currents information; climate predictions; spatial temporal references such as nautical charts, GPS augmentations, and marine populations; and other scientific and social science information. So NOAA is in the information business and is arguably the biggest user and producer of operational scientific data in the federal government.
Regarding its policy towards the access and reuse of PSI, NOAA follows OMB Circular A-130, which is the guidance for the executive branch agencies in the federal government. As Nancy Weiss has described, Circular A-130 states that the open, efficient, and free exchange of federal government information is essential. Consequently, NOAA sets user fees at a level sufficient to recover the cost of dissemination but no higher, and, in particular, it does not charge prices to recover the capital costs. Thus, although there are some exceptions in such areas as national security, open access to data is the agency’s policy.
What is the economic rationale for this policy? Kirsti Nilsen has already reviewed the professional literature. Basically, the underlying idea is that the information that NOAA generates has strong public good characteristics. First, it is difficult to exclude users, which makes it difficult to charge for the data in order to recoup the cost of the capital. Also, the marginal cost of producing additional information is essentially zero, so to charge for it would be non-optimal because it would exclude many users who value the data.
While NOAA provides the capital infrastructure—satellites, observing stations, distribution systems, and the like—the agency’s policy calls generally for private industry to add value by generating and providing forecasts and other information for their customers, as appropriate. There is a whole body of literature that attempts to define “as appropriate,” but the bottom line is that NOAA operates the infrastructure, and the private sector does the value-added part of it.
Of course, while public goods theory provides a rationale for publicly supplied information, it does not say how much publicly supplied information should be produced. So, consequently, NOAA has to make cost-benefit calculations in order to decide how much to produce. NOAA managers compare the net benefits of a particular system or data collection activity with other data systems and, ultimately, with other public investments, such as health or highways. The emphasis is on net benefits—the total lifetime system benefits less cost—rather than simple cost-benefit ratios, which can often be misleading as a guide to public investments. Cost-benefit analysis is essentially a social accounting structure, and it gives us an indication of whether the costs of a project are justified in terms of its benefits to society.
Moreover, recent advances in technology and the economics of observing systems make it necessary to carry out a case-by-case examination of whether the public goods argument is in fact still valid and justifies government funding. For instance, with the advent of the Internet and other technological advances, the costs of disseminating observations have come down dramatically, so, with the exception of the big satellites, it makes sense to reexamine the public goods argument for many of the new observing systems.
On the question of how to measure the benefits of NOAA’s data, or even PSI in general, it is important to note that raw data, in and of themselves, do not provide value.