Geospatial technology, information, and services are addressing some of the major priorities of our nations, adding value to productivity, reducing costs and enabling GDP growth in the process
Gross domestic product (GDP) is an economic parameter that puts a value on the goods and services a country produces in a given period of time and is used to measure the economic strength of the country. However, data and its derivatives, information and knowledge, are neither commodities nor services. In fact as famous economist G.J. Stigler said, “information occupies a slum dwelling in the town of economics”!
Therefore, the problem is to compute the monetary value of information. Data, information, knowledge, wisdom are terms used often in the context of decision making. According to Stigler, to arrive at a value for information, there is a need to “recognise that the economic system is activated by decisions which link information flows to objectives”. Russell Ackoff, a pioneer in the field of operations research, systems thinking and management science defined data as symbols, information as data that are processed to be useful and provides answers to ‘who’, ‘what’, ‘where’, and ‘when’. Knowledge applies data and information to answer ‘how’ questions; while intelligence is appreciation of ‘why’. Finally, the evaluated intelligence becomes wisdom.
Value of data as a commodity
In the geospatial world, data can be treated as a commodity in the limited sense of acquisition and sale. For example, remotely sensed data is collected and processed through satellites, earth stations and computers and is purchasable as a product. Taking the example of satellite imagery, we can assume that the marginal cost of production is independent of the quantity produced, i.e. the data cost remains constant. Therefore, the supply curve is a straight line parallel to the quantity axis (see Fig. 1 ). The demand of a government buyer is unit elastic as the buyer operates on a fixed budget, i.e. if the product cost goes up, the quantity bought is reduced or if the budget faces a cut and the price remains unchanged, the quantity is reduced. A classic example of this is the recent reduction of the volume of data ordered by the National Geospatial- Intelligence Agency (NGA) from Digital Globe and GeoEye due to funds shortage; an action which accelerated the merger of the two satellite imagery companies.
A study conducted by Prof U. Sankar of Madras University (The Economics of India’s Space Programme: An Exploratory Analysis, Oxford University Press, 2007), of the Indian remote sensing programme, which is one of the world’s lowest cost space programme, is revealing. The Indian remote sensing programme spent Rs 21,290 million ($395 million) from 1976 to 2001. As against this, the data sales and access fees resulted in an income of Rs 2,200 million ($40 million) only. Even if the opportunity cost of not getting similar data from foreign satellites is taken into account, it only contributes Rs 5,000 million ($93 million). Taken together with data sales, it adds up to half of the direct mission cost and barely one-third of the total programme outlay.
The picture improves if we look at the next level of the data-wisdom chain, i.e. information generated from data. The study notes that if the income from value addition to the data, i.e. extraction of thematic information from the data, is taken into account, then the picture improves by Rs 12,000 million ($223.5 million) and another Rs 11,000 million ($204 million) of cost saving is achieved by using remote sensing data for mapping in the place of conventional field surveys. Taking this into account, the return on investment seems to break even. However, just breaking even cannot justify such a large investment in the first place nor will this add significantly to the GDP.
The ACIL Tasman report on The Value of Spatial Information for the Australian Cooperative Research Centre for Spatial Information (CRC-SI) conservatively estimates that industry revenue in 2006-07 in Australia could have been of the order of $1.37 billion annually and industry gross value added around $682 million. However, this did not take into account use of spatial information that was increasingly being used in most sectors where it is having a direct impact on productivity.
Value of information
The ranges of activities where geospatial technology can be applied to enhance the economic return from these activities are many. They range from government schemes and plans to commercial ventures to disaster management. The economic impacts of these applications are best understood through case studies, which also reflects upon the maturity of the technology, applications and the absorption capability of the nations. Riding on these are issues like regulations, inadequate capacity, lack of data, ineffective spatial data infrastructure and inadequate public private partnerships.
The methodologies for evaluating the value of information range from return-oninvestment studies to cost-benefit analysis, to evaluating the impact on the productivity, and therefore, on macro-economic indicators like GDP. However, in all of these, some of the real social benefits remain intangible. Some have attempted to place a monetary value but these are guesstimates which contribute to a feel good factor.
» Australia: A study (Economic Benefits of High Resolution Positioning Services, November, 2008) by The Allen Consulting Group for the Victorian Department of Sustainability and Environment and the Cooperative Research Centre for Spatial Information, Australia shows that setting up a permanent real-time network of continuously operating GNSS reference stations for precision location can bring significant benefits to agriculture, mining and construction. In 2008, these sectors benefitted by A$829- 1,486 million ($847-1,519 million) per annum. Th is represents a contribution to GDP of between 0.08% and 0.14%. These benefits can be extrapolated to A$6,675-12,336 million ($6,827-12,617 million) by 2030. Th is equates to an increase in contribution to GDP by 1.1-2.1%, which compares favourably with other IT applications like e-commerce and Internet retailing.
