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Victoria's central highlands are essential to protecting Melbourne's water supply and also contributing $260 million a year to the tourism economy, a new study has found.
The report from the Australian National University (ANU) used an international method recognised by the United Nations to value the ecosystem in the central highlands — an area that spreads north and east of Healesville.
The study estimates the central highlands add $310 million of economic value to the state's water supply and $260 million to tourism, while the controversial native logging industry is worth just $12 million.
A study by Deloitte for the state-owned VicForests last year found native logging and processing helped generate more than $500 million for the state's economy supporting more than 2,000 jobs.
VicForests says the new ANU report does not factor in the value of timber products and processing.
Central highlands to be an election issue
Environmentalists and local tourism operators want much of the area turned into the Great Forest National Park.
They plan to lobby for the national park during next year's state election campaign.
The potential national park is also likely to be an issue in the upcoming Northcote byelection in inner Melbourne, where Labor and the Greens will go head to head.
The central highlands are home to mountain ash trees which have been logged for hardwood production.
It is also the catchment for the majority of Melbourne Water's 10 water storage reservoirs.
VicForests admitted the native hardwood supply is dwindling, a key reason the Heyfield mill in Gippsland decided to close.
The Andrews Government has since moved to buy the ailing business.
Opponents of native timber logging, much of which is used as pulp for paper, said the industry could be supplied with plantation timber, something many in industry acknowledge but argue that transition takes time.
The study said that moving away from harvesting of native forest would contribute to improved "economic, social and environmental benefits for the people of Victoria."
"The net value of ecosystem services would increase if native forest logging were phased out, due to improved ecosystem condition in older forests that continued growing,'' the report said.
By stopping logging, the water catchment would be improved and would maximise "water yield and quality" and increase the amount of water available to Melbourne, it found.
Timber benefits downplayed, industry says
But VicForests chief executive Nathan Trushell said the report substantially downplayed the value of the timber industry.
"The key issue is that the ANU report has only calculated the value add of timber in the forest, rather than the impressive domestic value add from processing and downstream manufacturing to produce high quality timber products,'' he said.
"This is akin to only calculating the value of grape growing for the wine industry while ignoring the substantial value add of producing high quality wine".
VicForests said only 6 per cent of forest in Victoria was available and suitable for native timber harvesting, while more than 70 per cent was located in National Parks and reserve systems.
One of the ANU report's authors David Lindenmayer said old forests were critical to water security.
"A young regenerating forest after logging soaks up most of the water, dries out the water catchments, reduces the amount of water that flows into the dams for the city of Melbourne but also what it does, quite critically, is it increases the risk of the forest burning at much high severity,' he said.
Tourism operators favour national park plan
Tourism is a major employer in the region and the report said it would be boosted by ending logging.
Local tourism operators want the attractions to be better recognised and supported by government.
They say a national park would boost domestic and international tourism with some of the world's oldest trees and forests in the region.
Wine growers, including Stephen Powell in the Yarra Valley, also supported the protection of the forests because he said the trees act as an air conditioner for the region during summer by cooling the air that flows into the valley, helping to contribute to the region's terroir.
"It is a really important part of creating the diversity that is the Yarra Valley.'
Strathvea Guest House manager Deanne Eccles said hospitality would also benefit from an end to logging.
"They always ask us about the forest, they ask us about Black Saturday fires, but they also ask about the forest and the future of the forest,'' Ms Eccles said.
"Then when they see it being destroyed and we say that government are doing this they are amazed, they can't believe we are destroying our tourist product."
Environment minister Lily D'Ambrosio said the central highlands were a complex issue and a special taskforce had been working on a solution.
She also said that a national park was a consideration.
"We will come up with the solutions that will ensure that we can protect what is of great value to our community in terms of our wonderful native forests but also of course have a clear eye on the need to look after jobs," Ms D'Ambrosio said.