enter-prises usually have a big share of assets that can be liquidated in the short run, which implies that this financial key figure is not really important in the forest enterprise. A well developed cost accounting system can, however, deliver a great number of interest-ing indicative figures. The Austrian forestry accounting data network, for instance, has provided an abundance of data from finan-cial and cost accounting of forest enterpri-ses for 40 years, but their shortcoming is the lack of non consideration of the changes in forest assets. As a first step, the so-called adjustment to the allowable cut has been prac-tically introduced.

The main shortcomings of forestry ac-counting consequently are: neglecting or in-correctly registering changes in growing stock, and not or inadequately representing other services, especially with respect to the

Table 2: Key indicators for an SFM analysis (WOLFSLEHNER and VACIK, 2004)

No. Indicator Description

1 NPV annual net present value2 growth/harvest balanced ratio of timber growth/harvest3 non-wood economic returns from non-wood products in relation to total incomes 4 Browsing area of natural regeneration damaged by browsing5 Damage timber volume of damaged wood in relation to the total timber production6 forest roads density of forest roads 7 natural regeneration area of natural regeneration in relation to total regeneration area 8 tree species forest area with a close to nature tree species composition 9 woody debris amount of coarse woody debris of standing volume

10 Planning quality and extent of planning instruments and tools 11 Ecosystem area with conservation measures for ecosystem protection 12 Training amount of money spent for professional training


environment in a wider sense. The conse-quence is that results shown by accounting are to a certain extent incomplete or wrong.

Many approaches have been proposed over time to evaluate forest assets and to consider changes in forest assets, but none of them has been accepted in practice so far. Currently, there are several new and prom-ising approaches to solve these problems. Whereas there are hardly any legal regula-tions concerning forest asset records in ex-ternal accounting, it is indispensable for in-ternal accounting to have correct records of forest assets and to examine if targets have been reached. With regard to the non-mar-ket or environmental benefits that cannot actually be assessed with a monetary system, so-called performance reports that show pri-marily physical factors are being examined.

The approaches can, for instance, be roughly classified into balance sheet and cal-culatory approaches. Balance approaches try to quantify changes in forest assets like a bal-ance sheet or profit and loss account. They are known from public forest enterprises in Great Britain, New Zealand etc. Recently, scientists from Central Europe have also dealt with the attempt to fully integrate forest as-sets into financial accounting. The approach of a German research group (BORCHERS, 2000) has been developed on the basis of IAS and the local commercial law. Forest assets appear as "growing stock" in the bal-ance sheet. A similar study was recently pre-sented for Scandinavian forest enterprises. Joint-stock companies that are publicly quoted are to show forest assets in their balance sheets. Enterprises run by state and provin-cial governments also strive at this goal. For smaller forest enterpri-ses, however, it is more reasonable to opt for calculatory approaches that avoid the evaluation of assets. In the follow-ing, a calculatory ap-proach for the periodi-cal performance assess-ment shall be presented that considers changes in forest assets, avoids the problem of evalua-tion, and integrates en-vironmental services.

5 A two-stage calculatory approach to improved economic performance assessment of the forest enterprise

In Central European forest enterprises the so-called allowable cut calculation has been generally introduced. The allowable cut is used instead of annual increment as a meas-ure and benchmark of the sustainable timber production potential. Deviations between allowable (AC) and actual cut (AH) are con-sidered to be an expression of changes in the value of growing stock.

(AC – AH) * CP = change of forest assets

where CP is the contribution margin (stumpage price) per m³ of the actual harvest.

This AC-calculation is only one step into the right direction, which has to be improved by other means for the following reasons: • problematic determination of allowable cut (average of different formula) • re-calculation of the actual felling quan-tity – disregarding tree species, timber qual-ity, logging site etc. • lacking consideration of the execution of silvicultural operations • proof of changes only in relation to the management plan (allowable cut)

In order to improve this calculation, a calcu-latory approach for a better periodic perform-ance assessment was developed by JÖBSTL (1981, 1996) – starting from the balance sheet and the income statement (see Figure 1).

Stage 1. The improved short-term perform-ance accounting approach

It comprises – starting from the allowable cut method – the following components/assess-ments:

• Deviation of actual cut (AH) from allowable cut (AC) subdivided into tree species, assortments, logging sites, etc. (i) (ACi – AHi) * CPi = change of assets i = timber species, …

• Deviation of planned (p) and actual (a) silvicultural measures (FM) (FMp – FMa) * cm = change of assets cm = standard cost of measure m

• Changes in the state of young stands and tending areas (FS) (FSp – FSa) * cs = change of assets cs = difference in standard con-

tribution margin of s • New damage caused by calamities and game • Maintenance of forest roads and buildings • Long-term effects of allowable cut on forest assets • Loss of timber production due to hunting, recreation, etc.


In order to eliminate or separate the influ-ence of fluctuations in market prices, stan-dard prices and standard costs are used. Expenditures and receipts from infrastruc-ture services (IS); non-timber services etc. are separated by proper cost centre account-ing and adequately loaded with overhead costs. Losses and damage caused by cala-mities and game and the provision of IS are calculated on the basis of opportunity costs. While environmental economists have de-veloped a number of techniques to estimate the value of non-market goods and forest services, we consider these techniques as difficult to apply and usually not useful on the enterprise level in their current form. My approach works without monetary eval-uation of IS services. However, a quantita-tive and qualitative description of environ-mentally and socially relevant facilities and services of the forest holding is proposed to be presented on a separate sheet.

Stage 2. The medium-term performance analysis

In combination with the forest inventory (car-ried out only at greater intervals in the course of forest management planning) a compari-son of the states of the forest (actual state to – actual state t1) and further analysis can be carried out. The process concept for medium-

term performance analysis is essentially based on the fundamental ideas of an actual-ac-tual- and a target-actual-comparison as well as an analysis of deviations and causes. It comprises the following components:

Comparison of two consecutive invento-ries (Actual – Actual; Target – Actual) Analysis of the past medium-term plan-ning period (period analysis – control of plan execution and analysis of financial results) Medium-term plan assessment and long-term development preview (forecasting)

Preconditions for this approach are a pur-pose-oriented design of the forest inventory, derived from a carefully created evaluation model, and the determination of the require-ments to be covered by book-keeping (re-cording of physical and financial quantities). The results of the analyses are a table of physical and monetary characteristics of the forest state and the periodic results (abso-lute, relative and differential figures). Their combination allows an assessment of the value-creating effects of the expired period. As far as possible and reasonable, the phy-sical data will be complemented by mone-tary values. This approach is supported by a set of calculation and development simu-lation models.

