Paper 105, CCG Annual Report 21, 2019 (© 2019)

Numerical and Analytical Approaches to the Value of Information in

Resource Management
Ben Harding and Clayton V. Deutsch

The value of information (VOI) is the difference in value generated by a decision with and without additional
information. The application of VOI to spatially correlated problems is discussed. In earth science scenarios
data is expensive collect and we would like our decisions to generate the maximum value possible. A VOI study
allows the practitioner to evaluate how uncertainty in the variable of interest changes when information is
collected. The reduction of uncertainty typically leads to the generation of value. If the decision maker has the
flexibility to change their decision in the light of new information the data is inherently valuable. The value
of information can be assessed numerically or analytically. The focus of this paper is primarily numerical
approaches as they are conceptually more straightforward though analytical methods are discussed briefly.
The primary numerical approach is the data driven resample and resimulate approach. The workflow is
discussed in detail here. The value of future information may also be calculated by establishing likelihood
and posterior probability distributions with Bayesian methods. Measures of static geologic uncertainty are
discussed as proxies to the numerical VOI workflow; easily calculated uncertainty measures may circumvent
computationally heavy numerical workflows.

Introduction
The value of information (VOI) framework involves evaluating a set decision alternatives prior to acquiring
information. The effect of the decision outcome with future information is compared to the decision out‐
come with current information. The information acquired may be in form of drill core, surface geochemical
samples, geophysics or any information which may influence decision being made. These decisions are often
capital intensive and cannot be undone once implemented. Howard (1968) and Eidsvik, Mukerji, and Bhat‐
tacharjya (2015) describe the action of making a decision a irreversible or irrevocable allocation of resources.
Decisions may be a simple binary choice, drill or do not drill. Decisions may involve set of alternatives, or se‐
quential data gathering and multiple decision scenarios. In spatially correlated earth science problems these
decisions are made under uncertainty. This uncertainty is typically quantified through sequential Gaussian
simulation of the relevant spatially correlated random variables. Uncertainty is directly related to spacing of
the data which conditions the geostatistical model. With widely spaced data uncertainty is higher and this
uncertainty is reduced with more closely spaced data (Wilde, 2010). The VOI framework allows the prac‐
titioner to assess how future information will reduce this uncertainty and determine if it is worth the cost
(Caers, 2011). In the context of resource management the typical set of decision alternatives, or what future
information to collect, involves collecting data at various densities. The question then posed is how much
data to collect. A target data spacing or number of samples can be determined though calculating the VOI
for the set of alternatives. The decision alternative which maximizes the expected value given the associated
costs is the correct alternative for a risk neutral decision maker (Deutsch, 2018).

This paper will discuss the application of numerical and analytical approaches to evaluating VOI. Barnett,
Lyster, Pinto, MacCormack, and Deutsch (2018) reffer to the numerical approach as ”resampling and resim‐
ulation”. The general framework involves simulating realizations of the true distribution, sampling the true
models at future data configurations, and resimulating conditional to the future data (Wilde, 2010). The re‐
sampled data respect the histogram and variogram of the true data. The outcome of the decision alternative
with future information can be passed through an appropriate transfer function and be evaluated in terms
of VOI:
𝑉𝑂𝐼 = 𝑣𝑎𝑙𝑢𝑒 𝑤𝑖𝑡ℎ 𝑛𝑒𝑤 𝑖𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛 − 𝑣𝑎𝑙𝑢𝑒 𝑤𝑖𝑡ℎ 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑖𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛
VOI can also be calculated as the difference between the posterior value and the prior value (Eidsvik et al.,
2015):
𝑉𝑂𝐼(𝑧) = 𝑃𝑜𝑉(𝑧) − 𝑃𝑉
With the random variable 𝑍 defined by the probability density function 𝑝(𝑧). Prior and posterior probability
density functions can be calculated by Bayesian inversion and used to generate prior and posterior values in

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Current
ill Value
t dr
no
Do

Dr Effects
ill
Decision
New Value
- Cost

Current Value
Does not - Cost
Effect Decision

Figure 1: A simplified decision tree for a drill/no‐drill decision. If the information improves the decision the
VOI is the difference between the new value and the current value.

monetary units (Eidsvik, Bhattacharjya, & Mukerji, 2008). This paper will also discuss proxies to the full value
of information framework. On a situational basis, the value of information may be inferred from measures
of static geologic uncertainty such as standard deviation or the probability of correct classification. General
learnings and paths for future areas of research are also discussed.

