Biological Diversity Ecosystem Condition and Productivity Soil and Water Role in Global Ecological Cycles Economic and Social Benefits Society's Responsibility
Economic and Social Benefits Distribution of Benefits Sustainability of Benefits
Indicator 5.1.1 - Contribution of timber products to the gross domestic product Indicator 5.1.2 - Value of secondary manufacturing of timber products per volume harvested Indicator 5.1.3 - Production, consumption, imports, and exports of timber products Indicator 5.1.4 - Contribution of nontimber forest products and forest-based services to the gross domestic product Indicator 5.1.5 - Value of unmarketed nontimber forest products and forest-based services
Indicator 5.1.1 - Contribution of timber products to the gross domestic product
core indicator


The gross domestic product (GDP) is the total value of goods and services produced annually in all sectors of an economy. The value of intermediate products used to produce the final product is excluded from the calculation of the GDP, since it is already implicitly included in the value of the final goods. The GDP of an industry is the value of its production minus the value of any intermediate products purchased. Comparing the GDP of the forest industry with that of the entire Canadian economy illustrates the contribution of forest products and services to the Canadian economy.

To factor out inflation in the analysis of changes in the GDP, the GDP should be expressed in constant dollars or real GDP. However, due to a major revision of Statistics Canada's industrial classification system, the data for this analysis came from two different data series. The first series, spanning the period 1961 to 1996, is based on Statistics Canada's Standard Industrial Classification System (SIC). The second series, spanning the period 1986 to 2004, is based on the North American Industry Classification System (NAICS). Unfortunately, there is too much discrepancy between the two series to build a continuous time series. As a result, the two sets of data are not directly comparable. The first data series has been expressed in 1992 dollars, while the second has been expressed in 1997 dollars.

From 1961 to 1991, the forest industry's share of the GDP fell by approximately half a percent per decade (Figure 5.1a). The years 1975 and 1982 were particularly difficult for the forest industry when labor disputes in 1975 and economic recessions in both years caused downturns in the industry. There is an average discrepancy of 0.6% between the data based on 1992 prices and the data based on 1997 prices. Besides differences in the data series, prices of forest products were more favorable in 1997 than in 1992, thereby increasing the industry's contribution to Canada's GDP for the data based on NAICS. Still, trends shown by the overlapping portion of the two data sets are similar.

Figure 5.1a

Figure 5.1a Contribution of the forest industry to Canada's GDP (%). (Source: Statistics Canada 2005c)
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The relative decrease in the contribution to the GDP by the forest industry does not mean that the industry did not expand. Timber harvest volumes and shipments increased in real terms, but the growth of the forest industry was slower than that of the rest of the Canadian economy. Thus, the forest industry's relative contribution to GDP, $37.6 billion in 2005, is currently less important than it used to be. This may reflect broader changes in Canada's economy, which has become more integrated into world markets and undergone significant technological change associated with the information technology revolution over the last few decades.

From 1991 onward, the contribution of forest products to Canada's GDP fluctuated between 2.9% and 3.2% (on the basis of 1997 prices), showing stability after the decline of the previous three decades. However, this stability is due to growth in the wood industries subsector while other subsectors continued to decline relative to the rest of the economy (Figures 5.1b and 5.1c). The wood industries subsector primarily includes the manufacturing of building products (lumber, wood panels, etc.), while the forestry services and logging subsector includes forest protection, regeneration, and timber extraction, and the paper and allied industries subsector includes pulp and paper production.

Figure 5.1b

Figure 5.1b Percentage of GDP per subsector, based on SIC data (1992$). (Source: Statistics Canada 2005c)

Figure 5.1c

Figure 5.1c Percentage of GDP per subsector, based on NAICS data (1997$). (Source: Statistics Canada 2005c)
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The contribution of wood industries has fluctuated from 0.75% to 1.25% and has taken on increased importance in recent years to become the leading contributor to the forest industry's GDP. This contribution reflects in part the growing importance of secondary manufacturing to the forest sector economy (Indicator 5.1.2).