Funding Models for SDI Implementation: from Local to Global

1. Funding Models for SDI Implementation: from Local to  Global Garfield Giff, Ph.D. Candidate Department of Geodesy & Geomatics Engineering University of New Brunswick

2. Presentation Format • SDI and the different levels of SDIs • Economic Issues associated with SDI Implementation • The Concept of Funding Models • Funding Models for the different levels of SDIs • Funding Models for Emerging Nations and Nations in transition • Evaluation of the models • Next Phase of the research • Conclusion

3. Introduction 1 • The recognition of the importance of Spatial Data Infrastructure (SDI) to the information society is now widely accepted. • List of SDI initiatives at http://www.spatial.maine.edu/~onsrud/gsdi.htm.

4. Introduction 2 • The different levels of SDIs (based on work done by Dr. Rajabifard) • Global • Regional • National • Provincial/State • Local • Are Spatial Databases below the level of a Local SDI a SDI, or just a component of a SDI?

5. Economic Issues associated with SDI Implementation • Associated with the implementation of a SDI are a number of economic issues. Some of the more significant ones are: • Benefit Cost Analysis • Funding • Pricing Policies and • Marketing • This presentation will focus on the Funding Issues

6. The Concept of Funding Models • The first generation of SDIs were mainly financed through an ad hoc manner • Structured funding mechanisms required for the second generation of SDIs. • A guide for SDI program managers on how to formalize and source financing for the implementation and maintenance of a SDI • In an attempt to address the deficiencies in SDI financing, the authors decided to perform research in this area and publish the results.

7. Preliminary Results of the Research • The investigation revealed the following: • Very little research on the economic issues of SDI. • The economic issues covered were mainly benefit-cost analysis to justify implementation and pricing to a lesser extent (Obermeyer and Pinto, 1994). • A lack of structured funding models • The need for alternative funding models to support the second generation of SDIs and SDIs in emerging nations

8. Pyramid of SDI Research Funding Models Social and Political Issues Institutional Issues Economic Issues: Benefit-Cost Analysis Technical Issues

9. Government Contribution (Derived from Taxation) Funding Agencies SDI Funding Pool Existing Funding Models • A Structured view of current SDI/Infrastructure Financing Private/Public Sector Contribution

10. Funding Models for National Level SDI 1 • Different methodologies available for designing funding models for SDI implementation at the national level • At the national level the main function of a SDI is to satisfy national needs. That is, providing spatial information to support for example: • The modernization of the public sector • E-government and e-commerce • Defense and emergency • Land Management and • Environmental and social activities

11. Funding Models for National Level SDI 2 • SDI a provider of Public Goods • Problems associated with Infrastructures providing Public Goods: • The production of public goods normally results in market failures and • The creation of natural monopolies • The above problems usually requires government intervention to successfully correct them. Therefore, government policies will play a key role in the designing of the models

12. Tax Incentives Duty free imports, no tax on capital goods & profit, etc Funding Models for National Level SDI Capital Market Instruments Tax-free bonds, Loans, Shares, line of credit,etc Matching Ratio State & private sector Implementation Environment 1 Appropriate Model(s) Special Financial Institutions SDI Funding Models Central Government Funding Implementation Environment 2 Appropriate Model(s) Government-Private Sector Partnerships Combined Methods BOOT Financing

13. Funding Models for State/Provincial Level SDI 1 • SDIs at the level will produce information at a larger scale & therefore open to more business opportunities • More private sector participation is expected • Financing similar to a business venture • Less emphasis on the Public goods theory

14. Appropriate Model(s) Implementation Environment 2 Appropriate Model(s) Matching Ratios (Private sector & national Gov.) Funding Models for State/Provincial Level SDI 2 Tax Incentives Waive property taxes,state taxes & taxes on profit, etc Combined Methods Implementation Environment 1 Project Financing (Business plan) SDI Funding Models Central and State Government Funding Government-Private Sector Partnerships Private Investment