Decision Framework
Making decisions is something that we all do whether the outcome is trivial or not. In the earth sciences
these decisions are always made under uncertainty. By the time we are certain about the state of nature the
decision has already been made and the resources have been allocated. A framework of decision analysis
allows the decision maker to navigate potential alternatives and make an appropriate decision based their
preferences (Eidsvik et al., 2015). Howard (1968) divides the methodology of decision analysis into three
phases: (1) the deterministic phase which establishes the relationships between variables; (2) the proba‐
bilistic phase which introduces uncertainty and (3) the information phase where a decision to gather more
information or not is made. The third stage step of the framework is the major theme of this paper. (Deutsch,
2018) frames the decision making process in an earth science context as (1) clearly defining objectives, (2)
enumerating the decision alternatives, (3) calculating the utility for each alternative and (4) and select the
alternative which maximizes the expected utility. Utility is often defined in monetary units. Framing the
decision alternatives clearly is important to understand if the those alternatives will effectively resolve the
uncertainty related to the problem. The VOI decision making process can framed in a decision tree (Caers,
2011). One branch of this tree is the prior value, or the value of the decision with current knowledge. The
other branches of the trees enumerate the decision alternatives. A simplified decision tree for a binary deci‐
sion variable is illustrated in Figure 1. Decision scenarios discussed in this paper are simplified by assuming
each decision is a ”one‐shot” event with information collected from a single source. One decision is made
based on the suite of feasible alternatives.

Value of Information Framework

A value of information study in a mining context requires, as mentioned above, a clear objective and set of
decision alternatives. This objective is often how much data is required to resolve sufficient uncertainty or
which decision alternative generates the maximum utility. Bratvold, Bickel, and Lohne (2009) suggest that
the value does not actually lie within the reduction of uncertainty, but rather the giving the decision maker
the ability to tune their decisions given the state of uncertainty. VOI analysis also requires a spatial model
to quantify the state of uncertainty. These models are typically generated using sequential Gaussian simu‐
lation (SGS). SGS is used to build a set of high resolution, equiprobable realizations which characterize the
spatial distribution of a random variable Z at location u, 𝑧𝑙 (u) ∀ u ∈ 𝐴 (Deutsch & Journel, 1998). The real‐
izations are conditional to the current data configuration and represent the state of uncertainty with current
knowledge. With a decision framework and spatial model available one must determine what type of infor‐
mation to collect and if it will be relevant to the problem at hand (Eidsvik et al., 2015). In a mining scenario
this information could be a bulk sample, diamond or reverse‐circulation drilling or airborne geophysics. In
a petroleum scenario this information may exploration wells or seismic data. Data collection in the context

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of this paper will refer to collecting drill hole data at a suite of data spacings from a realization of the truth.
The applicability of a particular medium of information to a decision scenario is situation based and requires
professional judgment.

Numerical VOI approaches require a transfer function to lead to a technical decision (Barnett et al., 2018).
The resampling and resimulation approach discussed in this paper involves passing sets of realizations con‐
ditional to ”future” data configurations though an objective function. This objective function generates a
technical design which maximizes value across all realizations. This technical design is then compared back
to the truth which represents the current state of knowledge. Alternative VOI approaches require deter‐
mining prior and likelihood distributions and value for each decision alternative; posterior values are cal‐
culated by the application of Bayes’ Law. Though easier to calculate, assumptions must typically be made.
Truly analytical methods assess posterior distributions from a parametric distribution such as a Gaussian
or Markov model while prior values are constant across all decision alternatives (Bhattacharjya, Eidsvik, &
Mukerji, 2010; Bratvold et al., 2009; Eidsvik et al., 2015)

