Johnny West at Open Oil: “Open financial models can clearly put analysis into a genuinely independent public space, and also trigger a rise in public understanding which could enrich the governance debate in many countries.
But there is a third function public models can serve: that of advocacy for targeted disclosure of information.
The stress here is on “targeted”. A lot of transparency debates are generic – the need to disclose data as a matter of principle.
It is striking that as the transparency agenda has advanced, and won many battles, so has a debate about whether it is contributing to an increase in accountability. As Paul Collier said: “transparency has to lead to accountability otherwise we’re just ticking loads of boxes”.
We need all these campaigns to continue, and we need to pursue maximum disclosure. Because while transparency does not guarantee accountability, it is its essential prerequisite. Necessary but not sufficient.
But here’s where modeling can help to provide some examples of how data can be used, in a very specific way, to advance accountability.
Let’s take the example of an oil project in Africa. A financial model has to deal with uncertainty and so provides three scenarios for future production and prices, which all have a radical impact on the revenues the government could expect to see. That’s unavoidable. Under the “God, Exxon and everyone else” principle, future price and to some extent production are hard to foresee.
But then there is a second layer of uncertainty caused specifically by the model having to use public domain data. The company, and the government if it exercised its rights of access to information, does not face this second layer because it has access to real data, whereas the public interest model must use estimates and extrapulations. These can be justified, written out and explained – they can be well-informed guesses, in other words, and in the blog on the analytical power of public models, we argue that you can still arrive at useful analysis and conclusions despite this handicap.
Nevertheless, they are guesses. And unlike the first layer of uncertainty, relating to future prices and the ever-changing global market, this second layer can be directly addressed by information the government already has to hand – or could get under its contractual right of access to information….(More)”