The implications of alternative publishing models for research funders

Major areas of impact include the potential information access and handling efficiency gains for all of the parties involved and enhanced visibility on the benefits side, and the diversion of research funding directly to fund author- or producer-side payments in an OA publishing model on the cost side. With limited information available the best one can do is to explore these in terms of a number of plausible scenarios. These relate to funding agency activities and grants funding, principally to higher education, with system-wide impacts explored elsewhere.

Box 4.2: Scenario assumptions: Fund research and communication Parameter Basis Value

Funder operational costs as a share of funding

UK S&T Budget document 3% Evaluation and reporting as a

share of operational costs

Authors’ estimate 50%

Potential savings in these costs from enhanced access

Authors’ estimate 5% to 10%, estimate 5%

Returns to publicly funded R&D Literature review (conservative consensus from the literature)

20% to 60%, estimate 20% Improved allocations increase

returns to R&D

Authors’ estimate 1% to 5%, estimate 2.5%

Increase in allocations to R&D Authors’ estimate 1% to 5%, estimate 2.5% Source: Authors’ analysis.

Funding agency and related costs

Scenario: Savings for funding agencies in internal evaluation of proposals, evaluation of impacts and reporting, and in lower cost of “lobbying” for funds

With estimated funding agencies operational spending at £87.4 million per annum in 2007 (RCUK and RAE), management, evaluation and reporting activities would cost around £44 million, and the potential 5% internal saving from enhanced access would be worth around £2.2 million per annum (excluding potential external peer review savings).

Scenario: Funder savings spent on R&D

If these savings flowed through to research in the form of an equivalent increase in research funding (assuming no substitution at the margin), the implied annual impact on returns to R&D would be around £440,000 (at average returns).52

Scenario: Savings in external evaluation of proposals (peer review)

With estimated costs of external grant application reviews at around £18.6 million nationally and £17.3 million in higher education circa 2007, the potential 5% annual savings from enhanced access would be worth around £865,000 for higher education and £930,000 nationally in 2007 prices and levels of grant applications and funding.

52 _{These are recurring gains, albeit lagged to account for the time between the conduct of research and its}

impacts. Such returns can be expressed in Net Present Value (NPV), lagged and recurring over the useful life of the knowledge. However, NPV calculations are sensitive to the discount rates applied. For example, lagged 10 years and recurring for 10 years thereafter the £440,000 would be worth around £330,000 (NPV) using a very conservative discount rate of 10% per annum, and around £600,000 (NPV) at 5%. While one might choose a real discount rate of 7%, returning around £470,000, we have taken the view that for the sake of simplicity and transparency we will simply take the original number (i.e. £440,000) as indicative of the value of the returns.

Scenario: Improved quality of peer review and better evaluation metrics lead to better allocations and raise returns to R&D

With grant and block funding to higher education institutions at £3.6 billion in 2006-07 (i.e. that share of funding most directly affected by research evaluation), a 2.5% increase in returns to R&D due to improved targeting and allocation would be worth around £18 million per annum in higher education alone (at average returns).

Scenario: Increased visibility leads to increased R&D allocations, and thereby to increased impacts

With grant and block funding to higher education institutions at £3.6 billion in 2006-07, a 2.5% increase would be worth £150 million with implied additional annual returns of £30 million (at average returns).

Scenario: All of the above scenarios are combined

Combined (i.e. simply combined rather than cumulative and excluding the savings relating to external peer review) these potential savings and impacts would be worth around £50 million per annum at 2007 prices and levels of funding.

OA publishing fees

Scenario: Some proportion of R&D funding is diverted to pay OA publishing fees (be it author-pays or other producer-side fees)

The potential impacts of OA publishing on costs and funding flows are difficult to estimate as OA publishing costs and/or fees can and are being met from a variety of sources, with perhaps less than one-half of OA journals charging author fees and the potential for other revenue streams (e.g. advertising, membership fees, etc.) to complement and reduce the author fees charged even by those journals that do, and emerging OA book publishing models as yet too embryonic to be readily classified.

The details of OA article publishing fees estimates are discussed in section 4.4 (below), and their system-wide impacts are dealt with elsewhere. In this section we focus on the cost and funding flow impacts relating to research funding bodies – in isolation from other system actors. If author/producer-side fees sufficient to cover the entire costs of OA journal publication had been paid for all articles produced within UK higher education during 2007, we estimate that the total cost would have been around £148 million, or 2.4% of higher education R&D expenditure

(HERD).53 _{Had these simply reduced HERD by 2.4% there would have been an implied loss of}

returns to R&D of around £30 million per annum (at average returns, 2007 prices and levels of funding). Thus the net cost would have been of the order of £177 million per annum circa 2007. There is insufficient information to estimate the costs of OA book publishing to funders as there is as yet no comparable process or business model for research monographs.

53 _{Nationally, author/producer-side fees sufficient to cover the entire costs of OA publication for all}

Funder-side costs and savings

Scenario: comparing funder-side costs and savings

Combining these funder-side costs and savings as they relate primarily to UK higher education would imply potential savings of around £50 million per annum from enhanced access, and costs of entirely funder-side supported OA publishing (i.e. a system in which all producer-side publishing fees were met from research grants) of around £175 million per annum at 2007 prices and levels of activity, leaving a shortfall of around £130 million per annum to be recouped from elsewhere.

Of course, it is most unlikely that an entirely funder supported producer-side OA publishing system would arise, so this is in some senses a ‘worst case’ scenario, intended to scope the potential quantum of cost and funding flow impacts. It does not take account of potential cost and funding flow impacts elsewhere in the system. More importantly, it is simply net of costs and does not take account of the potential impact of enhanced access on returns to R&D (discussed in sections 5 and 6, below).

4.2 Perform research and communicate the results

The activities involved in performing research and communicating results are outlined in Part 1 (http://www.cfses.com/EI-ASPM/SCLCM-V7/). Based on a variety of surveys and studies of the activities of researchers it is possible to estimate the costs involved in the performance of research and research communication in UK higher education and, to a lesser extent, in the UK nationally (See Box 4.3).

Costings are based on UK academic salaries during 2007 with on-costs and overheads calculated according to the UK’s full economic costing method (TRAC fEC), converted to an hourly cost at official working hours. To the extent that researchers work longer than official working hours without additional pay this may lead to a slight overstating of costs. Nevertheless, as the UK higher education sector is moving towards the full economic costing of research it seems appropriate to employ full economic costing for our estimations. All costs are expressed in 2007 UK pounds and, where necessary, have been converted to pounds using OECD published annual average exchange rates and adjusted to 2007 using the UK consumer price index published by the National Statistical Office.