Numerical Approaches
The resampling and resimulation approach for determining VOI is detailed here for a hypothetical gold bear‐
ing vein amenable to underground mining methods. The work flow is presented graphically in Figure 3. The
data set consists of 67 drill hole samples with hanging wall position and thickness measurements. The spa‐
tial model is built with SGS. The objective is to determine a target data configuration which maximizes the
expected value of the technical decision. If uncertainty is too high, the final stope placement may be sub‐
optimal resulting ore loss and dilution when the deposit is mined. As geologic uncertainty is reduced though
the collection of information, the technical decision of stope placement improves. The goal is to determine
the optimal balance between cost and uncertainty reduction. The cost of uncertainty in this scenario is lost
project value. This approach is also presented by Barnett et al. (2018) for an oil shale formation in northern
Alberta. A similar work flow is presented by Wilde (2010) though he explores the relationship between un‐
certainty and data spacing without specific mention of VOI. In this context the value of information is the
expected difference between the value with future information and the value with current information:
𝑉𝑂𝐼𝑐𝑡 = 𝑉𝑐𝑡 − 𝑉0𝑡
Where super script 𝑡 refers to a particular reference ”true” model and 𝑐 refers to a particular data configu‐
ration. The expected VOI for a particular data configuration is then:
𝑇
1
𝐸{𝑉𝑂𝐼𝑐 } = 𝑉𝑂𝐼𝑐𝑡 , 𝑡 = 1, ..., 𝑇 𝑐 = 1, ..., 𝐶
𝑇
𝑡=1

The resample and resimulate work flow is as follows:

1. Decluster data, normal score transform, calculate normal score variograms for attributes
2. Determine number and spacing of “future” data configurations, 𝑐 = 1, …, 𝐶; current data configuration
is denoted 𝑐 = 0
3. Simulate 𝑇 possible truths for the “current” data configuration, 𝑐 = 0, using existing data
4. Simulate 𝑇 possible truths for each “future” data configuration using existing data, 𝑡 = 1, …, 𝑇 ∀ 𝐶;
results in 𝐶 sets of 𝑇 true realizations
5. Re‐sample 𝐶 sets of true vein realizations at decreasing data spacings, 𝑐 = 1, …, 𝐶; results in 𝑇 new
data sets, 𝑑𝑡 , 𝑡 = 1, …, 𝑇 for all 𝐶
6. Simulate 𝑙 = 1, …, 𝐿 realizations with the current data, 𝑑0 , ∀ 𝑇 – “current knowledge”; results in 𝑇 × 𝐿
realizations for data configuration 𝑐 = 0
7. Simulate 𝑙 = 1, …, 𝐿 realizations with 𝑑0 plus 𝑑𝑡 , ∀ 𝑇 – “future information”; results in 𝑇 × 𝐿 total
realizations for each 𝑐 = 1, …, 𝐶
8. Generate 𝐿 hanging wall and footwall vein surfaces for all 𝑇 for each data configuration
9. Generate 𝐿 hanging wall and footwall vein surfaces for all 𝑇 for each data configuration
10. Optimize one stope design across 𝑙 = 1, …, 𝐿 realizations for each 𝑡 = 1, …, 𝑇 true vein realizations in
𝑐0 using a simple objective function:
a. The corners of the vein in 𝑙 = 1 are used to define an initial stope geometry

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b. Stope value is caluclaued as: 𝑉𝑙 = (𝑜𝑟𝑒𝑙 × 𝑜_𝑣𝑎𝑙) + (𝑤𝑎𝑠𝑡𝑒𝑙 × 𝑤_𝑣𝑎𝑙)

c. Initial stope geometry is perturbed and the average value across all realizations is calculated
as:
𝐿
1
𝑂0𝑡 = 𝑉𝑙
𝐿
𝑙=1

d. If the value of the objective function increases, the new geometry is kept. Negative changes
are rejected. Loop over the previous steps for a specified number of iterations.
e. Results in 𝑇 ”optimized” stope geometries with “current knowledge”
11. Optimize one stope design across 𝑙 = 1, …, 𝐿 realizations for each 𝑡 = 1, …, 𝑇 true vein realizations for
all 𝑐 = 1, …, 𝐶 future data configurations using the same objective function:
𝐿
1
𝑂𝑐𝑡 = 𝑉𝑙
𝐿
𝑙=1

a. Results in 𝑇 ”optimized” stope geometries for all 𝑐 = 1, …, 𝐶 “future” data configurations

