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The Value of More Information for Managing Koalas

By Sean Maxwell

Thinking like a multi-billion dollar mining magnate may help us better manage koalas.

Koalas in south-east Queensland are in trouble. They are threatened by vehicles, dog attacks and disease, and these threats are growing as koala habitat is cleared to make way for new housing and industrial estates. The rate of decline is alarming, with a significant population within south-east Queensland crashing from an estimated 6000 individuals to fewer than 2000 in the space of 15 years.

In response to this, the Queensland Government has allocated $26.5 million to managing koalas in south-east Queensland over the next 4 years. How should we spend this to maximise the chance of koalas persisting in south-east Queensland?

Most natural resource management budgets are typically allocated to either gaining new information about the species or ecosystem in question, or to direct management action. In the case of south-east Queensland koalas there is uncertainty about the birth and death rates, and the effect of forest cover on these rates. Gaining new information that would reduce these uncertainties may lead to more effective management strategies. Alternatively, new information about these uncertainties may not change how we currently manage the species, and a better investment could be to allocate funds to direct management action now.

These kinds of resource allocation problems are not restricted to natural resource management. They are common in health, economics, business management and the mining sector. Decision-makers in these fields have turned to analytical tools to help make good resource allocation decisions in the face of uncertainty.

For example, imagine that you are Gina Rinehart and that you’re reviewing a proposal for a potentially lucrative coal mining project. The project could bring in big returns, but you don’t want to blow millions on a project that isn’t viable.

If you were in this position, the question you would ask yourself is: “Should I fund geological studies, exploratory drilling and price forecasts to reduce my level of uncertainty, and hopefully improve the long-term success of the proposed mining project?”

Instead of relying on gut feelings or expert opinion, the smart approach is to use value-of-information analysis to help make this decision. It presents a way of evaluating the benefits of collecting additional information before making a decision. If after conducting the value-of-information analysis you see that the expected improvement in your profit margin from having additional information is not worth the cost of obtaining that information, then there’s little point in making that investment.

Where a miner might think in terms of profit, environmental decision-makers think in terms of conservation outcomes. Given limited funds to address the enormous challenge of arresting the decline in koala numbers, should we invest in learning more or just get on with the job?

I have been applying value-of-information analysis to evaluate the benefits of resolving uncertainty surrounding the declining koala population in south-east Queensland. We modelled the effectiveness of koala management using current levels of information and compared this to a situation where all uncertainty about birth and death rates, and the effect of forest cover on these rates, was resolved.

We found that the optimal management strategies with and without new information on birth and death rates, and the effect of forest cover on these rates, were very similar. This similarity suggests that resolving uncertainty will have negligible effects on management performance. Indeed, we found that a 0.034% improvement in the population growth rate is the best we could expect if uncertainty was resolved. Our analysis shows that if resolving uncertainty costs more than 1.7% of the koala management budget, it would be more cost-effective to allocate that money to direct management action now.

The low values of information illustrated in our koala case study have also been mirrored in case studies using other focal species. However, cases exist where gaining new information has dramatically improved management performance.

These contrasting results from different value-of-information analyses show how uncertainty can have variable effects on our ability to achieve a management objective. They highlight the benefits and importance of a value-of-information analysis before making that all important investment decision.

Sean Maxwell is a researcher with the Environmental Decisions Group. He is based at the University of Queensland.