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6
Reconciling the Views of the Stakeholders
This chapter provides guidelines for negotiating among
stakeholders—research scientists, private-sector organizations, govern-
ment agencies, policy makers, and the general public. Special emphasis
is given to interactions between the private sector and the research
community and between private-sector organizations and government
agencies, where the potential for conflict is greatest.
GUIDELINES FOR INTERACTIONS BETWEEN SCIENTISTS
AND PRIVATE-SECTOR ORGANIZATIONS
As illustrated in previous chapters, the involvement of private-sector
organizations in collecting environmental data and creating and dis-
seminating data products creates both problems and opportunities for
environmental researchers. Environmental research scientists obtain the
great majority of their data from public-purpose information systems but
supplement this source by making additional measurements or
purchasing commercial data. Guidelines for minimizing friction and
enhancing cooperation between research scientists and private-sector
organizations in public-purpose environmental information systems are
given below.
Purchasing Data for Scientific Research
Commercial data providers may offer a valuable source of data to
scientists (e.g., see Example 5.7), but not all environmental data
collected by the commercial vendors are suitable for scientific purposes
75
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The Privatization of Environmental Data
because of issues of quality, spatial or temporal coverage, price, or
restrictions. Scientific concerns about purchasing commercial data
include the following:
. Restrictions could prevent scientists from using data in
customary ways, such as sharing data with colleagues, using them for
multiple purposes, or publishing them in scientific journals.
· Research proposals that include the cost of purchasing data
(especially projects that require large volumes of data) are likely to be
more expensive and thus less competitive in the proposal process.
Mechanisms for the scientific community to convey their
collective needs to commercial vendors are currently insufficient.
Commercial data may not meet scientific specifications.
Many commercial instruments are tasked to collect data only in
specific areas, which prevents assembly of global datasets.
· Documentation of the quality of the data and the methods by
which they were acquired may be inadequate. Complete documentation
would include details of the design of the instruments used, the results of
calibration experiments, the way instruments were deployed and their
.
sampling, random and systematic measurement errors determined from
comparisons with other data, the algorithms used to process the data, and
a log of exceptional circumstances surrounding the measurements
themselves.
· There is usually no provision for Tong-term archival of
commercial data, which leads to gaps in the long-term record of the
environment and hinders the research of future generations of scientists.
On the one hand, scientists encountering barriers such as use
restrictions commonly abandon a particular line of research, rather than
invest resources to work around the barrier. The impact of such missed
opportunities is difficult to assess. On the other hand, scientists are
opportunists who will work with whatever data are available. If the data
are intended to be used for just a short-term research project, restrictions
on subsequent uses may be acceptable. If the purchased data will also be
contributed to an archive used by a broader community, then restrictions
on other uses may undermine the Tong-term interests of science as a
whole.
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Reconciling the Views of the Stakeholders
Conclusion. Scientific practices require (1J full ant! open access
to data and core products and (29 peer-reviewed publication. In
addition, global change research requires the compilation of
high-quality, long-term, global databases that are suitable for a
wide varied of scientific purposes. Private-sector entities that
supply data to public-purpose information systems must conform
to these practices.
77
Scientists can obtain commercial data either by purchasing them
directly from commercial vendors or by participating as investigators in a
govemment-sponsored data purchase program. Scientists using research
grants to buy data have a number of possible workarounds for reducing
their costs.
· Use data offered at an educational discount.
· Purchase small quantities of data and tailor the research
accordingly (e.g., Example 5.7~.
· Redefine specifications to avoid commercial elements, such as
by using only spectral bands Mom high-resolution instruments that are of
little or no interest to commercial customers.
· Delay purchasing data Until the commercial value declines (e.g.,
Example 5.3~.2
· Substitute something for the raw data, such as data that have
been manipulated to remove commercial (or confidential) elements (e.g.,
Examples 5.10 and 5.11~.
Nor example, under NASA's $50 million Scientific Data Purchase
program, NASA-approved researchers can obtain access to data already
collected by certain commercial vendors or they can task selected satellites or
aircraft (e.g., IKONOS) to make new observations in specific locations. The
terms of access are negotiated by NASA with input from the research
community on issues of data quality, science relevance, data usability, likely
breadth of use, levels of collaboration, and data rights.
