Governments around the world are increasingly relying on open licenses to release public sector information (PSI). A September 2011 report titled Costs and Benefits of Data Provision, prepared by John Houghton for the Australian National Data Service, examines the immediate and wider economic costs and benefits to making PSI available.

The key takeaway from the study: “the direct and measurable benefits of making PSI available free and unrestrictedly typically outweigh the costs. When one adds the longer-term benefits that we cannot fully measure, cannot even foresee, the case for open access appears to be strong.”

The report offers an interesting and instructive analysis about the overarching cost-saving potential of making PSI available online for free and under open licenses (we assume the figures to represent Australian dollars):

[W]e find that the net cost to the Australian Bureau of Statistics (ABS) of making publications and statistics freely available online and adopting Creative Commons licensing was likely to have been around $3.5 million per annum at 2005-06 prices and levels of activity, but the immediate cost savings for users were likely to have been around $5 million per annum. The wider impacts in terms of additional use and uses bring substantial additional returns, with our estimates suggesting overall costs associated with free online access to ABS publications and data online and unrestrictive standard licensing of around $4.6 million per annum and measurable annualised benefits of perhaps $25 million (i.e. more than five times the costs).

The Houghton study suggests that open licensing is a key component to reducing friction in the downstream use of PSI:

It is not simply about access prices, but also about the transaction costs involved. Standardised and unrestrictive licensing, such as Creative Commons, and data standards are crucial in enabling access that is truly open (i.e. free, immediate and unrestricted) … The efficient economic solution for the dissemination of PSI is likely to be free libre and free gratis (i.e. making it freely available online and using unrestrictive licensing such as Creative Commons).

In a separate internal document noted in the report, the Australian Bureau of Statistics described the impact of adopting CC licensing. It says that CC licensing “meets public expectations with regard to open government, facilitates data sharing (including across government), allows for more timely reuse of statistics, facilitates innovation, [and] makes sense to a growing percentage of people who recognise and understand CC licence symbols and conditions.”

The study urges us to try to understand and foster the unpredictable yet potentially powerful innovation that can be unleashed when PSI is made freely available online and released using unrestrictive licenses:

In the longer term, there may also be unforeseen uses and re-uses that simply cannot be accounted for, and again this may mean that the costs and benefits experienced in the early years of implementation tend to understate the longer-term advantages. Use and re-use can also have wider impacts, in terms of innovation and the development and introduction of new products, services and processes that, in turn, generate new economic economic activity, new business opportunities, better informed and potentially better government and business decisions.

The full report is licensed under the Creative Commons Attribution 2.5 Australia License.