EP7 – Measuring the Value of Geospatial Technology to Gross Domestic Product

In this episode of On Point with Korem, I sat down with Alan Smart. He’s the chairman of the Tasmanian Spatial Industry Council in Australia. We looked back a few years to a study that Alan was involved with sponsored by ACIL Tasman, a consulting firm, that attempted to value geospatial technology to a country’s individual gross domestic product (GDP). The results were absolutely fascinating because what was found was that between 0.6% and 1.2% of GDP was because of the productivity offered by geospatial technology.


Joe Francica: Well Alan thanks again this is a great opportunity for us to talk about some of the things that your organization has done in particular, maybe some of the older work that you did with ACIL Tasman and I just found the work…even though it was several years ago…just fascinating because it attempted to do things that I don’t think many organizations would attempt to do, which is essentially provide a value of geospatial technology on a fairly large scale. In particular, to match it to the gross domestic product that impacts an individual country. So, I’m just curious if you could just walk me through that initial study many years ago and who requested it and how was it received.

Alan Smart: Sure, well it was a different time. It was a time when governments were still thinking about foundation spatial data and spatial data infrastructure. There was a growing awareness amongst the community that there was a need, especially to have this spatial data infrastructure properly curated and collected, and a realization that they needed to communicate particularly to policy-makers, on why this was important. Now at that stage, it was in the early stages of adoption. There had been the applications to say in controlled traffic farming in agriculture and applications in navigation such as marine navigation, etc… but the awareness was not very high amongst decision makers at the high level in government and I think it was also in the private sector, not really top of mind. So, an organization then which was called The Cooperative Research Center for Spatial Information, and the spatial information business association approached me around 2007 and said, “would you be willing to estimate what our value is”? So, I said “Okay, I’ll have a look at it” and that led me into a fascinating discovery of the length and breadth of how these technologies were being applied. Now I had had some experience before particularly in the use of differential positioning systems in marine navigation, from a previous role I had. And I had done some work for a company called Fugro which was supplying a differential correction in Australia in the cotton industry, but I had no idea how deeply embedded some of these technologies have become. So, I must say it was a pathway of discovery and we looked…first of all we surveyed a lot of industries and we didn’t get much of a response. And part of that was because I think the people that were working on geospatial applications in various sectors were with a GIS specialist and they didn’t really get…they weren’t so visible amongst senior management…so when we sent the questionnaire out, people just didn’t respond because they didn’t know who worked on that and did we do any of that anyway. So, we ended up doing an extensive round of consultations through the business association and the CRC, they provided us with contacts. And we built up case studies of applications. And we used those case studies in specific examples, plus wider consultations on the level of adoption of these applications, to try and build up the productivity impact of geospatial applications in various sectors of the economy and that sort of started to show that there was a very important dimension to economies in terms of productivity improvement. So, we then used a technique called a Computable General Equilibrium model, or a CGE model, which is basically just a model of over the economy. It’s our model, is based on some data from Purdue University, but that enabled us then to put what we call productivity shocks into the model, so if we saw say, an example, which we did in agriculture, of a 10% improvement in broad agriculture productivity through the use of automated steering equipment and fertilizer and variable rate fertilizer techniques, we were able to put those productivity shocks into the model and that gave us a figure. Which I think came out from memory between six and 12 billion dollars in terms of the accumulated contribution since 2000 at the time, that these technologies are delivered. Now that amounted to about just a bit under one percent, of 1.2 of gross domestic product in Australia. Now, even though that may seem a small percentage, it’s actually a very big number! And when you consider that our GDP has been growing at the time of around one to two percent a year, productivity has been fairly flat. Sometimes slightly negative but you know sometimes half a percentage point growth to one percentage point both. That sort of impact was very significant to the Australian economy. The other thing was that it exposed us to realize, just where these things were being applied in agriculture, in mining, we found applications in construction, planning, fisheries it was being applied across a lot of sectors of the economy that are important to Australia. We then did similar studies; we did one for Canada, we did it for New Zealand, I did it for the UK.

JF: I remember those, yeah.

