1. Output information


 National Statistic   
 Frequency  Annual
 How compiled  Various sources
 Geographic coverage  UK
 Last revised  4 October 2019

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2. About this Quality and Methodology report

This quality and methodology report contains information on the quality characteristics of the data (including the European Statistical System five dimensions of quality (PDF, 3MB)) as well as the methods used to create it.

The information in this report will help you to:

  • understand the strengths and limitations of the data

  • learn about existing uses and users of the data

  • understand the methods used to create the data

  • decide suitable uses for the data

  • reduce the risk of misusing data

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3. Important points

This report aims to provide users of the environmental goods and services sector (EGSS) statistics with information on the usability and fitness for purpose of these estimates.

The EGSS statistics form part of the Office for National Statistics (ONS) UK Environmental Accounts.

This is part of a set of reports covering UK Environmental Accounts estimates. There is quality and methodology information available for other UK Environmental Accounts estimates, including:

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4. Quality summary

Overview

The UN System of Environmental-Economic Accounting (SEEA), together with the UN System of National Accounts (SNA) and the European System of Accounts (ESA), provides a framework for producing internationally comparable statistics on the environment and its relationship with the economy. The Office for National Statistics (ONS) is responsible for reporting annually on this basis to Eurostat.

Following this international framework and after considering expert advice, the UK has identified that there are probably 17 different areas of activity1 that make up the overall environmental goods and services sector (EGSS) of the UK economy.

A range of statistics is published in the UK Environmental Accounts on the size of the EGSS:

These are all made available for download as Microsoft Excel files from the Environmental Accounts page of the ONS website.

A wide variety of data sources is used to compile EGSS estimates. A starting point for estimating EGSS output, gross value added and exports are National accounts supply and use tables. Estimates of employment are largely taken from the Business Register and Employment Survey.

Where it is not possible to provide EGSS estimates from these sources a range of other data sources are used such as the Annual Business Survey, Inter-Departmental Business Register and Environmental Protection Expenditure Survey. Because of the inability to estimate accurately specific EGSS activity from available UK data sources, estimates for some specific activities within the EGSS2 should be treated with caution.

Users and uses

(Who is using the data and for what purposes.)

Owing to its compatibility with the boundaries and definitions used within the UN System of National Accounts (SNA), the EGSS data provide a useful input to economic analysis.

In addition to the mandatory requirement to supply data to Eurostat, the potential uses for data come from a variety of international organisations, UK and other governments and the research community.

Improving the timeliness and quality of all data provided regarding the EGSS has been the focus of a recent Eurostat grant, the recommendations from which are currently being implemented in compilation of EGSS estimates for 2017. These will likely be published by Eurostat in early 2020.

Notes for: Quality summary
  1. Waste, production of renewable energy, recycling, wastewater, water quantity, environmental charities, managerial activities of government bodies, management of forest ecosystems, insulation activities, in-house environmental activities, organic agriculture, environmental-related education, energy saving and sustainable energy systems, environmental consultancy and engineering services, environmental-related construction activities, environmental inspection, and control and production of industrial environmental equipment. Although previously included as EGSS activities, activity related to second-hand shops and the wholesale of scrap are no longer deemed to be part of the EGSS per SEEA guidance.

  2. Energy saving and sustainable energy systems, environmental consultancy and engineering services, environmental-related construction activities, environmental inspection, and control and production of industrial environmental equipment.

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5. Quality characteristics of the EGSS data

Geography

Estimates are available at UK level and not further disaggregated by geography. “UK level”, in this context, is on a “residency” basis – that is, including activity of UK-registered businesses that may take place outside of the UK, excluding activity in the UK of businesses that are registered abroad.

Coherence and comparability

Within the UK, the Low Carbon and Renewable Energy Economy (LCREE) Survey, although developed to fulfil UK policy rather than international requirements, provides information on turnover, employment, imports, exports, capital acquisitions and disposals within a similar area of the UK economy.

General trends demonstrating growth in this area (the “green economy”) can be observed from both LCREE and environmental goods and services sector (EGSS) estimates. Using available LCRE estimates within the EGSS framework is currently being implemented in the compilation of EGSS estimates during 2019. This is as a result of recommendations made following investigatory work to improve the quality of EGSS estimates, which was undertaken by the Office for National Statistics (ONS) funded by a Eurostat grant.