Figure 1: Outline of the calculatory approach to an improved periodical performance assessment


Perspectives for the future: A promising fu-ture approach for a continuous internal audit of forest assets changes has been developed by KARISCH (2003): a forest stand data base with annual updating of forest inventory data. Combined with plan-actual compari-sons for harvesting and tending, simulation of forest stand development as well as mo-netary valuations, the annual observation of forest assets development should be made possible.

6 Steps to forestry environmental accounting

A step-by-step approach to environmental accounting on the enterprise level in forestry and agriculture was proposed by MERLO (1996). It starts with conventional financial statements: balance sheet, profit and loss account of the forest enterprise following conventional accounting principles. The sec-ond step separates environmental/recreatio-nal activities from conventional ones, i.e. agricultural products and timber, from re-creational environmental services. A third step outlines near market values as perceived by the entrepreneurs. These are hidden val-ues – assets and liabilities (changes in grow-ing stock, risks due to natural hazards, …). A fourth step aims at incorporating non-market benefits and costs (externalities), or, at least, providing a framework for their in-corporation, as far as they can be shown in monetary terms, or by other means. Therefore satellite accounts and addenda including physical/biological aspects can be used. A related approach with examples from two forest enterprises was presented by MERLO and JÖBSTL (1999).

Several publicly owned enterprises, e.g. the Austrian federal forest estate, are con-cerned with the elaboration and publication of so called "Environmental Performance Reports" that have been expanded recently to Sustainability Reports, including diffe-rent aspects of SFM (ÖBF AG, 2004).

On the international level, first Guide-lines to adjust National Accounts in order to provide data on the real social costs and benefits of forestry for society were pro-vided in 1968 and renewed and improved in several steps (SNA, SEEA, EEAF). The basic idea here is to take the environmental services and the changes in forest assets in

physical dimensions and describe them in annexes or on satellite accounts, respec-tively, as in the enterprise model described above. The SEEA includes both physical ac-counts and, to the extent possible, monetary accounts. The EEAF follows the SNA and SEEA, but expands the presentation of for-est accounts to non-market forest products, forest services to non-forestry sectors, dis-tribution of forest benefits, and accounts at the regional and forest level.

7 Some comments

Finally, it has to be admitted that the tradi-tional accounting system is not even able to provide sufficient information for the Sus-tainable Timber Management and that ade-quate further developments with regard to forest resources are needed. The traditional accounting system cannot contribute much to meeting the new major challenges of SFM such as recording other forest services apart from providing information about expen-ses, costs and direct revenues. Therefore, it needs to be complemented by new ap-proaches. In this context, forest inventory plays a central role. Currently, there is a lack of data, especially of those that allow a mo-netary assessment. Forest inventories are planned inadequately. More mental input is needed. Data collection and processing are expensive and not feasible for small enter-prises. Models and calculation aids are miss-ing. Financing the further development of ex-isting models has a very low priority, since they seem not to be indispensable for the cur-rent management. Nevertheless, further ef-forts are necessary, since the provision of information about the state of the forest, for-est services and economic outcomes rele-vant for sustainability is the manager’s duty, whereas the stakeholder needs to go and get the information.

8 Concluding remarks and summary

Accounting has for a long time been an important information instrument for enter-prises both internally (management – con-trolling) and externally (reporting). Beyond that accounting provides information for the national income estimation and policy. The picture of the actual conditions, processes and results of a forest enterprise as shown by forest accounting in physical


and financial dimensions is incomplete, and partly even wrong and misleading. The pe-riodic changes of forest assets and the envi-ronmental achievements of the forest enter-prises are missing in particular, while wood harvesting is relatively well captured. An ex-tension is necessary for internal and exter-nal purposes. Though the forest, which constitutes the centre of forestry activities, covers 80-90% of the assets of the forest enterprises, it is to a large extent ignored by traditional finan-cial accounting. Yet, planning and control of forest management require to observe and to judge the stocks and their changes with a view to the future yields. In National Accounting, which also shows serious shortcomings, international organi-sations are elaborating proposals of proce-dures that aim at standardisation, harmoni-sation and, thus, comparability – including the natural resources, forest development and the non-market benefits of forestry. While first suggestions on the valuation of the changes of forest assets (physical sus-tainability) are more than 100 years old – but have never attained acceptance in gen-eral practice – proposals for the inclusion of the environmental benefits into manage-ment accounting (sustainability in a wider sense) are hardly 10 years old. Approximation solutions are commonly used: on the one hand, improved perform-ance estimation without evaluation of the forest assets on the basis of comparisons of planned (standard) and actual values (e.g. actual cut - allowable cut), and, on the other hand, the creation of so-called performance reports, recently extended to sustainability reports. In enterprise accounting we have prefer-ences for the calculatory method of account-ing for changes in value. Environmental ser-vices as well as changes of forest assets are not to be entered into financial accounting directly, but recorded in satellite accounts and/or described in the appendix to the bal-ance sheet. This avoids the mixing of diffe-rent qualities of information. The criteria and indicators of the various SFM processes can be used as a basis for the assessment of the necessary contribu-tions of accounting to further support the

measurement of sustainability. This con-cerns mainly physical data made available by carefully planned and accomplished for-est inventories and based on development prognoses. In the ideal case monetary eval-uations can be added. It is a fact that the majority of the forest enterprises do not have any systematic ac-counting system, while others maintain the bare legal minimum. In addition, also the ac-counting systems of progressively led enter-prises do not cover substantial aspects. Sig-nificant development is still ahead.

References

Borchers, J. (2000): Überlegungen zur Einbin-dung des aufstockenden Holzes in den Jah-resabschluss von Forstbetrieben vor dem Hintergrund des Paradigmenwechsels inter-nationaler Bilanzierungskonventionen. In: Jöbstl, H. (ed.): Waldvermögensbewertung - Forstliche Erfolgsrechnung. FOWI-Berichte 15, Wien. pp. 37-42.

Giugni, R. (2005): Erstellung von Nachhaltig-keitsindikatoren auf Ebene des Forstbetrie-bes unter besonderer Berücksichtigung des Rechnungswesens. Diplomarbeit, Universi-tät für Bodenkultur, Wien. 115 p.

Jöbstl, H. (1981): Zum Problem der Vermö-gensveränderungen in der forstlichen Er-folgsrechnung. AFZtg 36:411-412.

