Income and Expenditure Accounts Technical Series
The Natural Resources Satellite Account: Feasibility study
Prepared for Natural Resources Canada
by Marco Provenzano, Conrad Barber-Dueck and Joseph Floyd (National Economic Accounts Division, Statistics Canada)
This study indicates that it is feasible to create a satellite account that quantifies the size and scope of the natural resource sector in the Canadian economy. Estimates can be made available, both on an annual and quarterly basis, up to the current quarter (three months after the reference period, and approximately one month after the release of quarterly national GDP).
Provisional estimates of a Natural Resources Satellite Account (NRSA) have been constructed within the Canadian System of National Accounts (CSNA) framework. As such, they are directly comparable to values of Gross Domestic Product (GDP) and other economic measures produced within the CSNA.
This study defines natural resource activities as products and services originating from naturally occurring assets used in economic activity. These assets comprise mineral and energy resources, water, as well as natural timber, aquatic, and other natural biological resources. The resource assets may be renewable or non-renewable. They do not include intensively cultivated biological resources.Note 1 To provide a more complete measure of the economic importance of this sector, natural resource products and the services required in the initial extraction as well as the initial processing of the natural resource inputs are included. The activities related to the production of natural resource products constitute the scope of production for the natural resource satellite account.
Given the importance of various downstream natural resource activities to the Canadian economy, secondary and tertiary processing will also be identified in the Natural Resources Satellite Account. The downstream activity will be fully separable from the core natural resources sector for analytical purposes allowing the core activity to remain consistent with international definitions.
As an organizing framework, the satellite account presents information on natural resource activities by sub-sector (forestry, mining, energy and otherNote 2).
This study provides annual provisional estimates for the natural resource sector for the years 2009 to 2012 (with revised estimates from 2007 to 2015 available on CANSIM). These estimates serve as the foundation for possible future extensions including:
- more timely, quarterly natural resource statistics;
- provincial and territorial estimates;
- employment and human resources statistics;
- capital investment including research and development;
- links to the Natural Resource Stock Account and the Clean Tech Satellite AccountNote 3; and
- government revenue attributable to the natural resource sector.
The natural resources sector is an important part of the Canadian economic landscape. It plays a significant role in Canada’s economic growth, employment and investment. The development of new mines, energy sources, oil and gas reserves as well as forestry products have led to the sector’s increasingly important role in Canada’s overall economic development. The sector is often an important driver of economic growth and is a key influence on regional economic performance. Given the importance of this sector, policymakers, researchers, businesses and households require comprehensive and timely statistics in order to assess the evolution, structure, role and the contribution of this sector to the Canadian economy.
Statistics Canada produces a wealth of information on the natural resources sector. Statistics related to jobs, output, imports, exports, and investment can be found among the many products released by the agency. While a significant amount of detailed data on the natural resource sector exists, it is not currently organized in a coherent and comprehensive economic framework that can be easily expanded to address emerging issues.
This paper examines the feasibility of developing a Natural Resources Satellite Account (NRSA) consistent with the Canadian System of National Accounts. The NRSA is an expandable framework that can be used to present Statistics Canada’s existing data holdings for the natural resource sector as well provide increased detail for data users. This feasibility study starts by discussing satellite accounts within the framework of the System of National Accounts (SNA).The definition of natural resources is addressed. Experimental results are then provided for the years 2009 to 2012, based on the proposed definition. In this study, annual estimates have been calculated in both nominal and real terms. Further developments are discussed in a concluding section, including the computation of more timely, quarterly data along with other potential linkages and extensions.
2. The Canadian system of national accounts
The foundation of a Natural Resource Satellite account is the data contained within the Canadian System of National Accounts (CSNA). The CSNA is based on the 2008 System of National Accounts (2008 SNA), an internationally recognized framework used to measure economic activity within a country or region. The framework is used by countries throughout the world to record their production, incomes, investment, consumption, financial transactions and stocks of assets and liabilities. The data are organized into a sequence of accounts that articulate the change in wealth from one period to another by tracking the activities of economic agents (households, governments, corporations). The SNA provides a set of concepts, classifications and accounting rules for compiling and integrating data to give a comprehensive picture of the economy and how it works. Key measures that emerge from this framework include gross domestic product (GDP) at both basic and market prices, household disposable income, investment, capital stock, productivity, the international balance of payments and government debt.
