Global Earth Observation (GEO), such as satellite observations, helps manage environmental resources and prevent disasters. However, they are expensive. A recent study proposes a framework to assess the value of GEOs in which stakeholders are consulted.
GEO consists of all observational information about the state of the world, including satellite observations and 'in situ' information. Many governments and international organisations invest a large amount in GEO to inform their decisions. However, there have been recent budgetary pressures on GEO. To assess its benefits, the European Commission has funded the GEO-BENE project1, which supported this Dutch study. The study proposes a framework based on 'Bayesian decision theory', whereby the probability that a decision-maker will invest in information depends on how much uncertainty will be reduced by the information.
In order to assess the framework, the study assessed the value of satellite observations to monitor water quality in the North Sea. More specifically, the study examined three case studies: eutrophication (observed via chlorophyll-a - the pigment (colour) from algae, which acts as an indicator of eutrophication), excessive algal blooms and suspended sediments. A range of stakeholders was consulted, including policy makers, water managers, researchers and representatives of interest groups, using a questionnaire based on Bayesian decision theory.
On average, the results demonstrate that respondents expect satellite observations to improve water quality monitoring in the North Sea. This expectation is greatest for suspended sediments. It is considered slightly less valuable for monitoring for algal blooms and least valuable for eutrophication as respondents believed a well-functioning water monitoring system already exists and there is a good understanding of the relationship between source and effects.
Estimates of economic pay-offs could only be made for an early-warning system for algal blooms, based on an event in 2001 where algal bloom caused an approximate loss of EUR 20 million to the Dutch mussel farming industry. From this, the study estimated a value for satellite observations of EUR 74,000 per week for monitoring algal blooms. Since the total additional costs of satellite observations are about EUR 50,000 per week, the net benefits were estimated at EUR 24,000 per week. This suggests a social rate of return of 48 per cent. It is difficult to estimate economic pay-offs for eutrophication as more than 85 per cent of nutrients which cause eutrophication come from poorly controllable sources, such as historical stocks of phosphates and nitrates and atmospheric deposits. Hence, better information about chlorophyll-a's spread contributes little to better-targeted interventions.
The authors acknowledge much uncertainty surrounding the estimates used in the study, particularly those arising from participants' assumptions about the reliability of GEO information. However, when accounting for these uncertainties, the probability that investments in early warning enhance welfare is still 75 per cent.
The study concludes that Bayesian decision theory provides a suitable framework for assessing the economic value of GEO information through stakeholder consultation, but that it requires a high level of expertise and awareness from the respondents to quantify their responses. It also indicates the importance of including several decision-makers in the consultation since estimates of value vary depending on background, expertise and possible allegiance to existing monitoring systems or organisations.
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