Why Earth observation for public value struggles to move beyond pilots

In that sense, EO can create public value: broad public benefits that are widely shared, even when they do not translate into commercial revenues. But there is one recurring problem: while many EO initiatives deliver results during the pilot phase, they often struggle to remain operational as soon as the initial project funding ends.

In our recent paper, we argue that the main challenge is not the lack of development finance instruments in general. The problem is that Earth observation for public value is too often financed as a short-term project, while the value it creates depends on sustained service delivery over time. In other words, the missing piece is not innovation funding alone, but a way to move from the pilot phase to recurrent service finance.

Read the full paper here

The problem is structural, not incidental

When EO is used for public value, the people who benefit are often not those who pay for it. Citizens, smallholders or vulnerable communities may gain from better warnings, advisory services, compliance systems and public planning, but ministries, agencies, insurers, aggregators, public utilities or development partners are the ones paying for it. This creates a persistent payer-beneficiary mismatch.

Another part of the problem is that in many partner countries, demand for EO-enabled services is fragmented across institutions, procurement systems are poorly suited to support services spanning multiple years, and the real cost of operational delivery is underestimated. For example, operational delivery does not only require data collection and analysis, but also user-facing delivery channels, user support, connectivity, hosting, cloud or compute requirements, workflow integration and staff to keep a service running.

This is why many initiatives face what we call the ‘OPEX tail’: a post-pilot period during which the service needs to remain operational, but a stable budget line, a contracting pathway and institutional ownership are not yet in place. At that stage, projects often have to rely on ad-hoc extensions, short-term grants or successive pilots, instead of transitioning into routine service delivery.

Who pays, and how?

A common policy reflex is to ask which financial instrument could solve the scaling problem. But more important questions are: who is the credible payer for continued delivery, through what payment or contracting mechanism and under what contractual logic?

Before answering these questions, it is important to note that financial instruments often underperform, because they are asked to solve problems they were not designed to solve. A guarantee cannot create a payer where none exists. Blended finance cannot compensate for an unclear mandate or fragmented procurement. Grants can keep pilots alive, but they do not automatically create institutional ownership.

We therefore argue that financing decisions should centre around payer architecture rather than the available instruments. This means designing EO-enabled services around a credible payment pathway and a service model that can be contracted, renewed and monitored over time.

Three bankable operating models

To make this practical, we identify three bankable operating archetypes: (1) the anchor tenant, (2) the intermediate aggregator and (3) and the regional utility. Taken together, these three models provide a robust basis for structuring Earth observation for public value, which can then be adapted and specified further depending on the service, sector and delivery context.

In the anchor tenant model, a public authority or mandated public agency acts as a single buyer and procures an EO-enabled service under a multi-year agreement. In practice, this means that one public actor takes responsibility for buying and sustaining the service as part of an ongoing public function, rather than treating it as a one-off project. 

This model is most relevant where EO supports a core public function that must continue beyond donor cycles, for example, monitoring, compliance, risk management or operational decision support. In this structure, the central shift is from ‘project mode’ to service procurement. The objective is to create a predictable payment stream linked to service availability and performance.

In the intermediate aggregator model, a commercial or semi-commercial intermediary pays for the EO-enabled service because it improves performance in an existing revenue-generating activity. This means that the service is paid for indirectly, because it helps an intermediary improve an existing business line rather than relying on direct payment from end users. This could be an insurer, a bank, an agribusiness, an input supplier, a platform operator or a utility provider.

End users still benefit, but they do not pay directly. The service is financed indirectly because it strengthens underwriting, risk management, logistics, portfolio performance or customer retention. This model is especially important in contexts where direct payment by end users is not realistic.

The regional utility model applies in contexts where the key constraint is not only service demand, but the cost of enabling infrastructure itself. The idea is to pool core capabilities so that multiple downstream users can access services more cheaply and easily. In such cases, a shared regional capability can provide common services such as data access, hosting, compute, reference layers, interoperability and technical support. 

The goal is not to replace downstream services, but to lower fixed costs and reduce transaction burdens so that national or sectoral actors can contract services more easily. This model becomes relevant where fragmentation is high and no individual buyer can efficiently finance the backbone alone.

What this means for Team Europe and development partners

For Team Europe and other development partners, including in the context of interventions under the Global Gateway strategy, the practical implication is that support needs to be sequenced more deliberately. Only once the necessary payment, contracting and operational foundations exist do repayable and blended instruments become truly relevant for scaling.

In the early phase, the priority is readiness for recurrent service delivery: clarifying mandates, strengthening procurement pathways, improving data governance, addressing infrastructure constraints and making services ready to be procured and contracted on a recurrent basis.

In the next phase, the focus should shift to recurrent delivery: embedding the service into budget lines, commercial models, service-level agreements and renewal routines.

This is why we propose a time-limited service window to keep a service operational while the long-term payer pathway is being established. This would provide a bridging mechanism for the OPEX tail and avoid permanent dependence on subsidies.. Used well, such a mechanism could protect continuity, reduce risk for suppliers and co-payers and bridge the gap between donor-supported delivery and durable contracting.

A simpler message

Our findings demonstrate that EO for public value will not scale just because the technology works. It will scale when payment pathways, contracting structures and operating responsibilities are designed as carefully as the service itself.

This means shifting attention from one-off pilot demonstrations to a model of recurring service delivery. It means identifying who can pay, who can procure and who can renew. It means properly accounting for the real cost of delivery, including the institutional and operational costs often left outside project budgets. And it means using financial instruments in support of credible service models, not as substitutes for them.

For the European Commission and Team Europe, this points to a practical agenda: move towards financing continuity rather than repeated pilots, strengthen procurement and mandate clarity, invest selectively in enabling infrastructure, support deal preparation and implementation capacity, and use guarantees or blended finance only where there is already a plausible base for repayment and accountability.

In short, the challenge is not only to prove that EO can create public value. It is to organise that value into forms that can be paid for, contracted and sustained.

The views are those of the author and not necessarily those of ECDPM.