The annual supply and use tables (SUT) produced by Statistics Canada are the main source of information used to derive the annual NRSA estimates. These tables balance the total supply of all products in the economy with their uses. By definition, total supply must equal total demand for each product. The supply of a product can originate from domestic production or imports and is expressed in market prices (the price paid by the final consumer of the good); including margins for transport, trade, sales tax and tariffs. The various uses of a product include the utilization by businesses for the production of other goods or services (intermediate consumption), along with final consumption by households, government or non-profit institutions. Further, the product could be purchased as an asset for ongoing use in the production of other products (investment or gross fixed capital formation) or exported.
At Statistics Canada, industries are defined by the North American Industry Classification System (NAICS). Similarly, all products are catalogued by the North American Product Classification System (NAPCS). These classification systems are the building blocks for constructing the Supply-Use Tables (SUT), formerly known as Input-Output Tables (IOT) at Statistics Canada. The SUT combine and modify some of these industries and products. These, in turn, are then called the Input Output Industry Classification (IOIC) and the Supply Use Product Classification (SUPC).
3. Satellite accounts
One of the strengths of the System of National Accounts is its flexibility. While the system lays out the concepts, accounts and accounting rigour required to produce a set of integrated and internally consistent set of accounts, it does afford the compiler the flexibility to vary and in a sense ‘expand’ the framework to address a specific need. At the limit this ‘expanding’ is referred to as satellite accounting. There are essentially two types of satellite accounts that can be produced. One type of satellite account involves a rearrangement of the classifications or data (e.g., more detail alternative aggregations) and possible addition of complementary information of the existing core accounts. These satellite accounts do not change the underlying concepts of the core System of National Accounts but provide an expanded perspective on a particular sector, group of products or activity.Note 4 The second type of satellite account seeks to expand or supplement the underlying concepts of the core System of National Accounts to study a topic of social interest. This could involve, for example, expanding the concept of production (e.g., including volunteer activities as production), consumption or capital formation. The Natural Resource Satellite Account falls into the first category, where concepts are consistent with the core CSNA, but additional detail and presentational changes are used to better identify and articulate the natural resource sector.
The development of an NRSA involves extracting detail related to natural resource activities from the core set of published CSNA data. The account follows the main principles, classifications and definitions of the core CSNA, ensuring it is directly comparable with the rest of the CSNA. From this account, therefore, it will be possible to calculate a gross domestic product for the natural resource sector comparable to total gross domestic product—providing a measure of the sector’s contribution to total economic activity. By using the same principles as those in the CSNA, the satellite account leverages an internationally accepted statistical framework and infrastructure. Examples of other macroeconomic aggregates directly comparable to the core framework include international exports and imports, gross fixed capital formation (investment) and employment.
In addition to comparability and efficiency, the use of the CSNA infrastructure also provides a number of other advantages. A large array of data is already available at Statistics Canada to construct standard macroeconomic accounts and can be used as the starting point in the construction of an NRSA. The data has already gone through data quality validation and have been further integrated, reconciled and balanced in the process of producing the CSNA. This ensures that the data underlying the satellite account is equivalent in quality to Canada’s core macroeconomic accounts.
The NRSA also provides a clear organizing framework for analysis of the natural resources sector. It clearly defines the natural resource sector and thereby presents a consistent set of numbers rather than a variety of estimates based on inconsistent concepts. The account goes beyond an industry perspective of the Natural Resources sector, rather using natural resource activities as its main organizing structure. As a result, the NRSA will eliminate industry production un-related to natural resources and add in natural resource production which takes place in industries which aren’t traditionally defined as natural resources (such as the production of refined precious metals in the miscellaneous manufacturing industry and the production of fuel wood in the agricultural crop industry).
The NRSA has the potential to include information related to production, incomes, international trade, employment, investment, financial transactions and wealth in one coherent and integrated set of accounts, providing a convenient way to understand and analyze the natural resource sector comparable with traditional economic measures.
Finally, the NRSA is expandable in that work can be undertaken to disaggregate a given dimension (such as an industry or product) to provide additional granularity required by data users. For example, the satellite account could provide investment by sub-sector and by asset undertaken by the natural resource sector, which could be further expanded to examine investment by foreign controlled enterprises. Section 7 provides some possible further extensions of the base estimates constructed as part of this feasibility study.
4. Defining natural resources
The first step in creating the NRSA is to clearly define natural resource activity and to develop the corresponding classification systems. In doing so, two important factors to consider are:
- Does the definition align with international standards?