Jöbstl, H. (1996): Medium-term performance analysis in forest enterprises - A calculatory approach. The Finnish Journal of Business Economics 45:65-77.

Karisch, G. (2003): Berücksichtigung des Wald-vermögens im forstlichen Rechnungswesen. FOWI-Berichte 16, BOKU Wien. 200 p.

MCPFE liaison unit Lisbon (1998): General de-claration and resolutions adopted. Third min-isterial conference on the protection of for-ests in Europe. http://www.mcpfe.org/resolu tions/lisbon

MCPFE liaison unit Vienna (2003): Background information for improved pan-european in-dicators for sustainable forest management. http://www.forestry.gov.uk/website/pdf.nsf/pdf/mcpfebgr03.pdf/$FILE/mcpfebgr03.pdf

Merlo, M. (1996): Non-market environmental values in forest management accounting. The Finnish Journal of Business Econo-mics, 45: 29-47.


Merlo, M. and Jöbstl, H. (1999): Incorporating non-market values into the accounting sys-tems of publicly and privately-owned forest enterprises: an operative stepwise approach. In: The living forest. Non-market benefits of forestry. Proceedings of an international symposium on non-market benefits of fore-stry, Edinburgh, 24-28 June 1996. The Sta-tionery Office, London, UK. pp. 341-372.

ÖBf AG (2004): Wir leben Nachhaltigkeit. Pur-kersdorf, Austria. 120 p.

Rametsteiner, E. (2001): SFM indicators as tools in political and economic context: actual and potential roles. In: Raison, R.J. et al. (eds.): Criteria and indicators for sustainable forest

management. CABI Publishing, Wallingford, UK. pp. 107-130.

Wolfslehner, B. and Vacik, H. (2004): A pres-sure-state-response framework for multi-criteria analysis of sustainable forest man-agement. In: "Sustainable harvest scenarios in forest management", Proceedings, Tatras, Slovakia.

Wolfslehner, B., Vacik, H., Würz, A., Spörk, J., Hochbichler, E., Lexer, J.M. and Klumpp, R. (2004): Umsetzung und Relevanz der pan-europäischen Richtlinien für eine nachhaltige Waldbewirtschaftung. Endbericht. BMLUF, Vienna, Austria. http://www.forstnet.at/ article/articleview/25100/1/4921


FROM THEORY TO PRACTICE – GAPS AND SOLUTIONS IN MANAGERIAL ECONOMICS AND ACCOUNTING IN FORESTRY

Overview* Hans A. JÖBSTL and Maurizio MERLO

Introduction

In this symposium 49 scientists from 18 dif-ferent countries took part and 28 papers were presented. The majority of the papers focused on the main theme of the sympo-sium. However, the conference contents were far from being homogeneous, but re-flected various ways of thinking, different approaches, concepts, methodologies and perspectives, etc. It is believed that this vari-ety and complexity has added to the sym-posium value.

Science, or more precisely, scientists’ gaps and shortcomings, were at the centre of the first group of papers presented on theory and practice in decision making. The issue of different points of view in methods to solve problems was considered (Oesten). Actually, debate is part of the Scientific Community’s way of life, it is the rule of the game: a thesis needs an antithesis in order to find a syn-thesis through investigation and research. If the synthesis is called joint co-responsibility or co-operation, the result does not change.

It is not surprising that currently impor-tant forestry issues like certification, con-flicts between groups of interest, the role of the State are seen from different points of view. One scientist opposes another (Oesten). After all competition is the recipe for suc-cess. The following sentence summarises this well ‘... the expert dilemma is a prob-lem with which one can live, as long as so-ciety guarantees the freedom of experts and non-experts to debate freely and openly over what is true and right...’ (MARKL, 1996).

Theory and models

The symposium has shown that powerful in-struments are available for identifying best solutions, in cases where different interests, * From Theory to Practice - Gaps and Solutions in

Managerial Economics and Accounting in Forestry. Proceedings of the International IUFRO-Symposi-um of WG 4.04.02 and RG 4.13.00 in Prague/Czech Republic, 13-16 May 1999, Prague 2000, pp. 257-260.

goals and opinions are opposing each other. For instance, multi-criteria models can be used to reach compromise solutions when conflicting objectives must be pursued. Se-veral well updated papers were presented at the theoretical and applied level (Zadnik, Kazana, Proctor, Hitrec et al., Gajo et al.).

Is there a gap between these models and the practice? Yes, was the answer (Hitrec et al.). It was hinted that the gap could ap-pear to increase after this conference. Are models useless? This was also asked. No, absolutely not, was the answer. It has been mentioned that models are now recognised (this does not mean accepted) by some for-est managers. They offer an ‘intellectual back-ground for a general learning process’ and help foresters to develop ‘a systematic way of thinking’ about the problems at hand (Zadnik, Peyron, Kazana, Proctor).

It has been observed that systematic thinking and rationality are particularly needed when public forests are concerned. Decision making is particularly stressful for ‘elected’ people and so help is demanded. It is even better if from the help, i.e. clear transparent presentation of what is at stake, comes sup-port. Here, however, comes the ethic of the scientist and even more the neutrality of sci-ence. Some doubts have been cast on possi-ble confusion with politics, manipulation and even honesty (Jöbstl), reflecting the re-cent debate on the media.

It was pointed out that there are many types of models (Kazana), from yield tables, growth models (Kouba), stand structures (Novotny et al.) to the various MCDM with a higher degree of complexity. Generalisation does not help. Another question has been posed: is it a matter of ‘decision making’ or ‘decision support’ models that helps de-cision making? From this point of view the symposium has revealed clear opinions. Model builders should be realistic and also humble, open to suggestions and able to co-operate with practitioners, stakeholders; in other words, the people.

Prague 1999 Gaps and solutions in managerial economics and accounting 111

Other papers have coped with more classic economic models aimed at welfare improve-ment in general, rather than at a multiplicity of specific objectives. The social goals of for-estry, the changing rationality, the influence of factors almost blundering with ideology (e.g. the green ideology) were discussed (Vehkamäki). Far from traditional forestry new systems are re-emerging from the past (e.g. the Dehesa) and environmental account-ing is there to help decision making at en-terprise and policy level. In any case a clear cut distinction has to be made between pri-vate and public objectives (Campos et al.).

Should environmental accounting be a mere addendum to accounting, maybe just a qualitative annual report, or should it be-come an integral part of accounting? (Ny-quist). The issue is certainly not new to this IUFRO group, it has been discussed several times since the Tampere Conference (IUFRO, 1996).

