This study has two primary objectives and one secondary objective.
- To assess the economic impact, in terms of gross output, net output and employment arising from forest establishment and management, and harvesting. This assessment includes both the direct economic impacts from these activities and indirect impacts arising from supplier linkages and induced consumption expenditure from income generated in these activities.
- To determine the economic impact of downstream processing, including distribution and marketing of English produced timber, again capturing the direct, indirect and induced impacts. The input-output linkages are quantified for each stage, from the initial production to final consumption. Multipliers for each stage are estimated at the local and English level, capturing the direct, indirect and induced effects.
- To examine the potential impact of five alternative scenarios:
(a) Removal of the forestry sector in England.
(b) 50% increase in English timber harvesting.
(c) Substitution of English timber for imported timber.
(d) Removal of grant aid from English forestry.
(e) A doubled labour productivity in forestry activities.
This study investigates the linkages between all aspects of economic activity reliant on forestry production and processing in England. The output of this investigation is the quantification of forestry's contribution in terms of net output, gross output and employment to both the national and rural economies. Recreational activities have been excluded from this assessment and will be the object of another study.
Methodology and survey approach
Economic impacts are distinguished for England, local economies and rural areas. "Local" is here defined as 20 miles radius from the main place of work (the forest). The rest of England was split up between "rural" and "urban", where rural was defined as any settlements under 10,000 inhabitants.
One novelty of this research project lies in the fact that economic linkages are assessed separately for each type of forestry activities, that is to say "establishment", "maintenance", and "harvesting". The economic impact and multiplier analysis was also carried out for timber processing which includes sawmilling, wood based panels, and pulp, paper and paperboard.
The analysis was also undertaken for the forestry industry as a whole and for the following four forest types:
(a) Productive High Forest: Includes conifer and broadleaf productive woodlands. Excludes coppice and other minority activities. Forests managed by FE are included into this category.
(b) Traditional Estate: Large privately owned farm and/or woodland consisting of a mixture of wood types. May have included a sawmill and a designated labour force.
(c) Small Farm Woodland: Woodland under 10 ha., or for which the owner receives or has received Farm Woodland Premium Supplement scheme. If greater than 10 ha include in Productive High Forest.
(d) Community Forest: Woodland for which the owner receives or has received Management Grant for Access or/and Community Woodland Supplement.
Data to estimate the input-output linkages through the supply chain were collected through a company survey. Private owners and Forest Enterprise, management companies, contractors, and processing companies were sent a postal questionnaire and interviewed face-to-face. Data collection from their suppliers was undertaken by telephone.
Key information gathered was primarily quantitative. The postal questionnaire focused on employment, financial details, activities, and breakdown of purchases. The follow-up questionnaire was used to obtain more qualitative information on timber sales and purchases, and business trends and future plans.
Key findings from the multiplier and impact analysis:
- A multiplier is a parameter expressing the ratio of the total impacts (employment, net output, gross output) to the direct impacts. For example, with an employment multiplier of two for England, if there are 1,000 direct jobs in Industry A, the total effects (i.e. direct, indirect and induced) of Industry A on employment are 2,000 jobs. In the event of the creation of another 100 jobs in Industry A, the total effect on employment would be an additional 200 jobs in England.
- The total gross output generated by the forestry and processing industries in England amounts to £2,939 million, 37% of which is attributable directly to the forestry and processing activities (£1,085 million). The rest is indirect and induced. The total gross output multiplier is 2.71.
- Direct estimated forestry and processing net output amounts to £380 million. The net output multiplier is 2.63, meaning a total net output of £1,000 million.
- The total number of jobs (FTEs) supported by the forestry and processing activities in England is estimated to be 34,100, 84% more than the number of jobs attributable directly to the forestry and processing sectors (18,500). The total employment multiplier is 1.84.
- 94% of the direct employment impact (equal to 17,500) falls within the local area as defined. The local employment multiplier (1.36), and the rural + local employment multiplier (1.43) are much lower than the total (i.e. England) employment multiplier (1.84).
- The estimated employment multipliers for processing are much greater than for forestry (respective multipliers of 2.49 and 1.40). The net output and gross output multipliers for processing are also much greater than those for forestry.
- Amongst forestry activities, harvesting accounts for a large proportion of direct jobs, 5,200 compared with 3,600 in maintenance and 2,200 in establishment. It also generates larger employment multiplier effects than the other two forestry activities with a multiplier of 1.49 compared with 1.29 for maintenance and 1.38 for establishment.
- Within the different forest types, productive and traditional estate forests account for the majority of jobs generated direct (respectively 4,600 and 3,400) compared with 1,800 and 1,200 in small farm and community woodlands. The employment multiplier effects are also greater in the former two. Moreover, the employment multiplier for softwood is significantly higher than for hardwood, 2.63 and 1.38 respectively.
Timber impact simulations:
- The importance of the forestry and processing industries is demonstrated through a series of simulations. These simulations are based on different assumptions which set a framework in which the economic significance of English forestry and downstream activities can be gauged. These assumptions are not necessarily representative of the foreseeable picture of the forestry and processing industries.
- The removal of all forestry activities would impact quite dramatically on the English economy since, besides the loss of direct employment, gross output and net output effects for forestry, some processing activities are partially dependent on the supply of domestic (i.e. English) timber. The total impacts of such a removal amount to 16,500 jobs lost, a decrease of £914 million in gross output and total English net output diminished by £400 million.
- A 50% increase in English timber harvesting would add another 3,900 jobs to the English economy, £270 million supplementary gross output and an extra £103 million net output.
- Substituting English timber for imported timber would also positively impact on the forestry and processing industries in the English economy. For a 20% substitution level, an additional 1,500 jobs would be created, an extra £108 million gross output generated, and an additional £41 million net output produced. The higher the substitution level, the higher the benefits.
- In order to measure value to grant-aid, its removal to private woodland owners and farmers was assumed and it would result in an immediate loss of 900 jobs in the establishment sector. The total effects on the wider economy is much greater: 1,300 jobs lost, £59 million gross output lost, and a £28 million decline in net output. Longer-term effects of this removal would be very significant because of the impact on timber harvesting.
- Finally, a doubled labour productivity in forestry activities would result in some 5,500 jobs being lost in the sector, with another 2,100 jobs lost as a result of induced and indirect effects. This rise in labour productivity would also result in an increase in volume of timber harvested, leading to jobs creation (1,500 jobs for a 20% increase), to additional gross and net outputs.
Research carried out for Forestry Commission by:
Copies of the full report can be requested from Jackie Harper (firstname.lastname@example.org k)
Queries on the studies should be directed to Alastair Johnson (email@example.com .gov.uk)