2Some applications, such as monitoring natural disasters, require near real-
time access to data. In such cases, scientists may have no choice but to use
restricted data. See J.E. Janowiak, R.J. Joyce, and Y. Yarosh, 2001, A real-time
global half-hour pixel-resolution infrared dataset and its applications, Bulletin of
the American Meteorological Society, v. 82~2), p. 205-218.
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The Privatization of Environmental Data
If the quantity of data needed is small or if the commercial elements
have been avoided or removed, the vendor may permit full and open
access because sharing and publishing the data in a customary manner
would not harm the commercial market (e.g., Example 5.2~. If the
commercial vendor wit! not permit full and open access, the researcher
must switch to other sources of data or help justify spending taxpayer
resources on a new government-sponsored observing system.
Conclusion. It is sometimes possible to work around restrictions
but doing so is inefficient and requires scientists to modify their
research objectives.
A scientific audit conducted by respected and trusted scientists at the
time of data delivery might also be an acceptable compromise for
ensuring adequate documentation. Disclosure of the scientific quality of
such data and the circumstances surrounding their acquisition might
provide an advantage to competing vendors. Yet, if such metadata is not
gathered and carefully recorded at the time of observation, it is usually
impossible to reconstruct the information later. In that case, even if the
data meet minimal performance requirements, their value for future use
is greatly diminished. The auditors would (~) ensure that complete and
satisfactory documentation exists; (2) publish a summary of its
scientifically significant conclusions; and (3) obtain assurances that
complete documentation would be published as soon as its commercial
significance has decreased.
Conclusion. Confidential scientific audits of commercial data
followed later by full disclosure may be a valuable too! in
assuring data quality.
Purchasing Value-Added Products and Services
Value-added products and services are commonly created by private-
sector organizations. Commercial value-added products that meet the
needs of the scientific community are welcomed and used by most
researchers. [f the product is too expensive for research budgets,
scientists will create their own from the same openly accessible sources
of data. Such competition with the private sector is fair, as long as
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Reconciling the Views of the Stakeholders
79
funding for developing the product is obtained through the scientific
proposal process and is evaluated against other research activities.
Conclusion. If a value-added product is justified scientifically
but is too expensive to purchase from a commercial vendor, then
scientists are justified in creating the product, as long as all
costs are pai~from peer-reviewed research budgets.
GUIDELINES FOR INTERACTIONS BETWEEN
GOVERNMENT AGENCIES AND PRIVATE-SECTOR
ORGANIZATIONS
At the instigation of Congress, government agencies are promoting
the development of a commercial remote-sensing industry. In the initial
stages agencies are purchasing data and services from commercial
vendors, either by contracting with private-sector organizations or by
forming public-private partnerships. Eventually some of these products
and services will be privatized entirely. As noted in Chapter 4, private
firms and market mechanisms should be considered when they advance
the interests of society.
Guidelines for determining the respective roles of the government
and private sector have been proposed elsewhere. For example, an
industry study divided activities into three categories: those that are
clearly public and should be undertaken by the government; those that
are in the domain of the private sector; and those that have both public
and private benefits, which the government should undertake only after
careful consideration.3 Environmental information systems generally fall
into the latter category.
This section provides criteria for government and private-sector
interactions concerning the roots and branches of public-purpose
information systems. The criteria are meant to ensure that public-sector
needs continue to be met when the private sector provides the data or
3J.E. Stiglitz, P.R. Orszag, and J.M. Orszag, 2000, The role of government
in a digital age, A report commissioned by the Computer & Communications
Industry Association, 154 pp. The goals of these criteria, which are meant to
maximize opportunities for the private sector, are somewhat different from those
discussed in this report, which aim at maximizing the public good. Of course,
these views are not necessarily mutually exclusive.
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The Privatization of Environmental Data
service. The resulting arrangements are likely to be complex, particularly
if the information system serves multiple objectives.4
Purchasing Data and Public-Private Partnerships
Under some circumstances data collected by commercial entities or
by public-private partnerships may be suitable for use in public-purpose
information systems. Criteria for government agencies purchasing data
for public-purpose information systems include the following:
.