However, how should we supply data to environmental social accounting? For in-stance, what can the role be for the Contin-gent Valuation Method, which is now an established economic methodology. There is evidence from the Czech Republic survey, made by Sisak, which casts serious doubts on the method. The question asked was if non wood forest products only have a mar-ket price or do they have something more? Experts’ valuation techniques are therefore proposed as an alternative and/or as an inte-gration to economic valuation of environ-mental recreational values. Also forests and forestry contributions to the national income and welfare had been considered (Pabuayon), an issue rather familiar to this IUFRO groups (IUFRO, 1996 and 1998).

Coming to the main subject of the sym-posium it has been stressed that gaps and failures often occur due to attitudes, diffi-cult communications and misunderstandings. ‘The art is to find the border between what is simple and what is simplistic’ (Peyron). However, it was pointed out that models are not easily accepted, because they are trans-disciplinary (Oesten). In addition for-est models are by definition simplified im-ages of the real system and therefore they normally should not be deterministic, but stochastic and probabilistic. However most models are - still - deterministic. Nowadays they should include an important social

component, but it has been observed that social rationality changes (Vehkamäki). Mo-dels are built just to show these changing interests, to give transparency to a complex world, as argued by Proctor. However, the question of what would happen if the ra-tionality of today was different from that of next Monday, was asked by Gadow.

Perhaps one should remember that the symposium was concerned with gaps be-tween theory and practice, and not between models and practice. After all models are not pure theory, but they often just try to represent theory, or at most to develop a theory on the sound evidence provided by a model well founded on real world facts. Nobody can question Forest Economics as far as it is concerned with well established chapters like the market theory, the capital theory, welfare economics and business management. It has also been said, inciden-tally, that often practice is determining the theory (Vehkamäki), and this is rather com-mon in Economics. Maybe this can open another area of discussion: from practice to theory.

Publication of the research results does not help communication. Scientific quality, or supposed quality, sometimes prevents dis-semination. Model building exercises, and the related efforts and enthusiasms, may re-call the well known book by Hermann Hesse, Das Glasperlenspiel. Are we the élite, Castalia, living in our turris eburnea, and outside the rest of the world of the ordinary people, the practitioners? Perhaps each scien-tist should look at his own behaviour; it is a kind of personal responsibility towards the real world. Compromises between articles for the scientific community (and academic promotion) and articles for practitioners could provide the balance. This attitude could help our scientific community, after all, as members of IUFRO are ‘applied people’, aren't we?

Accounting and valuation

The roots of managerial economics must not be forgotten, was another message coming from several papers and the discussion. In this symposium there were several contri-butions attempting to bridge the gap between theory and practice. Accounting is a key instrument and is even better when applied


to a network of enterprises, as in the cases reported by Möhring and Sekot. It is an important tradition in Austria that goes back to the seminal work of FRAUENDORFER (1967). The Austrian tradition is similar to the German one (BRABÄNDER, 1996). On the basis of established network evidence has been given of the profitability of forest en-terprises in the former German Democratic Republic (Möhring) compared to Western Germany traditional farm forestry. Even coppices, according to Italian accounting data, have shown remarkable improvements in their profitability (Bernetti et al.) thanks to new market development of firewood and biomass.

It would have been beneficial to compare the continental Europe rate of return with that of New Zealand (Manley), the United States (Klemperer et al.), and also Northern Ireland (Harley). The remarkable rate of 6-10%, as reported, marks the difference with European rate that is at most around 3-5%.

Accounting is of course a useful tool for defining best forest management and prac-tices. The financial and social profitability of uneven aged forestry needs accounting support and evidence for this was shown by Hille et al. and Klemperer et al. Faustmann meanwhile remains a cornerstone in our profession, whatever the management is, as shown by Chang. Accounting can also be a useful instrument for possible future deve-lopment of certification (Plesha). Whatever the development will be in this field, ac-counting will remain an essential tool. In wood processing industries accounting and cost centres are more established tools, as shown by Sjöström and Zahvoyska analys-ing, respectively, added value/contributing margins of the paper industry in Finland, and the multistage transfer line systems of the wood processing industry of Ukraine.

Australia and New Zealand seem to be very keen on definition and classification: (i) forest valuation standards (Manley); (ii) accounting standards (Austin).

Manley reported the development of the for-est valuation standards in New Zealand as defined by the Institute of Forestry and by the body of forestry professionals. The simi-larity of approaches with the Continental European forest appraisal experience is

amazing. Flexibility is advocated: the stan-dard methodology is a ‘combination of trans-action evidence and the expectation value’.

Austin considered forestry within the more general accounting rules, e.g. accounting for self generating and re-generating assets, maintenance of productive capacity as seen in terms of market effects as well as biolo-gical growth. Is it not sustainability in the broader sense of the term? Is it not that foresters should learn from accountants? After all accountancy was founded by a fine mathematician, Pacioli, using mathe-matical logic, and so it is not surprising that enterprise accounting and national account-ing is coming back when considering stocks of natural capital and flow of public goods and services, as underlined by the well known paper of DALY (1988), and remembered by Pabuayon.

Conclusions

The two aspects of the symposium, model building and operational research, and ac-counting and valuation with reference to real cases, have been seen by Bartunek et al. as the changing emphasis of research in tran-sition countries. It was stressed that yester-day the emphasis was on organisation and optimisation and today it is on budgeting, taxation and valuation. One could have ad-ded another question: where was the em-phasis on at this symposium? The question posed to the participants has been answered, underlining that the mix of papers, after all, has reflected current ongoing research and debate amongst scientists and practitioners. New issues, facts, evidence have emerged both in the field of organisation and best solutions as well as in accounting and valu-ation. The symposium in this way has shown its validity, and balanced approach, thanks to the papers presented and the stimulating debate.

References (Authors of papers presented at the symposium are quoted in italic characters, and not reported in this list of references).

Brabänder, H.D. (1996): Beiträge der IUFRO zur Entwicklung des forstlichen Rechnungs-wesens, ‘The Finnish Forestry Journal of Business Economics’, 45, 1, 19-28.

Prague 1999 Gaps and solutions in managerial economics and accounting 113

Daly H. (1988): On Sustainable Development and National Accounts. In: Collard et al. (eds.): Economic Growth and sustainable development. St. Martin Press, New York, 41-58.

