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Value added in forestry - UK experiences

Explore the UK forestry industry's contribution to GDP through Gross Value Added (GVA) and its significant impacts on the economy. Gain valuable insights from the analysis of forestry goods, services, intermediate consumption, and more. Uncover key discrepancies between national and economic accounts, highlighting the need for further investigation. Enhance your understanding of forestry value addition with expert insights from Simon Gillam at the UNECE/FAO Team of Specialists in Edinburgh, May 2007.

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Value added in forestry - UK experiences

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  1. Value added in forestry - UK experiences For UNECE/FAO Team of Specialists, Edinburgh, 21-22 May 2007 Simon Gillam, UK

  2. 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 2007

  3. 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 2007

  4. 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 2007

  5. UK data - chart Simon Gillam for UNECE/FAO ToS May 2007

  6. 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 2007

  7. 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 2007

  8. 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 2007

  9. 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 2007

  10. 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) Simon Gillam for UNECE/FAO ToS May 2007

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