Key Social Economic Aspects of Sustainable Land Management in the - - PDF document

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Key Social Economic Aspects of Sustainable Land Management in the Baltic Countries

Armands Auziņš

MSc.oec., MSc.ing., PhD student, assistant professor Faculty of Engineering Economics and Management, Riga Technical University

Jānis Vanags

Dr.oec., associate professor Faculty of Engineering Economics and Management, Riga Technical University

Abstract The paper explores primarily social economic aspects of sustainable land management that vary among the Baltic countries. Land and associated to it valuable resources form the basis for any land use, land development and land protection activities, and thus – provide social economic benefits. The study is related to supervision of enforcement of the normative acts that should be suitable to both the particular social economic distinctions and traditions. Political, ecological and technological aspects also influence sustainable land management, but in this study the social economic aspects are

• emphasized. Various research methods are employed. Statistical, historical and logical approach,

comparative analysis and synthesis methods are selected in the research. Finally, findings of the study show comparable key social economic indicators, as well as prerequisites and proposals for sustainable land management activities within the framework of the Baltic countries. The cross–border discussions lead to applications of comparative advantage theory. Keywords: sustainable land management, social economic development, ecological footprint, criteria, indicators

Introduction

„Land‟ is characterised as a physical object in space with set value and attributed specific rights in land management. Land can be seen as most significant matter for both the transactions in real property market with social, economic, ecologic and cultural value (ownership rights) and the specific purpose of land use (land-use rights). Land management is concerned with long-term activities for efficient use and protection of land

• resources. Land management is not dependent on the position of neither an individual nor
• rganisation, but on their mutual interaction for achievement of land use goals in appropriate territory.

In the framework of land management, the legal regulations and organisational structures (institutions) for land use administration are established according to set social economic and environmental development goals within a country. Thus, land management shapes as interactive co-operational

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process of many participating parties (Auziņš A., 2009). The concept of sustainable land management (SLM) was discussed in different conferences and

• publications. The professor of Technical University of Munich Holger Magel argued and stressed

topicality and challenges of sustainable land development and management in relation to society needs in Nairobi‟s conference, 2001 (Magel H., 2001). Food and Agriculture Organisation of the United Nations emphasizes reduction of land degradation and promotion of optimal land use, as well as defines principles of sustainable land management (UNFAO, 2008). In publication of the World Bank about agriculture and rural development (World Bank, 2006) SLM is characterised as „knowledge- based‟ process, which simultaneously has to ensure: the needs of growing population; diminishing of land degradation; and preservation of revive ability of the land resources. World Bank also contributed in establishment of main indicators for assessment and supervision of rural development (World Bank, 1997). Framework for evaluation of sustainable land management (FESLM) is developed for assessment of operation and efficiency increase of farm-stead system on the basis of integrated approach (Smyth A.J., Dumanski J., 1993). Social economic criteria and indicators are one of the most frequently surveyed in order to get a notion about the level of development in a territory, and execute a comparative analysis. Selected sets

• f indicators and included indicators serve for the purpose to evaluate social economic environment

and identify – how equitable the appropriate policy is; what social economic aspects explain it; and how much the particular processes are influenced? Thus, the trade-off of both pillars, that are included into „Brundtland model‟ (United Nations, 1987), could be specified. For instance, a government for the purpose to balance both the governmental revenues and expenditures decides to diminish budget deficit to 3% of GDP and achieve economic growth – 4.5% in 2012. Accordingly, it is considered to promote lower rates for governmental bonds and lower interest rates for investments that will enhance the trustiness of inhabitants and investors to the state on the whole, and result to the predictability of social economic development. This study focuses on social economic aspects of sustainable land development exploring three Baltic countries – Estonia, Latvia and Lithuania. The research hypothesis: assessment of key social economic aspects in relation to valuable land resources lead to comparative analysis of the selected countries and foresee its future development trends and challenges. Thus, the aim of the study is to make analytical and comparative assessment of both the social economic indicators and the stocks of significant land resources in the context of sustainable land management in the Baltic countries. The following tasks are addressed to achieve the set aim: 1) assessment of both the conceptual considerations of sustainable land management and effect of ecological footprint; 2) identification and assessment of changes of valuable land resources and main social economic indicators; 3) making proposals for future sustainable land management on the basis of cross border comparative analysis. Analytical assessments are burdened due to the limitations of comparable data in national account systems and official databases. The problems aroused, because the particular data were determined

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using different methodologies by the countries, and the descriptions of the methodologies were available abstract. Statistical, historical and logical approach, comparative analysis and synthesis methods are employed in the research.

