Towards a Physical Supply Table Eurostat Task Force on Material Flow Accounts Towards a Physical Supply Table Aldo Femia, Italian National Institute of Statistics Renato Marra Campanale, Institute for Environmental Protection and Research Luxembourg, 6-7 November 2014

Overview of presentation Grant Agreement Environmental accounts: Construction of an integrated system for the production of EW-MFA On the relation of Physical Supply Table (PST)’s rows with the minerals' rows of the Use table for natural resources

Grant activities: Physical Supply Table for domestic manufacturing products (PSTdmp) 2008-2011: transformation in weight units of Prodcom data expressed in different physical units reconciliation with monetary supply table New estimation system for non-energy minerals extraction (ongoing)

Grant activity 1: the context Basic form of a physical supply and use table Note: Dark grey cells are null by definition. Blank cells may contain relevant flows Source: SEEA-CF

Grant activity 1 a PESACE (Equivalent Weight Estimated Through Foreign Trade): the transformation operated is based on the integration of Prodcom and COMEXT (Export) microdata, with the latter providing the necessary tons per non-weight physical unit or tons per euro coefficients to be used in the transformation (weight is always present in Italian COMEXT data) several methods are developed and are applied in PESACE for the transformation of each record of the Prodcom survey, identified by the year-product-enterprise triplet

Grant activity 1 a PAUI P_UI P_VI PAV The transformation methods are characterised by the following circumstances: P: the product finds one or more exact (8-digit level) correspondences in CN (essential prerequisite for all methods) The correspondence is relaxed only for a very few records produced exclusively for the domestic market or for reuse A: Prodcom and COMEXT data refer to the same year U: COMEXT data used are expressed also in a supplementary unit corresponding to the Prodcom physical unit the transformation is done applying a tons per non-weight physical unit coefficient V: COMEXT data used are expressed in value units (€) the transformation is done applying a tons per euro coefficient I: the Prodcom enterprise directly exports the CN product the transformation can be based on the specific enterprise (and product) export examples: PAUI P_UI P_VI PAV

Prodcom (all in weight) Grant activity 1 a Grossing up and summing by product group and main activity Enterprises by NACE Prodcom (all in weight) Products

Grant activity 1 b PSTdmt What do we have at this stage? raw final Raw PSTdmp (physical quantities by product group and industry from Prodcom) Raw MSTdmp (monetary values by product group and industry from Prodcom) Final MSTdmp (monetary values by product group and industry from NA) (Product group: 96 out of 256; main activity of the firm: 98 branches) raw final monetary PSTdmt physical

Grant activity 1 b PSTdmp at working disaggregation level (96 pr. x 98 br.) is obtained (at the moment): row-total: Raw PSTdmp : Raw MSTdmp = x : MSTdmp allocation of the row-totals to the 98 production branches according to the corresponding row structures given by the MSTdmp. Why? This implies constant prices (material intensities) throughout the activities Ongoing improvement: use of activity-specific prices derived from Prodcom aggregation of the PSTdmp into a 18(64) x 64 matrix, which is the level of aggregation for dissemination of monetary SUTs PSTdmp is all expressed in weight units (tons, from PESACE) and is based on Prodcom and National Accounting (NA) data on products 96 out of 256 products - not covered by PSTdmp: primary biomasses, animal husbandry, energy extraction and derived energy products - minor flows: services without material content - not covered at all: services with some material content

Grant activity 1 b The PSTdmp is: complete, as: all branches are covered (including those not represented in the Prodcom survey); the non-observed economy (incompleteness of Prodcom data) is included in the final physical estimates to the extent it is embodied in monetary estimates of NA correct, as it embodies: the same allocation of products’ supply to activities as in NA (local KAUs rather than enterprises as a whole); all other information used in NA; the effect of monetary tables’ balancing

Grant activity 2: non-energy minerals New estimation system based on comparison and integration of Prodcom microdata with extraction registers provided by Regional administrative authorities in charge of mines and quarries. New estimates for the observed economy, through: cleaning and standardising the files received; uploading the data in the DB; identifying the extracting firms in Istat’s Business Register; comparing and cross-validating the data with Prodcom survey data at the individual firm level, for the firms identified, namely: reconciling the material’s classifications; studying the statistical relation between the information supplied by the two sources; developing a statistically sound model for exhaustive estimation

based on integration of survey and administrative data. Grant Agreement Construction of an integrated system for the production of EW-MFA Final remarks / 1 The action has contributed to the development of a single integrated database (DB) for the production of physical environmental accounts, serving the purpose of producing aggregates that are: internally coherent; consistent with core Italian National Accounts (NA) practices and results; based on integration of survey and administrative data. DB has been built as an open and flexible tool: it is regularly fed with data and classification updates (e.g.: NA revisions) and constantly enlarged as to include new processes as well as the necessary data or links to other databases. DB now is not only the main infrastructure for regular as well as experimental production of Material Flow Accounts, but it also serves the construction of other Environmental Accounts (both in physical and monetary units).

Grant Agreement Construction of an integrated system for the production of EW-MFA Final remarks / 2 Towards a full-fledged PST: additional procedures, set up within and outside the DB, allow the extension of the PST to Source: SEEA-CF Emissions to water and to soil / wastewater / solid waste / NR residuals

DE (Table A Questionnaire) Relation of PST’s rows with the minerals' rows of the Use table for natural resources Premise: Source: SEEA-CF When we talk about Assigning material inputs (DE) to NACE industries we are talking about constructing the Phisycal Use Table for natural inputs (PUTni) DE (Table A Questionnaire)

Relation of PST’s rows with the minerals' rows of the Use table for natural resources At first, we thought that our results on the supply of products by industry (PSTdmp) would have straightly provided EW-MFA material inputs (DE) by NACE industries (PUTni). Indeed, as for primary non-energy mineral products’, one would expect that the rows of the PSTdmp be identical to corresponding rows of the PUTni, as the data on these products (Prodcom) are used to fill out the Questionnaire. This is not the case! Products supplied do not include reuse in the same unit, according to NA principles: ESA 2010, §3.08 - Definition of production; §3.90 - intermediate consumption excludes: (e) goods and services produced and consumed within the same accounting period and within the same local KAU (they are also not recorded as output).

The Prodcom survey includes data on the reused quantities. Relation of PST’s rows with the minerals' rows of the Use table for natural resources The Prodcom survey includes data on the reused quantities. These must enter EW-MFA and the PUT for natural inputs, but do not enter the PST for products. Item non-response on reused quantities in Prodcom data is therefore a possible reason for underestimation of minerals extraction in EW-MFA, that has no relevance for the PST of products but does for the PUT for natural inputs. Indeed, we verified that this phenomenon is significant, by combining Prodcom microdata with administrative sources: many enterprises that extract minerals only for their own use do not report the minerals (Prodcom codes 08….) but only the products derived thereof (Prodcom codes 23….).