Frauendorfer, R. (1967): Schätzung der Erträge und Kosten der österreichischen Forstwirt-schaft in den Jahren 1958-1962 anhand eines Betriebsmodells, Centralblatt für das gesamte Forstwesen, 84, 127-149

Frauendorfer, R. (1967): Bewertung des steh-enden Holzvorrates nach Verkehrswerten zur Erfolgsrechnung, XIV IUFRO Congress, Section 31, München pp. 8-28

IUFRO 4.04.02 (1996): Accounting and Finance in Forestry and Timber Industries ‘The Fin-nish Journal of Business Economics’, Spe-cial issue, 1-1996.

IUFRO 4.04.02 and 4.13.00 (1998): Accounting and Managerial Economics for an Environ-mentally-Friendly Forestry, INRA, Actes et Communications, IUFRO Symposium Nancy, 20-23 April 1997, INRA-Editions, Versailles.

Markl, H. (1996): Das Expertendilemma, in Nennen H.U. (Hrsg.): 'Das Expertendilem-ma: zur Rolle wissenschaftlicher Gutachter in der öffentlichen Meinungsbildung, Sprin-ger, Berlin, pp. 3-24

Section 2

ANNEXES

Appendix 1 117

English Abstracts and Summaries

On the State of Forestry Accounting in some European Countries James N. Hogg and Hans A. Jöbstl

First notable attempts to harmonise or ac-cord forestry accounting on the national level date from the 1950ies. In the early sixties first significant activities on the in-ternational level are reported (IUFRO work-ing group "Forestry Accounting", Cost Stu-dies in European Forestry, …). The objec-tives of these efforts were to further devel-op forestry accounting, to disseminate know-ledge on accounting matters and to make outputs comparable both nationally and in-ternationally. Some 30 years later by initia-tive of the IUFRO-group "Managerial Eco-nomics" at the XX. World Congress 1995 in Tampere a discussion forum was created, that was institutionalised from 1996 as IUFRO-group "Managerial, Social and En-vironmental Accounting". Main objectives for the work of the new IUFRO-group are 1. accordation of terminology, 2. survey and analysis of existing or realised concepts and 3. the further development of instruments in forestry accounting.

This paper gives an overview on the state of forestry accounting in several Euro-pean countries. It is the intermediate outcome of an ongoing survey carried out by the Uni-versity of Agricultural Sciences Vienna as part of an EU-HCM-research project on "New solutions in accounting of forest enterpri-ses" and should also result in basic infor-mation for the future work of the IUFRO-group on accounting. After a general dis-cussion on harmonisation, comparability, in-fluence factors on accounting, book-keeping obligations, applied charts of accounts etc. the situation in six countries (Austria, Fin-land, France, Germany, Great Britain and Switzerland) is described in greater detail.

By means of a questionnaire based on a comprehensive model of forestry account-ing - comprising 1. Financial accounting,

2. Cost accounting, 3. Social accounting and 4. Environmental accounting - basic data on forestry accounting were obtained from 21 countries, including 16 European coun-tries. This survey is supplemented by a re-view of literature and (in single cases) case studies. On this basis a comparison of seve-ral aspects for the six countries could be drawn up.

The ownership structure, the sizes of for-estry holdings, the accounting and tax law, the organisation of general accounting, the forestry tradition and the relationship of forestry and timber industries were identi-fied as major influence factors and reason for differences in financial accounting.

In spite of major differences between the stage of refinement reached in various for-est enterprises and presumably due to simi-lar subjective information needs, cost ac-counting as primarily internally-oriented in-formation system is more harmonious be-tween different countries. Many, and in particular smaller forest enterprises, do not have any cost accounting, while many larger entities, if at all, only maintain retrospective cost centre accounts. Information or con-trolling systems with application of plans and targets and the provision of decision-relevant information are usually lacking.

As consequence of the difficult finan-cial situation and the growing importance of non-market outputs of forestry, social and environmental accounting have evolved as new branches presenting information on the economic connections of the enterprise apart from flows of money and goods depicted in traditional enterprise accounting. A trend can be noted: With profitable timber production the major focus is usually directed towards profitability and efficiency information, while mainly negative economic results lead to a higher interest in reports on environmental and social achievements.

Centralblatt für das gesamte Forstwesen 114 (1997), 2/3, 73-95.


On the Quality of Information from Per-formance Measurement in Forestry Hans A. Jöbstl and Günter Karisch

Business management and reporting require various control information, which is to be derived from the targets. Main source are the enterprise accounts. However, in most (smal-ler) enterprises accounting is not employed and utilised at all, in larger enterprises – es-pecially as far as they are obligated to keep accountant books – only to minor degree. Following an analysis of the manifold term “success” and the derivation of success cri-teria from the target system, different results are discussed and a success evaluation model is established in this paper. Deficiencies of traditional success information such as the missing consideration of forest assets chan-ges, of depreciation and of the existing eva-luation of financial accounting are dealt with and an approach for an improved assessment of economic performance in the frame of ex-ternal reporting as well as internal reporting is discussed.

Information Management in Forest Enterprises. Proceedings, IUFRO-Symposium Freising/Ger-many, 6-8 April 2000, Munich-Freising 2000, pp. 93-99.

On the Honesty in Science Hans A. Jöbstl

Science is made by scientists who nowa-days are facing more and more different so-cio-economic conditions and situations of competition than in the past. According to FEYERABEND some of them are honourable persons, but some are not. Man is able to commit an error but also to use tricks de-liberately. Occurrences of lapses are increas-ing, the ability of the system of scientific community to separate black sheep on the other hand is decreasing. Competition for money and - undeserved - honour is leading to diverse tricks, from little lies, fakes, de-ceptions, even to plagiarism. Detection of all these offences is getting more difficult. Obviously it is easier for a tricky one to make money and to have a brilliant career than for an honest person. Recently several books have been published according to this theme. In the United States of America com-missions have been set up to get deception in science under control.

This paper is a reflection on some kinds of failure from swindle to fraud, on the reasons therefore, on the deny of supervision mecha-nisms and on possibilities and arrangements to uncover and stop dishonesty. Particularly lack of factual discussion and of culture of discussing are lamented.

From Theory to Practice - Gaps and Solutions in Managerial Economics and Accounting in Forestry. Proceedings, IUFRO-Symposium Prague/ Czech Republic, May 13-16, 1999, Prague 2000, pp. 25-31.