Results and discussion

• 1. Assessment of sustainable land management

Working group, which developed FESLM, identified land quality indicators as „biophysical component‟ for evaluation of sustainable land management (Smyth A.J., Dumanski J., 1993). „Land quality indicators (LQI) are a key requirement for sustainable land management‟, is stated in the

• report. These indicators are developed under the guidance of World Bank. „The LQI program

addresses the dual objectives of environmental monitoring and sector performance monitoring for managed ecosystems (agriculture, forestry, conservation, and environmental management). It is being developed for application at national and regional scales, but it is also part of a larger, global effort on improved natural resources management‟ (Pieri C. et al., 1995). However, Dumanski and Pieri in LQI program stated, that „a core set of land quality indicators is available to describe the state of biophysical resource, but similar progress has not been made for the economic and social indicators‟ (Dumanski J., Pieri C., 1998). As evidently indicate the results of former investigations in this area, this approach is binding and considerable for evaluation of SLM. FESLM approach is related to identification of evaluation factors and development of criteria, and based on understanding of cause and effect for the purpose to determine the likely status of different evaluation factors at future times. This approach provides definition of specific indicators and thresholds. Indicators are concerned with environmental attributes that measure or reflect environmental status or condition of change, but thresholds – levels of environmental indicators beyond which a system undergoes significant change, in other words, points at which stimuli provoke significant response. FESLM approach provides two „levels‟ – action (local framework) and master (reference framework). Thus, the first refers to a procedure for evaluating the sustainability of a specific kind of land use, in a specific location, over a specific period of time; using the pathway, aims, approaches and actions identified in the master framework expressed in terms of selected indicators, criteria and thresholds. It follows that the second refers to sustainability evaluations of land management package expressed in general terms and not tied to any specific land use goal (Smyth A.J., Dumanski J., 1993). However, for the purpose to make comparisons with the official indicators of the countries, one has to take into consideration the accessibility to data administration systems and availability of actual data within the systems. Along with quantitative indicators the qualitative indicators also exist, which are not unambiguously comparable without additional study. Furthermore, for more complete analysis, besides resulting indicators, the indicators of influence (impact) should be identified.

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Investigating and analysing different definitions and statements regarding to sustainable development and SLM, as well as taking into account both the land resources (soils, stands, waters) and the infrastructure needed for its efficient management (amelioration systems, roads, utilities, dams, and other building structures), „sustainable land management‟ can be defined as „managerial system, including the land and infrastructure needed for its use as unified creative resource, which is used according to set sustainable development criteria within the country for constant provision of changing needs of the bodies, balancing both the using of land resources and preserving its revive ability in appropriate territory‟. Thus, including systems approach in the concept of SLM and underlining the balanced using of land resources, the SLM system can be described according to main its goals: productivity; security; protection; social economic acceptability; and viability (revive ability) of land resources. In different countries the social economic indicators and its groups applicable to stated territory – either total in the country, region or municipality. Indicators are settled into national account systems and other data administration systems, and serve as basis for an option of key comparable indicators. It is possible to evaluate the SLM system, analysing these indicators. Three Baltic countries – Estonia, Latvia and Lithuania are the part of Europe, and territorially located in the central part of Baltic Sea

• region. The progress of cultural history and heritage has been similar in these countries. However, the

social economic development and the aspects of SLM are worth assessing, because they may be seen as substantial preconditions for future integration in EU and Baltic See region.