The data must fulfill public-sector needs. For example, data
intended for scientific purposes must fulfill both immediate research
objectives and Tong-term scientific goals. This in turn requires that the
government acquire all the data rights (i.e., full and open access) within a
specified period of time.
The data must be of suitable quality and have undergone credible
calibration and validation techniques to assure they meet that quality. If
the objectives include contributing to future research needs, full
documentation is required (see "Purchasing Data for Scientific Research"
above). When the data are initially available for confidential scientific
audit, the vendor must make a commitment to publish the full record of
that audit when commercial reasons for confidentiality are no longer
applicable.
· Because it takes several years to fully develop data products.
there must be a reasonable prospect of a Tong-term supply of data.
4For example, legislation governing data policy for Landsat-7 seeks to
achieve multiple goals: (1) ensure that unenhanced data are available to all users
at the cost of fulfilling user requests; (2) ensure timely and dependable delivery
of unenhanced data to the full spectrum of civilian, national security,
commercial, and foreign users and the National Satellite Land Remote Sensing
Data Archive; (3) ensure that the United States retains ownership of all
unenhanced data generated by Landsat-7; (4) support the development of the
commercial market for remote sensing data; (5) ensure that the provision of
commercial value-added services based on remote-sensing data remains
exclusively the function of the private sector; and (6) to the extent possible,
ensure that the data distribution system for Landsat-7 is compatible with the
Earth Observing System Data and Information System (Land Remote Sensing
Policy Act of 1992, Public Law 102-555~.
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Reconciling the Views of the Stakeholders
81
These criteria also hold true for public-private partnerships, which
are becoming an increasingly common mechanism for collecting
environmental data. Such partnerships differ Tom data purchase agree-
ments in that there is a quid pro quo, and therefore more incentive to
compromise. Although some public-private partnerships have been a
success (e.g., Examples 5.12 and 5.13), others have not (e.g., Landsat-4
and -5) or have not passed the negotiations stage (e.g., Example 5.15~.
Before entering negotiations with potential pnvate-sector partners,
government agencies should produce a data plan to ensure that their
mission and long-term strategy are fulfilled.
Commercializing Government Data
Commercialization refers to the financial exploitation of government
data (see Box 1.~. U.S. information policy (particularly OMB Circulars
A-130 and A-l 10; see Box 2.1) encourages such exploitation by
stipulating nondiscnminatory access at the marginal or incremental cost
of reproduction. Because the U.S. government does not hold intellectual
property rights (see Appendix B), commercial exploitation of govern-
ment data can coexist with public-sector uses, such as scientific research.
Such open data policies are partially responsible for the success of the
U.S. information indus~yS and research enterprise.6
Conclusion. The commercialization of U.S. government data
maximizes the use and thus the value of data in both the public
and private sectors.
5According to a European Commission report, "Since the Freedom on
Information Act was enacted in 1966, the US government has pursued a very
active policy of both access to and commercial exploitation of public sector
information. This has greatly stimulated the development of the US information
industry." See Public Sector Information: A Key Resource for Europe. Green
Paper on Public Sector Information in the Information Society, European
Commission Report COM(1998~585, Luxembourg, Belgium, 1998, 28 pp.
6NRC, 1997, Bits of Power. Issues in Global Access to Scientific Data.
National Academy Press, Washington, D.C., p. 17.
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The Privatization of Environmental Data
In contrast to the U.S. approach government agencies in other
countries exert copyright, database protections, and other forms of
intellectual property in order to control access to data (see Chapter 2),
thereby acting like monopoly suppliers and limiting the extent to which
government-collected data can be used.
These different approaches to data access are commonly a point of
contention in international collaborations (e.g., Examples 5.1 and 5.5~.
Yet, such collaborations are essential for addressing global or regional
environmental problems. Full and open access has been the norm in
international collaborations for the following reasons:
.
It is necessary for establishing confidence in the data, both for
current and future uses.
· It is difficult to predict what information and in what amount
will be needed to address the problem.
· It facilitates the integration of global datasets, as well as the
widespread application of knowledge gained about environmental
processes in a particular region.
