Towards distributional ecosystem accounts: An illustrative example of forest ecosystem assets in Finland

Abstract

Determining who owns and benefits from natural capital is challenging as typically ecosystems and ecosystem service flows are tied to a specific location, potentially exhibiting significant spatial variation. This thesis addresses the issue by combining geospatial forest data and administrative registries of personal incomes into a novel dataset, linking all privately owned forests in Finland to their owners and shedding light on the distribution of forest ownership across the income distribution. To demonstrate how ecosystems contribute to incomes, two key forest-based ecosystem services – timber provisioning and carbon sequestration – are quantified in biophysical and monetary terms and the beneficiaries are identified in the income distribution.

In contrast to the total wealth distribution, the study finds that forest ownership exhibits a relatively even distribution across income levels, although still concentrated to only 10% of the population. The bottom 50% of the income distribution owns 29% of forest area, the middle 40% owns 44% and the top 10% owns 27%. Notably, no large systematic variations in forest characteristics such as age or growth rate are observed across income levels, although within group variation is considerable.

Using an ecosystem accounting framework, the monetary values of forest ecosystem service flows are found to be substantial, with a higher relative impact at lower income levels. This emphasises the significance of timber as a source of income for low-income forest owners, but also the potential of sequestration-based subsidies to dramatically increase incomes of these owners.

This thesis contributes to the broader literature on inequality and the environment by demonstrating how distributional aspects of natural capital can be explored by integrating distributional national accounts and ecosystem accounts. Merging detailed geospatial ecological data with administrative registries provides nuanced evidence to support assessments of how environmental policies impact different groups in society.