AS: We kind of came up…for example; New Zealand it was sort of 0.6 of GDP, just looking at some numbers here. For Canada, it came up at about 1.1 percent of GDP. That was the value of their Geoconnection System, which is their geospatial database, which was worth 20 billion to Canada at that time. We did it for UK. In the UK it was interesting because we looked at the value of having open data policies, so we estimated that was the order of about 15 million pounds, just as a relative having, if they move to an open data policy. And, we looked at it for applications in the UK, in applications in local government, and came up with a figure of around about 400 million pounds, higher results in 2008 for local government. And we found some fascinating applications there: things like route optimization for garbage trucks and other services to improvement in planning and planning processes. So, it was very educational to understand just how widely it was being used at that time.

JF: What I remember particularly about the study, and you can correct me if I’m wrong, is that the contribution of geospatial technology to GDP often varied if the country had an economy based primarily in natural resources. So, you mentioned the Australian economy based a lot on mining, fisheries, etc. Same thing, maybe perhaps more or less in New Zealand and certainly in Canada. And so, that was particularly interesting. But when you compared it to something like the UK, which has a much more varied economy. How did you find the contribution there?

AS: The interesting thing in the UK was that a lot more of the benefits were in the provision of government services and in the provision (of) an application of geospatial technology and things like transport planning and in transport. That’s a much more densely populated economy than it is in Australia. And, that they were getting…they were just fascinating applications. For example, in policing they were using a GIS analysis to understand the nature of where crime happened and what might be causing it, so they could overlay different layers of demographic data and the like. And so, they actually used that to address crime problems, by not necessarily putting more police on the beat but for example, putting more lighting in areas where people were getting assaulted for example. So, they could get that kind of data because the cost of policing is very high and so they were able to prioritize how they spent their money rather than necessarily having to put another policeman on the beat. And that that went across to a whole range of things. For example, car theft; the cost of car theft rises very rapidly. The longer it takes to find the car that’s been stolen or damaged, corresponding to put more and more effort into finding it. So being able to target that more quickly, particularly areas where say, motorbikes or cars were being stolen by different approaches to lighting or different approaches to how they use their resources, they were able to reduce those costs quite significantly. So, it was much more in the use and analysis of the data in the UK for example.

JF: So, that brings up a couple of very interesting questions because I remember giving a presentation once to city governments that, I made the assumption and again correct me if I’m wrong, that some of the data could be extrapolated to cities. So, even if you took that the gross domestic product of a city, could be at least estimated on their use and utility of geospatial data. Even if again you took the low-end, something like 0.5 contribution to GDP. Is that a valid way because, as you know, cities all over the world now utilize geospatial technology and they have their own GIS departments, but I think they sometimes struggle with getting in front of policymakers and politicians, to value the cost of investing in geospatial data and technology.

AS: Yeah, you can with these techniques with CG modelling you can focus down on a certain region it’s a little bit of work but you can do it for say the Greater Sydney area or for the LA area, that’s possible to do. The interesting thing is since we did that work in 2008, in around the world but in Australia as well, it’s broadened out far more widely and the benefits are more than just productivity, which we were measuring then. But it’s also in consumer benefits, for consumers in lower prices, or better choices. And, there have been some subsequent studies which I’ll talk about later which look into that but the big thing about cities, and cities are one of the critical areas now where these technologies are having applications. I don’t know what the terminology is in the US or in the UK, but now the term here is “Digital Twins.”

JF: Oh yeah sure, that’s normally used, yep!