The ACIL Tasman report on The Value of Spatial Information for the Australian Cooperative Research Centre for Spatial Information has looked into the benefits of spatial technologies in various application areas in the public and private sectors from the point of view of increased productivity and estimated that this resulted in a GDP gain of 0.6% to 1.2% in 2006-07.
» New Zealand: According to the ACIL Tasman report on Spatial Information in the New Zealand Economy in 2008, the use and re-use of spatial information is estimated to have added $1.2 billion in productivity-related benefits to the New Zealand economy. Th is value is the result of increasing adoption of modern spatial information technologies over 1995-2008, and is equivalent to slightly more than 0.6% of GDP in 2008.
» USA: The Boston Consulting Group examined the benefits of geospatial applications in areas such as agriculture, construction, and geospatial service industry in the USA. In 2012 the industry size was about $75 billion, which in turn created revenue of $1,600 billion and a cost saving of $1,400 billion. These figures are expected to rise in the next five years to a size of $100 billion and $2,600 billion in revenue.
» United Kingdom: A report produced by ConsultingWhere Limited and ACIL Tasman on behalf of the Local Government Association on local public service delivery in England and Wales estimates that GDP was approximately £320 million ($498 million) higher in 2008-09 in England and Wales owing to adoption of geospatial information by local public services providers. The study goes on to state that “under a business as usual scenario, this would be expected to rise to an estimated £560 million ($872 million) in 2014-15, but with more rapid introduction of government policies to free up data access and copyright and with improved awareness of the value of geospatial information at senior management level, this could be improved to an estimated £600 million ($934 million) by 2014-15… Furthermore, construction, transport and business services sectors are positively impacted, and greenhouse gas emission intensity is lower”.
» Canada: Natural Resources Canada’s Mapping Information Branch in collaboration with the Canada Centre for Remote Sensing and the Surveyor General Branch, has announced that a contract has been awarded to Hickling Arthurs Low Corporation (HAL) to carry out a major study on the state of geomatics in Canada. HAL”s partners in the project include ACIL Tasman, Fujitsu Canada and ConsultingWhere. The primary focus for the study is to understand the current situation and emerging trends in Canadian geospatial activities and their overall direct and indirect economic value and contribution to the Canadian economy.
The study, managed by the GeoConnections Program of NRCan’s Mapping Information Branch is scheduled to be completed by March 31, 2014.
» Europe: The Report of International Workshop on Spatial Data Infrastructures’ cost-benefit/return on investment conducted by INSPIRE in 2006 indicated that against a cost of €93-138 million ($122-182 million) per annum on INSPIRE, the possible benefits are €770-1,150 million ($1,013-1,514 million) per annum. The report cites a few case studies. One such study is by the Centre of Land Policy and Valuations of the Universitat Politècnica de Catalunya on the socio-economic impact of the spatial data infrastructure (SDI) of Catalonia. The total direct cost of establishing and operating the Catalan SDI, IDEC over a five-year period (2002-06) was of €1.5 million ($1.98 million). Th is included the setting up of the infrastructure, operations and human resources costs. The main benefits of the IDEC accrue at the level of local public administration through internal efficiency benefits and effectiveness benefits through savings in time of the IDEC staff as well as the public and private users. The savings exceed €2.6 million ($3.42 million) per year.
» India: The Indian case studies are by U. Sankar (The Economics of India’s Space Programme: An Exploratory Analysis, Oxford University Press, 2007) and by Y.S. Rajan, S. Chandrashekhar and Gopal Raj (An Evaluation of the Benefits of the Indian Remote Sensing Programme). The study by U. Sankar computed a benefit of Rs 71,350-107,700 million ($1.3-2 billion) against an expenditure of Rs 15,620 million ($289 million). The second study computed a benefit of Rs 31,550.6 to 61,572.5 million ($585 million to $1 billion) in 1997-98 against an expenditure of Rs 2,000 million ($37 million). Th is does not include benefits arising from location-based services, better surveys and applications in g-governance and in industry. In addition, the study estimates a further benefit in excess of Rs 120,000 million ($2 billion) from intangibles like improved land cover estimation and avoidance of crop under-reporting which can have impact on the GDP but is not included in the above estimates.
