Valuing Australian state geological surveys : quantitative analysis for strategic planning

Abstract

The aim of this thesis is to design a framework to quantitatively evaluate Australian State geological surveys. An interdisciplinary methodology is developed that supports the measurement of the impact of geoscientific information in two separate decision processes. These processes reflect the role of Australian State geological surveys in: (i) stimulating exploration activity by the reduction of discovery risk and increasing perceived prospectivity; and (ii) providing advice for Government mineral policy decision making. The methodology is unique in addressing the problem of establishing causal relationships between Government geoscientific data, exploration investment and the strategic management of State mineral resources.The work has five major focuses: (i) an analysis of State geological survey objectives, client decision-processes and product impact; (ii) quantifying perceived risk using expressed and revealed preference studies and statistical analysis; (iii) stochastic mineral potential modelling and geographic information systems (GIS); (iv) quantitative resource assessment, to convert information on geology into economic terms; and (v) economic cost-benefit analysis, to determine how successful Government investment in geoscientific data is in meeting the broad goal of optimising community welfare. Point (i) underpins the development of the valuation methodology. Points (ii) to (iv) are modelling stages within the methodology. Information generated through these five points and a loss function, defined as the 'net benefit foregone', establishes the worth of upgrading existing geoscientific information infrastructure. The loss function addresses the question of whether investment in improved geoscientific data results in significant benefit in respect to the application of Government geoscientific data and the resultant economic impact on the State.The analysis of State geological survey objectives identified the principal role of all Australian State surveys as upgrading regional geoscientific information infrastructure. The main client groups to which this activity is directed are the exploration industry and, to a lesser extent, government. The upgrade programs are intended to reduce discovery risk and in doing so stimulate exploration activity, with a secondary benefit being the contribution that this data can make to strategic planning and the management of State mineral resources. Fundamental to this study is the requirement to establish causal relationships between information provision and identified outcomes. The valuation framework developed integrates quantitative modelling techniques relevant to exploration investment and government mineral policy decision processes. To test the methodology an evaluation is made, propagating two generations of information through the four modelling stages to derive a value for net benefit.To quantify the impact of government data on exploration expenditure by mineral companies and to measure the change in company perceptions of risk when using different generations of data, expressed and revealed preference techniques are employed. Using regression analysis upgraded 'second-pass' data is found to have a higher dollar investment response than existing 'first-pass' data. Upgraded government data sets, including geophysical data, attribute about 10 percent of variance in proposed exploration expenditure. First-pass data sets contribute approximately 5 percent. Questionaires are used to obtain information directly from exploration companies that compared first and second-pass data sets. Results of statistical analysis of this information indicates that the perception of prospectivity at least doubles with the provision of the upgraded data sets. .........