Leveraging NERP

Reflections on investing in research and the NERP ED Hub

In recent years we have claimed that the investment by the Australian Government Department of the Environment in environmental research in Australian universities through the CERF and NERP have generated considerable leverage (see the box on acronyms if you’re uncertain about these names). We have every expectation that our new NESP Threatened Species Recovery Hub will be every bit as effective in terms of return in investment.

In the mid-term review of our first hub (the Applied Environmental Decision Analysis Hub funded by CERF), leverage was documented as about five fold. How did we calculate this? Here is how you might go about calculating leverage in a fairly generic fashion. In so doing I’ll also give you an estimate of the cost of getting research to the point of the initial essential output – publications.

PhD students as an investment

PhD students are the backbone of many applied environmental research projects. Almost all of our PhD students come with a PhD scholarship worth about $24,000. Funds from the Australian Government Department of the Environment provide a top-up to around $30,000. This attracts better students and enables them to focus on their project without the distraction of earning money from other activities.

Universities normally provide some research funds, while Department of the Environment funds will often match that – let’s say $5,000 each. Students have a supervisory team of two or three academics and their net contribution will be about 4% of an academic – which is worth $6,000 per annum of salary. Hence the total salary and research costs per annum are $36,000 and $10,000 respectively. These attract overheads (see the box ‘on on-costs and overheads’) of 60% and 10% respectively making a total cost of around $67,000 per annum.

Bottom line: leverage for PhD students is typically 1:6 – $11,000 becomes $67,000.

At this point it is worth trying to work out the cost of getting a piece of research to the point of publication. A very good PhD student will produce about three papers over four years. If their cost is $67,000 per annum then the rough cost of a paper is $67,000*4/3 = $90,000.

Postdocs

Postdoctoral researchers, on face value, do not provide the efficiency of PhD students. They are typically twice as productive but they cost about $100,000 per annum (including on-costs). Adding in overheads, this means they cost about $160,000 for salary ($100,000 from the grant and $60,000 from the university). If we add some expenses of $18,000 per annum, shared about 50-50, then add 10% overheads on those expenses, the full cost of a postdoc is $180,000 per annum – leverage of about 1:2. However, most of our postdocs are co-funded from other sources, so the final leverage for postdocs is between 1:2 and 1:4.

Bottom line: leverage for postdoc researchers is typically 1:3 with high variability from project to project.

It is interesting, again, to try to work out the cost of getting a piece of research to the point of publication. A very good postdoc will produce about two papers per year. If their full cost is $180,000 per annum this means the rough cost of a paper is, again, around $90,000.

Another calculation

Another way of getting a ballpark on the leverage of Commonwealth funds is to consider the number of papers written per year and note that the net full cost of a paper is about $90,000. The latest count of NERP ED papers is about 100 per year. This represented $9 million of output for an investment of around $3 million per annum – leverage of 1:4, which lies somewhere between the postdoc and PhD calculations. This apparent consistency makes me happy.

Punch-line: We estimate that for every dollar invested by the Australian Government Department of the Environment in environmental research in our hubs, about $4 is actually spent on research (taking into account the full cost of research) – a leverage of 1:4.

This is a remarkable level of leverage. Similar results emerge from funded week-long workshops, which usually produce one or two papers. Our style of quantitative impact-oriented research has been especially efficient because it often uses existing data.

I end by noting the high efficiency of PhD students as investment although, as expected, the time it takes to deliver an outcome, and the uncertainty of the outcome, makes postdocs a better investment in many cases.


On on-costs and overheads

On-costs and overheads can cause confusion. In the Australian university sector, on-costs are direct costs that universities pay to employ their staff. Super-annuation is the biggest component of on-costs. On-costs typically run at 28% on top of the base salary. Overheads is the estimate of the additional costs to a university of employing staff. They range from 60% to 90% for salaries, depending on whom you are talking to, and 10% for equipment/ travel/consumables etc. Hence, if you employ someone with a salary of $78,000 then the actual cost is $78,000*1.28 = $102,400. The cost, taking into account ‘overheads’, is a minimum of $102,400*1.6 = $163,840.


Acronym timeline

CERF: Commonwealth Environment Research Facilities Program

AEDA: Applied Environmental Decision Analysis hub. The AEDA hub was funded by CERF from 2007-2010.

NERP: National Environmental Research Program

NERP ED: NERP Environmental Decisions Hub. NERP ED was funded from 2011-2015.

NESP: National Environmental Science Programme

TSR: Threatened Species Recovery Hub. NESP TSR is funded from 2015-2021.

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