MFAfin Finnish material flow accounts Method Description

Transcription

1 MFAfin Finnish material flow accounts Method Description Ilmo Mäenpää *, **, Mari Heikkinen *, Pablo Piñero *, Tuomas Mattila **, Sirkka Koskela **, Mari Kivinen *** *University of Oulu **Finnish Environment Institute (SYKE) *** Geological Survey of Finland Academy of Finland Sustainable Use of Resources and the Finnish economy (SURE) Oulu

2 FOREWORD The Finnish material flow accounts has been carried out as Excel workbook, which contains detailed information on domestic extraction of raw materials, as well as imports and exports of goods and services from year 2000 onwards. In addition, the workbook includes a framework which converts all material flows into mass units multiples of kilograms and compiles them into indicators at economy-wide level, and further into different illustrative figures. The framework has been designed so that updating it with new yearly data is easy. At the moment the series reaches year Similarly, modifications and additions of individual time series or calculation parameters are automatically passed on to whole system. The framework generates material flow calculations at three different levels: Direct Material (DM) flows, Raw Material (RM) equivalents of flows and Total Material (TM) flows. Furthermore, it provides production indicators (DMI, RMR and TMR) and consumption based indicators (DMC, RMC and TMC). Basic indicators per capita and per gross domestic product are as well calculated. In particular, the raw material productivity (GDP/RMC), a key indicator for the EU policy of resource use efficiency, is produced. To estimate raw material equivalent flows and total flows from nature, imported products have to be restored to the raw materials used for their production. Product specific raw material coefficients are estimated using the data of the international life cycle assessment database Ecoinvent, and other supplementary sources. In addition, for consumption based indicators, corresponding material flow coefficients for exports are needed. These are calculated using the environmentally extended input output model of Finland, ENVIMAT, for year Finnish imports and exports are classified rather detailed; up to 120 products are distinguished. The accounting framework complies with the EU material flow accounts standards at DM and RM levels. For system extension to TM level, accounting principles of the Wuppertal Institute and the Sustainable Europe Research Institute (SERI) are mainly followed. The main difference with these accounting frameworks is that in MFAfin the accounting boundary is uniform with the revised European national accounts (ESA 2010) where accounting of exports and imports are not based on cross-border movements of products between national territory and rest of the world but on the changes of product ownership between residents and non-residents independent of where the changes of ownership occur. 2

3 CONTENTS 1 INTRODUCTION MATERIAL FLOW ACCOUNTING Basic concepts Accounting boundaries in national accounts Classification of raw materials Classification of products DOMESTIC EXTRACTION Crops Wildlife Wood Fossil fuels Minerals and soil materials IMPORTS & EXPORTS Direct imports and exports in mass units Imports and exports of services International transport Used and unused flows of imports Used and unused flows of exports RME coefficients Special cases: water and by-products Comparing RME coefficients of imports to Eurostat s coefficients REFERENCES ANNEX. Grade % and strip ratio of fossil fuels, metals and other minerals

4 1 INTRODUCTION Definitions and general measurement methods of Material Flow Accounts (MFA), followed nowadays in Europe, was harmonized in 2001 in the Eurostat s methodological guide of material flow accounts (Eurostat, 2001). In EU, material flow accounts have been compiled systematically at national level since year Compilation of statistics and measurement methods has been specified in the compilation guide (Eurostat, 2013). So far compiled and published statistics are limited to the so-called direct material flows (DMI, DMC). There has been an obvious need to complement directly measurable material flows with their corresponding indirect fraction, especially for imports and exports, so that global use of natural resources associated to foreign trade is presented more correctly. In accordance with the so called Raw Material Equivalent (RME) measurement, European Commission has proposed Raw Material Consumption (RMC) and its derivative Raw material productivity (GDP/RMC) as key indicators for the sustainable use of resources (European Commission, 2014). Eurostat has recently produced preliminary calculations of raw material consumption for the whole EU for years (Eurostat, 2014a and 2014b), but systematic compilation of national time series are still missing. In the MFAfin workbook, these time series are now produced for Finland. Furthermore, scope of material flow accounts can be extended from raw material flows to include all materials from nature which are transformed or moved by human activity. On this basis, indicators are named Total Material Requirement (TMR) and Total Material Consumption (TMC). Indicators at this level have been produced, for example, in Germany by the Wuppertal Institute and in Austria by the Sustainable Europe Research Institute (SERI), which also maintains a data portal of global material flows (materialflows.net). Also MFAfin contains accounting in accordance with Total Material Requirement and Consumption. RMC and TMC of materials are often considered to be equivalent to the consumption of natural resources. However, consumption of natural resources is a broader concept including for instance water and ecosystem services. In addition, consumption of raw materials can be measured in different ways: consumption of metals can be measured as pure metals, which are for example summed together using their scarcity as a weight (Klinglmair, 2014). Consumption of biotic raw materials (crop, wood, etc.) can be measured by the amount of biocapacity (i.e. production capacity of biomass) their production has appropriated in the entire planet or in own country (e.g. Haberl et al. 2007). These methods, however, are typically restricted to certain types of materials and problem settings. MFA measures material flows by mass, which is a basic physical property common for all materials. While generality is achieved, a loss of qualitative differences of different raw materials occurs. Hence, MFA must ensure that within aggregate indicators, also the shares of different raw materials can be analyzed. However, qualitative indicators based on special characteristics of different raw material groups are needed alongside. 4