- Does the account serve the needs of users for policy or business decisions?
4.1 International definitions
It is important that the NRSA, as much as possible, follow international standards to ensure data are not only comparable with the Canadian accounts but also internationally. Two key international definitions of natural resources come from the Organization for Economic Cooperation and Development (OECD) and The System of Environmental-Economic Accounting 2012—Central Framework (SEEA), the internationally accepted economic-environment accounting framework.
The OECD defines natural resources as: “Naturally occurring assets that provide benefits through the provision of raw materials and energy used in economic activity (or that may provide such benefits one day) and that are subject primarily to quantitative depletion through human use”.Note 5
The SEEA defines natural resources as including “... all natural biological resources (including timber and aquatic resources), mineral and energy resources, soil resources and water resources. All cultivated biological resources and land are excluded from scope.”Note 6
Moreover, the definition of energy is taken from Statistics Canada’s Energy Statistics Framework which is based on of the International Recommendations for Energy Statistics (IRES) established by the United Nations Statistical DivisionNote 7. These frameworks follow the definitions above while more precisely defining the energy sub-sector, for example, treating all products produced within petroleum refineries to be energy.
4.2 Natural resources satellite account definition
With these definitions in mind, this feasibility study defines natural resource activities as those which result in products and services originating from naturally occurring assets used in economic activity. These assets comprise mineral and energy resources, water, as well as natural timber, aquatic, and other natural biological resources. The resource assets may be renewable or non-renewable. They do not include intensively cultivated biological resources such as agricultural crops.Note 8 To provide a more complete measure of the economic importance of the natural resource products, the services required in the extraction as well as the initial processing of natural resource inputs will be included. The activities related to the production of natural resource products constitute the scope of production for the natural resource satellite account.
In essence, the above definition splits the scope of natural resource activity into three processes: (1) the extraction of the natural resource inputs, (2) the services required to undertake this extraction (such as transportation, distribution and scientific services), and (3) the initial processing of the resulting natural resource products.
This initial feasibility study only provides experimental estimates related to forestry, mining and energy. For completeness, future studies will cover the full range of natural resource products including, for example, fisheries and water resources.
4.3 Natural resource products
Using the above definition, the economic activities defined as natural resource-related can be mapped out. This can be done from both a product and industry perspective. For products, the starting point is the SUT product classification, as these tables contain all the goods and services produced in the Canadian economy. The product classification structure is based on NAPCS.
4.3.1 Extractive natural resource products
From a product perspective, given the criteria to exclude intensely cultivated biological resources, agricultural products such as crop or livestock production would not be included in the account, nor would aquaculture products (fish farms), fur farming or tree farms.Note 9 Commercial fishing from the ocean or inland lakes would be included, as would products from hunting and trapping, as well as goods produced from forestry and mining. The extraction of energy from natural resources (such as water, wind, solar) would also be included. These products would constitute the natural inputs portion of the account (see Table 1).
4.3.2 Natural resource service products
As part of the process of extracting natural resource inputs, some service products are required, that would not be produced in the economy without the extraction activity. As a result, they are included in the sector to provide a more complete picture of the size of the natural resource activity in the economy. Services related to the extraction or discovery and development of natural resources are included in this category. Further, any transportation of the natural resource product to the location of processing is also included. As such, mineral exploration as well as pipeline transportation would be included as service products in this category. The transportation services provided in the forestry and mining sector for the delivery of goods to the initial processing location (e.g., trucking and rail) should also be included as natural resource activity but data for this service is not separately available at this time (see Table 1). Further investigation will be made to determine whether this data can be readily obtained.Note 10 Services related to research and development as well as legal, and scientific and technical services are included, as are all other services which are required to create the product. Housing and accommodation services are excluded as they would exist regardless of the existence of the sector.
4.3.3 Initial processing products
Similar to the case of natural resource service products, the initial processing of the natural resource inputs, for the most part, would not be found in the economy without their initial extraction.Note 11 As a result, the initial processing of natural resources is a clear extension of the extraction industry and is therefore included within the natural resources sector. These products are often classified as manufactured goods within the SUT framework since the processes physically transform inputs. As a practical implementation rule, manufacturing activity will only be included in the natural resources sector if over 50% of the material inputs into the production process are natural resource inputs (4.3.1).Note 12
In practice, natural resource inputs (such as logs and crude oil) are first identified. Secondly, each industry within the SUT framework is examined to determine if it meets the 50% criteria in its production process (these could be thought of as the “main” natural resource industries, although natural resource activity could also take place in other industries (see Table 2 for examples). As a final step, all products made primarily in these industries are deemed to be natural resource products. The NRSA captures the production of these products regardless of whether they take place in the main natural resource industries or outside of them.