Fundamental Problems of Forest Asset Valuation and Forestry Performance Accounting - An Introduction Hans A. Jöbstl

Starting from the aims and purposes of for-est valuation and forest asset accounting, some basic problems and methods of forest asset valuation and forestry performance accoun-ting are introduced. The elements of a valu-ation situation and the components of a val-uation model are illustrated, problems, meth-ods and relevant aspects of forest asset val-uation derived and internal and external aims addressed. A pragmatic approach for the short and medium term performance calcu-lation refraining from forest asset valuation is presented. Finally, the papers are classi-fied into thematic groups and it is attempted to point out, to which questions answers can be expected by this workshop.

Waldvermögensbewertung - forstliche Erfolgs-rechnung. Beiträge zum IUFRO-Workshop, 11.-12. Juni 1999, Salzburg/Austria, Wien 2000, pp. 1-9.

Forest Asset Valuation for Purposes of Forestry Performance Accounting Hans A. Jöbstl and Günter Karisch

The missing consideration of forest asset changes in forestry performance accounting is one of the oldest, practically unsolved prob-lems of managerial economics in forestry. Although this topic has often been dealt with in scientific publications, a generally accepted solution remains still missing. In a pre-study to the prevailing research work about 60 historic and actual approaches/ methods for forest asset accounting were in-vestigated, described, analysed, grouped by

Appendix 1 119

different aspects as time horizon, method etc. and finally evaluated by a set of various criteria. In the applied part of the research work – starting from a multi-part approach of the first author – an EDP-model based on a forest stand data base has been devel-oped. Central components of the model are (1) the extension of the traditional allow-able cut based performance calculation to a detailed comparison of planned and actual measures in the fields of harvest (differen-ces of allowable and actual cut regarding size, structure and value) and silviculture (plan-actual-differences regarding area ex-tent and value), (2) forest asset valuation with four different value approaches and (3) the updating of forest inventory data and forest value on the basis of annual incre-ment and annual cut. In the prevailing arti-cle the model is outlined and a pattern for a financial report extended by forest asset chan-ges is introduced.

Forst und Holz 56 (2001), 23/24, 770-77.

Sustainable Forest Management in Accounting Hans A. Jöbstl

Management of forests - for whatever pur-poses - requires a variety of information. The central element for providing this informa-tion is the accounting system. Hence, ac-counting is a means necessary for managing businesses (planning, decision-making, con-trolling), for reporting to the economic and social environment (owners, tax office, etc.) as well as for policy-making. Nowadays, the communication of sustainability indica-tors as well as social and environmental as-pects to the society is growing more and more important.

An accounting system supporting man-agement should depict the relevant econo-mic reality correctly and completely. From the SFM point of view forest accounting is not sufficiently developed as in most cases it does not measure and record relevant para-meters connected with sustainability. While many small forest holdings do not have any noteworthy accounting, even enterprises with established accounting systems suffer from widespread deficiencies as reality is only represented inaccurately or incompletely, e.g. changes in the value of forest stands, non-

market outputs as well as social and envi-ronmental information are normally not in-cluded. The generally applied allowable cut concept is indeed a first step to consider these changes regarding volume sustainability, but it has to be improved by further steps. A similar problem is the broadly acknowledged collection of specific expenditures resulting from the provision of non-market-benefits (with the help of cost centres), but ignoring their opportunity costs and their value (per-formance) for the consumer. Improvements are necessary.

Starting with a brief overview on the state and development of forestry accounting in European countries the paper proposes a framework to improve forestry enterprise ac-counting and reporting, e.g. by including annual changes in growing stock values and environmental non-market values.

Economics of Sustainable Forest Management, Proceedings, IUFRO Conference Toronto/Cana-da May 20-22, 2004, Toronto 2004, p. 72.

Sustainability Reports – A Tool for Forest Enterprises? Hans A. Jöbstl

"Sustainability reports" are being introduced to an increasing extent into the accounting of listed enterprises, including the forest and paper industries in particular. The term is also being more frequently used in indivi-dual forest enterprises that are not listed. It refers to the inclusion or holistic considera-tion of interdependencies between the envi-ronment, the economy and social aspects.

Since the business year 2004, the Aus-trian Federal Forests Company has labelled their annual report as sustainability report. In addition to the traditional business report section with balance sheet, financial results etc., social and environmental dimensions are also discussed there. Sustainability bal-anced scorecard and GRI guidelines em-body target orientation and responsibility for the future. Many facts are represented by criteria and indicators. Continuous develop-ment is a must. However, a main weakness from the point of view of forest economics is the missing representation of changes in forest assets, for example. The IAS 41 (Agri-culture) wherein appraisal at fair value is regulated cannot be applied.


The main objective of a sustainability report, apart from its usefulness as a management tool, is external presentation, i.e. public rela-tions: How does the enterprise deal with the environment? What does it accomplish for the owners, the employees and the stakehol-ders? In this context, the following ques-tions arise: What are the benefits of sustain-ability reporting for the enterprise and for the industry? What is the procedure for the future? Which information is of interest to the individual target groups? What do forest visitors, politicians or investors expect? Con-

ceptions are still relatively vague, and most forest visitors are still unfamiliar with the term sustainability.

This paper presents results of a recent study about the information wishes of for-est visitors in the Vienna area and some con-siderations concerning the further develop-ment of annual accounting.

Emerging Needs of Society from Forest Ecosys-tems: Towards the Opportunities and Dilemmas in Forest Managerial Economics and Account-ing. Proceedings, IUFRO Symposium Ljubljana/ Slovenia, 22 - 24 May 2008, Ljubljana 2008, p. 196.

Appendix 2 121

IUFRO1 Units on Managerial Economics2 and Accounting 3 4

Meetings and Proceedings 1995 - 2010

1995 Accounting and Finance in Forestry and Timber Industries. IUFRO-World Con-gress, 6–12 August, 1995, Tampere, Finland. 15 contributions. Proceedings: The Finnish Journal of Business Economics 45 (1996), 1, 1-124, ISSN 0024-3469.

1996 Non-Market Benefits of Forestry. 24–28 June, 1996, Edinburgh, Scotland. 80 con-tributions altogether, 5 related to Forestry Accounting. Proceedings: 415 pages, The Living Forest, The Stationery Office, London, UK, 1999, ISBN 0 1171 0343-8.

1997 Accounting and Managerial Economics for an Environmentally-Friendly Forestry. 21–23 April, 1997, Nancy, France. 33 contributions. Proceedings: 384 pages, Actes et Communications No. 15, INRA-Editions, Versailles, France, 1998, ISBN 2 7380 0656-6.