5 2 MATERIAL FLOW ACCOUNTING 2.1 Basic concepts Material Flow Accounting (MFA) measures how much human activities extract, transform or move solid resources from nature. In most cases, the national economy is the system under study, although it can be also a region or an industry. The fundamental physical feature of materials is their mass. Thus, in MFA, material flows are accounted in mass units, kilograms or their multiples. Flows of natural resources from the environment can be divided into two basic types: used extraction and unused extraction. Used extraction consist of materials that the economy further processes, while unused extraction are those transformed and moved to obtain the former, but which remain in the environment. Figure 1 shows main material flows of national economy. The national economy utilizes natural resources from its own domestic environment. Similarly, natural resources can be directly taken from foreign nature, for example in the form of fishing in international or other countries territorial waters. In addition, goods from other economies enter the economy as imports and exits from the economy as exports. In general, production of exports requires also imported goods, and some imported goods are exported without further processing (commission business, in which products are first brought to the intermediary country). Domestic Environment National Economy Rest of the world nature Rest of the world economies Figure 1. Material flows of national economy Direct Material Input (DMI) of the economy quantifies essentially material flows from the domestic environment to the economy along with the direct material imports. Additionally, it is possible to extract directly from the rest of the world nature. Domestic Material Consumption (DMC) of the economy is obtained when material flows of exports are deducted from DMI. DMC measures how much material is accumulated within the economy in one year, either stored in built capital stocks, 5

6 inventories and waste landfills; or releases as emissions to air or water. However, materials used indirectly for production of exports remain in DMC, but are not included in actual exported goods. Direct materials flows are asymmetrical in the sense that exports and imports comprises manufactured goods, whereas domestic material inputs are measured in raw material terms. Raw Material Equivalents (RME) of material flows can be achieved when imports and exports of products are measured as the total of all raw materials required along the production chain. When raw material equivalent imports are added to the raw materials extracted from domestic environment, the Raw Material Requirement (RMR) of the economy is obtained. Here, the term for direct material flows, input, has been changed to requirement, because the raw materials used abroad in the manufacture of imports do not enter the economy, but only the products themselves. When enlarging the accounting from direct material flows into raw-material equivalent flows, definition of imports and exports must be extended to encompass immaterial imports and exports. Intangible imports and exports include electricity, various services and tourists consumption in destination countries. Even though electricity and services are per se immaterial, their production requires raw materials. Exports and imports of tourism are included in the national accounts as a sub-item of imports and exports of services, but its physical counterpart is the tourists purchase of goods and services in the destination country. Deduction of raw material use of exports from RMR leads to Raw Material Consumption (RMC), which indicates how much raw materials are needed for domestic final use of products, consumption and capital formation. Total Material Requirement (TMR) and Total Material Consumption (TMC) are achieved when unused flows (unused straw and tops in agriculture, logging residues in forestry, removed topsoil and waste rock by extractive industries and unused soil materials from construction) are added to raw material requirement (i.e used extraction of natural resources). 2.2 Accounting boundaries in national accounts In environmental statistics, the subject is usually limited to the geographic area boundaries (territory principle). The environmental loads generated are measured inside the boundaries. In addition, international transport is mostly excluded from the description. In national accounts instead the residence principle is applied. By Economic unit - the household, company, facility - operation is read in its entirety on the national economy, in which the economic entity has been or intends to be resident for at least one year, regardless of the area where the activity itself takes place (European Communities and others, 2009, Eurostat, 2013). The most significant cross-border region operations are international transport and tourism. Accordance with the resident principle the fuel consumption of the Finnish airplanes and vessels are accounted as fuel consumption of the Finnish economy regardless of where the fuel is consumed or purchased. Similarly, the consumption expenditures of Finnish tourists abroad are included in Finnish consumption and the consumption expenditures of foreign tourists in Finland are counted as foreign consumption. 6