This definition results in the inclusion of manufacturing activities such as sawmills and the refining of ores and oil in the NRSA. Further downstream processes using the refined products, for example, wood furniture and plastics manufacturing, are not in scope for the core NRSA (see Table 1 and Table 2).
With advances in technology, new natural resource products are being developed and new uses are being found for traditional by-products or waste products from natural resource product manufacturing. For example, lignin used to be considered a by-product of producing pulp; now, it is being used as an important building block for bio-products. Unfortunately, data on lignin, and other new natural resource products, are not easily accessible at this time. It is not known where in the NAICS or NAPCS they have been included. Although included in the scope of the feasibility study, they have not been included in the estimates as reliable data currently does not exist within Statistics Canada. Going forward, attempts will be made to fully capture these activities as new data sources become available.
4.3.4 Downstream activities (secondary and tertiary production)
Although not part of the core account, natural resources have important downstream effects on other sectors. These products fall outside of the definition of the natural resources sector but are nonetheless important in understanding the role of natural resources in the Canadian economy. They include such items as iron pipes, copper and aluminium tubing, cutlery and wood and kitchen cabinets. In this study, they are labelled as secondary and tertiary products (see Table 2). Measurements can and have been made for these activities (see Appendix 1). In general, secondary production uses a large portion of primary manufactured products as inputs. These secondary products are then used in the production processes of tertiary products. The economic contribution of these products are calculated at the request of NRCan, however, they are not part of Statistics Canada’s natural resources calculations.
4.4 Natural resource industries
Within the industry classifications of the SUT, there is no single industry that comprises all natural resource activity. Rather, the economic activity attributable to natural resources is found in many industries. For the purposes of the satellite account, natural resource industries can be defined as those in which more than half of total output originates from the production of primary natural resource inputs as described in section 4.3.1. It also includes industries in which at least half of the material inputs in the production process are natural resource inputs. For example, the forestry industry chiefly produces SUPC commodity MPG113001 – Logs, a natural resource commodity and therefore is a natural resource industry. The main products from these industries are then considered natural resource products (4.3).
It is important to note that only activity within an industry attributable to natural resource product production is included in the NRSA. Therefore, if the forestry industry produces both logs and provides housing for its employees, only the natural resource activity (production of logs) will be included.
Further, some non-natural resource industries may produce natural resource products. This economic activity is also included in the account. For example, an agriculture chemical manufacturer may produce some electricity internally as part of their primary production process. Although the manufacturer’s total output would not be included in the energy sub-sector, its production of electricity would. Another example concerns the production of refined precious metals in the “other miscellaneous manufacturing” industry. This production would be included in the mineral and mining sector. Other output from this industry, such as sporting and athletic goods will be excluded.
In this way, the NRSA goes beyond a simple industry perspective of natural resources and seeks to accurately identify natural resource activities within the Canadian economy. Table 3 and Table 4 show some of the industries where natural resource products are produced.
4.5 Natural resource sub-sectors
Moreover, the natural resources sector will be split into four distinct sub-sectors: forestry, energy, mining and “other”.Note 13 SNA and NRSA concepts will be applied consistently across the four sub-sectors with the aggregation forming the total natural resources sector. The sub-sectors are each a cross-section of products and industries. For example, the forestry sub-sector includes the natural inputs, services and processing products related to forestry. This activity occurs across several IOIC industries.
One complication of the sector presentation is that in some cases products and industries may be classified to more than one sub-sector. The three chief examples in this study are coal and uranium mining, which are included in the energy and mining sub-sectors, as well as the extraction of fuel wood, in both energy and forestry. Under Statistics Canada’s SUT classification systems, fuel wood is considered an energy product which is primarily produced within forestry industries. Similarly, coal and uranium are considered energy products produced in mining industries. For the purposes of aggregation, each of these products will be assigned to sub-sectors based on their industry classification. That is to say, fuel wood will primarily be considered part of the forestry sub-sector and coal and uranium will be primarily considered part of the mineral and mining sub-sector. In order to accommodate the cross-cutting nature of these activities, the tables in this feasibility study present each sub-sector both with and without these specific products.Note 14
5. The scope of the feasibility study
The objective of this feasibility study is to determine if the above definition can be used to extract data from the annual supply and use tables to determine the size of the natural resource sector in Canada. The scope is annual data for the years 2009 to 2012. These years were chosen since a complete SUT is available for this period. Along with many other economic measures, the SUT contain the necessary information to calculate the GDP attributable to natural resource activity. The GDP of the natural resource economy in Canada can be calculated in three separate ways using these tables: production, incomes and final expenditures. These methods all provide estimates of GDP. These different calculations of GDP fit into the SNA sequence of accounts that begin with total output (production) and continue to articulate primary incomes generated in productive activity and final expenditures.