Internationally, the ONS provides EGSS estimates to Eurostat in line with System of Environmental-Economic Accounting (SEEA) guidelines, which allow comparability of EGSS accounts across different European countries. Compilation methods of the EGSS accounts vary across EU countries depending on what specific activities are deemed to be economically significant within the agreed framework, which potentially reduces the comparability between other countries.

A time series of EGSS estimates is currently available back to 2010, therefore trends and patterns can be established over time to, for example, help monitor progress towards a green economy within the UK. The ONS continuously looks to make methodological improvements based on international best practice, changes to reporting requirements, data revisions from suppliers and so on. This means that while the whole time series is always subject to being revised, the data are comparable over time.

Timeliness and punctuality

EGSS estimates are supplied to Eurostat each year in line with Y-21 regulatory requirements. Eurostat then releases the estimates in their EGSS database alongside data for other countries.

EGSS data are published within the UK Environmental Accounts (EA) release in June each year, currently on a Y-3 basis.

The release, and any articles associated with the EGSS estimates, are pre-announced on the ONS website. Previously released datasets are accessible on the ONS website.

Concepts and definitions

The UN System of Environmental-Economic Accounting (SEEA), together with the UN System of National Accounts (SNA) and the European System of Accounts (ESA), provides a framework for producing internationally comparable statistics on the environment and its relationship with the economy. The ONS is responsible for reporting the information to Eurostat on an annual basis.

Although there is no commonly accepted definition of the green economy, the EGSS framework, adopted under the SEEA, provides a set definition and specification of activities that start to represent the green economy. The EGSS is made up of areas of the economy engaged in producing goods and services for environmental protection purposes, as well as those engaged in conserving and maintaining natural resources.

Excluded from the scope of EGSS are goods and services produced for purposes that, while beneficial to the environment, primarily satisfy technical, human and economic needs or that are requirements for health and safety. Goods and services related to minimising the impact of natural hazards and those related to the extraction, mobilisation and exploitation of natural resources are also excluded.

The estimates of output, gross value added, employment in full-time equivalents and exports are presented in the EGSS estimates disaggregated by industry (Standard Industrial Classification: SIC 2007) and by Classification of Environmental Protection Activities (CEPA) and Classification of Resource Management Activities (CReMA) categories.

Notes for: Quality characteristics of the EGSS data
  1. Y-2 in this context refers to the amount of delay in the data from the reference period to the provision, For example, 2017 data are provided to Eurostat in 2019.
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6. Methods used to produce the EGSS data

A general methodology for producing environmental goods and services sector (EGSS) accounts has been developed by Eurostat, as outlined in the Eurostat EGSS Handbook 2016 edition (PDF, 2.91MB) and the Eurostat EGSS Practical Guide 2016 edition (PDF, 2.58MB).

However, the handbook and practical guide acknowledge that each member state will need to adapt the methodology to meet its country’s needs, in line with data sources available. Owing to the large array of data sources used to compile data for 17 different EGSS activities, the information in this section provides a high-level summary of the main sources of data and demonstrates the basis on which the EGSS accounts are produced.

A summary of all data sources and methods used for each EGSS activity is available in the EGSS Methodology Annex. To aid with understanding of methods used to produce the data this section has been split by economic variable (output, gross value added, employment or exports).

Output and gross value added

The main sources of data used for estimating EGSS output and gross value added (GVA) are national accounts supply and use tables and the Annual Business Survey (ABS).

National accounts supply and use tables allow for estimates of output, GVA and exports by Standard Industrial Classification (SIC) industry and show the supply of goods and services that are either produced in the domestic industry or imported, and where and how goods and services are used in the economy.

The ABS is an annual survey covering the production, construction, distribution and services industries and provides data on output and GVA for approximately two-thirds of the UK economy, please see the ABS Quality and Methodological Information for more detail.

For some parts of the EGSS, supply and use table estimates of output and GVA by SIC can be taken as mapping directly onto an EGSS activity.

For example, for the EGSS activity of water quantity management, the total output and GVA of SIC 2007 Division 36 can be obtained directly from national accounts supply and use tables and used to represent this activity.

However, in other cases where an EGSS activity may make up only a proportion of output or GVA from an industry, available data from the ABS (or other data sources as required), which provide a more detailed level of SIC breakdown than available supply and use tables, can be used to apportion supply and use table estimates into their specific EGSS activity component.

