Value added in forestry - UK experiences For UNECE/FAO Team of Specialists, Edinburgh, May 2007 Simon Gillam, UK

Simon Gillam for UNECE/FAO ToS May GVA Gross Value Added at Basic Prices Measures how much the industry contributes to Gross Domestic Product (GDP)

Simon Gillam for UNECE/FAO ToS May Definitions Accounting definitions: GVA = total output at basic prices less total intermediate consumption at purchaser's prices also GVA = compensation of employees plus gross operating surplus plus taxes less subsidies on production. Some other impacts of forests

Simon Gillam for UNECE/FAO ToS May UK Data In UK, two different sets of figures A) National Accounts, produced by Office for National Statistics B) Economic Accounts for Forestry (from 2007 in IEEAF), produced by Forestry Commission

Simon Gillam for UNECE/FAO ToS May UK data - chart

Simon Gillam for UNECE/FAO ToS May National Accounts National Accounts uses input-output structure For most industries, based on Annual Business Inquiry (ABI) ABI extended to include forestry from 2001 Similar levels before and after ABI Detailed methodology not known by FC

Simon Gillam for UNECE/FAO ToS May EAF / IEEAF Forestry Commission calculation uses former EAF table structure New IEEAF table incorporates most of EAF table structure, but with added complication to include growth of standing timber (not considered here) Most items valued using financial accounts of state forests (Forestry Commission), then extrapolated to all forests

Simon Gillam for UNECE/FAO ToS May UK Outputs Forestry goods: about 90% of value is timber, other contributions from firewood, afforestation, plants and other products Since mid-90s timber volume has increased, but price has declined by more. Forestry services: from input-output, now equivalent to about 40% of forestry goods output, can include services to other industries, but most comes back into account as part of intermediate consumption, so no net impact on gross value added

Simon Gillam for UNECE/FAO ToS May UK Intermediate Consumption Total from input-output, allocated to categories using FC financial accounts for state forests Forestry services (from any industries, but mostly from forestry, as above - currently assume all from forestry.) Plants Maintenance of materials, buildings Energy Other goods and services

Simon Gillam for UNECE/FAO ToS May Conclusions EAF/Forestry Commission extrapolated from limited data But approximate level and trend seems right, given trends in timber prices and quantities Complication of forestry services - are they incorporated correctly? Why do National Accounts get a very different answer? - need to investigate further Possible problems with scope (e.g. ABI includes whole of FC, not just forest management)