Creating multiple copies of data and metadata through open
sharing increases their chance of long-term survival.
Even if scientists and government agencies in wealthy countries can
afford to buy data and the associated data rights from commercialized
government agencies, it is unlikely that developing countries will be able
to do so. If developing countries are excluded from long-term programs,
it will not be possible to obtain the comprehensive coverage and range of
expertise needed to address many global environmental problems.
Conclusion. A data policy offull and open access that provides
for unrestricted uses maximizes the benefits of international
collaboration and the social benefits of the scientific endeavor.
Privatizing Government Functions
Determining which functions should be public and which ones
should be private is the object of a Tong-standing debate. It is commonly
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Representative terms from entire chapter:
commercial data
Reconciling the Views of the Stakeholders
83
in the public's interests to transfer government functions to the private
sector, provided that competition leads to better products and services at
lower prices, and public resources can be directed to other priorities.8 On
the other hand, where the environment is concerned, privatization may
have some pitfalls, including
· a likelihood that the market structure will evolve toward a
monopoly, which would increase the cost of data to all users and
probably diminish responsiveness to user needs;
.
a commercial market may not exist and thus measurements
important for some public uses (e.g., research, operations) may not be
made at all (Example 5.4~; and
.
a commercial market may lose viability and thus measurements
may be discontinued, creating gaps in the long-term environmental
record.
Government attempts to stimulate commercial markets for Earth
observation data in Europe have not been entirely successful. A
European market study indicated that total revenues for commercial
Earth observation data grew only 6 percent from 1994 to 1997.9 The
same study indicated an apparent tendency toward industry
concentration. In 1997, 13 companies captured 50 percent of the market,
down from 16 companies in 1994. Little had changed by 1999,'° and a
United Kingdom Parliament committee noted, "Despite more than a
decade trying to stimulate commercial markets for Earth observation
7For purposes of this report, public-sector interests include scientific
research on the environment, health and safety issues, and government
operations.
HA general discussion of the economics of privatization can be found in J.
Vickers and G. Yarrow, 1988, Privatization. An Economic Analysis, MIT Press,
Cambridge, Massachusetts, 454 pp.; and D.M. Newbery, 2000, Privatization,
Restructuring, and Regulation of Network Utilities
Massachusetts, 466 pp.
MIT Press, Cambridge,
9ESYS Limited, 1997, European EO Industry and Market. 1998 Snapshot -
Final Report, Prepared for the European Commission, Guildord, United
Kingdom, 82 pp.
representation to a European Commission workshop, Has EO found its
customers?, by S. Howes, ESYS Limited, on April 21-22, 1999. See
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The Privatization of Environmental Data
data, provided at public expense, it is universally accepted that the take-
up has been unsatisfactory.... Further EO expenditure at current levels
must be driven by more than an expression of general but unsub-
stantiated hope that commercial markets wait be generated. It must also
be accepted that there are good public policy reasons to gather EO data
which cannot be expected to generate a commercial retum."~i Similarly,
the U.S. Congress concluded that "commercialization of the Landsat
program cannot be achieved within the foreseeable future."
This situation may change as the market matures. According to
Geoffrey Moore, when a new technology is introduced, it follows a
predictable path of marketplace adoption.~3 First, a small group of
visionaries who like new things and are looking for breakthroughs buys
the product. The early adopters, who take on high-risk products in hopes
of high rewards, soon follow. The pragmatists, who make up the bulk of
the market, enter only when the products are well established and well
supported. In the case of environmental information systems, scientists
are the visionaries, government agencies are the early adopters, and
private-sector organizations are the pragmatists. Privatization is possible
when and if the chasm from early adoption to the mainstream market is
crossed.
Privatizing Branches
Pr~vate-sector organizations may be better positioned than
government agencies to identify potential applications. If a viable
commercial market for the value-added product exists, it may be in the
public interest to encourage private-sector organizations to create that
product. Government resources could then be devoted to developing
products that benefit broad and diffuse groups of users or are considered
too risky for the private sector to undertake. On the other hand, if
suitable commercial products are too expensive (in terms of price or
restrictions), it may be appropriate for the public sector to provide the
value-added product or service. Criteria for the government to
reunited Kingdom House of Commons, Trade and Industry Committee,
Tenth Report.
