CeBIT Spatial@gov 2012- Alan Smart, ACIL Tasman

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Valuing Spatial Information A review of methods and findings Alan Smart - Sydney Andrew Coote - London 22 November 2011

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Transcript of CeBIT Spatial@gov 2012- Alan Smart, ACIL Tasman

Page 1: CeBIT Spatial@gov 2012- Alan Smart, ACIL Tasman

Valuing Spatial Information

A review of methods and findings

Alan Smart - Sydney

Andrew Coote - London 22 November 2011

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Topics

● Value added approach

● Economic welfare analysis

● General equilibrium analysis

● Valuing intangibles

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Why is it so hard to estimate

● An enabling technology

● Public good dimension

● Impacts occur across a large number of sectors

● Dynamic nature of change

Spatial technologie

s

AgricultureMining and resources

Transport

Planning and

Construction

Utilities

Property and

servicesEmergency manageme

nt

National security

Natural resource

management

Retail

Banking

Government

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Value added approach

● Economic contribution of Ordnance Survey in Great Britain – Oxera 1999

● Allens Consulting (2008)

● Value added is the value of output less the cost of inputs

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Oxera findings

● Largest contribution to GVA came from users of OS services and products

£79 billion to 135 billion

Around 10% to 21% of GDP of Great Britain at the time

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Value added approach in Australia and

New Zealand

● Allen Consulting Group 2010

● Value added in Australia - $12.5 billion

Mainly in government administration, property services, business

services, construction and mining

Around 1.4 % of value added in these industries

● Value added in New Zealand - $ 1.6 billion

Around 1.4 % of value added

Similar industries apart from mining

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Welfare analysis

● One measure of benefit is consumer and producer surplus

● Product specific ● Need to know what

consumers are prepared to pay

● And what producers are prepared to receive

Consumer Surplus

Producer Surplus

P

PE

QE Q

D

S

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Value of WA Land Information

System (WALIS)

● ACIL Tasman (2004) Willingness to pay survey of 12 user groups and a producer

survey to estimate producer and consumer surplus

Estimate value to WA economy was $14 – 15 million

Plus $1 million from more efficient and effective production of data

Study tested the results against a counterfactual that recognised some provision of data could still occur without WALIS but less efficiently

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Cambridge study of Ordnance

Survey Data

● Rufus Pollock et al (Cambridge University, 2008) ● Estimated demand curve to assess the value services

supplied from government trading funds And the impact on consumer surplus of changes in

pricing for data

● Price elasticity of demand = percentage change in demand/ percentage change in price

● Used multipliers to estimate broader economic and dynamic impacts on the economy

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Cambridge study

● Studied large scale topographic mapping and transport network products – sales worth £70 million

● Concluded that a move from average to marginal costing would increase economic welfare by £156 million

Pm

Pavc

Psrmc

Qm Qavc Qsrmc

Short run marginal cost

Average cost

Demand curve

Quantity (Q)

$

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ANZLIC Study

● PWC study for ANZLIC in 2010 used a similar methodology to address pricing policies

● Change in economic welfare (consumer surplus in this case) by moving from cost recovery to marginal cost pricing is shown in table below

● Report notes that this would come at a loss in revenue to the agencies concerned which has consequences for custodianship of data.

Victorian topographic Landgate topographic Landgate arial photography

Geoscience Australia

topographic

$ million $ million $ million $ million

Change in economic welfare 3.3 1.4 1.0 4.7

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Welfare analysis - issues

● Suitable for single product analysis

● Elasticities of demand vary with quantity

● A partial analysis that does not take into account resource transfers in the economy

Eg - Planning and construction sector expands while legal sector contracts

● Multiplier techniques subject to considerable scepticism when resource transfers occur

● Welfare analysis serves as an indication of the implications of different pricing and access models but should not be regarded as conclusive.

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Productivity estimates and CGE

modelling

● Economy wide approach Estimate direct impacts and use general equilibrium

model to translate into economy wide impacts Takes into account resource transfers within the

economy as a result of change

● Direct impacts changes in productivity of labour or capital or multifactor changes in resource availability changes in income or trade

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Adoption curves over time –

accumulating productivity

Geospatial adoption curves in UK local government

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General equilibrium modelling

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New Zealand Agriculture 2010

● Example – Precision Agriculture

● Controlled traffic farming, etc. 10-20% productivity ↑

● Adoption ≈ 10%

● = 1.25% sector-wide productivity improvement

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Productivity impacts compared

New Zealand 2009 Australia 2007 Tasmania 2010

Agriculture 1.25% -1.9% 0.93% -1.5% Nil

Forestry 5.25% - 5.71% 1.93% 1.93%

Fishing 3.40% 4%-5% 5.14%

Manufacturing 0.25% -0.35% 0.02% 0.02%

Transport 2.1%- 3.15%% 1.4%-1.5% 1.04-1.6%

Communications 0.82% 0.98%-1.32% Nil

Utilities 0.70% 0.7-1.25% 1.0%

Property and business services 0.23%-0.46% 0.47% 0.2%

Construction 0.75% -1.13% 0.25%-0.5% 0.25%

Trade and retail 0.77%-1.15% 0.08 Nil

Recreation 0.23%-0.46% ~ Nil

Mining Low 0.15% - 0.36% 0.01%

Government 0.77% -1.15% 0.0.34%% 0.37%

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Studies using CGE modelling

Year Organisation Issue Results

2008 SRCSI and ASIBA (ACIL

Tasman)

