GEOGRAPHIC INFORMATION: Value, Pricing, Production, and Consumption - Chapter 2

chapter two Determining the value of geographic information 2.1 Introduction Everyone is a user of information, and the same information can be used by all sections of society for quite different purposes — citizens, businesses, and public bodies. In this chapter, we address the question: What is the value of geographic information? Longley et al. (2001, p. 376) note that “the value of the same information differs hugely to different people and for different applications.” Different values also apply at different times or when infor-mation is in different formats or when used for purposes other than that for which it was first collected. According to Barr and Masser (1996), “informa-tion has no inherent value, it is only of value once used and that value is related to the nature of the use rather than the nature of the information. As a result information has very different values for different users.” Accord-ing to the U.S. Federal Highway Administration (1998, p. 3), information has value “determined by its importance to the decision maker or to the outcome of the decision being made … professionals require information that is not only accurate, timely, and relevant, but also presented and interpreted in a meaningful way.” To complicate matters, as we saw in Chapter 1 (p. 2), geo-graphic information (GI) has many definitions. The very meaning of the word value, in relation to worth, is another indi-cation that it may be extremely difficult, if not impossible, to assign any one value to something as multifunctional and multifaceted as information. The Many Meanings of Value Value, noun, worth; intrinsic worth or goodness; recognition of such worth; that which renders something useful or estimable; relative worth; high worth; price; the exact amount of a variable quantity in a particular case. (Larousse, 1997) Value, noun, the importance or worth of something for or to someone; how useful or important something is; the amount of money that can be received for something. (Cambridge Advanced Learner’s Dictionary, 2005) Value, noun, a fair return or equivalent in goods, services, or money for something exchanged; the monetary worth of 23 ` 2008 by Taylor & Francis Group, LLC 24 Geographic Information: Value, Pricing, Production, and Consumption something, e.g. a market price; relative worth, utility, or impor-tance; a numerical quantity assigned to something or determined by calculation or measurement. (Merriam-Webster Dictionary Online, 2007) Value of information or information-based services seldom relates to pur-chase price or cost, except for the monetary value received by a vendor from sale of information or services. However, the value perceived by a customer may impact on the price charged by a vendor or the customer’s willingness to pay. In the commercial marketplace, for an information product or service to be sustainable, price must cover at least cost of production and distribu-tion, and preferably some return on investment. For public sector geographic information (PSGI), required or produced as part of a public body’s governance responsibilities, any value based on com-mercial price to acquire data or a service may be irrelevant, since the data must be collected or used in order to fulfill legally-mandated tasks. In this case, the true value to both the public body and society, i.e., citizens and busi-nesses, lies in the efficient completion of those tasks. For both the public and commercial sectors, remember that all information has a cost, yet the cost for acquiring and using the same information may vary, and the same infor-mation may have differing values for different users at different times, in different formats, with different conditions attached. As Bryson (2001) notes, it becomes important in the global information society to “identify and man-age different value propositions from a financial, political, corporate, social, cultural, personal and community values perspective … to exploit the total worth of the information and knowledge age.” Also, Lash (2002) introduces the concepts of exchange value and use value, in which use value typically exceeds exchange value. A warning is perhaps in order here for the reader who is looking for in-depth coverage of the many issues surrounding value of information. This chapter provides an overview of the issues and theories surrounding the definition of value, many of which warrant entire books in their own right — and indeed some of the topics, such as value theory, value chains, and information economics, have generated entire literatures. Therefore, we have limited ourselves to setting out the key issues and definitions, and introduc-ing the reader to some of the underpinning theories, which can be explored more fully using the extensive references listed at the end of the chapter. 2.1.1 Information value is in the eye of the beholder The value of information as a product, sold by a vendor, may not equate to the value of that same information to the final consumer or user. For the former, the value of information may be totally financial, based on a sales price that covers all costs plus an acceptable return on investment. For the user, depending upon the type of user, the value might be financial, social, ` 2008 by Taylor & Francis Group, LLC Chapter two: Determining the Value of Geographic Information 25 economic, cultural, political, or personal, as Bryson (2001) indicated. At the personal level, the value could vary from simple added convenience, e.g., finding a restaurant or theatre more easily, to enabling a new information ser-vice offered by the user for his or her financial gain. Also, what is the value to a vicarious user, i.e., the value of location-based data used in an emergency vehicle routing system that may help save a person’s life — your life? Thus, one can see that the question “What is the value of GI?” depends very much on who is asking and why. A GI vendor who is making an acceptable profit from sales of a GI product or service is quite happy with the value of the GI on offer. A purchaser disappointed by the utility that he or she received from that product or service, for a specific purpose in certain circumstances, might be less inclined to assign high value to the very same GI. Disregard for the moment the distinctions typically made among data, information, and actionable knowledge gained from use of information. Set aside the claim that “geospatial information is special” (Van Loenen, 2006, p. 19) in the world of information and information markets. As mentioned in Chapter 1, some of the aspects of GI put forward to support the claim for the uniqueness of GI also apply to many other types of data, especially in the scientific, technical, and medical (STM) realm. Regarding perceived value, this ephemeral thing called information has similarities to physical goods that one can see and touch. For example, a chair has production costs, which must be met by someone, as does information. A chair is created with some purpose or planned use in mind, some marketplace, as are informa-tion products and services. The chair may have different values to different people, e.g., a chair constructed in a 1950s’ style might be desired by certain collectors of furniture from that period, and thus of high value, but consid-ered to be hopelessly old fashioned by others, and thus of low value. The monetary value placed today on a Louis XVI antique chair certainly bears no relationship to its production cost. Similarly, geographic information describ-ing road centerlines is of critical importance for a highway authority, and therefore of great value, but of little importance to a forestry commission, and of no use