Reconciling the Views of the Stakeholders
85
discontinue an existing product line in favor of its production by private
entities include the following:
· There are no overriding considerations, such as health and
safety, that require continuing government control.
Government-funded functions (e.g., scientific research, edu-
cation, government operations) would not suffer greatly from restricted
access to the product.
· Private-sector organizations are interested in taking over the
functions of the government-funded branch.
· The research and development underpinning the application is
mature (i.e., there are no significant uncertainties surrounding the
interpretation of the available data for the purpose at hand).
A demonstrable market that supports vigorous competition exists
or is at least plausible, thereby reducing the possibility of a private
monopoly. This is particularly important when the government and its
affiliates would be the major customers.
· Existing users would not be harmed significantly if product
availability were interrupted. For example, gaps in the long-term climate
record may prevent detection of rapid temperature changes, thereby
hindering scientific research and environmental policy making.
To avoid creating a monopolized market it is important that the
following three conditions be satisfied before proceeding with
privatization: (1) the prospective products are substantially differen-
tiated; (2) it makes financial sense for separate firms to offer these
distinct products; and (3) the affected market is of sufficient size to
support at least two but preferably three or more firms (see Chapter 4~. if
a market is too immature to identify this information with any reasonable
certainty, privatization may be premature.
Government agencies should not fee] compelled to discontinue a
service that is to the public benefit simply because a commercial vendor
chooses to duplicate it. Similarly, government agencies should be
permitted to replicate a privatized service if regeneration can be done at
an incremental cost smaller than that of purchasing full rights from a
private vendor or if questions about data quality or continuity arise.
Information vital to the public interest should not be "captured" by the
private sector, which has economic reasons for controlling access.
86
Privatizing Roots
The Privatization of Environmental Data
Criteria for government agencies to discontinue data collection and
purchase data from private-sector organizations include the following:
A commercial capability for supplying the necessary data exists.
The private sector is likely to provide a stable, long-term
information supply.
There is an effective process for conveying scientific or
operational requirements to the private sector.
The content and conditions of access to datasets (in particular,
full and open access) would fulfill public-sector needs.
There is an established process for ensuring quality assurance
and quality control of the commercial data.
· A substantial commercial market for the data exists that would
not be compromised by the full and open access provided to the
government and could reduce costs to the government.
If all of the above conditions are fulfilled for public-purpose
information systems, it may well be in the public interest for the
government to privatize data collection. In such a case, continued
provision of data by a government agency will likely discourage private-
sector organizations from building quality services that better meet the
needs of the public.
On the other hand, privatization is not without risk because it
involves discontinuing government functions with proven value in favor
of private-sector services for which benefits may never accrue. The risks
are greatest in data collection because of the potential for gaps in the
Tong-term record of environmental change. Nevertheless, under certain
conditions, the collection of data andJor generation of data products can
be transferred from the government to the private sector. Care must be
taken to ensure that high-quality measurements and products needed by
the public sector continue to be made, that data will continue to be made
available on a full and open basis (i.e., without restriction and for no
more than the cost of reproduction), and that the commercial vendors
operate in a competitive market.
Decisions concerning which functions should be public and which
should be private must be made case by case, using criteria such as those
Reconciling the Views of the Stakeholders
87
outlined above. Most decisions will involve the transfer of government
functions to the private sector but some will concern the reverse
situation. For example, if previous privatization efforts have led to a
costly monopoly, a decline in data quality, or gaps in the long-term
record, then re-entry by a government agency may be desirable. Of
course, such decisions must be re-evaluated as circumstances change.
Policy makers cannot expect to be able to write a single rule that applies
to all cases or for all time.
Recommendation. Before transferring government data
collection and product development to private-sector
organizations, the U.S. government should ensure that the
following conditions will be satisfied: (1) avoidance of market
conditions that will give any firms significant monopoly
power; (2) preservation of full and open access to core data
products; (3) assurance that a supply of high-quality
information will continue to exist; and (4) minimized
disruption to ongoing uses and applications.