Value of spatial information in Australia $6 billion-$12 billion addition to GDP

2007

7% higher economic impact if barriers

removed

0.61 % - 1.2% of GDP

50 % higher adoption if

barriers removed

2009 NZ Ministry of Economic

Development and LINZ (ACIL

Tasman/SKM/Ecological

Consultants)

Value of Spatial information in New Zealand $NZ1.2 billion

$NZ 1.6 million with barriers removed

0.6 per cent of GDP

2010 Consultingwhere /ACIL

Tasman for UK Local

Government Association

Value of geospatial information for local

government in England and Wales

Main sectors with positive impacts –

construction, transport, business services

GDP £320 million higher in 2009 as a

result of geospatial information in local

government

£560 million higher in 2015

Additional £600 million with improved

policies

0.02% of GDP

BC ratio of 1.25

2010 CRCSI (Allen Consulting) Value of enhanced positioning in selected

sectors - mining, agriculture and construction

1.1% to 1.2 % increase in

GDP by 2030

2011 Department of Premier and

Cabinet (ACIL Tasman/ Lester

Fanks/ConsultingWhere)

Value of improved SDI in Tasmania GSP $105 million higher in 2011

$401 million by 2020

Additional $100 million by 202 0with

investment in spatial data

infrastructure

0.47% of GSP

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Issues with general equilibrium

modelling approach

● Estimating sector wide productivity impacts

requires assumptions about levels of adoption

● Some users are not willing to share data on

benefits

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Components of value

TOTAL ECONOMIC VALUE

Outputs

• petroleum and minerals

• transport• communications• property and

construction• agriculture• Fishing• forestry• tourism • public

administration

Benefits

• flood control• climate• sustainable water

resources• sustainable

natural resource management

• Biosecurity• biodiversity

Benefits

• protection from fires, floods and natural disasters

• improved management of climate change

• Insurance• defence

Benefits

• satisfaction that resource is there

• preservation of environment and conservation values

• national security• Long baseline for

historical analysis

Benefits

• altruistic• preserving

national assets for the next generation

USE VALUES NON-USE VALUES

DIRECT USE VALUE

ECOLOGICAL FUNCTION

VALUE

OPTION VALUE

EXISTENCE VALUE

BEQUEST VALUE

Based on work by Professor Mike Young- University of Adelaide

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A wide range of applications -

Tourism to sea bed mapping

Tourist information

systems in New

Zealand

Bathymetric

mapping in Australia

and New Zealand

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Natural resource management

● Water resource management Eg CSIRO/Murray Darling

Basin sustainable yields project

Value of water at the margin ~ $100/ML - $500/ML

A 1% reduction in national water consumption saves around $37 million

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Summing up

● Understanding economic and social value of spatial information is important for both government and industry

● Welfare analysis useful where single product or service involved and impact on the rest of the economy is not significant in terms of

resource allocation in the rest of the economy

● General equilibrium analysis useful when multiple products are involved and multiple sectors are affected.

● Both approaches confirm that a move from average cost pricing to marginal cost pricing for foundation data increase economic welfare But only as long as governments are prepared to fund the cost of

custodianship

● More work on social and environmental benefits

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Thank you

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POPSIS Study

● European union sponsored study into pricing of public sector information (2011)

● Assessed different models of supply and charging through 21 case studies (including meteorological and geographical information)

● In case of zero-cost or cost-recovery number of re-users increased by between 1,000% and 10,000%.

● PSI sales revenues can remain stable or even increase after drastic price cuts due to the growing demand.

● Several case study public sector providers have reported that intensified ties with re-users that may lead to improved data quality and process efficiency

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Productivity and adoption –

sector wide impacts

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Translates into national

economy Precise

positioning used in road

freight

Decreased price road transport sector

Lower production price in sectors using road trasnsport (such as the retail sector). Increased access to

factors .

Productivity improvement

National economic impacts

GDPConsumptionInvestment

Industry outputEmploymentIncreased output and

value added

Increased output per unit of value added

Decreased competitiveness.

Lower value added in coastal shipping due to

resource transfer to road freight

Decreased valueadded

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UK Local government productivity

gains

● Channel shift – through deployment of transactional web mapping systems.

● Improved transport efficiency – by wide application of route optimisation and better street works management.

● Better decision making – using geospatially-enabled local information systems.

● Reduced data duplication – using master datasets such as the NLPG.

● Empowering frontline workers – by speeding up analysis and enhancing mobile working.

● Helping identify social deprivation – through data integration and analysis.

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Example of results - Local Government (UK)

● Output of local government increased by $221 million in 2009 as a result of the accumulated productivity benefits of using geospatial application

● Gross Domestic Products (GDP) for England and Wales was over $320 million higher in 2009

● Projecting forward to 2015, GDP for England and Wales will be an estimated $600 million higher with right policy framework

● Average annualised cost to benefit ratio of using geospatial information and services in local government is on average 1:2.5 over 5 years.

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Australia Infrastructure 2008

● More efficient asset planning, design and management

● Recording location of assets and features

● More efficient maintenance

● Overall productivity impact – 7%-12%

● Adoption ~10%

● Productivity impacts in infrastructure in Australia 0.73% to 1.25%

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Productivity impacts on

Tasmanian economy ● 2011

GSP higher by $105 million Real income around $81 million higher Real wages around 0.4 per cent higher

● 2020 – scenario 2 (investment in data infrastructure compared to scenario 1 (no change) GSP higher by $106 million Real income around $96.4 million higher Real wages around 0.2 per cent higher