"The Concept of Privatization and Cost Recovery

within the Cadastral Community"

A draft report by

Professor D. Grant (Australia)


Discussions among FIG delegates over recent years have revealed the topical nature of the economic implications within government of the delivery of spatial information. It is the opinion of the members of FIG Commission 7 that the issues of privatization and cost recovery are important indicators of the direction of the geomatics industry. The annual meeting of Commission 7 in Budapest reviewed the status of both issues on Thursday June 20, 1996.


There was a wide range of views. These views largely reflected an attitude and perception of the cadastral environment seen through the eyes of each delegate. Each perception rests within a complex three-dimensional model having social, economic and political characteristics. This model in turn moves in a time continuum and reflects the maturity of each society and the rate of change possible. This rate of change is subject to a range of drivers - the existing status, the condition of the bureaucratic institutions, the economic well-being of a society, the maturity of the market place and the evolving aspirations of the society.

The delivery of spatial information is, in most cases, provided by a combination of both the private and public sectors. However this varies, even within the same country, due say to the annexation of territory with existing operational systems intact, or to the relative strengths of national, regional and municipal institutions. The acceptance and registration processes of cadastral plans also varies. It does however seem to be generally accepted that the state has a responsibility for the provision of the spatial infrastructure which provides the fundamental data sets. This infrastructure includes the policy and standards, and the fundamental data sets include the geodetic network, the cadastral network and the topographic mapping.

There was a general view that this spatial infrastructure should be provided from general taxation since it plays a major role in the foundation of national growth. Conversely, the registration process which accommodates the mutation and transfer of land rights in a market economy was seen to be appropriately funded by the user or beneficiary, since it results in an individual enjoying specific rights not in common with other members of society. However, it was appreciated by delegates that the transition from a command economy to a market economy may require extensive general taxation to create the situation which ultimately provides for the ease of land transactions. Further, it was clear that this transition has strong political implications and that the process could be protracted in order to send appropriate societal signals of justice, restitution, equity and that a particular political system has been purged from a community.

In summary then, there was a view that the spatial infrastructure of policy, standards and the creation of spatial data sets should be funded by the state, whilst the land registration process should have a user pays approach. Indeed there was a strong view that the registration process should directly fund the spatial infrastructure and survey system, since it is the survey system which the registration process depends upon for its integrity. Both functions could be performed by either the public or private sectors but the fundamental data sets should, at all times and under all conditions, remain as assets of the state and be seen to be the "crown jewels". The use of the data sets should be available to society at large for a fee, inter alia, based upon the use to which those data sets are to be put.

Cost Recovery

Cost recovery proved to be a vexed question. Discussion revealed that there was limited clear understanding of the subject in an economic sense. The extent of cost recovery varied from in excess of 100% to negative cost recovery. It was obvious to delegates that the extent of cost recovery was a function of the costs which the system had to bear as opposed to the level of delivery to the consumer. In most cases it appeared that no value was placed upon the initial construction of the fundamental data sets. This varied from work carried out 3,500 years ago in one large country, to perhaps $500 million of expenditure for a young country over the last 200 years.

There was a general approach that the cost was known only from the time that digitization began and this was perhaps a suitable time to introduce a costing platform. Such an approach accepts that the analogue development becomes a "sunk" cost. Even at that stage there seems to have been little consideration given to the costs associated with asset depreciation since digitization began. It was claimed by some delegates that the charges for spatial information should be minimised to encourage use and stimulate economic growth. Others claimed that realistic asset depreciation and maintenance costs should be factored into any information delivery.

There was also a view that any delivery price should include data conversion, maintenance, extraction and distribution costs. The general opinion was that the revenue generated should be adequate to ensure maintenance and growth of the fundamental spatial data sets, whilst ensuring that the organisations responsible for the acquisition and maintenance of those data sets were responsible and efficient, and subject to user monitoring.

In summary, the cost recovery issue was seen as complex and one which required an approach appropriate to the subject society. It was however seen as one which will require considerable attention to ensure that the spatial information bank can be readily utilised for the social, economic and structural changes which will impact our changing world.

Further Action

It was agreed that the issues of privatization and, in particular, cost recovery should be the subject of further collective consideration at the 1997 FIG Commission 7 annual meeting in Malaysia, and that a comprehensive report in the form of a paper should be delivered at the FIG Congress in Brighton, UK, in 1998.

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Last Modified: September 1996.