Cost-Benefit Analysis in Perspective -...

Spatial Data Infrastructures

Cost-Benefit Analysis in Perspective

Arnold Bregt, 15 October 2012 JRC

Content

n  Cost-Benefit analysis in SDI

n  Reflection on Cost-Benefit analysis

n  Other Approaches

n  Conclusions

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Cost-Benefit analysis in SDI

n  Various Cost-Benefit Analysis done

3/14

INSPIRE Costs (estimated in 2003)

4/14 Inspire Consolidation team, 2009

INSPIRE Benefits (estimated in 2003)

5/14 Inspire Consolidation team, 2009

Summary

n  Benefits 7-8 times costs (INSPIRE studies)

n  Detailed case-studies (Catalonia (2007) and Lombardia (2008-2009) (clear benefits)

n  Netherlands (2009): benefits 2 times costs

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Dutch Case INSPIRE

7/14 Ecorys, 2009

Dutch Cost-Benefits Timeline

8/14 Ecorys, 2009

Reflection on Cost Benefit analysis

n  Po’s: l  Easy to understand l  Loved by policy makers l  Translation of all aspects into monetary terms l  Looks exact (numbers)

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Reflection on Cost Benefit analysis

n  Con’s: l  Some aspects cannot be translated into monetary

terms l  Not really suitable for complex issues l  Limits decision making to economic arguments l  Some times not believed by policy makers l  Costs are now benefits (much) later

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Esra Klein n  I've been on both the producing and receiving end

of too many cost benefit analyses to trust them. If you're being relatively honest and if you're dealing with fairly concrete, short-term issues, they're useful tools, but even then it's still the case that you can manufacture strikingly divergent conclusions by manipulating your assumptions and inputs by surprisingly small amounts. Cost-benefits usually look like they're grounded in hardheaded thinking simply because they're numerically based, but quite often they're nothing of the kind.

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Characterisation of INSPIRE

n  Very complex process (Complex adaptive system)

n  Emergent properties n  A lot of small interventions n  Cause effect relations are not or hardly known

12/14 Grus et al., 2011 “SDI as CAS”

Cost-Benefit INSPIRE

n  Cost-Benefits were done for INSPIRE l  They had their role in the beginning (just to start) l  Now they can even have a negative effect (see next

slide)

n  Maybe time for another approach

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Reverse “pyramid effect”

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EU level

National level

Local level

Costs Benefits

Other Approaches:

n  Reference class forecasting (Kahneman and Tversky):

n  Approach l  1.Identify a reference class of past, similar projects. l  2.Establish a probability distribution for the selected

reference class. l  3.Compare the specific project with the reference class.

n  I have no experience

15/14 Kahneman, 2011 "Thinking, Fast and Slow,"

Goal oriented assessment

16/14 Grus et al., 2011. CEUS

More detail

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More detail

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Goal oriented assessment

n  Developed for Dutch SDI

n  Used for evaluation (Impact of open topographic data)

n  Used for Liander (gas, electra utility company)

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Application on open topographic data

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Conclusions

n  Cost benefit analysis had their role in the past n  (mainly done before the project)

n  For a extremely complex project as INSPIRE they are not the right tool

n  We need to look for alternatives

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Thank you!

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