Compiling the EFA: How to overcome data shortages and methodical constraints - the case of Austria Walter Sekot 04.02.2019

Complying to assumed requirements a three-dimensional challenge developments actual Choices in regard to: Sources of data Approaches for deriving the figures requested Degree of compliance, detail and comprehensiveness imply trade-offs in terms of consistency industry inter-industrial Beschäftigte: A ca. 3,15 Mio.; FW: ca. 7.400 BIP: ca. 210 Mrd. €; FW ca. 0,75 Mrd. national international 04.02.2019

EFA: current state in Austria Table B1 on the economic aggregates of the forestry and logging industry submitted regularly. Official Forestry Accounts are still established based on the previous concept of the Economic Accounts for Forestry (EAF) (with some adaptation) which are supplemented by bridge tables. The EAF and the bridge tables serve as foundation for B1 Tables A1 (wooded land) and A2 (growing stock of timber) submitted for the year 2014; no follow-up yet No recent or ongoing work as regards the other tables of the EFA some experiences from pilot studies on the IEEAF dating back to 1999 Beschäftigte: A ca. 3,15 Mio.; FW: ca. 7.400 BIP: ca. 210 Mrd. €; FW ca. 0,75 Mrd. 04.02.2019

Conceptual framework for establishing the EAF / table B1 Primarily: aggregated data of various industry-specific statistics e.g. volume of harvest; timber prices; production of forest plants; plant protection products; real property tax; forestry subsidies Secondary: industry-specific totals derived from a decomposition of aggregates in the National Accounts (for sake of coherence) e.g.: compensation of employees, certain taxes, FISIM (Financial Intermediation Services Indirectly Measured), research & development Complementary: inferences based on area or cutting volume from data provided by enterprises (forest accountancy data networks, National Forest Enterprise) e.g. other products, energy, maintenance, gross fixed capital formation Subsidiary: expert opinion or mere assumptions for filling data gaps 04.02.2019

Dealing with data deficits pertaining to B1 Typical problems of missing data: total volume and individual items of intermediate consumption and gross capital formation in those parts of the industry, where no empirical data of institutional units is available such as tree nurseries, services of contractors, forest-related consulting General approach for deriving the total volume: assumed ratios (which are typically held constant) are applied to the figure of the output General approach for deriving individual items: assumed, constant percentages are applied to the totals 04.02.2019

Filling of gaps at the example of contractors‘ work in 2016 Calculated Output: 235.29 Mio. € Assumed cost effectiveness: 1.05 Total of intermediate consumption: 235.29 / 1.05 = 224.09 Mio. € Assumed share of consumption of fixed capital: 20 % Consumption of fixed capital: 224.09 * 0.2 = 44.82 Mio. € Assumed gross capital formation: 110% of consumption of fixed capital Gross capital formation: 44.82 * 1.1 = 49.30 Mio. € Assumed share of gross capital formation in machinery: 10 % Gross capital formation in machinery: 49.30 * 0.1 = 4.93 Mio. € 04.02.2019

Alternatives in terms of sources of data: Allocated versus empirically founded figures For some items such as compensation of employees and certain taxes the National Accounts provide industry-specific details. These somehow allocated figures may be confronted with inferences based on empirical data from Austria’s two forest accountancy data networks. Hence, convergent validity can be addressed. Although the time-series of ratios hint at systematic effects, the allocated values were adopted for sake of consistency with National Accounting. 04.02.2019

Convergent validity of data Convergent validity of data? Industry specific values of National Accounts in % of estimates based on data of forest companies 04.02.2019

Alternatives in terms of data processing: simple inferences versus modelling Small-scale forestry, which accounts for almost half of the timber growing industry in Austria, may be represented by approaches with quite different levels of sophistication: Conventional approach (still implemented): Extrapolation of average figures per ha and per m3 as documented by the small and biased network of farm forests (n~110) Modelling approach (to be introduced in 2019): Assessing forestry-specific inputs for all units of the Farm Accountancy Data Network and calculation of statistical inferences from that (n~ 2000) 04.02.2019

13.02.2015 Differences between alternatives for representing small-scale forestry in the EAF (2013)

13.02.2015 Effects on the overall results of the industry according to the framework of the EAF item difference in 2012 (%) in 2013 (%) total intermediate consumption +4.0 +5.8 gross value added -1.8 +2.6 consumption of fixed capital -12.7 -12.0 net value added +0.6 -0.5 factor income -0.3 -1.4 net entrepreneurial income -2.0 gross fixed capital formation +26.7 +15.6 changes in inventories -167.6 -186.9

Challenges associated with the valuation of increment and growing stock I. Physical data: availability of data from national forest inventory  updating, smoothing and corrections in hindsight splitting up into assortments  assumptions for determining the volume of potential assortments II. Valuation: assessing the degree of completion and the costs of production  stumpage value at current market prices as surrogate adjoining of harvesting costs to the different assortments (joint-product production)  average unit costs of harvesting assumed equal for all assortments 04.02.2019

Increment: currently available information versus approximation and smoothing of period-specific values in hindsight Most recent data of NFI: 2007-2009 04.02.2019

Conclusions as to the valuation of increment and standing timber The framework provides no stringent rules. Hence, international comparability may never be achieved In any case, physical as well as monetary data are associated with a bulk of assumptions Without strict standards the results will remain highly ambiguous and of little significance Valuation should strictly stick to pragmatic approaches Carbon reporting may provide the required annual, physical data 04.02.2019

General conclusions There is a considerable potential for biases, double counting and omissions International comparisons are hampered by the different availability of basic data and the use of different methods as well as surrogates, the compatibility of documented results being by no means guaranteed A comprehensive documentation as well as the revision of whole time series are decisive for the consistency and hence also for the relevance of national results Clearly defined interfaces with other industries (esp. agriculture), the national accounts and other related statistics (like e.g. carbon reporting) are of utmost importance for smoothly fitting the forestry satellite accounts into the general statistical framework at the national level 04.02.2019

Thank you very much for your attention and interest! 04.02.2019