Turnover and value added estimation Practical approach and methods Workshop on Reporting Environmental Goods and Services 12-13 november 2009 Bech Building – A3/45 ICEDD asbl

Turnover Value added Turnover Totals invoiced by the observation unit during the reference period. This corresponds to the market sales of goods or services supplied to third parties It excludes: stocks (so is not really the production except in case of services where it is a proxy) imported goods nor services reductions in prices, rebates, discounts, etc. It includes all charges, duties and taxes on the goods or services (except VAT charged to customers or other deductible taxes directly linked to turnover) For non-market producers (GG or ancillary): turnover = total costs of production (as there are no sales) Handbook, Chapter 4 (4.3 and 4.4), pp. 123-131

Turnover Problem of possible double-counting among main producers: Value added Turnover Problem of possible double-counting among main producers: Environmental goods, technologies or services could be used in the production of another environmental output Solution: Intermediate consumptions of environmental technologies, goods and services are quantified and excluded from total turnover of EGSS For secondary or ancillary producers, it is assumed that no intermediate consumption of environmental goods, services or technologies are realised (the whole IC is related to principal activity)

Turnover of the corporations Value added Turnover of the corporations In case of specific environmental NACE classes: Turnover extracted from registers directly The entire turnover is taken into account as they carry out only environmental activities In case of sectors providing both non-envi. and envi. technologies and products: Need to know the environmental share of the activities to allocate the appropriate turnover to EGSS

Turnover of the corporations Value added Turnover of the corporations Estimation of shares based on coefficients If the population is large: share of total environmental producers to total producers of a corporations sector applied to total turnover of the sector In other cases: shares are estimated on an establishment base To distribute turnover by establishments, share of employed people of an establishement to total employment of the company can be used For some sectors, employees are in the headquarters and not in each establishement of production (for ex. energy sector): use the number of establishments as a share

Turnover of the corporations Value added Turnover of the corporations Estimation of turnover based on physical or consumption data Turnover could be approximated by combining physical output and average price ratios of the output For example: in the case of energy (part of renewable energy: physical production of energy used) Case of integrated technologies as production system Turnover = costs of production (excluding environmental techn., goods and services bought) Personnel costs, Material costs Consumption of fixed capital for own account production Taxes on production

Turnover of the corporations Value added Turnover of the corporations Case of ancillary production: Turnover = environmental expenditures for the use of the good, techn. or service = costs of production Sources of data: By SBS regulation collecting ancillary EPE By table B of EPEA and current expenditures collected through the Joint Questionnaire In the case of the RM ancillary activities: costs of auto-production of energy deducted from physical data sources (for example: energy statistics in case of combined heat and power plant)

Turnover of the General Government Value added Turnover of the General Government = non-market producers: Turnover = sum of costs of production Sources: Table B of EPEA for the GFCF and table A for the expenditures Budget analysis: have information on receipts and use of funds by the government units. Description of expenditures is needed to select environmental expenditures (need share for not specifically envi. units) COFOG: GG’s expenditures by functions of government A full division dedicated to the environment protection (Division 5) No division for the resources management Expenditures could also be classified in divisions with a mix of envi. and non envi. expenditures

Turnover Surveys to collect information on turnover Value added Turnover Surveys to collect information on turnover In order to avoid compiling information on non environmental activities: Ask the respondents to provide their lists of environmental technologies or products Let them select their principal and secondary activities Ask them the turnover of each environmental technology or product Will then have turnover by type of technology or product and can isolate environmental turnover

Turnover Value added Value added Value added at basic prices = the difference between production (at basic prices) and intermediate consumption (at purchasers’ prices) Comparable to the national level of income (GDP) It includes: Consumption of fixed capital Compensation of employees Taxes on production (for examples taxes on property and payroll taxes, except taxes on intermediary inputs) Product-related subsidies It excludes: Subsidies (for example labour or capital-related taxes except product-related subsidies) Intermediary consumption (environmental or non-environmental)

Value added of the corporations Turnover Value added Value added of the corporations Method of estimation based on employment Ratios of production per employee or valued added per employee are roughly similar in a particular NACE class (the most detailed NACE information) VA/employee of a particular NACE class * EGSS employment = EGSS VA SBS data or national accounts data by NACE classes

Value added of General Government Turnover Value added Value added of General Government VA = difference between total costs of production and intermediary consumption VA = sum of compensation of employees, consumption of fixed capital, some labour and capital-related taxes and product-related subsidies

Value added Surveys to collect information on VA Turnover Value added Value added Surveys to collect information on VA In order to avoid compiling information on non environmental activities: Ask the respondents to provide their lists of environmental technologies or products Let them select their principal and secondary activities Ask them the VA of each environmental technology or product Will then have VA by type of technology or product and can isolate environmental VA for establishments carrying out both envi. and non envi. activities For entirely environmental activities, take the entire value added

Thanks for your attention! Céline Martin cm@icedd.be Marco Orsini mo@icedd.be Maria Jose Lopez mjl@icedd.be ICEDD asbl Boulevard Frère Orban, 4 5000 Namur + 32 80 250 480