to a mariner, for which it is unlikely to have any value at all. Yet all three — highway authority, forestry commission, and mariner — are users of geographic information. Thus, while the value proposition may be similar between information and hard goods, the economics of information are quite different from those of physical goods, since “information can be costly to produce, but cheap to reproduce” (Longley et al., 2001, p. 379), and even less costly to distribute, especially in the digital age. 2.1.2 What type of value to measure? Value should be measurable in some acceptable way. However, if information has different types of value, representing different aspects of worth, then there will be different measures, which will not apply equally to all infor-mation in all circumstances. One measure of worth is financial or monetary ` 2008 by Taylor & Francis Group, LLC 26 Geographic Information: Value, Pricing, Production, and Consumption value, i.e., sales value related to production cost recovery, profit margins, and return on investment or similar financial targets within the commer-cial information market environment. This relates more to what Lash (2002) refers to as exchange value. Financial value can also apply to public sector GI if use of the information helps deliver cost savings or aids in managing financial risk while improving service delivery. In this case, however, the numeric value may be more difficult to specify and no longer necessarily relates to exchange value. Monetary value recognizes that information pro-duction costs are real, e.g., for data collection, processing, dissemination, and management, and must be recovered by someone, somehow. This type of value applies to raw data, as a commodity to be traded, and to value-added information products and services. Since costs can usually be computed with some degree of accuracy, this type of value, typically reflected in the price at which the data are traded and the consumer’s willingness to pay for the product or service offered, can also be determined reasonably well. In other words, the sales price offered in the information marketplace serves as a financial surrogate for one type of value. Remember that both raw data and value-added products and services can have different perceived values to consumers, represented by the customer’s willingness to pay. If this value is lower than production costs, then the data, product, or service will soon disappear from the marketplace. Much is also written about the socioeconomic value of information, i.e., value of an information good or service in achieving societal goals, typically by impact on quality of life or better governance or improved economics at the macro level. Socioeconomic value is much more difficult to quantify than monetary value because of the myriad uses to which the same information product or service can be put in regard to a wide range of societal goals or economic targets. In this chapter, we review some past attempts to assign socioeconomic value to geographic information, for which the location attri-bute supposedly adds specific value. However, such value assignments are often frustrated by difficulty in translating acceptable measures of success in achieving often intangible benefits to society as a whole into something quantifiable, such as a monetary value or other tangible benefit for which a surrogate monetary value can be assigned. Proponents of GI as a valuable information resource often rely on such financially indefinable or ambigu-ous benefits when promoting the concept and value of spatial data infra-structures (SDIs) to government, for which costs at the national level can be considerable, an issue explored further in Chapter 6. There is also the question of whether one should assess social value and economic value separately. According to Angeletos and Pavan (2007), research into the social value of information goes back more than 35 years, with the early work of Hirschleifer (1971), during which period competing claims are offered that “public information can reduce welfare (and) … public informa-tion is necessarily welfare improving.” In their 2007 (p. 568) paper, they show that “the social value of information depends not only on the form of strategic ` 2008 by Taylor & Francis Group, LLC Chapter two: Determining the Value of Geographic Information 27 interaction, but also on other external effects that determine the gap between equilibrium and efficient use of information” (Angeletos and Pavan, 2007, p. 5). Their work investigates economies in which welfare (a measure of social value) would be greater if agents (decision makers) increased their reliance on public information, contrasted with economies in which just the opposite is true. They also describe economies in which any and all information is socially valuable contrasted with economies in which welfare decreases with increased access to both public and private information, the latter claim call-ing into question claims of the importance of the information commons to society. Information also has cultural value, which may be considered separately from social or economic value, yet this is difficult to measure except in social terms, for which, as already indicated, it is inherently difficult to assign a specific value. Thus, cultural value is perhaps the most difficult of all types of worth to assign to GI or, for that matter, to other types of information and a whole range of physical objects, from historic monuments to the Domesday Book. Yet when one looks at the often significant sums that nations assign to cultural budget lines, e.g., for museums, libraries, orchestras, or maintenance of national monuments, it appears that culture is considered to be a valuable national asset. Information both protects and promulgates cultural identity, where place is a key attribute for much of the information deemed to be cul-tural. Information defines cultures, imparting a sense of identity, sovereignty, principles, and rights to those in a specific society, and also separates subcul-tures. One aspect of cultural value for GI relates to preservation of informa-tion, for example, of old maps or other place-based collections of data, which help us to understand human history and our place in that history, in our own society and in the global society, both today and in the past. Defining what constitutes cultural information and the cultural values that relate to measures of worth, importance, or usefulness is no simple task, as cultural value is very closely linked to the social value of informa-tion and its supporting technologies. Again, according to Bryson (2001, p. 5), this is “because information and its supporting technologies assist with developing individual and collective minds and manners, and contribute to the intellectual and artistic development of different societies and groups.” Understanding the rights of others is also one of the cultural values quoted by Bryson, which includes the right to determine “ownership, presentation and management of information and knowledge.” In fact, much of our cul-tural heritage is captured in, or represented by, artifacts from our past, of all shapes and forms, including the information needed to interpret those artifacts in a cultural or societal setting. In that sense, geographic informa-tion provides cultural contexts, whether represented by the earliest maps, which were often produced as works of fine art, or simply textual references to events, objects, and people that establish spatial references. Bryson also proposes that the political value of information derives from its usefulness in communicating ideas, principles, and commitments. We are ` 2008 by Taylor & Francis Group, LLC ... - tailieumienphi.vn