7 In national accounts cross-border operations are recorded in imports and exports. Final consumption expenditure of Finnish tourists abroad and Finnish transport fuel purchases abroad are imports to Finland. Similarly, consumption expenditure by foreign tourists in Finland and foreign purchases of transport fuel in Finland are Finnish exports. In the national accounts reform, which was implemented in Finland and other EU countries in 2014, the residence principle in imports and exports was specified further: imports and exports of goods occur when economic ownership of goods changes between residents and non-residents. This applies irrespective of corresponding physical movements of goods across frontiers (European Communities et al. 2009, Eurostat 2013). A special case is contract manufacturing, where the host company let the contractor company in another country to manufacture products in such a way that the host company acquires the raw materials and also owns the manufactured products. If the raw materials are purchased abroad and the products are sold abroad, they are recorded in the national accounts as imports and exports of the resident country of the host company although physically they do not exceed the frontiers of the host country. In addition, the fee charged by the contractor company for the manufacturing is recorded as imports of manufacturing services. For the foreign trade of the contractor resident country only the exports of manufacturing services are recorded. Along the globalization of the national economies also in Finland the cross-border contract manufacturing has become more common. Because the foreign trade statistics is still based on the physical flows of products, the ownership based recording of foreign trade in national accounts give raise to considerable changes to several figures in the foreign trade statistics. In the MFAfin accounts the accounting boundaries of revised national accounts are applied. 2.3 Classification of raw materials Raw materials are divided into eight main categories: Crops Used extraction: Cultivated crops, also used straw and plant residues; grazing biomass from pastures, cultivated Christmas trees and energy crops; households vegetable production for own use. Fodder crop mass is converted to 15% moisture content. Unused extraction: unused crop residues (straw and other residues). Wild animals and plants Used extraction: Game and natural fish catch measured in live weight. Picking of wild products including berries, mushrooms and lichens. This group also includes reindeer intake of wild plants. Unused extraction: Discarded, died or dying fish. 7

8 Wood Used extraction: Roundwood, fuelwood and forest chips. Wood is converted to 15% moisture content. Unused extraction: Logging residues, including tree stumps and roots, abandoned loggings left in the forests and furthermore net growth of round wood in managed forests. Fossil fuels Used extraction: Fossil fuels include coal, lignite, crude oil, natural gas and peat. Coal is measured as rough or unsorted coal coming from mines. Unused extraction: Overburden and waste rock due to mining of coal and lignite, overburden of peat extraction. Metal ores Used extraction: Used extraction of metals is measured as mined metal ore. Unused extraction: Unused waste rock and overburden. Recovered waste rock and overburden are moved to soil materials. Industrial minerals Used extraction: Industrial minerals are mainly used in the paper industry, chemical and glass industry, and other non-metallic minerals industries with the exception of limestone. Unused extraction: Unused waste rock and overburden. Recovered waste rock and overburden are moved to soil materials. Construction minerals Used extraction: Minerals used for building, including stone and limestone. Unused extraction: Unused waste rock and overburden. Recovered waste rock and overburden are moved to soil materials. Soil materials Used extraction: Soil materials include sand (other than quartz sand), gravel, crushed rock, clay (except kaolin) and other soil materials, also soil extracted due to mining of other minerals, as well as used soil extraction in construction areas. Unused extraction: Unused overburden in extraction of soil materials and unused soil materials excavated in construction areas. The first three compose the group of biotic raw materials, and the rest the group of abiotic raw materials. Eurostat (2013) includes soil materials along with construction minerals. In the MFAfin accounts they are considered separately, as soil materials account for over a half of domestic 8

9 extraction of raw materials and form a clear, separate group. Thus, it is useful to analyze them also as their own group. 2.4 Classification of products Selection of basic data of material flows from different statistics is carried out using own product classification of each statistics. In the accounting system they are compiled into uniform ETTL product classification. ETTL (Envimat Sector Classification of Products) is the product classification of ENVIMAT model, which is used in calculating the parameters of the accounts. ETTL is based on CPA 2008, and it divides the material flows of the economy into 240 products. Correspondence between ETTL and CPA 2008 is presented in MFAfin workbook ETTL_ETOL. 9

10 3 DOMESTIC EXTRACTION 3.1 Crops Statistical data sources: Arable crops Grazed biomass Horticultural crops Christmas trees Honey Household production for own use Natural Resources Institute Finland, Statistics database, Agricultural statistics, Production, Crop production statistics; Natural Resources Institute Finland, Statistics database, Agricultural statistics, Production, Utilized agricultural area; Natural Resources Institute Finland, Statistics database, Agricultural statistics, Production, Horticultural statistics; Finnish Forest Research Institute (METLA), Finnish Statistical Yearbook of Forestry 2014, Table 6.0 Natural Resources Institute Finland, Statistics database, Agricultural statistics, Other, Balance sheet of food commodities; Household Budget Survey 2001, 2006 and 2012, compiled by Statistics Finland (unpublished data) In MFA, used extraction of agricultural resources is measured generally as harvested crops. Most of the information is obtained directly from agricultural crop statistics. Fodder crops instead are converted to 15% moisture in accordance with Eurostat guidelines (Eurostat, 2013). Grazed biomass from pastures and ornamental plant production are however recorded only in terms of surface area and numbers. For these, productions yields per unit or per surface area are estimated. Data of Christmas trees is nowadays included in agricultural production even though in Finland it is estimated that half of the trees is retrieved directly from forests, and half is cultivated. Household production for own use includes home harvest of vegetable gardens. In Statistics Finland s Households Budget Survey, a sample of households is asked the crop size of vegetables produced for own use, which is further converted to represent the entire population. Information is limited to those years that consumption surveys are carried out, most recently in 2001, 2006 and Intervening years are estimated by interpolation. In national accounts, monetary value of household vegetable production is included in household income and consumption expenditure as well as in the value of agriculture production. Crop residues (straws and tops) are estimated from primary harvest using harvest factor. Crop residues are further divided in used and unused fraction. Harvest factor are taken from the numbers estimated in Finnish Greenhouse Gas Inventory (Statistics Finland 2014, ). In Finland, utilization of the residues from arable crops is relatively low, straw is mainly used for animal bedding, and tops of sugar beets for fodder (see Mäkinen et al. 2006, p. 68). Estimated used fraction of residues is 20%, considerably lower than suggestion of 70 % in Eurostat s guide. 10