The applications areas
» Agriculture: Th is sector is a major beneficiary of the impact of geospatial technology. The Australian studies show that using GNSS and GIS, it is possible to optimise agricultural yield through controlled traffic farming and inter row sowing. The Allen study estimates a benefit of A$152-206 million ($155- 210 million) for agriculture, which can rise to A$1,005-1,357 million ($1-1.3 billion) by 2030 if a nationwide GNSS network is established. The ACIL Tasman study estimates that in the case of broad-acre agriculture, the impact on the GDP is currently about 1% and can jump to 1.25% through the additional usage for pests and disease management, improved climate forecasting, improved asset management and farm planning, natural resources management, and increase in yield.
The Indian case studies have broken down agriculture-related benefits in great detail. Sankar estimates the benefits from horticultural development in wastelands to be Rs 13,000 million ($241-482 million. The Rajan team estimate the benefits for commercial crops like cotton and sugarcane to be Rs 334.8 ($6 million) and 18,944.8 million ($352 million), respectively.
» Forestry: Inventory management, remote assessment of forest yield estimation, canopy health mapping and operations management are being used by both government and private industry. In Australia, this has resulted in forest managers being able to handle 50% larger area. In India, benefits such as cost savings in range management, stock mapping, and improving afforestation schemes could yield Rs 221.1 million ($4 million). Sankar estimates the cost saving due to improved mapping for Forest Working Plans alone to be Rs 11,860 million ($220 million).
» Water Resources and irrigation: Sankar estimated the potential returns on the use of hydrogeological maps prepared from remotely sensed data for groundwater prospecting in India to be Rs 5,000-8,000 million ($93-149 million) due to cost savings arising from a better success rate in drilling. The Rajan team examined the use of geospatial data in irrigation in India and delineated the benefits as improved reclamation of salt-affected and water-logged areas, improved management, leading to less disparity between head and tail-end portions of irrigation commands and improved collection of water cess resulting in a benefit of Rs 5,260-18,060 million ($98-335 million).
» Micro-watershed management: Use of geospatial technology in micro-watershed management in India for improvements in area under agriculture, increased area under agro-forestry, horticulture and increases in milk yield could earn benefits of over Rs 20,000 million ($371 million). Land reclamation provides a benefit of Rs 24,690 million ($458 million) through productivity increase.
» Fisheries: In Australia, recording fishing tracks, fisheries management and habitat mapping resulted in a 4% productivity rise which can rise to 5.14% by 2030 as more improved techniques are adopted. In India use of remotely sensed data from Oceansat for determining potential fishing zones for pelagic fisheries has resulted in a benefit of Rs 16,350 million ($303.5 million) due to savings in fuel and higher fish catch.
» Mining: The Allen Group study considered the use of GNSS network for accurate selective mining and autonomous haul trucks. Applications of precision GNSS in open cut mining are estimated to be delivering benefits between A$371 million ($379 million) and A$744 million ($761 million) annually. By 2030 this could rise to A$4,614-9,347 million ($4,724-9,570 million). The ACIL Tasman report for Australia estimates that in the coal industry, spatially enabled robotic mining was delivering around 37% improvements in productivity at around a 9% adoption rate in 2006-07. Use of the spatial information application ‘Millmapper’ in precious metals mining is estimated to have improved milling operations and generated costs savings of around 2.4% with an adoption rate of around 11%. Oil, gas and mineral production has increased by 3%, 5% and 7%, respectively, using spatial technologies.
» Asset mapping: Precision GNSS technology can be used to accurately locate and map infrastructure assets such as pipelines, storm-water drains and underground cables. Th is is particularly useful for local government councils and utility companies that manage large networks of infrastructure assets. It can result in cost savings in undertaking the mapping task and also improve the efficiency of asset maintenance. According to the Allen report, “application of precision GNSS to asset mapping by utilities and local government Australia-wide is estimated to result in operating cost savings of A$435 million ($445 million) to A$870 million ($890 million) per annum and capital cost savings of up to A$2.3 billion ($2.4 billion) per annum”. The ACIL Tasman study estimates a productivity impact of 0.73% rising to 1.25% by 2030.
