with damages to ecosystem services, water supply and carbon sequestration), and non-use value loss associated with loss of forests. This section examines each of these categories of losses with the available data.

India’s forest cover is about 21% of total land area (about 69 million hectares). Dense forest constitutes only 12% of total forest cover area (indiastat.com). Although forest cover area increased by 0.1% in 2007 (indiastat.com), the north-eastern mountainous states with the most dense forest, like Nagaland, Arunachal Pradesh, Tripura and Assam, continued to experience deforestation due to the widespread practice of shifting cultivation. This loss is especially damaging for hilly areas where destructive agricultural practices can result in total ecosystem destruction. Total annual deforested land averaged from 2006-2009 is at about 0.6 million hectares annually (indiastat.com).

Many sources reflect a substantial level of land degradation in India. Overexploitation of forest resources has led to the opening up of the canopy and an increase of shrub-covered areas. The degraded area grew from 19.5 to 24.4 million hectares in 2003 (3rd National Report on Implementation of UN Convention to Combat Desertification, 2003). From the figure of 2.4 million hectares and with annual forest deforestation assumed to be at the same level as in 20062009, the total degraded forest area in 2009 would be estimated at 28 million hectares.

The estimated losses from the degraded forests are based on the use values attached to the forest in their non-degraded state. Previous studies have estimated the use values for two categories: direct use value and indirect use value. Under direct use value they have included: (i) Timber, (ii) Non-timber forest products, (iii) Fodder, (iv) Eco-tourism and (v) Carbon sequestration. Under indirect use values they have covered (i) Soil erosion prevention and (ii) Water recharge. No estimate has been made of non-use values from forests, nor has any account been taken of biodiversity values (e.g. from bioprospecting) although these can be significant.

A summary of the values obtained, both in total and normalized in terms of Rs. per hectare are given in Table 7.1. The biggest source is carbon sequestration, followed by fodder and ecotourism.

In order to value the losses we assume that degraded forests provide between 20 and 80 percent for most of the direct use values but none of the indirect values since indirect values are only associated with dense forest functions. In the case of sequestered carbon a more precise figure is available: degraded forests are associated with 20% loss of total accumulated carbon (Gundimeda, 2001), reported in the range of 21-59 tC/hectare in India,<sup>16</sup> valued at a social cost of carbon USD20 per ton of CO2<sup>17</sup> . The losses are applied to 29 million hectares of degraded forest and about 0.6 million hectares of deforested lands.

> 16 We assume that degraded land would continue to sequester carbon up to 80% of what it uptakes on non-degraded forest. Carbon issues are complicated and at the next stage they should be carefully studied in the context of geographical location and other specific factors. This study attempted to provide indicative country-wide estimates.

> 17 The same CO2 price is applied in China 2030 (World Bank, 2012).

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