SDI Convergence - Global Spatial Data Infrastructure Association

equired to know which properties the potential buyers consider significant and the extent
to which these properties are valued (Krek, 2002).
The commercial sector of GI has often identifiable monetary value for its producers and
vendors, but difficulties arise when considering the public sector, for which GI also has
a direct and indirect social value. The public sector value is problematic to quantify due
to the countless uses and social objectives, which can be aimed at the same GI data or
services (Longhorn and Blakemore, 2008). Moreover, GI is supposed to be valuable
not only for the data owner or user, but also for society as a whole.
3.2. The value chain
The multi-stage processes of modifying GI from its original form to create new derived
products are particularly important when assessing the value GI has to an economy.
Porter (1985) defined the concept of the value chain for classic production, expressing
that activities within the organisations add value to the services and products that they
create and distribute. This set of value-adding activities is defined the value chain. The
concept of value chain is also used in the context of supply chain management to describe
the added-value flow, which provides the revenue stream for each stage of the
supply chain (Cox, 1999).
In the context of GI, the value chain relates to the set of value-adding operations undertaken
by one or more producers, to transform GI (datasets or analogue maps) to the
final product (Krek and Frank, 2000). Assessing the GI value chain entails many variables,
the foremost being that GI is not a standard economic good as it is often not
possible or reasonable to restrict any person’s use of the information (non-excludible).
Thus, the same dataset may be used repeatedly and new products can easily be created
by forming different combinations of datasets. Furthermore, as a public good, GI is
defined as “non-rivalrous” by Krek and Frank (2000): one person’s use of that information
does not limit the amount of the good available for consumption by others
(Samuelson, 1954; Krek and Frank, 2000). These characteristics of GI data were emphasized
by the spread of the Internet and the resulting democratisation of GI. To
manage this, organizations frequently face enforcement costs, including cost of protecting
rights, policing and enforcing agreements (Krek, 2003).
Value is created step-by-step along the chain, even if most of the costs are incurred
during the initial data collection (Krek and Frank, 2000). This initial cost represents a
high percentage of the total cost of producing a dataset, a usual characteristic of information
goods (Shapiro and Varian, 1999), which is due to a high cost of labour while
capturing or measuring the data from the data sources, as well as the cost of data
transformation, analysis, and modification. The high cost of data collection seems to
justify high prices for data at the first stages of the value chain.
Moreover, exchanging GI involves transaction cost. Transaction costs consist of cost of
searching for the information about the possible data sellers or producers and cost of
contact the possible providers. They include measurement cost (the cost of measuring
the valuable attributes of that which is being exchanged) and enforcement cost (the
cost of protecting and enforcing the property rights) (North, 1997; Krek, 2003). As
transaction costs are not often transparent, they are difficult to measure. Moreover,
they were completely ignored by neoclassical economic models, which are thus not
easily applicable to GI (Krek, 2003).
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