11 3.2 Wildlife Statistical data sources: Hunting Gathering of wild products Gathering of wild products for own use Reindeer husbandry Fishing Natural Resources Institute Finland, Statistics database, Fishery and game statistics, Structue and production, Hunting; Maaseutuvirasto, Luonnonmarjojen ja sienten kauppaantulomäärät vuonna 2015, Maaseutuvirason raportteja ja selvityksiä Household Budget Survey 2001, 2006 and 2012, compiled by Statistics Finland (unpublished data) reindeer_economy/timeline/live_reindeers_samiarea Natural Resources Institute Finland, Statistics database, Fishery and game statistics, Structue and production, Fishery total; Game In MFA, wild animals are measured as mass of live animals, live weight. However, Finnish game statistics report numbers of animals and quantities of derived meat (carcass weight). Here, number of caught animals is used, and they are converted to live weight using average live weight of each species. Catch statistics are compiled by Natural Rersources institute Finland (Luke). Gathering of wild products Gathering of wild products are mainly edible plants, berries and mushrooms, but also lichens collected for ornamental purposes. Only gathering products purchased by companies have been recorded, but most of wild berries and mushrooms are picked up for own use. In Statistics Finland s Household Budget Survey, a sample of households is asked the amount of wild berries and mushrooms that has been picked up for own use, which is converted to represent the entire population. Household Budget Survey has been carried out most recently in 2001, 2006 and Intervening years are estimated by interpolation. In national accounts, monetary value of households gathering of berries and mushrooms is included in household income and consumption expenditure as well as in the value of forest production. Reindeer husbandry Half of reindeer food intake is assumed to be forage, and half grazing lichens and other plants, beard moss and other natural plants. Taking into account reindeer annual food requirements and lichen nutritional value, an annual requirement of wild plants for a reindeer is 860 kg at 15 % moisture content (see Nieminen et al. 1998). Fishing In the fisheries statistics of Luke, fish catch is measured in live weight, so the catch data can be directly considered as used extraction of natural resources. Fisheries statistics also include recreational fishing catches of households for own use. Unused extraction of fishing consists mainly 11

12 on discards, whose share is estimated to be 5% of the prey. Fish farming is not included in the used extraction. Fodder of fishery is already encompassed in other domestic and imported raw materials. 3.3 Wood Logs, pulpwood and fuelwood Logging residues and stumps in energy generation Abandoned loggings Net growth of managed forests Natural Resources Institute Finland, Statistics database, Forest statistics, Structure and production, Roundwood removals; Natural Resources Institute Finland, Statistics database, Forest statistics, Economy, Volumes and prices in energy wood trade; Finnish Forest Research Institute (METLA), Finnish Statistical Yearbook of Forestry , Chapter 5, text Statistics Finland, National accounts, unpublished background data Roundwood mass conversion According to Eurostat MFA guide (Eurostat, 2013), round wood is measured including the bark, and is converted to mass units at 15 % moisture content. Eurostat general guidelines suggest conversion factors of 0.52 t/m3 for conifers and 0.64 t/m3 for deciduous trees. However, here smaller coefficients are used, 0.45 for conifers and 0.58 for deciduous trees. These figures are consistent with the Finnish Statistical Yearbook of Forestry 2014, tables 1.0 and 1.29, in which Finland s forest resources by wood species, measured as stem wood, are expressed in cubic meters in the first table, and in tonnes of dry matter in the second one. Dry mass density factors of 0.38 t/m3 for conifers and 0.50 t/m3 for deciduous are obtained. When these are calculated in 15 % moisture content, factors used here are obtained. Fuelwood and wood chips Natural Resources Institute Finland (LUKE) compiles statistics of wood removal, where wood is presented as stem wood. Thus, fuel wood category includes both fuel wood in small-scale housing and the share of stem wood in wood chips. In addition, logging residues and stumps and roots that end up as forest chips can also be obtained. When logging residues and stumps and roots obtained from the statistics of energy use of wood are added to this, total used extraction of fuelwood and wood chips is encompassed. Logging residues and abandoned loggings Logging residues, or unused extraction of wood, is equal to the total biomass of felled trees minus the biomass retrieved from forests. Residues of felled trees (tree tops and branches with needles and leaves, stumps and roots) are calculated from the division of the total biomass of living trees in Finland s forests by tree species (Finnish Statistical Yearbook of Forestry 2014, table 1.29). Abandoned logging is felled stem wood that for some reason is left in the forest, and thus, is part of the logging residue. The amount of abandoned logging has been estimated in the context of the National Forest Inventory. The amounts are presented in the text section of chapter 5 in the Finnish 12

