Everyone who’s ever drawn up a budget is familiar with the acronym ROI (return on investment). But have you heard of VOI? No? Well, neither had I, until I was involved in the National Science Foundation-Office of Cyberinfrastructure’s Task Force on Data and Visualization.
VOI stands for value of information, and like ROI, it’s a very useful tool for economic analysis. Sure, we all know that information has some value, but how can we quantify it? What, for instance, is the economic value of knowing the mean April temperature in
Minneapolis over the past 50 years?
The U.S. Geological Survey (USGS) has taken the lead in developing a framework for measuring VOI. For the USGS, the question was this: What is VOI of the Land Use/Land Cover maps that have been generated by Landsat’s moderate resolution land imagery (MRLI)? This is an enormous store of data, dating back to the 1970s, but how valuable is it? Do its economic benefits justify its cost?
To answer that question, the USGS is conducting a test project that uses archival MRLI data to observe historical crop rotation patterns in 35 counties in Iowa. The USGS is then correlating this information on agricultural land use with data from wells, to estimate how changes in planting patterns affect the chemical composition of the groundwater. This study will enable the researchers to develop models to forecast the impact of planting
decisions on water quality.
These forecasts will help determine when it is cost-effective for policymakers to get involved in planting decisions that affect groundwater. For example, it will add a new economic perspective on the recent shift to more corn production in Iowa, which has been driven in large part by biofuel initiatives. Corn requires heavy use of nitrogen fertilizer,
which eventually shows up as nitrates in the groundwater. A better understanding of the impact of increased corn production on the quality of the groundwater will go a long way to providing a more complete picture of the cost/benefit ratio of the biofuel-driven shifts in land use.
The VOI of the MRLI maps will be determined by the economic impact of land-use decisions that balance pollution hazards against agricultural needs. The USGS is aiming for a VOI that will maximize agricultural production while lowering the costs of treating contaminated groundwater.
While VOI should not be the only consideration in undertaking a data-intensive project, it is certainly a valid one in today’s world of limited budgets. After all, we all want to be sure that we’re getting the greatest socioeconomic benefit from our research dollars.