The production method examines who produces the natural resource products and how they are produced. It is calculated using the total output of the natural resource sector less its intermediate inputs. Output is the production of goods and services by the sector. Intermediate consumption is the products and services the sector uses as material inputs into the production process. Other inputs include labour and capital.
The income method considers the generation of income. It sums all income originating from natural resource production, including both the return to capital (operating surplus) and labour (compensation of employees). In the case of unincorporated businesses, the return to capital and labour cannot be separated and therefore their income is referred to as mixed income. Taxes less subsidies on products and production are also included in this method, as they are part of the valuation of production at market prices.
The expenditure method sums all final expenditure on natural resources in the economy. These expenditures include final consumption of households, government and non-profit institutions. They also include investment on capital (gross fixed capital formation), and the change in inventory levels. Exports of natural resources minus any imports of inputs into the production process complete the calculation.
In the SUT, these GDP estimates, along with other data, are calculated in nominal terms. This study will also remove the impact of prices so that the volume of the economic activity can be observed. This is particularly important for the natural resources sector since prices can fluctuate significantly from year to year.
It is important to note that the annual estimates provide the foundation for all potential extensions of the natural resource account. Further extensions to the account are discussed in section 7.
6.1 The overall natural resources picture
The results of the feasibility study should be considered provisional in that many of the proposed methods need to be reviewed and refined, this is especially true for real estimates. The main intent of this section is to show the type of analysis possible with the NRSA. Nevertheless, the overall picture demonstrated in this report is expected to remain intact. Several methods that still require development include using more precise prices for certain natural resources, moving real GDP from a Laspeyres volume index to a Chained Fisher volume index and adding in the “other natural resources” category. An extended time series from 2007 to 2015 along with revised estimates for 2009 to 2012 will be released on CANSIM in September 2016.
6.1.1 Nominal terms
GDP at basic prices for the natural resources sector totalled $207.6 billion in 2012 (12.2% of total GDP). The year 2012 was down 6.3% from 2011 but was 28.3% higher than 2009. The largest component of the natural resources sector was energy, with a GDP in 2012 of $147.5 billionNote 15, representing 71.0% of natural resources GDP. The GDP for minerals and mining stood at $46.8 billionNote 16 (22.5% of natural resources) in 2012 while forestry registered a GDP of $13.4 billionNote 17 (6.5% of natural resources). More detailed tables are available in the appendix.
The NRSA provides many different views of the natural resource sector. For example, inputs into the production process of natural resources can be examined. These inputs totalled $261.0 billion in 2012, representing an increase of 1.2% from the previous year. The largest non-natural resource inputs were “logging, mining and construction machinery and equipment”, “other financial investment and related activities” and “architectural, engineering and related services” at $5.7 billion, $5.6 billion and $5.5 billion respectively in 2012. The largest natural resource input in 2012 was conventional and synthetic crude petroleum amounting to $63.6 billion in 2012, with the vast majority ($60.7 billion) used by petroleum refineries in producing fuel oils and motor gasoline.
The use of natural resources can also be examined with the NRSA. In 2012, $468.6 billion of natural resources were produced in the Canadian economy. After adding imports and margins, the value of natural resources supply in the economy totalled $643.8 billion. $351.2 billion of the output was used as intermediate inputs into other production processes while $86.2 billion was purchased by final domestic consumers. $2.0 billion was placed into inventories and $204.4 billion, or 31.8% of total supply, was exported out of the country.
Natural resource output used as intermediate inputs into the production of other goods can be further broken down between those used in the production of other natural resources and those used outside of the natural resources sector. In 2012, $151.2 billion worth of natural resource output (43.1%) was used domestically as inputs into other natural resource production processes (for example, crude oil used in the production of gasoline and other fuels). The remaining 56.9%, or $199.9 billion was used outside of the natural resources sector.