13 Statistical Yearbook of Forestry 2014, in the balance of total drain from year 2008 onwards. The ratio of abandoned loggings to the removal of saw logs and pulpwood was 16% during years , while in year 2008 it was 14% and in %. In MFAfin accounts, for years the estimated amount of abandoned loggings is taken directly from the balance sheets. For the period it is assumed to be 16% of the removal of saw logs and pulpwood. Net growth of managed forests In national accounts the value of the net growth of round wood in managed forests valued at stumpage prices are added to the gross domestic product. As a background data, the net growth of round wood is estimated at cubic meters. In MFAfin this background data provided by Statistics Finland is used. The net growth is interpreted as unused extraction. The cubic meters are conversed into tonnes by the round wood conversion factors and expanded further to the net growth of total wood biomass by the wood residue factors. 3.4 Fossil fuels Statistical data sources: Fuel peat Statistics Finland, Energy 2016 Table Service, Table 2.7 Other peat Finnish Forest Research Institute, Finnish Statistical Yearbook of Forestry 2014, Table 9.9 Peat is classified in the Eurostat guide as fossil fuel (Eurostat, 2013). Energy peat (Milled and sod peat) as well as environmental and horticultural peat production statistics is available in the Finnish Statistical Yearbook of Forestry Production volumes are in cubic meters, which in MFAfin are converted to mass units at 15% moisture, consistently with the mass conversion of wood. Sod and milled peat dry matter weights per unit of volume are 175 and 233 kg/m3 (Alakangas et al. 2011) and for environmental and horticultural peat on average 75 kg/m3 (Peat industry, 2009). At 15% moisture, conversion factors are respectively 206, 274 and 88 kg/m3. Unused extraction of peat production is removed topsoil and drainage, which are presumed to be 5% of the actual amount of peat production. In the production of fuel peat, the amount of removed topsoil that is considered to be unused extraction is lower, because the surface peat can be used as horticultural peat. 3.5 Minerals and soil materials Within this category, data is compiled for metal ores, industrial minerals, construction minerals and use of soil materials. This is because data from different sources is partly crossing. 13

14 Statistical data sources: Long time series Kaiva.fi, Kaivannaisala, Tilastointi Recent years Mining The Finnish Safety and Chemicals Agency (Tukes), Statistics of the mining industry Panning Gold Prospectors Association, monitoring reports of mechanized gold mining Gravel, crushed rock and Registry of earthen materials, SYKE, Infra ry other rock aggregates Unused soil materials Statistics Finland, Waste Statistics from construction Metal ores and other minerals Mining activities considered here are those regulated by the Mining Act of Finland. These include metal, limestone and industrial mining, as well as soapstone mines from quarrying of building stone. Currently, mining data are collected by The Finnish Safety and Chemicals Agency (Tukes). Published mining statistics, include ore and total extractions of mines. Extraction of mineral ore is regarded as used extraction in MFA. The difference between total material extracted and ore extraction is waste rock. In addition, removing topsoil causes overburden. Part of the overburden and waste rock is utilized in tailings ponds and as a base for route construction in mine sites. Recovered waste rock and overburden materials are considered as used extraction, but in material flow accounting they are transferred to the construction sector s use of soil materials. Unrecovered waste rock and overburden, which are also used for mine filling, are considered as unused extraction of mining. Furthermore, remaining tailings from ore enrichment can be utilized. Amounts are small, however, and they are already included in the used extraction of ore. Mining statistics don t encompass data of mines overburden or utilization of residues of extraction. However, these are included in the unpublished basic data of the statistics. In Thule Institute, basic data for material flows of mining was compiled for years (Härmä et al. 2005). From 2006 onwards, information has been compiled by Statistics Finland (Statistics Finland, 2014). Pyhäsalmi mine produces alongside copper and zinc significant amounts of sulfur concentrates, unroasted iron pyrites. Sulphur concentrate is transferred from the production of metal ores to the production of industrial minerals. On the other hand, nickel concentrate is gotten in talc production. It is converted to ore, and transferred from industrial minerals to metals. Small-scale mining of gold have been collected by the Gold Prospector Association since Extraction of soil materials In Finland, extraction of soil materials and rock aggregates that are not included in the mining Act, are regulated by the Land Extraction Act. Permit information for activities regulated by Land Extraction Act, and annual extraction amounts are recorded in NOTTO register, from which yearly summary is further made by the Finnish Environment Institute (SYKE). Amount of extraction and stored waste rock of other building stones (than soapstone) are gotten from the data compiled by SYKE. 14

15 Used extraction of gravel, crushed rock and other soil materials is obtained from the data compiled together by SYKE and Infra Association. Data includes also the gravel and crushed stone material from construction areas that is not included in NOTTO register (Rintala & Lonka 2013, 47). Unused extraction of construction is extracted soil from construction areas which have no further use. These have been estimated in Statistics Finland s waste statistics (Statistics Finland, 2014). 15

