Estimating the Market Value of Indigenous Knowledge
Considering the value of Indigenous Knowledge for businesses
In 2019 IP Australia released a commissioned report from the Australian National University’s Centre for Aboriginal Economic and Policy Research (CAEPR) on how the market value of Indigenous Knowledge (IK) in Australia could be estimated. This insight is the first of a short series that will highlight some of the key findings from that report.
What is IK and why consider its value?
Indigenous Knowledge or ‘IK’ includes a range of knowledge held and developed by Australian Aboriginal and Torres Strait Islander peoples. It includes Traditional Knowledge (such as methods, skills and know-how) and Traditional Cultural Expressions (such as language, art, craft and dance).
IK is an important asset belonging to Aboriginal and Torres Strait Islander people, their communities and their organisations or businesses. Obtaining free, prior and informed consent for use of IK from the knowledge holders is therefore fundamental. Appropriate management and protection of IK helps protect culture and can unlock economic opportunities for Indigenous people.
In putting the report together, CAEPR drew on a large range of literature and developed case studies about the use of IK. This research demonstrates how IK can contribute to a diverse range of goods and services across the industrial sector of the economy. Some of the sectors raised in the report include medicine, cosmetics, bushfoods, health care, environmental and biodiversity management, tourism, product design, architecture, research and education, and culture. Understanding the value of IK is important to support new opportunities across each of these sectors.
IK is valuable, but difficult to value
Like all forms of knowledge, IK is an intangible asset whose economic value is not easily derived. The difficulty in valuing IK should not be mistaken for a low economic potential. Intangible capital or assets such as ideas and processes can contribute twice as much of a product’s value when compared to tangible assets.
The value that IK generates for a business is unlikely to be fully captured on the balance sheet. Current accountancy standards do not necessarily allow for all IK to be easily captured or considered by a business. The report notes suggestions to address this by:
- treating Indigenous culture, heritage and IP as assets
- including Elders in the valuation process
- enhancing the financial and commercial literacy levels of Indigenous entrepreneurs
- developing auditing and accounting models which incorporate cultural, social and environmental measures.
Why estimating the value of IK is tricky
Calculating the market value of IK is a challenging task for a range of reasons. One difficulty is identifying where IK has been used and is contributing to value. IK can contribute in different ways to the output of a business. IK might make a direct contribution to the creation of a product that is easily identifiable, for example, the creation of a piece of art for sale. However, other IK that is embedded in the understanding, creating, and retail processes of that piece of art also contribute but are harder to identify. An example of this value is the ability of people to procure and sell the art in a culturally appropriate way.
It can also be difficult to determine the percentage of value attributable specifically to IK. The CAEPR report refers to this as the attribution problem. Drawing on a range of research, the report estimates possible IK attributions in different sectors. These estimates are a good starting point but more information and work are needed to refine them. Some of the possible attributions are outlined in the case studies below, summarised from the report. The actual percentage of attribution in any given case could be larger and requires further research.
Case Studies – Examples of attributing the contribution of IK in growing sectors
IK and Plants
A large number of plant species used traditionally have been commercialised. Knowledge about native plants can have applications in medical, cosmetic, nutrition or culinary sectors.
Bush foods are an example of a growing market based on Traditional Knowledge. In 2012, the bushfood sector was valued at $50 million. For example, the Kakadu plum is a known bushfood used by several Northern Australian Indigenous communities. It has been commercialised in a range of ways including in cosmetics, nutritional supplements and food products. The CAEPR report found that, as an initial estimate, 2.5% to 12.5% of the value of Kakadu plum products could be attributed to the original IK about Kakadu plum.
IK and Design
The CAEPR report notes that there is a growing market for Indigenous designs, particularly fashion and furniture. CAEPR looked at two businesses as case studies - Indigenous fashion business Kirrikin and furniture business Koskela.
CAEPR’s initial estimate is that the value that could be attributed to IK in this sector was between 1.7% and 12.5%. Kirrikin grew by over 400% over three years, an example of how significant business growth can occur in an area which draws on IK.
Key take-aways for businesses
- It is important to remember that IK has both cultural and economic value.
- Business should consider appropriate strategies to protect, maintain, and commercialise its IK.
- When working with IK it is also important to think about the consent, benefit sharing and other protocols that need to be put in place.
Interested to learn more? You can check out the full text of the CAEPR report on our website.
More information about IP Australia’s Indigenous Knowledge project is available on our webpage.