6.1.2 Real (volume) terms
In real (volume) terms, GDP of natural resources decreased by 2.9% in 2012, in contrast, nominal GDP decreased by 6.3%. This difference in growth rates was largely due to a weakening of certain commodity prices, such as natural gas and natural gas liquids, a major component of the natural resources sector as well as weak prices in the minerals and mining sub-sector.
6.2 The energy sub-sector
6.2.1 Nominal terms
Energy GDP was $152.1 billion in 2012.Note 18 This represented 8.9% of total economy-wide GDP in 2012 and is the largest of the three natural resource sub-sectors. Within this sub-sector, the largest shares of GDP are accounted for by conventional oil and gas extraction with a GDP of $45.9 billion in 2012, and non-conventional oil extraction with a GDP of $31.8 billion. When measured excluding fuel wood, uranium and coal, the GDP of the energy sector drops to $147.5 billion or 8.6% of the economy.
The largest component of energy, the oil and gas sector, can be further broken down into its main outputs, namely, crude oil, natural gas and bitumen. In 2012, just under a third (32.0%) of GDP for the sub-sector was attributable to crude oil while natural gas and bitumen contributed 5.0% and 7.6% of energy GDP, respectively.
Output from the energy sub-sector totalled $310.5 billion in 2012, with the majority being conventional and non-conventional crude oil $79.9 billion. Output of refined petroleum products was $90.8 billion in 2012 with the majority being motor gasoline and diesel fuel.
Inputs into energy production totalled $158.3 billion in 2012, the majority of which came from crude petroleum used by refineries to produce gasoline and fuel ($60.7 billion). The largest non-energy inputs were seen in the primary extraction of energy products such as conventional and non-conventional crude oil and in electric power generation.
For conventional and non-conventional crude oil and gas extraction, the largest non-energy inputs were “financial investment services” at $2.9 billion, “repair and construction services” at $1.4 billion and “architectural services” at $1.5 billion. These services are indicative of highly capital intensive industries. The largest non-energy input into electrical power generation was “repair and construction services”, which totalled $1.7 billion in 2012.
6.2.2 Real (volume) terms
On a real basis, GDP for the energyNote 19 sub-sector decreased 1.2% in 2012 from the previous year, conversely, nominal GDP decreased by 5.4%. Over the 2009 to 2012 period, growth in real GDP has been more stable than nominal GDP. This was largely due to the sizeable drop in natural gas prices over the period (-48% from 2009 to 2012) as well as volatility in other energy prices.
6.3 The mining and minerals sub-sector
6.3.1 Nominal terms
The size of the Canadian mining and minerals sub-sector, which includes extraction and primary processing such as aluminum production, was approximately $46.8 billion in 2012, or 2.7% of total GDP, based on preliminary estimates from this feasibility study.Note 20 This represents a 14.1% decrease from 2011 but a 38.9% increase since 2009. When excluding coal and uranium, the size of this sub-sector decreases to $42.3 billion or 2.5% of total GDP in 2012.
The importance of downstream production (secondary and tertiary activities) related to the mineral and mining sub-sector can also be examined. These sectors, characterized by the use of primary and secondary products as inputs into their production processes, include such industries as iron and steel mills and a portion of hardware manufacturing. In 2012, downstream mineral and mining production contributed $21.5 billion to the Canadian economy.
6.3.2 Real (volume) terms
On a real basis, GDP for the core mineral and mining sector declined 9.6% from the previous year, after registering two consecutive increases in 2010 and 2011 of 15.4% and 26.3% respectively. Prices in this sub-sector have generally been falling since 2009.
6.4 The forestry sub-sector
6.4.1 Nominal terms
The size of the Canadian forestry sector, which includes extraction and primary processing such as sawmill products, was approximately $13.4 billion in 2012, based on preliminary estimates of this feasibility study. This marks a 1.4% increase from 2011 and a 14.0% increase from 2009 and represents roughly 0.8% of the total Canadian economy. When excluding fuel wood, the size of the sector decreases to $13.2 billion, still representing 0.8% of GDP in 2012.
Downstream processing (secondary and tertiary activities) related to forestry, which are characterized by the use of primary products as inputs into their production processes, include such industries as mill working and wood furniture manufacturing. In 2012, downstream processing contributed $9.8 billion to the Canadian economy.
