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Economic Benefits from Oceanographic Research a special report of the Committee on Oceanography National Academy of Sciences National Research Council _~ EXECUTIVE Cal . Ci-~.CE - ' I, ~ Van \~) Publication 1 228 National Academy of Sciences National Research Council Washington, D. C. 1964

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Price $2.00 Copies available from Printing and Publishing Office National Academy of Sciences National Research Council Washington, D. C. 20418 Library of Congress Catalog Card Number: 64-60088

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Foreworcl The rapid growth of the federal budget for research and development, which has for some years been growing much faster than the gross national product, has been documented and discussed in numerous publications. Two recent studies, "Federal Support of Basic Research in Institutions of Higher Learning", National Academy of Sciences National Research Council, 1964, and "Federal Funds for Science", National Science Founda- tion, 1964, state that the total expenditures public and private for research and development rose from approximately $5 billion in 1953-54 to $15 billion in 1961-62. ~ ~ , .. The federal research and development budget alone reached $15 billion in 1963-64. A very large share of this increase is attributable to applied research and development, especially in connec- defense and with the programs of the National Aero- nautics and Space Administration. But support for basic research, though still a relatively small part of the total, is also increasing. While total research and development funds were only about 3 per cent of the gross national product in fiscal year 1963, the rapid growth of expenditures for research and development in relation to the growth of the nation's total economy cannot continue indefinitely. Thus, it is important to attempt to evaluate, in economic terms, the potential benefits to be expected from given expenditures of funds on scientific research and development, so that they may be compared with benefits that might be expected to accrue from alternative expenditures. Federal support of oceanographic research has increased substantially, from $24 million in fiscal year 1958 to $124 million in 1963. According to tabulations of the Interagency Committee on Oceanography of the Federal Council for Science and Technology (ICO), the federal budget for oceano- graphic research in fiscal year 1965 is $138 million. Projected budgets shown in ICO pamphlet No. 10 of June 1963 indicate an average annual growth of about 1 0 to 11 per cent, reaching 5350 million in fiscal year 1972. This rapid growth of appropriations for oceanographic research, like the growth of the federal budget for research and development in general, raises legitimate questions as to its economic justification. It seems im- portant, therefore, to examine the benefits which may be expected from oceanographic research, in order to provide an objective basis for determin- ing whether appropriations of this magnitude are a wise expenditure of the n~ation'$ funds tion with national OCR for page R1
In this report, rlle Committee on Oceanography presents its estimate of the future economic benefits that could result from oceanographic research, and compares these benefits with the cost of doing the research. In its deliberations during the past year, the Committee recognized that research, deriving from scientific "breakthroughs" and revolutionary tech- nical innovations, cannot be forecast. Similarly, dollar values could not be placed on the oceanographic requirements for national defense, on the human satisfactions that come from greater understanding of the oceans and their contents, or on the benefits to national prestige and international understanding and to international economic development. Therefore, in comparing future economic benefits from oceanographic research with the cost of conducting that research, we have considered in detail only that portion of the national oceanographic program for which it is possible to forecast the benefits with some confidence. Since some of the benefits expected from these expenditures have not been included, our total estimates are probably conservative. Where we have made estimates of benefits, there may very well be differences of opinion as to whether the estimates are correct. We believe that the analysis presented in this report, and the benefit- to-cost ratios we have derived, will be a useful basis for judging the relative value of expenditures on oceanographic research. We also hope that the method of analysis developed herein will be useful to others concerned with estimating future benefits, either in annual savings or in annual new production, and who may therefore wish to make similar calculations to arrive at independent judgments. For this reason, we have presented in some detail in an Appendix to the report our methods of calculating the discounted value of economic benefits from research. The application of this procedure offers a possible method of comparing the relative benefits to be derived from alternative possible expenditures of research funds. The method of economic evaluation employed in this report, as detailed in the Appendix, is a somewhat novel application of economic analysis. We are most grateful to Professor Michael Brewer, who reviewed this material and offered many valuable suggestions, and also for comments from Professor Robert Dorfman, Dr. W. Lee Hansen, and Dr. Howard White. Many individuals contributed to this report by providing data, ideas, and criticisms of preliminary drafts. These include, in addition to members of the Committee and its panels, representatives of several government agencies who generously responded to our requests for information. Drafting of the various sections of the report was performed by the follow- ing individuals: "Introduction and Summary," Roger Revelle; "Benefits and Costs," "International Cooperation," and the Appendix, Roger Revelle and M. B. Schaefer; "Products from the Sea," M. B. Schaefer and Maurice Ewing; "Near-Shore Environment," Donald Pritchard; "Transportation," Sumner Pike, Harris Stewart, and Roger Revelle; "Weather Forecasting,"

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Roger Revelle and Columbus Iselin; "Defense," Allyn Vine and Paul Eye. The report was edited by Richard Vetter, Executive Secretary of the Committee. The completed report was finally reviewed, amended, and approved at a meeting of the Committee at Woods Hole Massachusetts on 11 May 1964. Milner B. Schaefer Chairman Committee on Oceanography

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