• 2. The effect of ecological footprint

Development of society creates externalities that influence the environment in integrated way. This influence may be seen as ecological footprint (EF). EF reflects the biologically productive landed and sea area needed for provision of resources that in average uses one global inhabitant when acquiring necessary goods and services. Global hectare is a measure unit of EF. This unit is calculated taking into account the utilised resources during the year and productive areas of lands and waters needed for production of these resources (Vanags J. et al., 2010). Assessment of EF and its comparison in the Baltic countries can be seen as global aspect of sustainable development. There is impossible to solve the sustainable development problems in one or several countries because of influence of global aspects. However, it is cause of deem that the results

• f sustainable development policy can be evaluated taking into consideration EF of each country – the

accessible land resources and necessity of its use for production of commodities and services during determined period of time. Table 1 shows the assessment of EF in the Baltic countries. „Overplus‟ indicates the area of fertile land and water, which is either left over or lacks in the current country to provide resources for production of products and services to be consumed by the inhabitants of the particular country. From the indicators that are included in Table 1, it can be seen that EF among the Baltic countries is larger

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than in a world overall. The consumption of inhabitants of Latvia is in the size of 5.6 global ha large

• EF. Moreover, biocapacity of Latvia gives opportunity to its inhabitants consume 30% more products

and services without borrowing resources from other countries. In both other countries Estonia and Lithuania the situation regarding this aspect is worse. Total biocapacity, measuring in global ha per inhabitant, is behind the EF by 0.3 in Lithuania. Table 1 Assessment of EF in the Baltic countries

Territory EF global ha/inhab. Overplus global ha/inhab. EFAk Estonia 7.9 1.1 0.1 Latvia 5.6 1.4 0.3 Lithuania 4.7

• 0.3
• 0.1

World 2.7

• 0.9
• 0.3

Europe* 4.7

• 1.8
• 0.4

Source: made by the authors according to Living Planet Report 2010; data source from 2007 (Living Planet Report, 2010); *data about 35 countries selected in Europe; EFAk – adequacy coefficient of EF

At the same time, comparing the level of inhabitant‟s well-being in selected countries, the difference is relatively insignificant. Thus, the gross domestic product (GDP) at current prices per inhabitant in year 2009 is EUR 10 300 in Estonia; EUR 8 200 in Latvia; and EUR 8 000 in Lithuania (European Commission, Eurostat database, 2010). However, it can be concluded that, if the difference in sizes of EF of comparable countries is larger than difference in GDP per inhabitant, than the country which has these indicators larger uses larger amount of resources to produce each unit of GDP. Observing EF and well-being of other countries of the world, the differences can be seen even more significant.

• 3. New aggregative index of Baltic See countries

Swedbank Baltic See Index (Swedbank, 2010) can be seen as new aggregated indicator in the countries of Baltic See region. The index characterises a social economic setting, including attractiveness of foreign investments and competitiveness of the country. The results of the study about 2009 indicate that: Estonia with the population of 1.3 mill., and 1.8% of average growth of GDP during last 5 years score relatively high on the index – 7.3; Latvia with the population of 2.3 mill., and 2.1% of average growth of GDP during last 5 years score on the index – 6.3; Lithuania with the population of 3.4 mill., and 2.7% of average of GDP during last 5 years score on the index – 6.5. Thus, foreign trade, governance and education score well, while there is room for improvement in labour market policies in Estonia. In particular, Latvia ranks relatively high in the categories „Education‟ and „Logistics‟, while lagging in the areas of „Tax policy‟ and „Financial markets‟, but labour market indicators are low, while education performs well in Lithuania. The Nordic countries – Sweden, Norway, Finland and Denmark score the highest in the Baltic Sea region

• n the index and are, at 8.5-8.8, among the 15 most competitive countries in the world (Swedbank,

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2010). The average index for the region is 7 (out of a possible 10).

• 4. Changes of most important land resources

In Tables 2 and 3 the changes of both the agricultural and forest areas in the Baltic countries can be identified. The areas are selected by land-use categories and contain a percentage of registered areas of the countries. During last decade the agricultural land is increased in Estonia and decreased in Latvia and Lithuania, but the forest land is gradually increased in all three Baltic countries, and contain remarkable share. Table 1 and Table 2 reflect the quantitative changes of valuable land resources during the time period 2000 – 2009, and its area share in percentage. Table 2 Changes of agricultural area in the Baltic countries

Country Division of agricultural area by years 2009 to 2000 2009 to 2005 2000 2005 2009 1000 ha % 1000 ha % 1000 ha % % % Estonia 875.80 19.4 882.30 19.5 931.80 20.6 6.39 5.61 Latvia 2487.93 38.5 2462.08 38.1 2429.77 37.6