12. Calculate value with current information:
a. 𝑇 total optimized stope geometries for 𝑇 true vein realizations in 𝑐0
b. Calculate value of 𝑇 optimized 𝑐0 stopes against 𝑇 true veins in 𝑐0; results in 𝑇 stope values
with “current” information
c. 𝑉0𝑡 = (𝑜𝑟𝑒𝑡 × 𝑜_𝑣𝑎𝑙) + (𝑤𝑎𝑠𝑡𝑒𝑡 × 𝑤_𝑣𝑎𝑙), 𝑡 = 1, ..., 𝑇, 𝑐 = 1, …, 𝐶
13. Calculate value with future information:
a. 𝑇 optimized stope geometries for 𝑇 true vein realizations in 𝑐 = 1, ..., 𝐶 data configurations;
Results in 𝐶 × 𝑇 total stope geometries
b. Calculate value of 𝑇 optimized stopes against 𝑇 true veins in 𝑐 = 1, …, 𝐶 data configurations;
results in 𝐶 × 𝑇 stope values with “future” information
c. 𝑉𝑐𝑡 = (𝑜𝑟𝑒𝑡 × 𝑜_𝑣𝑎𝑙) + (𝑤𝑎𝑠𝑡𝑒𝑡 × 𝑤_𝑣𝑎𝑙), 𝑡 = 1, ..., 𝑇 𝑐 = 1, ..., 𝐶
14. Calculate value of information for 𝑡 = 1, …, 𝑇 optimized stope geometries for all 𝑐 = 1, …, 𝐶 data
configurations
a. 𝑉𝑂𝐼 = 𝑣𝑎𝑙𝑢𝑒 𝑤𝑖𝑡ℎ 𝑛𝑒𝑤 𝑖𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛 − 𝑣𝑎𝑙𝑢𝑒 𝑤𝑖𝑡ℎ 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑖𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛
b. 𝑉𝑂𝐼𝑐𝑡 = 𝑉𝑐𝑡 − 𝑉0𝑡 , 𝑡 = 1, ..., 𝑇 𝑐 = 1, ..., 𝐶
15. Calculate the expected VOI for each data configuration:
1 𝑇
a. 𝐸{𝑉𝑂𝐼𝑐 } = ∑𝑡=1 𝑉𝑂𝐼𝑐𝑡 , 𝑡 = 1, ..., 𝑇 𝑐 = 1, ..., 𝐶
𝑇
b. Results in one 𝐸{𝑉𝑂𝐼} value for each future data configuration
16. Compare expected VOI against cost of acquiring 𝑐 = 1, …, 𝐶 new data configurations; calculate net
VOI
17. Calculate incremental and cumulative VOI
a. Incremental VOI is the difference in expected VOI from one decision alternative to the next
b. Cumulative VOI is cumulative expected value over all decision alternatives
18. Select the decision alternative which maximizes the cumulative net value of information

An example of the results of the work flow are presented in figure 2. The data spacing that maximizes
the cumulative net value of information (NVOI) is the correct choice for a risk neutral decision maker. The
maximum NVOI in this case corresponds to a 14m data spacing. Within the numerical work flow the technical
decision always considers all of the realizations. The set of realizations quantify the state of uncertainty with
a given data configuration. The expected value is the only way to deal with the inexact nature of multiple
realizations (Deutsch, 2018). Expected values are taken as late as possible and on utility or profit. This is an
important concept as the response of an expected value may not be the same as the expected value of a set
of responses, particularly for non‐linear transfer functions.

