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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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76 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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78 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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80 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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82 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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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
84 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.
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