• 2.34
• 1.31

Lithuania 3488.70 53.4 3472.13 53.2 3463.57 53.0

• 0.72
• 0.25

Source: made by the authors according to Land Report of the Republic of Latvia (State Land Service of Latvia, 2010); Land Fund of the Republic of Lithuania (National Land Service of Lithuania, 2010); Statistical Year Book

• f Estonia, 2001; 2010 (Statistics Estonia, 2010)

Table 3 Changes of forest area in the Baltic countries

Country Division of forest area by years 2009 to 2000 2009 to 2005 2000 2005 2009 1000 ha % 1000 ha % 1000 ha % % % Estonia *2243 49.6 *2284 50.5 2288.49 50.6 2.03 0.20 Latvia 2865.15 44.4 2916.77 45.2 2955.49 45.8 3.15 1.33 Lithuania 1998.40 30.6 2100.34 32.2 2125.77 32.6 6.37 1.21 Source: made by the authors according to Land Report of the Republic of Latvia (State Land Service of Latvia, 2010); Land Fund of the Republic of Lithuania (National Land Service of Lithuania, 2010); * FAO, Global Forest Resources Assessment 2005 (UNFAO, 2010); Estonian Environmental Indicators 2009 (Estonian Environmental Information Centre, 2010)

• 5. Assessment of main social economic indicators

The results of analysis of this publication are substantiated with assessment and calculations of major indicators of the Baltic countries. Analysis contains data characterising social economic development in years 2000, 2005, and 2009, which are included into national account systems and accessible in both the national official databases and the European official database – Eurostat. Respective indicators are applied to the territorial/area unit and number of inhabitants and bathed in tables and in Appendix of this publication. The accuracy level of data indicated in euros and national currency may differ due to conversions

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made on the basis of consolidated data. Data about foreign investments have been converted into euros based on the official exchange rate at the end of period. Since first quarter of 2005, has been changed estimating of the foreign direct investments in Lithuania (Statistics Lithuania, 2010). Changes in the estimating influenced break in time series. Data of total foreign investments is not included into

• fficial statistics of Lithuania for corresponding time period, therefore the overview of foreign

investments is limited, thus for the purpose of international comparisons includes only data about direct foreign investments (DFI). Direct investments characterize the long-term relationships between a direct investors and enterprises of direct investment. Comparing data of three Baltic countries, it can be stated that Estonia has the most amount of stock of DFI. Thus, the amount of received DFI gained at 20.6% of GDP in

• 2005. However, statistics shows that the amount of received investments of this kind is shrunk in all

Baltic countries in 2009, but remarkable amount of stock of DFI even flowed away from Estonia (see Appendix). GDP, a measure of the economic activity, defined as the value of all goods and services produced less the value of any goods or services used in their creation. Estonia has the smallest number of inhabitants and smallest area of the country among three Baltic countries. Though, GDP at current prices per inhabitant contains the higher volumes in Estonia. Exploring statistics of GDP by production approach, the structure of value added (VA) by economic activity is identified. This structure among other economic activities shows gross VA of agriculture, hunting and forestry. The VA of agriculture, hunting and forestry at current prices related to agricultural and forest area unit in Estonia is about 20% higher than in Latvia in 2000 and 2005, but about 10% less than in Latvia in 2009. Lithuania has the biggest number of inhabitants and largest area of the country among the Baltic countries. GDP volume at prices of previous year is higher in Lithuania. Moreover, GDP volume at prices of the previous year related to country area unit in Lithuania is about 30% higher than in Latvia and Estonia, but VA of agriculture, hunting and forestry at current prices related to agricultural and forest area unit in Lithuania shows considerably higher figure than in Estonia and double as much than in Latvia. It can be concluded that Lithuania is more agrarian country than both

• ther Baltic countries, therefore more actual are implementation of rural development programs and

land consolidation activities to promote efficient rural infrastructure. Although all three Baltic countries have considerable amount of agricultural and forest lands, and the associated resources are seen as valuable and significant that influence development of national economies, their proportion in national structure of VA decrease gradually considering time period 2000 to 2009 – from 4.5% to 2.3% (-2.2%) in Estonia, from 4.3% to 3.0% (-1.3%) in Latvia, and from 6.3% to 4.2% (-2.1%) in Lithuania. In this analytic assessment of social economic aspects of SLM are included major indicators that let make cross-border comparisons, exercising available data in national account systems and official

• databases. Availability of appropriate data is a prerequisite for including other indicators in the study.