AS: Three states, and in fact now some local government areas, are looking at developing 3D digital models of the building environment and they’re already using early versions of that for things like, better understanding of the services that they need to provide. Where are the services being used? Where are the people travelling? What are they doing? If you’re in a state like Tasmania in Australia, where tourism was important, what are the facilities that need to be provided. Where are the tourists going? What type of tourists are we getting? They’re starting to use these sorts of layered models to better analyze that and better plan their infrastructure. But the idea of these digital twins is really creating a lot of excitement and there are three states; New South Wales, Queensland and Victoria, who are running pilot projects at the moment and so they’re building digital 3D digital models of various areas in Brisbane. It’s to do with what they call “the river crossing” which is a rail crossing under the river and the idea there is, first of all, in terms of infrastructure you can have a better understanding of where your infrastructure is! Where all your piloting is! Their utilities are to help the designers. And we did some work a couple of years ago on that and found there were major benefits for the construction and planning industry and having digital twin models. But more importantly, the digital twins linked with demographic and social data are now being considered for things like better planning of primary healthcare better linkages of transport interchanges being able to visualize something means that when you’re consulting with the community about say, a bus interchange, you can actually show them a certain level of it. And I’ll tell you an interesting story; one provider of these services said that they were looking at some consultations on an overhead, bus interchange in South Australia, and they showed that in the consultations and one of the designers, had designed a long staircase from the upper platform down and as soon as the women saw that in consultation said, “I’d never walk down that staircase because that’d be too dangerous”. So, they changed their design as a result of being able to visualize in 3D what they were planning, so we just … I hadn’t been able to anticipate how many different ways this can be used.

JF: Yeah, so that brings out certainly another question is; when you go down the path of building information models and digital twins, there’s quite a bit of investment in data collection. Not just in processing. So, this has to bring up an interesting problem or at least challenged to government policymakers and politicians; are they willing to invest in the technology or do they have to be convinced by showing them some of the results, that again, maybe that original study you know, 10-12 years ago actually did?

AS: Yeah no, it’s definitely the case that there is a need to continue to be able to advocate for the provision of foundation spatial data and the proper custodianship of it an investment in it by governments. So, I share a consultative council in the state of Tasmania down here, which is an industry government consultation group, that reports to the minister for planning. And, what this group did, I wasn’t the gem of the time, but this group did a study in 2010…in fact I did the study at the time…but was looking at the value of what they call “The List The Land Information System of Tasmania” because it needed investment. So, we did a study of that and showed what its value was and that was used as the basis for further investment in the database. Since that time, Australia just like the US now, has an open data policy for a lot of spatial information and we’ve got 10 spatial data sets that are available free and they include the cadaster and things like topography, etc., but there is a continuing need to be able to make the case because this is where governments have to spend money and they have to make the case they have to be satisfied that this is as valuable, and that’s again I think, there’s ongoing need to continue to just set the story to policymakers and to politicians. And this is experience I’ve had in discussing with a number of politicians here I said look “Hey, you guys must get this now, you know you’ve got a phone! You know it’s in there” and they said, “no”. There is an ongoing need to get this message across at all levels.

JF: That’s very interesting to hear you say that. Over the years I’ve had the opportunity to interview mayors and governors in the US and one of my favourite questions to ask them is; “Do you govern your city geographically?” Because I feel, and again be curious to your opinion, that government is a geographically based business, right! You don’t dig a hole, you don’t create a park, you don’t locate a police station without knowing where it’s going to be and when I ask that question politicians just give me this blank stare, but they ought to be more aware perhaps of what they’re investing in.

AS: Yeah, sure I mean I did some work in 2016 for the New South Wales government on the value of spatial information to the state of New South Wales, and one of the studies that I came up with was, the value of better location of ambulance services. And I used some US research which showed that every minute that an ambulance gets to a cardiac arrest increases the survival times by a large amount…I can’t remember the number…so I used that and some value of statistical life, etc. and was able to show that simply by better locating the ambulance services, where you’ve got the ambulance centres, and then better dispatching of those, using geospatial information, was worth a significant amount, a significant value to the country in Perth in terms of improved health outcomes and lower costs in terms of you know the provision of hospital services, etc.

JF: Right, yeah that’s a typical geospatial model we always used to call it “move up allocation.” So yeah, you move a resource around and you improve the time. In fact, I had a conversation with the mayor of the city I live in and one of his goals was that everybody gets to work within a 14-minute time window. So you design your roach infrastructure, you design traffic lanes or public transportation accordingly.