1998 Institutional Aspects of Managerial Economics and Accounting in Forestry. 15–18 April, 1998, Ostia-Rome, Italy. 28 contributions. Proceedings: 558 pages, Agnesotti, Viterbo, Italy, 2000, ABI 06065-CAB 15401.

1999 From Theory to Practice – Gaps and Solutions in Managerial Economics and Ac-counting in Forestry. 13–15 May, 1999, Prague, Czechia. 27 contributions. Proceed-ings: 260 pages, Department of Forestry Economics, Faculty of Forestry, Czech Uni-versity of Agriculture, Prague, Czechia, 2000, ISBN 80 213 0638-6.

1999 Forest Asset Valuation – Forestry Performance Accounting. Workshop, 11–12 June, 1999, Salzburg, Austria. 11 contributions. Proceedings: 180 pages, Department for Ac-counting, University of Agricultural Sciences, Vienna, Austria, 2000, ISBN 3 900962 24-3.

2000 Information Management in Forest Enterprises. 6–8 April, 2000, Munich-Freising, Germany. 25 contributions. Proceedings: 128 pages, Department of Forest Economics, TU München, Freising, Germany, 2000, http://www.boku.ac.at/rwfh/Muenchen2000.pdf

2000 Sustainable Forest Management under Conditions of Growing Global Pressures. IUFRO-World Congress, Group Session, 9 August, 2000, Kuala Lumpur, Malaysia. 6 contributions. Abstracts: Forests and Society – The Role of Research, Abstracts of Group Discussions, Vol. 2, IUFRO 2000, ISBN 983-2181-09-7.

2001 The Economics of Natural Hazards in Forestry. 7–10 June, 2001, Solsona, Spain. 25 contributions. Proceedings: 157 pages, Padua University Press, 2001.

1 IUFRO = International Union of Forest Research Organizations 2 Working Party "Managerial Economics in Forestry" (4.04.02), renamed from "Site Types and Management Targets"

in 1990. Coordinators: Jiri Ruprich (1981-1989); Hans Jöbstl (1989-1995 and 2003-2005), Maurizio Merlo (1996-2003), Jean-Luc Peyron (2006-2010)

3 Research Group "Managerial, Social and Environmental Accounting" (4.13.00), founded in 1995. Coordinator: Hans Jöbstl (1996-2010)

4 Reorganisation of groups in 2004: merger of Research Group "Managerial, Social and Environmental Accounting" and Working Party "Managerial Economics" into the new Research Group "Managerial Economics and Accounting" (4.05.00) with the 2 Working Parties "Managerial, Social and Environmental Accounting" (4.05.01) und "Managerial Economics" (4.05.02). Coordinators: Hans Jöbstl (2004-2005), Shashi Kant (2006-2010)


2002 Management and Modelling Multifunctional Forest Enterprises and Properties. 26–28 May, 2002, Sopron, Hungary. 21 contributions. Proceedings: 191 pages, Univer-sity of West Hungary, Sopron, Hungary, 2003.

2004 Economics of Sustainable Forest Management. 20–22 May, 2004, Toronto, Onta-rio/Canada. 80 contributions. Proceedings: 117 pages, University of Toronto, Toronto, Canada, 2004.

Forest Policy and Economics, Special Issue (2004), 6, 3-4, 195-440. Economics, Sustainability, and Natural Resources: Economics of Sustainable Forest

Management. Springer, Dordrecht, The Netherlands, 2005, 274 pages. ISBN 1402034652. Institutions, Sustainability, and Natural Resources: Institutions for Sustainable Forest

Management. Springer, Dordrecht, The Netherlands, 2006, 362 pages. ISBN 1402034792.

2005 The Multifunctional Role of Forests: Policies, Methods and Case Studies. 28–30 April, 2005, Padova, Italy. 45 contributions. EFI Proceedings No. 55, Joensuu, Fin-land, 2008, 380 pages.

2005 Innovations in Forestry Accounting: Integration of Forest Assets and Non-market Environmental Benefits into Management and National Accounting and Reporting. Session at the IUFRO World Congress - Forests in the Balance: Linking, Tradition and Technology, 8–13 August, 2005, Brisbane, Australia. 14 contributions. Abstracts: International Forestry Review 7 (2005), 5, Commonwealth Forestry Asso-ciation, UK, ISSN 1465 5489. Selected contributions: Austrian Journal of Forest Science 126 (2009), 1/2, 1-118.

2006 Managerial Economics and Accounting in an Evolving Paradigm of Forest Man-agement. 17–20 May, 2006, Rottenburg, Germany. 20 contributions. Proceedings: 356 pages, second edition, University of Natural Resources and Applied Life Sciences Vienna, Austria, 2009, ISBN 978-3-900962-82-1.

2007 Building Insights of Managerial Economics and Accounting towards Sustainable Forest Management. 16–19 May, 2007, Lviv, Ukraine. 18 contributions. Proceed-ings: 184 pages, Ukrainian National Forestry University, Lviv, Ukraine, 2009, ISBN 978-966-433-039-5.

2008 Emerging Needs of Society from Forest Ecosystems: Towards the Opportunities and Dilemmas in Forest Managerial Economics and Accounting. 22–24 May, 2008, Ljubljana, Slovenia. 31 contributions. Proceedings: 234 pages, Biotechnical Faculty, University of Ljubljana, Ljubljana, Slovenia, 2008, ISBN 978-961-6020-52-7.

http://www.iufro.org/down load/ file/4194/1649/40500-ljubljana08.pdf

2009 Sustainable Forest Management and Accounting - Resolutions During the Fi-nancial Crisis. 28 October, 2009, Darmstadt, Germany. 14 contributions. Proceedings in preparation: Chair of Forest Economics, TU München, Freising, Germany.

2010 Planned: New developments in forest management accounting and reporting to ensure sustainability. Session at the XXIII IUFRO World Congress - Forests for the Future: Sustaining Society and the Environment, 23-28 August, 2010, Seoul, Korea.

Appendix 3 123

Publication series of the Division for Accounting and Marketing

Heft 1 Organisatorische Voraussetzungen für den Computereinsatz. (Organisational Requirements of Applying Computers in Forest Enterprises). Beitrag zum Seminar "Theorie und Praxis der EDV-Anwendung im Forstbetrieb", Ossiach (Kärnten), 1979. Von Hans A. Jöbstl. 1984, 30 Seiten.