Analytical or Model Driven Approaches

The resample and resimulate approach for calculating VOI assumes the data being collected is ”perfect”, that
is there is no measurement error associated with sampled values. Wilde (2010) discusses adding random
error to resampled values relative to the sampling method being imitated. This is to simulate the effect of

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Incremental VOI Cumulative VOI

600 2000
400
200 1000
Unit Value

0
200 0
400
1000
600
800
64 32 16 8 4 2 64 32 16 8 4 2
Data Spacing (m) Data Spacing (m)
Cost of Data VOI Net VOI

Figure 2: Incremental and Cumulative VOI curves

imperfect data, though not implemented in this work flow. Caers (2011), Eidsvik et al. (2015) andBratvold et
al. (2009) distinguish between perfect and imperfect information when evaluating the value of information
and consider the reliability of the data. Considering the value of information with imperfect information is
typical done with some form Bayesian statistics (Bratvold et al., 2009). Though not strictly analytical these
methods are more model driven that the resample and resimulate approach. The simulated drill core sam‐
ples in the example above would be considered partial perfect information. The reliability of the data may be
important considering the type of information being collected. If the information is seismic data, airborne
geophysics, or remote sensing data, though it is typically exhaustive, it is only a ”noisy” approximation of
the true underlying variable (Eidsvik et al., 2015). Sometimes the response of the test will be incorrect and
the reliabilty or imperfectness of the information can be captured in VOI analysis. The true ”information
content” (Caers, 2011) of the data can be calculated though the application of Bayes’ Law. The geostatistical
application of Bayes’ Law is discussed in Deutsch and Deutsch (2018) while Eidsvik et al. (2015), Bratvold et
al. (2009) and Phillips, Newman, and Walls (2009) discuss the direct application to the value of information
framework.

The value of information in this context relies on the posterior and prior probability density functions (pdf)
where 𝑦 represents the imperfect information:
𝑉𝑂𝐼(𝑦) = 𝑃𝑜𝑉(𝑦) − 𝑃𝑉
Where (Eidsvik et al., 2015):

𝑃𝑜𝑉(𝑦) = 𝑚𝑎𝑥 𝐸{𝐴} | 𝑦 ⋅ 𝑃(𝑦)

𝑦

𝑃𝑉 = 𝑚𝑎𝑥 𝐸{𝐴} ⋅ 𝑃(𝑥)

𝑥

𝐸{𝐴} is the expected value of the decision alternative. The posterior pdf is used to determine the poste‐
rior value, that is the value of the decision conditional to the future data observations (Ulrych, Sacchi, &
Woodbury, 2001). Recall Bayes’ Law:
𝑃(𝑦|𝑥)𝑃(𝑥)
𝑃(𝑥|𝑦) =
𝑃(𝑦)
Establishing the pre‐posterior distribution 𝑃(𝑦), requires knowledge of the prior, 𝑃(𝑥), and likelihood, 𝑃(𝑦|𝑥),
distributions. The likelihood distribution can be inferred from the data (Deutsch & Deutsch, 2018). The prior
and pre‐posterior distributions can be evaluated by ”flipping” the probabilities from assessed to inferred
form with Bayes’ Law (Bratvold et al., 2009; Caers, 2011; Eidsvik et al., 2015):
𝑃(𝑦|𝑥)𝑃(𝑥) 𝑃(𝑦|𝑥)𝑃(𝑥)
𝑃(𝑥|𝑦) = =
𝑃(𝑦) ∑𝑥 𝑃(𝑦|𝑥)𝑃(𝑥)

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− 100

− 200

− 300

− 400

− 500

Data 20200 20400

Configuration = 0 , 1 ... C

1 ... T 1 ... T 1 ... T

0 0 0 0 0 0

− 100 − 100 − 100 − 100 − 100 − 100

− 200 − 200 − 200 − 200 − 200 − 200

− 300 − 300 − 300 − 300 − 300 − 300

− 400 − 400 − 400 − 400 − 400 − 400

− 500 − 500 − 500 − 500 − 500 − 500

− 600 − 600 − 600 − 600 − 600 − 600

20200 20400 20200 20400 20200 20400 20200 20400 20200 20400 20200 20400

0 0 0 0

− 100 − 100 − 100 − 100 − 100

− 100

− 200 − 200 − 200 − 200 − 200 − 200

− 300 − 300 − 300 − 300 − 300 − 300

− 400 − 400 − 400 − 400 − 400 − 400

− 500 − 500 − 500 − 500 − 500 − 500

− 600 − 600 − 600 − 600

20200 20400 20200 20400 20200 20400 20200 20400 20200 20400 20200 20400

0 0 0 0 0 0

0 0 0 0 0 0
− 100 − 100 − 100 − 100 − 100 − 100
0 0 0 0 0 0
− 100 − 100 − 100 − 100 − 100 − 100
− 200 − 200 − 200 − 200 − 200 − 200
− 100 − 100 − 100 − 100 − 100 − 100
− 200 − 200 − 200 − 200 − 200 − 200
− 300
− 200
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− 300
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− 200
1
− 300 − 300 − 300 − 300 − 300

