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5 Setting Priorities for Ocean Infrastructure Investments The infrastructure and research investments required • oes the research contribute to a greater understand- D to address most of the compelling scientific questions are ing of ocean issues at a global scale? substantial. The development and maintenance of Earth ob- • oes the research address mandates of governing D serving systems have been a significant challenge for decades entities (federal agencies; state, tribal, and local and major elements of the observing system are actually in governments)? decline (NRC, 2007b). Consequently, the competition for resources to develop and maintain the infrastructure needed This committee expands upon these proposed ques- to support scientific investigations is growing. A list of infra- tions on the basis that ocean research infrastructure will structure requirements, matched to scientific questions and increasingly be judged on its importance to society. Public societal needs, is by itself insufficient guidance to ensure investment in the research enterprise exists as part of a appropriate investment for infrastructure that will facilitate social contract, first articulated by Vannevar Bush in his ocean research in 2030. Instead, it needs to be accompanied seminal document, Science the Endless Frontier (Bush, by mechanisms or criteria for prioritization. 1945). It describes a framework in which investment in A National Research Council review of Charting the the basic sciences is motivated by benefits that are realized by the public (e.g., improvement in the standard of living, Course of Ocean Science in the United States for the Next higher productivity, increased jobs, national security). Gov - Decade: An Ocean Research Priorities Plan and Imple- mentation Strategy (NRC, 2007a) proposed the following ernment research investments today are often connected to questions to identify the most compelling research priorities the societal benefits that might accrue, providing greater for ocean research: linkage between basic research and application than was implied in Bush’s brief report. In this chapter, the commit - • s the proposed research transformational (e.g., will I tee describes a framework in which ocean infrastructure the proposed research enable significant advances in investments are prioritized by their potential societal con - insight and application, even with potentially high tributions within an economic valuation. It is important risk for its success; would success provide dramatic to note that societal contributions for the public good can benefits for the nation)? come in many forms, including the value of job creation • oes the proposed research impact many societal D or avoidance or mitigation of natural disasters. As the 20th theme areas? century saw enormous investments in research motivated • oes the research address high-priority needs of D by the Cold War, the 21st century may see investments resource managers? motivated by a wish to avoid or lessen the impact of envi- • ould the research provide understanding of high W ronmental catastrophes. value to the broader scientific community? Research infrastructure in place in 2030 will shape both • ill the research promote partnerships to expand the W the nature and quality of ocean science that is undertaken, as nation’s capabilities (e.g., contributions from other well as the value that this science will generate for inform- partners, including communities outside of ocean ing policy and management decisions. As noted throughout science, such as health science; unique timing of the report, the degree to which ocean research infrastructure activities)? is of compelling importance to society can be judged based • oes the research serve to contribute to or enhance D on potential contributions toward enabling stewardship of the leadership of the United States in ocean science? the environment, protecting life and property, promoting 53

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54 CRITICAL INFRASTRUCTURE FOR OCEAN RESEARCH AND SOCIETAL NEEDS IN 2030 sustainable economic vitality, and increasing fundamental allow fishing closer to maximum sustainable yield without scientific understanding. risking overexploitation or other adverse ecological conse- quences. By increasing yield without reducing sustainability, the economic value of the fish stock to the nation could be A PROCESS TO SET PRIORITIES maximized. The difference in economic outcomes with and Each piece of infrastructure enables or supports a set without the information is its value. of data collection and/or modeling activities, and therefore Although infrastructure costs can usually be determined supports the production of information, which has value. The with considerable accuracy, the value of information in same piece of infrastructure also has a cost associated with most cases can only be estimated (e.g., Adams et al., 1995; it (e.g., building and maintaining a ship or computer model, Nordhaus and Popp, 1997; Teisberg and Weiher, 2000; training and supporting