» Construction and engineering: The two main applications of GNSS networks is site survey and machine guidance of earth moving equipment. The Allen report says “a more productive construction sector can also produce more physical capital or infrastructure than would otherwise be the case and this helps the industry deliver significant economic benefits across the economy”. These benefits are estimated to be A$306-535 million ($313-547 million) and are mainly contributed by precision surveys that eliminate re-work and by automating machinery such as bulldozers, excavators and graders such that they conform to the site plan. Economy in the construction sector has a downstream benefit in other sectors dependent on it. By 2030 this could grow up to A$1,057-1,897 million ($1-1.9 billion). According to the ACIL Tasman report, modern surveying techniques have contributed 0.5% to the GDP.
» Transportation and storage: Spatial technologies have helped improvements in logistics, route selection and itinerary planning, transport planning, vehicle tracking, traffic and congestion management, transport operations in rail and air and intelligent transport systems. In Australia, the productivity ranges from 1.4% now to 1.58% by 2030.
» Communications: Spatial technologies for network planning and management and for postal routing has contributed 0.98% productivity gain in Australia. Th is can rise to 1.32% by 2030 with improved GNSS as well as better telecommunications systems marketing.
» G-governance: Government activities cover a variety of areas like geosciences, natural resources and environmental management, defence and security, land administration, development approvals etc. In Australia, land information has shown nine times benefit. Even a 50% adoption rate can improve productivity by 0.34% and this can rise to 1.05% productivity improvement based on observed improvements in asset management, service delivery, infrastructure planning, defence, emergency services, risk management, biosecurity, compliance and regulation.
» Geo-services : An Oxera study computed the revenues from providers of satellite imagery, digital maps, satellite positioning signals and navigation devices to be $150-270 billion globally. These services add value of about $100 billion per year. The added value comes from reduction in travel time through better navigation, saving of gasoline, competitive pricing of infrequently bought goods and services, better irrigation of agricultural areas, faster emergency response and better emoluments to students trained in geo-services.
» Disasters: A NASA study on Volcanic Cloud Data for Aviation Hazards focused on developing ash data in near real time for distribution by the National Oceanic and Atmospheric Administration to decision support systems that, in turn, provide the data to operational aviation agencies to manage flight operations and ensure safe flights. As an example, information on the ash cloud from the eruption at Eyjafjallajökul was used by the US VAAC to minimise revenue losses by $72 million. Had the London VAAC used the data, a further loss of $132 million could have been avoided. On a global scenario such information could help reduce losses by as much as $10 million a year.
The ACIL Tasman report lays importance on the availability of data. Data constraints are estimated to have reduced the direct productivity impacts in certain sectors by 5% to 15%. The areas of concern include availability of fundamental data, adequacy of spatial data infrastructure, access to data and pricing for access. An online survey on the use of spatial data to produce environmental reports conducted by the European Commission Joint Research Centre in 2009 investigated how easy it was to obtain the spatial data they needed to carry out environmental impact assessments and/or strategic environmental assessments.
The main outcome of the survey is that practitioners still face problems in using spatial data for the preparation of environmental reports. Issues mainly relate to finding and accessing data of the quality needed for the purpose. As a consequence, there is a 15% increase in cost and time to produce such reports. A solution to the data problems could result in a saving in excess of €150 million ($197.5 million) per annum.
Role of SDI
A note generated by the US National Geospatial Advisory Committee as late as December 2012 on ‘Toward a National Geospatial Strategy’ believes geospatial technology, information, and services can help address some of the major priorities of the nation. “The recommendations presented in this paper, including developing a nation geospatial policy, fully implementing the geospatial platform and portfolio management, and encouraging coordinated intergovernmental data initiatives, will lead toward a robust and forward-looking strategy to accelerate the development of the geospatial infrastructure,” it notes.
Governments are spending considerable effort and time on establishing SDIs. The expectation is that SDIs will contribute to efficient data collection, supply and usage by the public and private sectors. The findings of various studies do not bear out this expectation. The Tasman ACIL Australia study notes that “in summary, the first generation of spatial data infrastructure development in Australia has tended to be product based.”
While there have been attempts to break down silos and implement whole-of-government approaches, success has been at best partial. Hence, the Australian experience in developing a virtual spatial information infrastructure has meant that, rather than spatial data infrastructures being mechanisms for enhancing innovation and efficiencies in the supply chain, they have progressed only as far as being points at which spatial data that is discoverable can be accessed and retrieved. What is not ‘shared’ or communicated are needs, strategies, goals, value-added services and innovation, processes and operational objectives that are the context for the use of the spatial information. Solving these problems will result in a much better footprint of geospatial systems on the national GDPs.
(The author would like to acknowledge with thanks the inputs provided by Prof U. Sankar of Madras University and Gopal Raj of The Hindu.)