15. Funding Models for Local Level SDI • The scale at this level is even greater, thus the possibility of greater business opportunities • More private sector participation is expected • Financing similar to a business venture • Greater participation from environmental/community organizations

16. Selected Model(s) Local Government capital funding Special projects funding Implementation Environment SDI Funding Pool Private Sector funding Local Government/ Private Sector Local Government /Public Sector/ Community groups Project Financing Tax Incentives Tax Increment Financing Implementation Environment Selected Model(s) Federal/State/ Local Government Funding Models for Local Level SDI

17. Funding Models for Global and Regional Level SDI • A SDI at this level will be the coalition of a number of national SDIs • Sources for funding a SDI at this Level will mainly come from: • National Governments • Regional or Global SDI affiliated organizations • The International Development Community • National Development communities

18. Funding Models for Global and Regional LevelSDI • Funding Mechanisms for SDI implementation at this level may be of the following formats: • Membership Fees • Regional and global organizations • UN member nations • International Development Agencies (e.g. USAID and EEC) • International Funding Community (e.g. World Bank & IDB) • Partnerships with other organizations collecting spatial data at Global & regional levels

19. Selected Model(s) Government capital funding Special projects funding Implementation Environment SDI Funding Pool Private Sector funding Government/ Private Sector Project Financing/ Special Banks Government /Donor Community/ Partnership Tax Incentives Tied Aid Financing Selected Model(s) Implementation Environment Government/ Private/ Donor Community/ Partnership Funding Models for Emerging Nations

20. Evaluation of the Models 1 • The Method of Modeling used here is often referred to as the System Dynamic Methodology (SDM) • SDM is applicable to this project since it facilitate the modeling of both measured data and data that are not easily quantifiable (e.g. knowledge & political and environmental changes with time) • The nature of this type of modeling makes it very difficult to evaluate

21. Evaluation of the Models 2 • Need to evaluate: • The results • The changes in the model & the model output due to changes in the input variables/implementation environment • The relationships amongst the different variables • Number of software now on the market to assist in the creation and evaluation (e.g. powersim, Matlab, Vensim and Simulink) • To date preliminary evaluation of the models have been carried out using powersim

22. Evaluation of the Models using Powersim Studio

23. Evaluation of the Modelsusing Powersim Studio • Important features of Powersim • Allows for visualization of the models • Capable of presents both graphic and numerical analysis of the models • Capable of analyzing changes to the model due to changes in a particular variable(s) • It facilitates testing the completeness and coherence of the modeled relationship

24. The Next Phase 1 • A great deal of research still needs to be done on the economic issues of SDIs: • Further assessment of the private sector roles in SDI financing. • Level of private sector monetary contribution • Quantity, time frame, expected returns vs actual returns etc. • Private sector non-monetary contribution • Consultation, Working groups,Education/training, Management, etc

25. The Next Phase 2 • Investigate the markets, infrastructures and socio-political climate of emerging nations to better formulate/customize models for their conditions. • Are these conditions different from that of the developed nations? • What effect will these differences (if any)have on the models created for the developed nations? • What are some of the lessons learnt from implementation in developed world that can be applied to emerging nations?

26. The Next Phase 3 • Develop framework(s) to identify how the models change in response to a change in the nature of the infrastructure. • The effects of a change from fix-lines to wireless access • Further testing of the models developed • How they react to changes in input variables • How they react to changes in the implementation environment in general

27. Thanks for your keen interest in the presentation

28. Questions?

29. References Crandall, Robert W. (1996). Funding the National Information Infrastructure: Advertising, Subscription and Usage Charges. In The Unpredictable Certainty: Information Infrastructure Through 2000. White Paper of the NII, Chapter 18. National Press, Washington. http://bcb.nap.edu/html/whitepapers/ch-18.htm. Obermeyer, N.J., and Pinto, J.K.( 1994). Managing Geographic Information Systems. The Guilford Press, New York Rhind, David (1999). “Funding a Spatial Data Infrastructure.” Unpublished