For example, when trying to estimate output and GVA for the EGSS activity of waste, national accounts supply and use tables can provide information on output and gross value added for SIC 2007 Division 38 (waste collection, treatment and disposal activities). However, in order to represent the EGSS activity of waste fairly, SIC 38.3 (material recovery) is not deemed to be an EGSS activity and so needs to be excluded from these data. Such a breakdown is not available with supply and use tables and so the relationship of output and GVA for SIC group 38.3 (which is contained within SIC Division 38) to SIC Division 38 can be taken from available ABS data and be applied to the supply and use table data in order to achieve this1.

Employment (full-time equivalents)

The main source for employment estimates for EGSS is the UK Business Register and Employment Survey (BRES). This survey collects comprehensive employment information from UK businesses.

Exports

For compiling data for the EGSS module, exports on both goods and services are required.

The main sources of data for estimating exports are the International Trade in Services (ITIS), HM Revenue and Customs (HMRC) international trade in goods data, and national accounts supply and use tables.

Together, the ITIS and HMRC data can help provide a complete picture of the UK exports of goods and services. As with output and GVA, supply and use tables can be used to provide estimates of exports so when EGSS activity maps directly to available supply and use data SIC breakdowns.

Accuracy

Defining the scope of the EGSS in a sufficiently accurate way for statistical measurement is not straightforward. The issue is where to draw the borderline of the sector and how to do it in a way that is conceptually relevant, statistically sound and aligned in practice to the definitions and classifications used in the data sources available for the compilation of the accounts. Because of the variety of data sources used in the production of the EGSS accounts, it is not possible to produce statistical measures of accuracy, such as variances and confidence intervals.

Currently, the accounts aim to capture the most prominent areas of EGSS, but it is unlikely that all relevant EGSS activity is being captured. Over time we hope to identify more industries that also have relevant activity and include these in the accounts. In addition, the majority of data sources used to calculate estimates were not specifically intended to capture EGSS and therefore have been adapted from the initial purpose in which the data were collected.

Some of the EGSS activities are likely scattered over many different SIC categories. Therefore, whilst a range of data sources has been used to compile the estimates, these have varying degrees of reliability and quality. The quality of the statistics for the more traditional environmental activities such as waste management and recycling is of higher quality when compared with more innovative activities such as energy saving and sustainable energy systems, as the former can be captured within national accounts supply and use table data.

For example, for five of the EGSS activities: energy saving and sustainable energy systems, environmental consultancy and engineering services, environmental-related construction activities, environmental inspection and control, and production of industrial environmental equipment, estimates are currently derived from a two-part question added to the Annual Business Survey in 2013 (see Annex 1). Therefore, estimates for output, gross value added and employment for the years 2010 to 2012 have therefore been modelled based on the available survey data.

In addition, due to the small sample sizes involved and the subjectivity necessary when businesses interpret these questions on the ABS there is a degree of volatility in the results. Therefore estimates for these specific EGSS activities should be treated with caution.

There are some known discontinuities in some of the data sources used to compile EGSS estimates. For example, the EGSS activity in-house environmental activities uses the Environmental Protection Expenditure Survey. Due to the change of commissioning of this survey from the Department for Environment, Food and Rural Affairs (Defra) to the Office for National Statistics (ONS) no data were collected in 2014 and the migration to the ONS also resulted in a break in the time series for this activity.

Whilst compiling the EGSS estimates, quality assurance processes are completed to ensure accurate and consistent compilation of the EGSS accounts. Quality assurance processes include built-in automated checks to compilation and Eurostat submission spreadsheets that highlight any discrepancies and allow their correction as early as possible. For example, automated checks examine: subtotal to total consistency, year-on-year differences in estimates and the ratio of EGSS economic variables to each other (such as the ratio between output and gross value added).

Notes for: Methods used to produce the EGSS data
  1. The ABS survey provides more disaggregated data than supply and use tables.
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8. Annex 1: EGSS question on the Annual Business Survey

Question 3.3 Environmental Turnover

a) Does your business produce good(s) and/or service(s) that protect the environment?

Include: goods and/or services produced by your business

  • eg the production of installation of solar panels

  • eg waste collection, treatment and disposal services

  • eg environmental consultancy and training services

Exclude: goods and/or services used by your business

  • eg the use of energy saving lightbulbs

  • eg the consumption of recycled materials

Yes – go to question 3.3 (b)

No – go to question 4

b) What proportion of your total turnover related to the environmental good(s) and/or service(s) produced?

0 – 9%

10 – 24%

25 – 49%

50 – 74%

75 – 100%

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Contact details for this Methodology

David Ainslie or Ellie Whatley
environment.accounts@ons.gov.uk
Telephone: +44 (0)1633 455847