...
− 300
− 400 − 400 − 400 − 400 − 400 − 400
− 300 − 300 − 300 − 300 − 300 − 300
− 400
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− 500
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− 500 L
− 400 − 400 − 400 − 400 − 400 − 400
− 500 − 500 − 500 − 500 − 500 − 500
− 600 − 600 − 600 − 600 − 600 − 600
−20200
500 20400 −20200
500 20400
−20200
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− 600 − 600 − 600 − 600 − 600 − 600
20200 20400 20200 20400 20200 20400 20200 20400 20200 20400 20200 20400
− 600 − 600 − 600 − 600 − 600 − 600
20200 20400 20200 20400 20200 20400 20200 20400 20200 20400 20200 20400

Stope10 StopeT0 Stope11 StopeT1 Stope1C StopeTC

Value with current Value with future Value with future

information information information

VOI VOI VOI

E{VOI0} E{VOI1} E{VOIC}

Figure 3: The resample and resimulate work flow presented graphically.

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Geophysical
Response Geophysical
RT=1
Positive Response
0.90
0.8 Positive
RT=1 0.62
0.7 0.10
0.2 RT=0
Negative
RT=1
Positive 0.37
0.2 0.38
0.3 Negative
RT=0 0.63
0.8 RT=0
Negative

Figure 4: Assessed (left) and inferred (right) probability trees. The posterior and pre‐posterior probabilities
are calculated with Bayes’ Law.

and
𝑃(𝑦|𝑥)𝑃(𝑥)
𝑃(𝑦) =
𝑃(𝑥|𝑦)
VOI can then be calculated considering the uncertainty in the future information. The general workflow
established by Caers (2011) is as follows:
1. Establish the prior value, or the value of the decision with the current state of knowldge
2. Establish a decision framework
3. Determine the likelihood distribution
4. Calculate the posterior and pre‐posterior distributions through the application of Bayes’ Law
5. Establish the posterior value using the posterior distribution
6. Calculate the value of imperfect information as the difference between the posterior and prior values

A simplified application of Bayes’ Law is presented below. Consider a decision scenario with two alternatives:
drill an exploration well to determine the presence of rock type 1, or not. Geophysical data is proposed to
improve the well placement. Based on conditioning data the prior probability of rock type 1, 𝑃(𝑅𝑇 = 1),
is 0.70. Based on historical data the likelihood of the geophysical data correctly identifying rock type 1,
𝑃(𝑅𝑇 = 1|𝑧), is 0.80 (Figure 4). If the value of successfully drilling rock type 1 is 10 units and the value of an
unsuccessful well is ‐1 units, how much should one be willing to pay for the geophysical data? As discussed
above we must determine the posterior and pre‐posterior probabilities from the prior and likelihood (Figure
4).

The posterior probability for rock type 1 given a positive geophysical response is:
𝑃(𝑅𝑇 = 1)𝑃(𝑧|𝑅𝑇 = 1) (0.7)(0.8)
𝑃(𝑅𝑇 = 1|𝑧) = = = 0.90
𝑃(𝑅𝑇 = 1)𝑃(𝑧|𝑅𝑇 = 1) + 𝑃(𝑅𝑇 = 0)𝑃(𝑧|𝑅𝑇 = 0) (0.7)(0.8) + (0.3)(0.2)

The pre‐posterior probability is then calculated as:

𝑃(𝑅𝑇 = 1)𝑃(𝑧|𝑅𝑇 = 1) (0.7)(0.8)
𝑃(𝑧) = = = 0.62
𝑃(𝑅𝑇 = 1|𝑧) 0.90

The prior and posterior values for the decision framework can then be evaluated:
𝑃𝑉 = 𝑚𝑎𝑥[0, (10 × 0.7) + (−1 × 0.3)] = 6.7