Heft 2 Betriebswirtschaftliche Beurteilung der Rotwildschäden und des Jagdbetrie-bes - am Beispiel eines privaten Fichtenforstbetriebes. (Economic Evaluation of Game-Caused Damages and of Hunting - by Example of a Spruce-Forest-Enter-prise). 4 Teile (1975-1986). Von Hans A. Jöbstl. 2., um Teil 4 erw. Auflage, 1987, 78 Seiten. ISBN 3 7040 0889-3.

Heft 3 Führungsorientierte EDV-Anwendung im Forstbetrieb & Das Planungssys-tem größerer Privatforstbetriebe – Ergebnisse einer ersten empirischen Erhebung 1977. (Management-oriented EDP-Applications in Forest Enterprises & The Plan-ning System of larger Private Forest Enterprises). Nach Vorträgen 1976 und 1977. Von Hans A. Jöbstl. 1986, 67 Seiten. ISBN 3 7040 0923-7.

Heft 4 Einführung in das Rechnungswesen mit besonderer Berücksichtigung der Forst- und Holzwirtschaft. (Introduction to Accounting in Forestry and Timber Indus-tries). Studientext zu Lehrveranstaltungen an der Universität für Bodenkultur, Von Hans A. Jöbstl. 13., akt. Auflage, 2007, 252 Seiten. ISBN 978-3-7040-2273-8.

Heft 5 Zum Marktverhalten der Forstbetriebe. (On Market Behaviour of Forest Enter-prises). Holzpreis, Arbeitsfixkapazität und Einkommensteuer als Bestimmungs-größen der Marktanpassung - eine Daten- und Modellanalyse. Von Hans A. Jöbstl. 1986, 104 Seiten. ISBN 3 7040 0924-5.

Heft 6 Betriebsklassensimulationsmodell FOBSI. (Forest Enterprise Simulation Model FOBSI). Grundlagen, Anwendungsbeispiele, Musterausdrucke, Benützerinstruktion, Programmdokumentation. Von Hans A. Jöbstl. 1987, 100 Seiten. ISBN 3 7040 0925-3.

Heft 7 Forstliche Absatz- und Marktlehre. (Forest Trade and Product Marketing). Eine Einführung. Studienunterlagen, Universität für Bodenkultur, Band I. Von Hans A. Jöbstl. 3., akt. u. erw. Auflage, 1991, 184 Seiten. ISBN 3 7040 0991-1.

Heft 8 Ökonomische Bewertung von Waldschäden infolge von Luftverunreinigungen – Economic Assessment of the Damage Caused to Forests by Air Pollutants. Beiträge zum Symposium der IUFRO-Arbeitsgruppe S 4.04-02, Gmunden (Öster-reich), 13.-17. September 1988. Hrsg. von Hans A. Jöbstl. 1989, 260 Seiten. ISBN 3 7040 0970-9.

Heft 9 Rechnungswesen für Forst- und Holzwirtschaft – Band II. (Accounting in For-estry and Forest Product Industry). Teil 1: Aufsätze und Materialien zum Rech-nungswesen (Reader); Teil 2: Übungsbeispiele. Von Hans A. Jöbstl. 6., erw. Auflage, 1996, 232 Seiten. ISBN 3 7040 1259-9.


Heft 10 Forstliche Absatz- und Marktlehre. (Forest Trade and Product Marketing). Stu-dienunterlagen Band II. Waren- und Zahlungsverkehr bei Roh- und Schnittholz. Von Hans A. Jöbstl und Mitarbeitern. 2. Auflage 1991, 72 Seiten.

Heft 11 Forstliche Absatz- und Marktlehre. (Forest Trade and Product Marketing). Eine Einführung. Studientext zu Lehrveranstaltungen an der Universität für Bodenkultur, Teil I und Teil II. Von Hans A. Jöbstl. Akt. u. erw. Auflage der Hefte 7 und 10, 1994, 264 Seiten. ISBN 3 7040 0991-1.

Heft 12 Contributions to Managerial Economics in Forestry – Reader. Eine Sammlung englischsprachiger Aufsätze. Begleittext zu Doktorandenseminaren an der Univer-sität Trento, Italien. Von Hans A. Jöbstl. 1995, 119 Seiten. ISBN 3 7040 1122-3.

Heft 13 Kosten- und Leistungsrechnung in Forstbetrieben. (Cost and Performance Ac-counting in Forest Enterprises). Eine Anleitung für die forstliche Betriebsabrech-nung, Kostenkalkulation und Erfolgsrechnung mit einer Einführung in die Grund-lagen. Von Hans A. Jöbstl. 3., erw. Auflage, 2000, 212 Seiten. ISBN 3 7040 1328-5.

Heft 14 Umtriebszeit der Fichte unter geänderten Marktverhältnissen. (The Rotation Period of Norway Spruce under Changed Market Conditions). Eine Modellstudie mit benützerorientierter Darstellung der Simulationsmodelle FOWISIM und FOBSI. Von Hans A. Jöbstl., 2.Auflage, 2003, 128 Seiten. ISBN 3 900962 42 1.

Heft 15 Waldvermögensbewertung – Forstliche Erfolgsrechnung. (Forest Asset Valua-tion – Forestry Performance Accounting). Forest Asset Valution – Forestry Performance Accounting. Proceedings, IUFRO Workshop Salzburg/Österreich, 11.-12. Juni 1999. Hrsg. von Hans A. Jöbstl unter Mitarbeit von G. Karisch. 2000, 178 Seiten. ISBN 3 900962 24 3.

Heft 16 Berücksichtigung des Waldvermögens im forstlichen Rechnungswesen. (Con-sideration of Forest Assets in Forestry Accounting). Analyse der Vermögensrech-nungsgeschichte und Entwicklung eines Modells zur Erfassung der Waldvermö-gensänderungen. Von Günter Karisch. 2003, 200 Seiten. ISBN 3 900962 45 6.

Heft 17 Controlling – Grundlagen und Konzepte für die Forstverwaltung. (Controlling – Basics and Concepts for Forest Enterprises). Beitrag zur Jaakko Pöyry-Studie „Grünes Informationssytem – Machbarkeitsstudie, Soll-Konzept, 1993“, geringfügig erweitert, aktualisiert und durch Grundlagenmaterial ergänzt. Von Hans A. Jöbstl. 2. Auflage, 2004, 108 Seiten. ISBN 3 900962-28-6.

Heft 18 Contributions to Accounting in Forestry – Reader. Essays based on contribu-tions to IUFRO conferences. Accompanying reader to Volume 12 "Contributions to Managerial Economics in Forestry". Von Hans A. Jöbstl. 2009, 124 Seiten. ISBN 978-3-900962-83-8.

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