PPI for Water and Sewerage in Sweden 27

PPI for Water and Sewerage in Sweden 27 th Voorburg Group meeting Warsaw, Poland October 4 th 2012

Content • Structure of the industry • Background to the construction of PPI for Water supply • Price collection and weight calculation • Index calculation • Reasons for a new review • Questions for the 2012 review

Structure of the industry HOUSEHOLDS • Almost all water consumed by households is produced and treated by municipal plants. Municipalities are required by law to provide water and sewerage services. • Revenues for the business may not exceed necessary costs. • Raw water for tap water production is taken both from ground water and surface water. Mainly larger cities use surface water.

Structure of the industry THE INDUSTRY SECTOR • The industry sector is almost completely self-sufficient in water supply. Only 5 % comes from other sources. • The most important water source is surface water from rivers and lakes, but also from the sea. • Wastewater treatment mainly done in-house.

Background to the construction of PPI for Water supply • First published on the web for January 2000. • A review in 2003 - Changed method from survey to collected data due to a volatile index. • Sweden only covers Water supply. Sewerage not included but is to some extent integrated in Water supply. • Hard to measure the price for households and companies self-supply of water.

Price collection • Prices collected are from municipal plants. Data for two type houses is collected from all municipalities by the trade association Svenskt Vatten (Swedish water). • The two type houses, A and B, are an average house and an average apartment building with the amount of water consumed specified. • We calculate a weighted average of the annual cost of each type house.

Weight calculation • Weights for Type house A and B is based on the amount of houses in these forms in the country as well as the cost for respective house. • Weight for NACE 36 in the total PPI is based on the total production of water from municipal plants and the cost for water from municipal plants.

Index calculation • Compilation of prices from all municipalities are usually not completed until sometime during the summer. • CPI index Water and Sewerage used as a proxy in January. • Only two price updates per year as seen in the chart on the next page.

2004 M 01 2004 M 03 2004 M 05 2004 M 07 2004 M 09 2004 M 11 2005 M 03 2005 M 05 2005 M 07 2005 M 09 2005 M 11 2006 M 03 2006 M 05 2006 M 07 2006 M 09 2006 M 11 2007 M 03 2007 M 05 2007 M 07 2007 M 09 2007 M 11 2008 M 03 2008 M 05 2008 M 07 2008 M 09 2008 M 11 2009 M 03 2009 M 05 2009 M 07 2009 M 09 2009 M 11 2010 M 03 2010 M 05 2010 M 07 2010 M 09 2010 M 11 2011 M 03 2011 M 05 2011 M 07 2011 M 09 2011 M 11 2012 M 03 2012 M 05 2012 M 07 125 Division 36 Water collection, treatment and supply Producer Price Index, home sales, 2005=100 120 115 110 105 100 95 90

Reasons for a new review • Long time since last review (9 years). Do we cover what is produced in the industry and can we do better? • Concerns regarding calculations of weights. Can the calculation be more intuitive?

Questions for the 2012 review • Can we include sewerage as an own division? • Should we split surface- and groundwater according to NACE Rev. 2? • What does National accounts want? Currently use CPI rather than PPI. • Could we replace PPI with CPI?

Emma Strand Statistics Sweden +46 8 506 947 17 emma. strand@scb. se