Last updated: 
30 June 2020

Insights #3
What more needs to be done to better understand the value of Indigenous Knowledge?

This is the third and final of an Insights series looking at the key findings of the Estimating the Market Value of Indigenous Knowledge report prepared by CAEPR for IP Australia. The first Insight discussed the value of Indigenous Knowledge (IK), while the second Insight looked at the tools that can be used to protect and manage Indigenous Knowledge. This Insight explores why this work is useful, some of the possible methodologies for estimating the value of IK and what further information would help unlock future valuation and related research.

Why look at the market value of Indigenous Knowledge?

IP Australia’s IK project is investigating ways that the intellectual property (IP) system can better support the protection and management of Indigenous Knowledge (IK). IK has important cultural and heritage value, and it can also be used (with appropriate consent) in a way that creates economic value. Because of this, IP Australia is looking at how the IP system can support Aboriginal and Torres Strait Islander people using their IK to unlock economic opportunities. CAEPR’s research is an important part of building the evidence base for IP Australia’s work to support IK. However, CAEPR’s exploration of IK is relevant beyond the IP system.

The CAEPR report presents an opportunity to better understand IK-based opportunities for the Indigenous business and community sector as well as the Australian economy. It provides a sound conceptual framework for further research into the valuation of IK.

Case study - Indigenous Protected Areas and ranger programs

The CAEPR report looks at Australian Government-supported Indigenous Protected Areas (IPAs) which are protected environmental areas. Rangers are usually employed to manage and protect the land though activities such as cultural burning to reduce bush fires, managing feral animals, protecting threatened species and managing tourist visits. IK is central to the management of IPAs and associated ranger programs which often combine traditional knowledge with western practices. CAEPR initially estimated that 8.3% – 28.5% of the value in this area could be attributable to IK.

Further information about the costs of running IPA programs and a better understanding of the full scope of Aboriginal land and sea management undertaken under the ranger programs would support a more precise estimate of the value of IK used in these

 

Learnings from case studies and next steps

Estimating the market value of IK is not a simple exercise, and limited work has been done to date on this issue. The CAEPR report represents ground-breaking work in this area. A key problem for each approach to estimating the value of IK is the ‘attribution problem’, also mentioned in Insight #1. This refers to the difficulty in knowing exactly how much IK contributes to the value of a good or service. For example, where access is provided to a plant known through IK to have medicinal properties, it is difficult to determine how much of a product’s final market value is attributable to the original IK. A number of factors go into producing any good or service so these other factors also need to be accounted for. Attribution is also more difficult because knowledge is held and used by people, so some of its value is hidden in the cost of employing people (e.g. labour costs) or as part of other elements, such as the ‘good will’ of a business.

The CAEPR report looks in depth at six case studies (and identifies many more that can be explored) to understand the correct IK attributions and so calculate IK’s market value. The initial estimates attributed to IK range from 1.7% to 12.5% for furniture manufacturing to 8.3% to 28.5% for Indigenous Protected Areas. Depending on the sector, different types of information would help support more detailed work to refine the initial estimates in the report (see case studies for examples).

Accurately attributing the value of IK in different sectors could inform how IK creates part of the value proposition for new or on-going projects. This could be useful for a range of decisions, such as in relation to government funding or even for businesses seeking investment opportunities. 

Case Study - Garma Festival

The Garma Festival is an annual cultural festival held in Northeast Arnhem Land and hosted by the Yothu Yindi Foundation representing the Yolngu people. Literature on the Garma Festival often notes its cultural and political significance. The economic contribution that the festival makes does not appear to have been considered to the same extent.

The CAEPR Report examined publicly available information about Garma from different years, including an estimate of its revenue. Based on this information, an initial estimate is that up to 16.8% of the value generated by Garma can be attributed to IK.

More details about the spending, revenue and growth record of the Garma festival could be used to better predict the value attributable to IK.

 

What methods can estimate the value of IK?

Using a literature review and case studies as a basis, the report presents four possible methods to estimate a monetary value that could be assigned to IK. These would be the basis for economic estimates only, that can’t and are not intended to capture the full importance and value of IK as part of Aboriginal and Torres Strait Islander culture. 

  1. Accounting standards – Accounting standards include strategies including production function approaches for capturing the value of intangible goods such as knowledge. Therefore, accounting standards could be adapted to require attribution of the value of IK as an intangible asset. This method is particularly suitable for smaller scale valuation of IK such as for a firm’s accounting purposes or to estimate the value of the IP it holds.
  2. Valuation of the Indigenous business sector – Previous work on the value of the Indigenous business sector could be built upon by focussing on how much of that value may be related to IK. This would have to be extended to capture non-Indigenous companies that that use IK as well. 
  3. Valuations of the contribution of IK to a specific sector – This approach would build on the kind of case study analysis presented in the report but apply it more broadly to derive an average estimate of IK attribution for each sector. The contribution of IK is likely to vary between different sectors, and such analysis allows for these differences to be better understood.
  4. Assessing willingness to pay through surveying - Willingness to pay is the price a consumer is prepared to pay for a product or service. By surveying customers with specially designed questions and techniques, we can better understand the value of embedded IK in a product to consumers. It can highlight instances where consumers are prepared to pay a premium for a product which draws on IK. 

How can this research be taken forward?

The four methods described above outline some starting points to better estimate the value of IK. Further information and data (including through microeconomic studies) are needed to generate more accurate estimates of IK attribution percentages. This work could be followed by macroeconomic assessments to understand the value of IK more broadly in the economy. Continuing research in this area would be a valuable contribution to how Indigenous Knowledge is understood and protected.

Key takeaways

  • The gathering and sharing of information and data from across different sectors could support better understanding of how Indigenous Knowledge contributes to value in different contexts. 
  • Some of the methods outlined could be used by business or government to understand how IK can impact the value proposition for various activities, whether the production of specific goods or the funding of certain programs.

Interested in more of these Insights? Check out the rest of the series - Insight 1 and Insight 2.