a technician, archiving and making Williamson et al., 2002). Certainty about the value of infor- accessible a data set). The task of prioritizing ocean research mation from research investments decreases the further it is infrastructure investments can be interpreted as maximizing removed from helping to answer specific applied questions; net benefits over time by choosing the best combination of this uncertainty is greatest for basic science investments, infrastructure investments needed to address the science where the nature of the answers and their applications are within budget constraints. The committee concedes that there by definition not well identified in advance. Uncertainty may be other legitimate considerations beyond those spelled about the expected value of information from infrastructure out in this report, but most likely these could all be incorpo- investments arises from several sources, including uncer- rated into an economic optimization framework. tainty about the performance of new technologies, the nature The bottom-up linkage from infrastructure to societal of information generated by new technologies or research benefits shown in Figure 1.1 provides a useful approach to activities, and the value that the information will in fact gen- thinking about infrastructure priorities. An important feature erate. Uncertainty can lead to missed opportunities in com- of this prioritization is economy of scale and scope, as a mercial market assessments, when comparing a well-known given piece of infrastructure may support multiple research market with an arguably better but less well defined market activities, models, and science questions. For example, a (e.g., the Innovator’s Dilemma [Christensen, 1997]). Deep- particular mooring may support multiple sensors, each sen- mapping autonomous underwater vehicles (AUVs) provide sor can supply data that feed into several models, and each an ocean technology market example. They are an example model can contribute information to one or more societal of a disruptive new technology introduced to the established objectives. In addition, a system of coordinated sensors seafloor survey market, which had relied upon deep towed can provide information that is more valuable than their systems prior to AUV use. Due to the established companies’ individual contributions. An approach of this kind requires hesitancy in adopting a new technology or because of their knowledge about the value (benefit) generated by specific already significant investment in the existing technology, information about the ocean and its contribution to achieving smaller survey companies using AUVs were able to quickly societal objectives; linkages between each piece of infra- gain a strong market. structure and this specific information; and the cost of each It is not necessary to have perfectly accurate estimates piece of infrastructure. of the value of information in order to make reasonable The value of information (Howard, 1966; McCall, 1982; prioritization decisions. It is necessary, however, to employ Nordhaus, 1986) relevant to societal objectives is determined a rigorous and harmonized approach that will need to be un - by the degree to which the information allows decision mak- dertaken at a national level—one that is consistent across and ers to achieve an economically better outcome. The role of between all relevant agencies, and one that treats uncertainty information is to reduce the uncertainty under which these about returns from investments in a systematic way. Uncer- decisions are made. For example, the societal objective of tainty in making ocean research infrastructure choices can managing the nation’s commercial marine fish stocks for be addressed in part through mechanisms for the treatment maximum sustainable yield can be advanced by improving of uncertainty in investment decisions (Dixit and Pindyck, the quality of information represented by stock assessments 2010), and the emerging theory and practice of strategic and forecasts of fish stock abundance under different levels decision making about real options in research and develop- of fishing effort, environmental conditions, and ecological ment (Trigeorgis, 1996). Much of this work is focused on interactions. When information (e.g., stock assessments, investment in research and development by firms seeking forecasts, interactions between species within and across to maximize profits from future technology improvements tropic levels) is less than perfect, fisheries managers must (Bowman and Moskowitz, 2001; Huchzermeier and Loch, make decisions with greater uncertainty. Uncertainty can 2001; Weeds, 2002; Gunther-McGrath and Nerkar, 2004; be addressed by either reducing the fish catch below the Wang and Hwang, 2007), but these problems are structur- theoretical sustainable yield or by accepting an increased ally analogous to the challenge facing government agencies risk that the stock will be overexploited. If these assess- as they seek to maximize return from research infrastructure ments and forecasts were perfect, fisheries managers could investments.