6.4.2 Real (volume) terms
On a real basis, GDP for the forestry sub-sector decreased 2.0% in 2012 from the previous year, conversely, nominal GDP increased by 1.4%. Over the period (2009 to 2012) real GDP increased 2.5% while nominal GDP increased 14.0%.
7. Future extensions of the NRSA
This study presents provisional annual estimates for the years 2009 to 2012 in nominal and real terms. This data corresponds with the SUT benchmark years. The foundation created with this feasibility study is the base for many potential extensions to further illuminate economic activity in the natural resources sector.
7.1 Creating quarterly estimates
One such extension of the NRSA is more timely quarterly estimation. Quarterly data would be targeted to be published approximately ninety days after the reference period. For example, data for the first quarter of a year (January, February and March) would be released at the end of June. This information could be provided in current and constant dollars (adjusted for price effects). The tables would be less detailed than the annual data but could still provide estimates of GDP, international trade, production and employment. The methodology to produce these estimates would be similar to what is currently used to produce the quarterly National Tourism Indictors which rely heavily on the monthly and quarterly national accounts estimates. These estimates will be benchmarked to the annual NRSA.
7.2 The creation of more detailed commodities
Currently, the SUT tables provide commodity detail at a level that at times, is quite aggregated. Future work could focus on disaggregating these commodities into greater detail, providing greater insight into the structure of the natural resources sector. With more detailed analysis and by finding new data sources, some of the commodity detail could be published at lower levels (e.g., uranium separated from non-metal mining).
7.3 Provincial and territorial estimates
A possible extension is the development of a provincial and territorial Natural Resources Satellite Account. The creation of a provincial and territorial account would follow a similar path as the national account. Initially, an account would be created using the latest SUT Tables (in this case 2012).
Once this account has been created, it can be extended to more recent years using provincial income and expenditure accounts as well the provincial industry accounts. The publication of the full provincial account occurs in November of the following year (e.g., 2014 data was published in November 2015). A provincial natural resources account could be constructed and completed within several months of the publication of the full accounts. These statistics would be available at an annual frequency (not quarterly like the national statistics).
7.4 Employment and human resources
A human resource module is another possible extension of the account. The module would focus on employment and occupation data related to the natural resource sector. Total employment data could be constructed by industry. The various types of occupations involved in the production of natural resources could also be estimated.
More timely employment data could also be published at the same time as the quarterly estimates described in section 7.1. Again, the publication of this data has been shown to be feasible as the Tourism Satellite Account-based estimates have been publishing employment data for many years using this methodology. This module would utilize data from the Canadian Labour Productivity Accounts.
7.5 Capital investment
Further, additional detail with respect to capital investment within the natural resources sector could also be examined and presented. Since natural resource industries are generally capital intensive, this could be an important extension to the account. Information would be taken from Statistics Canada’s capital stock, investment and consumption of fixed capital program which is directly comparable to the CSNA. The analysis of investment data can be further extended to look at the source of the investment, whether it pertains to domestic controlled or foreign controlled firms (i.e., foreign direct investment).
Another extension of the base satellite account would be an examination of research and development expenditures made by the natural resource sector. The supply and use tables articulate many inputs (expenses) made by companies within the natural resources sector including investments on research and development. These estimates could be presented by industry and sub-sector.
7.6 Stock account and clean tech
Another extension that could be explored is integration of the satellite account with the Natural Resources Stock Account, currently in production at Statistics Canada. This account examines the stock of natural resources currently used in production or other known stocks that could be brought into production. The two accounts are both based on SNA accounting principles. Similarly, links with the proposed Clean Tech Satellite Account, currently being evaluated for feasibility by Statistics Canada could also be made. Again, both accounts will share the SNA principles as their foundation.
7.7 Government revenues attributable to natural resources
Another useful extension that has been established for other satellite accounts are government revenues attribute to the satellite account sector, in this case, natural resources. This account would calculate the total government revenues collected from natural resource economic activity.
The Natural Resources Satellite Account will provide a useful framework to analyze the economic importance of the natural resources sector on the Canadian economy. It represents a coherent and credible data source that could be used to understand the role, evolution and structure of the natural resources sector in a macroeconomic context. Possible extensions to the account, including more timely quarterly estimates, provincial data, as well as information on jobs and investment, could provide further detailed statistics on natural resources and inform policy decisions for the natural resources sector.
Appendix 1. NRSA data tables
Total natural resources sector
Minerals and mining sub-sector
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