Abstract: In order to serve the decision-making process for forest management better and to provide the basis for policy-making, this paper discussed the concept of green accounting and analyzed its policy application based on a summary of domestic and foreign green accounting.After the evaluation of a green GDP for forests in 2000 and 2004 in China,this paper pointed out that the eaGDP(environmentally adjusted gross domestic product) for forest had increased by 0.11% from year 2000 to 2004,which indicated that the forest's contribution to the national economy had increased continuously.In the evaluation of environmental services and social benefit by the forests,soil conservation and forest protection made the greatest contribution to carbon sequestration and oxygen generation,and water conservation was second in importance while the values of forest recreation was in the last place.Therefore,the most important sectors in providing benefit are agriculture,water conservancy and electric power while that of the forests is minimal.Finally,this paper analyzed the optimization of forest policy in China based on the evaluation results of green accounting,then proposed that forest protection should be under the direct control of the government.Compensation should be enhanced,as well as funds provided and local standards,legal protection of the forests should be established.Simultaneously,human capital used in the forests should be promoted and property rights of forest clearly spelled out in order to promote social-economic development.Forest resources should be increased and the goals of increased GDP in China should be realized.