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Examining indicators, which are included in different databases, it can be concluded that they are determined using different methodologies, and the descriptions of the methodologies are available

• abstract. For instance, the employment rate according to data of national agency – the State

Employment Agency and data included in Eurostat database varied about 3% for equal time period in Latvia in 2009. Accessible and comparable data, which were provided according to unified methodology, would allow expand the study on indicators that characterise the influence of social economic factors, incl. territorial development and development of specific economic sectors, environment and infrastructure, access to credits, productivity of land resources, development of innovative technologies, availability of renewable energy resources etc. Similarly, unemployment rate, governmental expenditures, national debt and inflation/deflation during the social economic crisis in a great extend witnesses the capacity and possibilities of the governments to get out of global crisis. For instance, timely support of a government and promotion of an employment during crisis can be seen as notable prerequisites to tide over the critical problems and contribute to further growth. However, this publication does not stress on indicators that characterises the crisis being, but it reflects major comparable indicators of economic development, which influence the social economic environment of land management, as well as its sustainability.

Source: made by the authors according to data selected in Eurostat database (European Commission, 2010)

Fig.1. Growth rate of GDP volume, % change of previous year

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The calculation of the annual growth rate of GDP volume is intended to allow comparisons of the dynamics of economic development both over time and between economies of different size. For measuring the growth rate of GDP in terms of volumes, the GDP at current prices are valued in prices

• f previous year, and thus computed volume changes are imposed on the level of a reference year – a

chain-linked series. Accordingly, price movements will not inflate the growth rate. Graph in Fig. 1 shows the growth rate of GDP volume – percentage change of previous year. Black lines accordingly show data of years 2000, 2005 and 2009. The years 2010 and 2011 reflect forecasted data. Following both the nature and direction of the black line in Fig. 1, the prognosis of Latvia‟s future development seems the most optimistic among the Baltic countries, because the most rapid economic decline planned to convert into the most sustained increase. Although the production volumes and export indices were tangible increased, GDP growth was: 2.9% in Lithuania; 2.0% in Estonia; and 0.1% in Latvia at the second quarter of 2010 according to estimations of Eurostat. Thus, the development according to this indicator relatively can be characterised as „plunge‟ in Lithuania, „slowly‟ in Estonia, but „weakly‟ in Latvia. Along with the GDP growth, it would be reasonable to compare also governmental expenditures, budget deficit and total debt for foreseeable time period that characterised the preconditions of promotion of social economic situation and GDP growth. Both the unreasonable amount of loans and inefficient increase of governmental expenditures can facilitate decrease of limited national land resources in a future.

Conclusions

1. In the course of this study the motion is made that data of national account systems and other

• fficial statistical data should be included into national data systems according to unified

methodology and uniform indicators, as well as appropriate data accessibility has to be ensured in Eurostat database for making unambiguous comparisons of interstate data, incl. uniform currency. Otherwise, the expression has to be practised from Swedbank’s study regarding to „not bearing the responsibility of the study results‟ that in itself does not solve any problem. Furthermore, the precondition for accession to an alliance of the countries should be provision of the data compatibility of national accounts. 2. Selected groups of indicators and embraced indicators serve as basis for evaluation of social economic environment and identification of progress of proper policy, as well as ascertain – how equitable the policy is; what social economic aspects explains it; and what influence to specific processes is made? Analysing data that are included in Appendix of this study, in general it can be concluded that comparatively the level of social economic development meets the results of Swedbank Baltic Sea Analysis in three Baltic countries. 3. Since the stocks of major resources of forests and agricultural lands are relatively stable during