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𝑃𝑜𝑉(𝑧) = 0.62 ⋅ 𝑚𝑎𝑥[0, (10 × 0.93) + (−1 × 0.1)] + 0.38 ⋅ 𝑚𝑎𝑥[0, (10 × 0.37) + (−1 × 0.63)]
= 5.71 + 1.16
= 6.87
The value of zero comes from the decision alternative to take no action. The value of information can then
be calculated as the difference between the posterior and prior values:
𝑉𝑂𝐼(𝑧) = 6.87 − 6.70 = 0.17
There for the maximum value one should be willing to pay for geophysical data in this scenario is 0.17 units.
The VOI is fairly low in this example as the prior uncertainty of the presence of rock type 1 is fairly low. If the
prior uncertainty in the variable of interest is higher the greater the impact additional information can have
on the decision outcome. If the cost of the geophysical data exceed 0.17 units it would not be economic to
acquire.

Proxies to the Value of Information

Numerical approaches to determining the value of information may computationally demanding depending
the on the scale of the model or the transfer function used to generate value (flow simulation, mine planning,
etc.). It may be adventageous for a practitioner to be able to correlate the value of information with a more
easily calculated measure of static geologic uncertainty. Easily calculated measures include standard devi‐
ation and the probability of correct classification. Standard deviation is a common measure of uncertainty
however the units may may be difficult to conceptualize in the VOI framework. The probability of correct
classification is easy to conceptualize as it takes a value ∈ [0, 1]. The probability of correct classification is
calculated as 1−(𝑃𝐼 +𝑃𝐼𝐼 ) where 𝑃𝐼 and 𝑃𝐼𝐼 are the probabilities of type I (false positive) and II (false negative)
errors.

Figures 5 and 6 illustrate measures of static geologic uncertainty versus data spacing and the value gener‐
ated from future data collection. The example is drawn from a simple synthetic data set presented in paper
307 of this volume. Sample spacing at 128 units represents the state of current knowledge. The maximum
attainable value is the difference between the expected value of the reference models and the expected
value of the decision with no additional information. The expected value of the reference models considers
perfect selectivity. The cost of acquiring the data is displayed in the left hand panels. Figure 5 illustrates
the relationship between data spacing, the probability of correct classification and the maximum attainable
value. There is a significant jump in the probability of correct classification as the sample spacing is reduced
to 64 units. This corresponds with a jump maximum attainable value. As the data spacing decreases be‐
low 16 unit spacing the probability of correct classification begins to flatten and little contributions to the
maximum attainable value are made. Standard deviation (Figure 6) follows a similar relationship to the prob‐
ability of correct classification. Standard deviation in this example is of a binary indicator, either inside of
the vein or out. Both measures of static geologic uncertainty suggest diminishing returns in value beyond
a sample 16 unit sample spacing. This is consistent with the cumulative VOI generated through the full nu‐
merical workflow (Figure 7). The maximum cumulative NVOI corresponds with a sample spacing of 25 units.
This corresponds to a probability of correct classification of 0.73 and a standard deviation of 0.07. There is
reasonable agreement between the full VOI workflow and the static measures of uncertainty in a simplified
scenario.

Discussion
The numerical approach to the calculating the value of information conceptually is fairly clear. Future data
configurations are drawn from realizations which honour the true histogram and variogram. Sets of real‐
izations are simulated with these future data configurations. The effect of these future data on a technical
decision is assessed. Though the concept is straightforward, implementing an numerical VOI analysis in prac‐
tice can be difficult. The number of realizations generated grows rapidly as data configurations are added.
𝑇 × 𝐶 × 𝐿 realizations are generated in total where 𝑇 is the number of reference models, 𝐶 is the number of
data configurations and 𝐿 is the number realizations in a set. It is not uncommon to generate 10’s to 100’s of
thousands of realizations per stationary domain. Depending in computer specifications this could be hours
to days of run time. Though difficult in practice the numerical data driven approach is the most correct as no
assumptions are made. Measures of value are generated from the spatial model which has been updated
with simulated data that honour the spatial variability of the true data. Provided the input histogram and

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1.0
0
0.8
250
Prob. Correct Classification
0.8

% Max Attainable Value

500 0.6

Cost of Data
0.6
750
0.4
0.4 1000

1250 0.2
0.2
Prob. Corr. Class. 1500
Cost 0.0
0.0
128 64 32 16 8 4 2 0.0 0.2 0.4 0.6 0.8 1.0
Data Spacing Prob. Correct Classification

Figure 5: Data spacing vs the probability of correct classification and cost(left) and the probability of
correct classification vs the maximum attainable value (right).