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55 SETTING PRIORITIES FOR OCEAN INFRASTRUCTURE INVESTMENTS Economic value estimations begin with mapping • ow dependent is an area of research on the specific H research questions to infrastructure requirements. In Chapter infrastructure? 4, the committee takes a first step in assembling the infor- • oes the infrastructure provide the appropriate level D mation needed to map infrastructure components to relevant and quality of data? Are the measurements and analy- ocean research questions for 2030. More detailed mapping of ses provided sufficient to support science and reduce linkages between future infrastructure and information pro- uncertainty for decision making? duced may require formal or informal simulation exercises • hat is the potential for quantum leaps in under- W (e.g., Observing System Simulation Experiments). As with standing or capability? the estimation of future economic benefits, there are limits to the precision with which this kind of mapping can be car- Affordability, Efficiency, and Longevity ried out; development of a framework, however approximate, can indicate trends useful for prioritization. The challenge • s there an appropriate infrastructure portfolio to I of prioritizing ocean research infrastructure investments manage uncertainty? is best approached by estimating the economic costs and • oes the infrastructure have design flexibility to D benefits of each potential infrastructure investment, and take advantage of future trends in technology (e.g., funding those investments (subject to budget constraints) through upgrades, component swap-out)? that collectively produce the largest expected net benefit • oes the infrastructure portfolio avoid redundan- D over time. Indeed, the net societal benefit from investment cy with investments by non-ocean industries or in ocean science infrastructure is likely to be high. The pro- agencies? cess of prioritization needs to incorporate uncertainty in the • hat is the unit cost of observation (cost per unique W value of information from future ocean science, including observation) provided by this infrastructure, and uncertainty about the economics of the societal interests, how does the cost compare to that of other forms of and uncertainty about the ability of future science to produce measurement for the same information? information relevant to those interests. • s there an appropriate infrastructure portfolio to I manage a combination of sustained, episodic, and event-driven requirements? CONSIDERATIONS TO SET PRIORITIES • s the infrastructure broadly accessible to the ocean I As mentioned throughout this report, the science research community? Does it promote or leverage research questions were selected based on their potential to community talents or capabilities? contribute to four major societal objectives: enabling stew- • oes the infrastructure leverage other sources of D ardship of the environment, protecting life and property, support (e.g., from states, international partnerships, promoting sustainable economic vitality, and increasing public-private partnerships, or the private sector)? fundamental scientific understanding. • hat is the balance between risk and potential bene- W The infrastructure needs required to address the fits? Is risk managed appropriately (e.g., by spreading broad range of ocean research questions can be priori- investment in technology development over several tized using an economic framework that includes consid- competing groups)? eration of important criteria, such as: • s the infrastructure technologically mature, or are I there limiting technological (or other) challenges? 1. Ability to address the science 2. Affordability, efficiency, and longevity Capacity to Contribute to Other Missions or Applications 3. Ability to serve other missions or applications • oes the infrastructure serve multiple science ques- D Each of these major considerations, which are listed in tions or applications that yield multiple benefits, es- the order in which they should be applied, encompasses a pecially across more than one domain or discipline? variety of other factors and questions that contribute to the • oes the infrastructure improve or enhance D determination of the value of ocean science and, by impli- collaborations? cation, the value of the infrastructure necessary to support • oes the infrastructure serve other issues of national D that science. strategic importance (e.g., leadership in ocean sci- ence and technology, resource development, national security, education)? Usefulness for Addressing Major Science Research • hat is the potential for serving applications or mis- W Questions sions in multiple agencies? • ow important is the infrastructure in addressing and H resolving one or more science questions? These considerations can assist in the process of determining costs and benefits to prioritize ocean research infrastructure

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56 CRITICAL INFRASTRUCTURE FOR OCEAN RESEARCH AND SOCIETAL NEEDS IN 2030 investment decisions; such a process would optimistically of that process and its application is beyond the scope of result in a well-supported economic argument for a particular this report. set of infrastructure investment priorities encompassing all Recommendation: Development, maintenance, or re- federal agencies with a role in ocean research. In the process placement of ocean research infrastructure assets should to optimize investments in ocean research infrastructure out- be prioritized based on (1) usefulness for addressing lined above, decision makers (e.g., federal, state, and local important science questions; (2) affordability, efficiency, governments) will naturally take into account subsidiary and longevity; and (3) ability to contribute to other mis- considerations that help define the net benefits associated sions or applications. Such prioritization will maximize with development, maintenance, and eventual replacement societal benefit for the nation. of specific infrastructure. Developing the detailed structure