AS: Yeah so, just recently I did some work on the research into digital twins and one of the big priorities for all local government and mayors, is congestion costs. And you can value congestion costs. And that’s sort of one of the areas… you’re so right, that’s one of the areas that this is going to have quite big applications in. And also in terms of intelligent transport systems, more generally already London has differential charging for going into Central London. It’s spatially enabled but you know we’re going to be probably moving more to that. One of the big areas that I came across, very important, is in natural disaster management and biosecurity management. They sort of go in hand in hand. And, natural disasters management is because we seem to be getting more wildfires and flooding events that we need to deal with and, of course, in a post Covid recovery, I mean spatial information is being used in the monitoring of Covid outbreaks in Australia and it’ll be a big part of the recovery process afterwards. I’ll tell you an interesting story in Tasmania, again because I know it’s at stake where I spent a lot of time on space information, they had some fires a couple of years ago and I was there at the time and went to their central control point where they have one map and they have all of the services there; ambulance, emergency services, the fireries but they’re all looking at one map, and they can now do things like manage response time to the fires to protect say agricultural investments. And the one that I saw, was in fact looking at protecting the beehives…they have registered Beehives in Tasmania…honey is an important production area there, and they were able to track…they knew where the hives were, they could see the fire front, they knew where all of their responders were, or and they had it online looking at it, and they were able to coordinate where they put the control lines in to protect those particular facilities. And the same with agricultural generally, and the same with coordinating the ambulance services to remove vulnerable people who needed to be removed, because they knew where they were, and that was all on one map.

JF: Yeah, well and also important to Australia is viticulture and vineyards up there.

AS: So well, I did some work in New Zealand, and again it’s back now in 2012, but they were also…the viticulturalists were also using it as a marketing tool because they could locate the actual vine areas where the particular grapes came from, so they were using that on their labelling. But they were also using it for managing the vines and monitoring and tracking irrigation, etc., using the combination of geospatial information and sensors and control systems, but they were also using it in marketing. Another interesting application I came across was insurance. The insurance industry in Australia is looking at getting closer to their customers, so we’re looking at similarly to the US getting augmented…you call it the WAAS (Wide Area Augmentation System), we call it SBAS (Satellite Based Augmentation System) here, but a very accurate almost decimetre accuracy in the GPS system. And the aim for them is to be able to have a property owner just walk outside the property and get their coordinates, put that into an application online. They can then, using a 3D model that’s been developed of all the buildings in Australia…it’s a very broad model, but it’s the best we’ve got at the moment…they can actually investigate through that and through both observations from face data, they can look at the property, so they don’t have to visit it, and they can price it at the time. But then they want the next step, they want to do is, to engage more with their customers by being able to send them alerts if their property is in threat somewhere. So, they combine all of that with their threat modelling because they’re now modelling floods and fires quite in a detailed way to assess their risk exposure but combining all of these things, three things together, they can a make it quicker and easier for their customers to apply for insurance. Like an easier, better analyzer, without having to go there. The risk that the property is exposed to and finally they can help the property owner mitigate their risk by taking steps. So it goes through the whole supply chain of the provision of a service.

JF: Yeah, I was going to ask you that, that was going to be one of my final questions, is; what’s the uptake of the technology among commercial companies? Private companies? We certainly see the insurance industry utilize the technology here, more accurate geocoding, so that indeed you can find the property. Is it in or outside of a flood zone or a fire zone, fire hazard area? So, all of the perils that are associated with underwriting an insurance policy is one of the things. But now, also, retailers, banks, all are engaged at some level of using the technology. Not just for marketing, but again it’s either pricing rich or a mortgage underwriting. It’s really spanning a lot of different applications.

AS: Yeah so, I think on the adoption curve 10 years ago, we were talking mainly about the early adopters and the innovators, but now we’ve moved away along that adoption curve. I mean the big,…for our country…the big areas are agriculture mining, transport and government services, but it’s now becoming far more ubiquitous in the economy.

JF: Yeah, well Alan, thank you so much for your time. This has been a fantastic conversation and a great capability of just catching up on the studies that you did over your career because I don’t think a lot of people understand the value often, and I think this will help educate a real broad community of what the value of geospatial technology is. So again, thanks so much for your time.

AS: Yes, thanks so much. It’s been a pleasure.