Enhancing Estimation of Small-Scale Gold Mining: Methodological Revisions

1. REVISIONS ON THE DIRECT MEASUREMENT METHODOLOGY USED FOR NON-OBSERVED ECONOMY: A CASE FOR SMALL-SCALE GOLD MINING By Dean Joseph A. Villanueva and Reynaldo F. Fulleros Presented by Dean Joseph A. Villanueva Macroeconomic Accounts Service Philippine Statistics Authority

2. OUTLINE OF THE PRESENTATION • Introduction • Current estimation procedure of the small scale gold mining • Proposed estimation methodology • Findings, conclusions, and recommendations

3. I. Introduction: Context of small scale gold mining Source: Mines and Geosciences Bureau

4. I. Introduction: Context of small scale gold mining Small scale gold mining as a non-observed economy • There are specific approaches in quantifying the production of the non-observed economy. • Eurostat’s Tabular Approach to Exhaustiveness: Source: Eurostat

5. II. Current estimation procedures Formula: SSM Production = BSPgold purchases + Undercoverage “Resulting estimates are used to extrapolate quarterly and yearly outputs based from a benchmark.” Limitations: • Under coverage mining uses a fixed ratio • This fails to capture behavior of production during structural changes in the industry

6. III. Proposed estimation procedures: Methods in estimating the non-observed economy Source: Organisation for Economic Co-operation and Development; Philippine Statistics Authority

7. III. Proposed estimation procedures: Alternative data and source Source: Environmental Management Bureau and Provincial LGU of South Cotabato

8. III. Proposed estimation procedures: Labor input method • Step 1: Derive the basic indicators: • Total Production • Labor Productivity • Specific Gravity • Recovery Rate • Step 2: Estimate for the total level of production • Ore mining • Gold panning • Step 3: Compute for the total production of the identified area/mining site • By identified provinces • By identified regions • Step 4: Use the growth rate of the employment level in extrapolating the total level of production (by mine site, by identified province, by region)

9. IV. Findings, Conclusions And Recommendations: Findings and conclusions The devolution of power vested by the Local Government Code (LGC) to the LGUs significantly affected the capacity of the national government (through the MGB) to monitor activities of SSM. The CPH and LFS are potential sources of data on Labor, however, the classification level is still highly aggregated. Small scale mining industry is not entirely homogenous in terms of labor inputs, capital and technology, among others.

10. IV. Findings, Conclusions And Recommendations: Recommendations • Develop a well defined coordination system among government agencies from both national and LGUs, that will perform the following major tasks: • Overall monitoring, data collection and processing of administrative based information. • Conduct of benchmarking, surveys and other forms of data collection when necessary. • Regular evidence gathering of illegal activities in small scale mining. • Validation of reports and information. • This inter agency cooperation should be bonded by formal agreements, administrative orders or a Presidential decree, if necessary.

11. IV. Findings, Conclusions And Recommendations: Recommendations • Push for the establishment of “Minahang Bayan” which operations are directly monitored the MGB and jointly with the LGU (following LGC). • OTPs issued by the MGB for the first issuance and LGUs for the succeeding periods must be processed for quarterly estimation, meantime proposed systems are still not in place. • Generation of the parameters suggested in the proposed benchmarking and surveys, can be included as requirements in the issuance of OTP, as another alternative. • There is the need to regularize the conduct of benchmarking to monitor and reflect effects of structural changes in the market.