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the time period 2000 – 2009, the assessment of EF can be seen as constant for mentioned time period in the Baltic countries. Assuming this consideration and evaluating GDP data, it can be concluded that for production of each unit of GDP, there has been used greater amount of resources in Estonia than in Latvia and Lithuania, because difference of both the EF and GDP per inhabitant is relatively higher. 4. The proportion of VA of agriculture, hunting and forestry in the structure of national economies of the Baltic countries are relatively small – currently 2.3% - 4.2% that are apart from wood and wood products, wholesale, retail trade and services. However, considering the long-term land management goals and rural area development trends in the Baltic countries, it can be concluded that agricultural and forest resources make significant potential for solving ecological and nature protection objectives promoting traditional living and livelihood in rural areas. 5. In the future topical is notion: how consumption of the resources could be rationalised – more saved up than consumed for the purpose of progress and development, because of gradual reduction of population and development trends of global market that will promote either little increase or retain in the level of previous period or even decrease of produced VA instead of its rapid annual growth, as it was recognised during recent years. 6. Also further collaboration of the Baltic countries has essential importance for ensuring SLM. Although the economic activities explained by social economic indicators are comparatively distinctive, however the historical development and neighbourly relations, as well as the location and development possibilities within the Baltic Sea region are conjunctive. Furthermore, the territories of these countries are covered with considerable amount of forests and agricultural lands, which in political-economic and ecological context can be seen as advantage for future sustainable development and usage of land resources.

11 Appendix The major comparable indicators of the Baltic countries in corresponding course of time

Indicator \ Year 2000 2005 2009 ESTONIA Economic activity (source of data: European Commission, Eurostat, 2010) GDP at current prices (EUR/inhab.) 4 500 8 300 10 300 GDP volume (mill. of EUR) at prices of the previous year 5 892.9 10 598.7 13 868.0 GDP per capita in Purchasing Power Standards (EU-27 countries=100); *brake in series 45 62* 62 Foreign direct investment (source of data used for calculations: Statistics Estonia; Bank of Estonia, 2010) Stock (mill. of EUR) at the end of year 2 843.0 9 560.5 11 283.2 Stock per capita, EUR 2 031.4 7 102.4 8 418.4 Received per year (mill. of EUR) 389.0 2 186.2

• 587.2

Received per capita, EUR 278.0 1 624.1

• Received, % of GDP

6.6 20.6

• Value added (VA) on area

GDP volume at prices of the previous year related to country area unit (EUR/ha) 1 303 2 343 3 066 VA of agriculture, hunting and forestry at current prices related to agricultural and forest area unit (EUR/ha) 79.6 104.4 86.6 LATVIA Economic activity (source of data: European Commission, Eurostat, 2010) GDP at current prices (EUR/inhab.) 3 600 5 700 8 200 GDP volume (mill. of EUR) at prices of the previous year 7 279.7 12 300.6 18 910.1 GDP per capita in Purchasing Power Standards (EU-27 countries=100); *brake in series 37 49* 49 Foreign direct investment (source of data used for calculations: Central Statistical Bureau of Latvia, 2010) Stock (mill. of EUR) at the end of year 2 240.9 4 159.0 8 158.5 Stock per capita, EUR 947.8 1 812.5 3 628.6 Received per year (mill. of EUR) 439.4 567.9 51.6 Received per capita, EUR 185.2 246.9 22.9 Received, % of GDP 5.3 4.4 0.3 Value added (VA) on area GDP volume at prices of the previous year related to country area unit (EUR/ha) 1 127 1 904 2 928 VA of agriculture, hunting and forestry at current prices related to agricultural and forest area unit (EUR/ha) 59.0 81.7 93.9 LITHUANIA Economic activity (source of data: European Commission, Eurostat, 2010) GDP at current prices (EUR/inhab.) 3 500 6 100 8 000 GDP volume (mill. of EUR) at prices of the previous year 10 626.4 19 574.8 27 442.2 GDP per capita in Purchasing Power Standards (EU-27 countries=100); *brake in series 39 53* 53 Foreign direct investment (source of data used for calculations: Statistics Lithuania, 2010) Stock (mill. of EUR) at the end of year; *brake in series 2 509.2 6 920.7* 9 638.8 Stock per capita, EUR 719.7 2 033.7 2 895.3 Received per year (mill. of EUR) 291.6 2 231.0 489.3 Received per capita, EUR 83.6 655.5 147.0 Received, % of GDP 2.7 11.4 1.8 Value added (VA) on area GDP volume at prices of the previous year related to country area unit (EUR/ha) 1 627 2 998 4 202 VA of agriculture, hunting and forestry at current prices related to agricultural and forest area unit (EUR/ha) 126.2 163.1 180.7

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