0
0.25 0.8
250
% Max Attainable Value
Standard Deviation

0.20 500 0.6

Cost of Data

0.15 750
0.4
1000
0.10
1250 0.2
0.05
Stdev. 1500
Cost 0.0
0.00
128 64 32 16 8 4 2 0.00 0.05 0.10 0.15 0.20 0.25
Data Spacing Standard Deviation

Figure 6: Data spacing vs standard deviation and cost (left) and standard deviation vs the maximum
attainable value (right).

Incremental VOI Cumulative VOI

750
1500
500 1000
250 500
Unit Value

0 0
250 500
500 1000
750 1500
1000 2000
64 32 16 8 4 2 64 32 16 8 4 2
Data Spacing Data Spacing
Cost of Data VOI Net VOI

Figure 7: Incremental and cumulative VOI curves for the proxy example. Diminishing returns are evident
beyond 16 unit sample spacing.

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variogram are representative of the true distribution the numerical VOI workflow provides a realistic model
of how reducing uncertainty in the variables of interest effects the value of the technical decision.

Model driven VOI approaches provide a more approximate solution however they are more straightforward
to implement in practice. The simulation heavy approach is not required and value is derived from estab‐
lishing likelihood and posterior probability distributions. This does not require resampling and resimulation
methods to quantify uncertainty. The uncertainty is codified in the probabilities. Approaches driven by a
Bayesian model require establishing the prior and likelihood distribution which is commonly done by expert
judgment, degree of belief or based on historic data (Bratvold et al., 2009); though both can be inferred from
the data. Assumptions made about the reliability of a certain test or method may be accurate however they
likely lead to a more approximate assessment of the VOI. With analytical methods it is common to simplify
the decision making scenario to a finite set of alternatives as well as limit the data gathering to a one‐time
decision (Eidsvik et al., 2015). This is often necessary as decision makers in earth science problems typically
face sequential decisions scenarios with highly flexible alternatives. By simplifying the scenario to a discrete
set of decision alternatives the problem becomes computationally simpler. In certain situations posterior dis‐
tributions may be approximated by assuming a parametric model such as a multivariate Gaussian or Markov
random feild model (Bhattacharjya et al., 2010; Eidsvik et al., 2008, 2015)

A potential research path is the calibration of more easily implemented model driven methods with more
computationally heavy data driven methods. The numerical VOI approach is relatively easily parameterized
for a variety of different decision scenarios. The effect of geologic scale, engineering selectivity and other
input parameters are easily explored. By understanding which input parameters have greatest control on
the decision outcome for a particular scenario one may be able develop an analytical approximation which
is validated against a numerical calculation. This could allow the practitioner to only have to implement
the full numerical once to determine the influential parameters and then subsequently assess the value of
information with a calibrated approximation.

Conclusion
The decision making and value of information frameworks in spatially correlated earth science problems are
discussed. The data driven resample and resimulate workflow is discussed in detail as well as small example
of the more model driven Bayesian approach to determining VOI. Numerical methods of calculating VOI are
more correct however they are computationally expensive and difficult to implement in practice. 10’s to
100’s of thousands of realizations may be generated to quantify the impact future information has on the
decision making process. To simplify this workflow the decision maker is typically limited to a finite set of
alternatives which may not be entirely realistic in the real world. Measures of static geologic uncertainty may
be used to circumvent the heavy numerical workflow. In the context of data spacing, measures such as the
probability of correct classification and standard deviation correspond well with the value of information and
could be useful in determining points of little contribution or diminishing returns. Paths of future research
may include the calibration of more easily calculated analytical VOI values with results from the numerical
workflow to evaluate accurate approximations with a lighter workflow.

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