16 4 IMPORTS & EXPORTS 4.1 Direct imports and exports in mass units Basic data of imported and exported goods is mostly retrieved from Foreign Trade Statistics, compiled by Finnish Customs and available at CN8 product level in Uljas database, where all goods but electricity are measured in kilograms. In year 2010 over 8000 products at CN8 level were imported and more than 6500 exported. At CN8 level, the quantity data for more than 40 imported and 130 exported goods is suppressed. These quantities have mainly been estimated utilizing the different hierarchical levels of CN classification and additionally, the data of SITC classification of corresponding product groups. Using Eurostat s correspondence tables between CN8 and CPA (Eurostat 2015), the CN8 products have first been connected to CPA classification, and then further to ETTL classification. Import and export data has been gathered at quite detailed level, distinguishing 118 products. At chosen level of classification, data confidentiality is no longer an issue. Statistics Finland supplied the data about the main changes caused by the cross-border contract manufacturing to the imports and exports by the ETTL product groups. In Finland there are recently three companies delivering significant manufacturing services to foreign companies and four companies ordering significant manufacturing services abroad. In the MFAfin workbook the changes made to the time-series of the foreign trade statistics are not specified for data protection reasons but only the changed time series are presented. However, one particular case affects significantly the accounting of material flows of the Finnish imports and exports and the changes can be picked up from published data (foreign trade statistics, industry production statistics). In Finland the copper and zinc manufacturing in industry NACE 244 is contact manufacturing to a foreign company. Thus imports of copper and zinc concentrates of the foreign trade statistics are left out from the imports accounted in accordance of the national accounts and correspondingly all the copper and zinc concentrate produced by the Finnish mining companies are recorded as exports. Furthermore the exports of manufactured copper and zinc of the foreign trade statistics are to be left out and their imports grow by the difference of their production in the industry production statistics and exports in the foreign trade statistics. Wood in the rough (ETTL ) is measured in Foreign Trade Statistics in fresh weight tonnes and solid cubic meters. Until 2004, round wood was measured including the bark, and thereafter without. In the Finnish Statistical Yearbook of Forestry 2014, tables 11.1 and 11.6, roundwood imports and exports are accounted consistently including the bark, in cubic meters. Therefore, roundwood imports and exports have been replaced in the time series by data from the Finnish Statistical Yearbook of Forestry and converted to 15% moisture content. Imports are mainly from neighboring regions of Russia, which explains why domestic conversion factors have been used also for imported wood. In the time series, imported electricity has been measured in gigawatt hour (GWh). It is deducted from the direct material input of imports, but it is needed when evaluating the indirect material input of imported electricity. 16

17 At the end of the product classification of Foreign Trade Statistics there is class CN 99, Unspecified, which includes small consignments, share of trade under the threshold value, as well as non-notified transactions. Quantity information is reported only for small consignments. Share of Unspecified for Finnish exports in 2010 was 3% and for imports 1.4%. Value of unspecified imports and exports was converted to the price of year 2010 using national accounts price indexes for imported and exported goods. Their direct amount of material was estimated choosing 30 of the classified imported and exported goods, mainly final products, to which average kg/eur conversion factors were calculated for the values of year Imports and exports of services Imports and exports of services don t imply direct material input. However, production of services requires indirect material inputs. To derive indirect material input, value change of imports and exports of services at constant prices is used as a measure for their physical volume. Imports and exports of services are further divided into service products and tourism services. Imports of tourism services include Finnish tourists consumption expenditure abroad, while exports of tourism services encompass foreign tourists expenditure in Finland. To estimate material content of tourism services, information regarding the product structure of tourists consumption expenditure is needed. Statistics Finland and the Finnish Tourist Board conduct an annual border interview survey to foreign travelers (Statistics Finland, 2015). Data of unpublished, detailed specification of products for 2010, needed in the compilation of national accounts, was obtained from Statistics Finland. Similar specification is not available for the Finnish households tourist expenditure abroad. However, the National Supervisory Authority for Welfare and Health (Valvira) compiles data of Finnish tourists imports of alcohol and tobacco based on annual survey (Valvira, 2011). Finnish tourists consumption expenditure was obtained assuming that the consumption structure is otherwise the same as the foreign tourists consumption expenditure in Finland, but the structure of consumer good purchases was matched to the data of purchases of alcohol and tobacco products. 4.3 International transport According to the principles of national accounts, fuel purchases of Finnish transport companies abroad are considered imports, whereas foreign companies purchases of fuel in Finland is included in Finnish exports. These must be included in the material flows of imports and exports. Data has been obtained in energy units for years from yet unpublished Energy Accounts of Statistics Finland. Purchases previous to 2008 are estimated using data of Statistics Finland s balance of payments accounts. 4.4 Used and unused flows of imports Used and unused extraction of imported goods encompasses how much raw material extracted from nature is required in total along the whole production chain of each product. Mainly, the data source used is the international life cycle assessment data bank Ecoinvent. Missing data is complemented with available information from different sources, inter alia, for food and textiles. 17

