Valuation of the Water Protection Function of Forest Territories and Income Allocation: a Case Study of Bulgaria

Abstract

The owners of forests with water protection functions in Bulgaria do not receive compensation for their limited right to use wood and non-wood forest products from the forest areas they own. At the same time, the contribution derived from forests with water protection functions is received by water users and water consumers, whereas the costs of managing the forests are borne by their owners. The problem thus defined is not a forestry one, but an economic one, and the purpose of this paper ensues therefrom, namely to propose and test a methodology for valuating the production function of forest areas with water protection function in Bulgaria, allowing a fair distribution of income between the forest owner and the user of forest ecosystem services. The methodology is based on the form of forest management and the analytical expression of the economic relationship between a forest owner and a user of forest ecosystem services, constructed using Schenrock’s formula. It has been tested with actual data from forest areas with water protection functions falling within the administrative and territorial scope of Velingrad municipality. The obtained results are as follows: as regards the forest territories falling into Sanitary protection zone (SPZ) I of the forests with water protection functions, the economic gains from the property should be 100% realized from water consumption and the owner should receive about EUR 49.83 /ha per year; in SPZ II of the forests with water protec-tion functions, the economic gains from the property should be realized by prioritizing the water protection over the wood production function in a 75:25 ratio, i.e. the owner should receive about EUR 37.37 /ha/year; in SPZ III of the forests with water protection functions, the economic gains from the property should be realized equally in a 50:50 ratio through both production functions, i.e. about EUR 12.22 /ha/year.

Keywords

• forest ecosystem services
• rental income
• wood pro