18 Because the life cycle assessment information applies to individual products, data were first collected at detailed level, including 430 products, and then aggregated to 118 imported products of MFAfin classification level by using import shares of year From Ecoinvent, information of resource use for 240 products was gathered. Initially, data were retrieved from Ecoinvent version 2.1, and later complemented by version 3.0 for vegetables and fruits. At the calculation level of 430 product level, many largish product groups had to be approximated with one Ecoinvent product or product mix. Especially metal products and machinery and equipment included these product groups. In Ecoinvent, for important raw materials there are also inventories specified according to the geographical origin. When it was possible to separate the products by origin, a product specification of Finnish imports by country of origin was taken from Ecoinvent. Thus, data of life-cycle resource use of crude oil produced in Norway and Russia was obtained from Ecoinvent, which was combined using import shares of both countries as weights. Similarly, the life cycle data of gas produced in Russia was obtained from Ecoinvent. In Ecoinvent, there is information on how much raw wood, fossil fuels as well as metals and other minerals are needed for producing unit of each product (kg, m3, kwh). Metals and other minerals have been measured as pure metals and minerals in the soil, so they also include losses occurring in ores enrichment. For used extraction of MFA, metals and minerals have to be measured as the ore extracted. Ore extracted can be estimated using metal ore concentration figures (grade %), which are used generally in the analysis of ore resources of the mines. The amount of unused extraction, i.e. waste rock, can be estimated with the strip ratio, which is also commonly used (see annex). The strip ratio is the ratio of waste rock to ore mined. Concentration grades and strip ratios used in MFAfin are detailed in annex for 86 raw material types of Ecoinvent. Figures are presented as world average values as well as average values of concentrates directly imported to Finland, when these differ from world averages. In Ecoinvent, numerical codes of fossil fuels, metals and other minerals are presented in random order. Hence, to obtain manageable order for all 86 raw materials, a hierarchical classification of raw materials, ERC (Envimat Resource Classification), was developed, in which the first digit identifies the main category of raw material of MFAfin. In Annex s table, biotic raw materials categories that start with zero, have been left out: 01 Crops, 02 Wildlife and 03 Wood. Unused extraction of fossil fuels, expressed as strip ratio, is obtained from the data bank of global material flows, maintained by the Sustainable Europe Research Institute (SERI) (SERI & WU, 2014). Ore grades are calculated mainly using the global metal mining data of Raw Materials Group (RMG). Calculations take into account allocation of ore to different metals from coupled production. Rare earth elements are assumed to have a uniform grade of 5%, since they tend to appear together. In electronics, small quantities of used special metals, such as Gallium, Indium and Rhenium, are obtained when processing aluminum, zinc and molybdenum, so the estimation of their used and unused flows is problematic. Grade and strip ratio of uranium is calculated considering that in 2010, already 42 % of uranium was produced using in situ leaching. In this case, the obtained uranium solution contains only about 20 % of ore impurities, and it must also be taken into 18

19 consideration that uranium in soil is uranium oxide U3O8. Material flows of actual uranium mines have been calculated using material flows of 10 biggest uranium mines. Data for other minerals has been sought from different mining sector sources. Material flows of kaolin, which is an important imported good for Finland, are based on the kaolin report of British Geological Survey (2009). Ore concentrations for many minerals have been specified also in Ecoinvent. Limestone and talc strip ratios are calculated as the average of Finnish limestone and talc mines. Unused flows or strip ratio is not included for example in RMG s mining data. Strip ratios are very rough estimates, based on statistics of different minerals ratio of underground mines to strip mines, and for example information obtained from environmental reports of mining companies. Mines behind metal concentrates and minerals that are directly imported to Finland are more easily identified, and for them, strip ratios are more accurate. How much of the metals that are included in products have to be extracted from nature, depends on recycling rates of metals. In Ecoinvent it is assumed that the share of recycled steel in steel products is generally 37 %, the share of recycled copper in copper products is 44 % and for aluminum products the recycled share is 32 %. For biotic raw materials, in Ecoinvent only round wood is included. In Ecoinvent, crops are not considered natural raw materials and consequently, they are not included in raw materials inventories. Agricultural crops included in Ecoinvent are cereals, oilseeds, potatoes, and in Ecoinvent version 3.0 also vegetables and fruits. Material flows of fertilizers and fuels used for production of crops are obtained from Ecoinvent. Biotic used extraction of crops is obtained, when used seeds are added to a kilo of crop. The share of seeds was obtained from FAO statistics (FAO, 2014). Because seed production requires seed etc., adding the production of seed to the used input, per kilo of crop, is obtained as a solution of a geometric series with coefficient [1+1/(1-s)], where s denotes the ratio of used seeds to the yield. As the harvest varies each year, seed ratio is calculated as a 5-year average. Data for material flows of coffee cultivation were obtained for coffee beans produced in Brazil, from Coltro et al. (2006), and for material flows of cultivation of cocoa powder for cocoa beans of Ghana from Ntiamoah & Afrane (2008). Livestock is lacking in Ecoinvent almost completely. Only sheep wool production is inventoried. Direct import of livestock products slaughter, raw milk, eggs is very low, but livestock material flows are needed for assessing material flows of processed food. MFAfin used results of a study funded by the United Kingdom Department for Environment Food & Rural Affairs (Defra) about environment impact assessment of agricultural production (Williams et al. 2006). From the study material flows in the UK for the production of slaughtered animals (cattle, pigs, sheep, poultry), raw milk and eggs were obtained. Despite UK is not the main country of origin for Finnish processed meat imports, it is however located in a milder climate than Finland. Finland s imports of raw fur, produced in fur farms, are quite high, despite the fact that domestic fur production is quite large as well. Imported furs are mostly re-exported through international fur auctions. Fur production material flows were estimated according to material flows of domestic fur production (Silvenius et al. 2011). 19

20 The majority of Finland s imported fresh fish is from Norwegian salmon farming. Norwegian salmon farming material flows were obtained from the Nofiman report of the Norwegian Food research Institute (Ytrestøyl et al. 2011). Life-cycle estimates for material flows of deep-sea fishing of tuna, coalfish and herring were obtained from the Danish LCA food data bank (Nielsen et al. 2003). This was used as raw material data of processed fish products. Food industry products available in Ecoinvent are vegetable oils and their by-products (oil cakes and animal fats used as fodder). These form the largest item of Finland s food imports. The resource use of meat, fish, dairy and bakery products was estimated by adding energy consumption of processing to the raw material use of agriculture and fishery. For imports of drinks, life cycle material flow estimates for beverages and soft drinks were obtained from Amienyö et al. (2013), for beer from report of The Brewers of Europe (2002) and for wine from Gazulla et al. (2010). Material flows for cognac was estimated assuming it to be distilled wine, and for whiskey and other spirits assuming them to be distilled products of beer. For textiles and clothes material flow estimations, the main problem is that in trade statistics at CN classification, they are not classified by their material, but by their purpose of use. Material flows are significantly affected by the fibers of which textiles and clothes are made. According to statistics compiled by FAO, world textile and fiber production in 2010 was distributed as follows: 60% synthetic fibers, 33% cotton, 4% viscose fiber and 2% animal wool. The majority of synthetic fibers, about 80%, is polyester. (FAO 2013). Life-cycle inventories for polyester, cotton, viscose and wool fibers can be found in Ecoinvent. In MFAfin it is assumed that the fiber distribution of imported textiles and clothing follows the distribution of world production. Ecoinvent fiber information is complemented with assumptions about material loss and energy consumption in textile and clothes production. For material use included in the imports of service products, Eurostat s product-specific material flow coefficients calculated for the imports of the whole EU were used (Eurostat, 2014). These were applied to the structure of Finnish imports of service products in Similarly for imports of tourism service products Eurostat coefficients were used. 4.5 Used and unused flows of exports When domestic and imported material flows are estimated, the ENVIMAT model produces used and unused material flow coefficients per product per euro in Export coefficients of products have then been converted to coefficients calculated per kilogram using the value and quantity data of Foreign Trade Statistics. For services and tourism exports, the coefficients are obtained directly from ENVIMAT model, calculated per euro. ENVIMAT model includes 230 products and 147 industries, as shown in MFAfin worksheet ETTL_ETOL. The model calculates the direct and indirect raw material use included in the products of each industry using Leontief inverse. The model solution includes assumption that each product of an industry measured in euros is produced with the same average technology of the industry. Thus, the sector s direct and indirect use of raw materials is distributed among products following their share of monetary value. The same assumption is widely used in life cycle 20

21 assessments for the cases of co-production of multiple products. When the raw material coefficients kg/euro, are converted to coefficients measured per kilogram of product, kg/kg, the relative magnitude of product coefficients is determined by their prices. If same product is produced in more than one industry, the raw material factor is determined as a weighted average of each producing industry, according to what is the share of each industry of the production of the product. Some imports are directly re-exported, so raw material use of imported goods also affects the total raw material use of exports. The share of re-exports is relatively high for example in computers (99% of total product exports), fur (17%) and motor vehicles (17%). 4.6 RME coefficients Coefficients of imports and exports by material type are in MFAfin s worksheet RMEcoef. Below the coefficient tables there are also product distributions used estimating the imports and exports of unspecified goods, services, and tourism. 4.7 Special cases: water and by-products Material coefficients for imported and exported products are generally higher than one. This is natural, because usually the production process uses more materials than what is actually included in the product. There are however two product groups, whose material coefficients are smaller than one: soft drinks and by-products. Water of soft drinks (ETTL 110b) encompasses often more than 99 % of product s mass. Thus, water is included in the mass of product, but not in the use of raw material. Even though during the manufacturing process solid raw materials are used (f.ex. as energy) many times more than what is the product s actual share of solid raw material, the share of solid raw material use remains smaller than the total mass of product. By-products typically appears in the food industry (ETTL 101b, 102b), vegetable oil production (104b), wood milling waste (161b, 161c) and waste recycling (381b, 381d and 381e). In life cycle assessment, for example in Ecoinvent, the financial allocation method is generally followed. If the process produces several products, according to financial allocation method, raw material use of the process is distributed to products following their economic value instead of their physical amount. When the price per kilogram of the by-product is low, only a small part of process raw material use is allocated to it. Recycling of waste is characterized by the value of materials being zero. Thus, for recycled products raw material use is allocated only during the recycling process and transportation. The financial allocation is also recommended in the Eurostat s manual for allocating ore to different metals, when the mine produces several metals. Similarly, the ENVIMAT, which is a monetary input-output model, allocates sector s input use to different products of the sector in proportion to their value. 21