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Presentation made at the Michigan State University Short Course Environmental Biosafety August 2011
From left to rigth: a) Damage by Asia corn borer and b) Bt maize plot in Barangay Conel, Mindanao, The Philippines, c) Bt/RR maize Isabela province, North Luzon
Outline
1. 2.
3.
4.
5.
6.
Introduction and Background Economics of GE biotechnologies and biosafety Experiences with socioeconomic assessments Cost of compliance with biosafety regulations Practical socio-economic assessments implementation Concluding comments
taking Technical capacity We learn over time Trade-offs and alternatives Status quo is not necessary risk-less Technology deployment and precautionary approaches to regulation
constraints not easily addressed by conventional means Can be deployed in low resource use production systems Flexible fit with other production systems Impacts can be non-monetary, indirect, and scale neutral Scalable
The basic decision making rule in economic impact assessment of any new technologies
Sum of All Benefits Sum of All Costs
issues
May be done before(ex ante) or
against an alternative
Impact assessment is a scientific process that significantly incorporates art in its implementation
The practitioner has to in many cases subjectively address many problems with data, assumptions, models and uncertainties
technology
Regional considerations National laws and regulations
International agreements
Other political, institutional and
stakeholder interests
Socio economic considerations and Article 26.1 of the Cartagena Protocol on Biosafety
Applies to decision on import only National measures Voluntary NOT mandatory
1 . The Parties, in reaching a decision on import under this Protocol or under its domestic measures implementing the Protocol,
Especially WTO
socio-economic considerations arising from the impact of living modified organisms on the conservation and sustainable use of biological diversity,
especially with regard to the value of biological diversity to indigenous and local communities
understand:
the impact of the inclusion of socio-economic issues in
decision making
The relationship / interaction with the risk assessment
process
Consider impacts on innovation, opportunities lost due to additional regulatory hurdles and who is impacted more by regulatory actions and technology decisions
Democratic societies right to know vs. Freedom to operate vs. Freedom to choose
Important distinction
An impact assessment during the biosafety regulatory stage needs to be ex ante For monitoring or standard technology evaluation purposes this is a conventional expost assessment
Regulatory impacts
reviewed studies
Examined studies with a
focus on:
Farmers, household and
community
Industry and markets
Consumers Trade
Citation: Smale, Melinda; Zambrano, Patricia; Grure, Guillaume; Falck-Zepeda, Jos; Matuschke, Ira; Horna, Daniela; Nagarajan, Latha; Yerramareddy, Indira; Jones, Hannah. 2009. Measuring the economic impacts of transgenic crops in developing agriculture during the first decade: Approaches, findings, and future directions. (Food policy review 10) Washington, D.C.: International Food Policy Research Institute (IFPRI) 107 pages
cases/authors generalizations should not be drawn yet...need more time to describe adoption
further study including impacts of poverty, gender, public health, generational Need improved methods to examine broader issues
Knowledge
Crop and trait Economic Health Nutrition Labor Social norms
Attitudes
Perceived and actual risk Social norms Gender roles
Technology developers
Regulators
Farmers
Farming practices
Impacts
By crop- trait Economic Health Nutrition Labor Social norms
A joint study on the Bt/RR maize in the Philippines done by UP-LB and IFPRI examining relationship between gender and biotechnology adoption and impact
Lists of potential issues should not be viewed as check lists Prudent to carefully choose which issues are relevant to the technology decision making process
How does a producer benefit? Insect resistance and herbicide tolerant traits
The case of Bt/RR maize
+
Decrease pesticide application cost -Insecticide -Machinery & Equipment Increase Yield -Timing applications -Reduced damage bolls
Additional cost of controlling secondary pests Amenable to IPM and/or controlled easily
Labor
0
Labor
Additional cost of using the Technology
Tech fee
63 93 85 141 Industry
150
100
80
50
97 37 -14 1998
58 0
-50 -22 1996
37 -12 1997
Foreign Farmers
Bt cotton Smaller Net Benefits than other studies Negotiating downward the technology fee is key Larger share of benefits tends to be captured by developers based on conservative assumptions used in the model
Citation: Falck-Zepeda, Horna and Smale, African Journal of Agricultural and Resource Economics, 2008
significantly increases profits and yields Significant insecticide use reductions Adopters tend to:
Cultivate larger areas Use hired labor
Change in economic surplus (mill pesos) Producer Surplus Seed Innovator Total Surplus Producer Share (%)
Bt maize studies in Philippines led by Dr. Jose Yorobe Jr. with 466 farmers in 16 villages Isabela Province, Luzon, South Cotabato Province, Mindanao
More educated
have more positive perceptions
1136 Kg ha-1 yield (2433%) Bt maize yields preferred even by risk averse producers 100% higher seed cost than conventional hybrid Institutional issues important
Small Resource-Poor Countries Taking Advantage of the New Bioeconomy and Innovation: The Case of Insect Protected/Herbicide Tolerant Maize in Honduras. Jose Falck Zepeda, Arie Sanders, Rogelio Trabanino, Oswaldo Medina and Rolando Batallas-Huacon. Paper presented at the 13th ICABR Conference The Emerging Bio-Economy, Ravello, Italy June 17-20, 2009.
promote sustainable growth How precautionary an approach is necessary/sufficient for society to accept a technology? All biosafety processes/regulations are by definitionprecautionary
Precaution is really a matter of degree Need clear bounds, decision making rules, time
limitations
Biosafety as a process
Regulatory decision points
Deliberate Release
Post Release
Deregulation
2
Early Product Testing & Development
3
Integration & Product Selection
4
Product Ramp Up
5
Market Introduction
Author: Ramaeker-Zahn
defined acceptable level of safety and the necessary cost to achieve it Critical to include all direct and opportunity benefits and costs of adopting and not adopting biotechnologies and alternatives Identify which areas contribute more overall to safety and net benefits in order to focus investments
Avoid investing (good) money in issues that are trivial, manageable or irrelevant
Cost of Compliance with Biosafety Regulations in Indonesia and the Philippines: A PBS study
for
Public sector Small private (domestic) firms Crops and traits of interest to
Options
No inclusion vs. Mandatory vs. Voluntary
Narrow interpretation article 26.1 Narrow set of socio-economic issues Broader set of assessments (SIA or SL)
Concurrent but separate vs. Sequential vs. Embedded Implementation entity Each submission vs. Event-by-event Laboratory/greenhouse vs. CFTs vs. Commercialization For post release monitoring At all stages? Choice of methods for ex ante assessments is much more limited than for ex post Decision making rules and standards Method integration, standards, tolerance to errors
How?
Not approve
ASSESSMENT OUTCOME
? ? ?
Require more information
Negative Socio Economic Assessment due to institutional issues Biosafety renders product to be safe
innovate
Consider impacts on public sector and crops
investments
Contrasting benefit levels from GE crop adoption with higher costs and regulatory lags in the Philippines
Bt eggplant
Net Benefits baseline (NPV US$) 20,466,196
MVR tomato
16,748,347
Bt rice
220,373,603
Impact on net benefits due to an increase in the cost of compliance with biosafety 75% higher 200% higher 400% higher 0% -2% -5% -1% -3% -7% 0% 0% -1% 0% 0% -1%
Impact on net benefit due to an Increase regulatory time lag 1 year longer -28% -36% -12% -27%
2 years longer
3 years longer
-56%
-79%
-71%
-93%
-23%
-34%
-49%
-67%
Notes: 1) Source: Bayer, Norton and Falck Zepeda (2008), 2) Discount rate for the estimation of NPV = 5%, 3) Change in Net benefits defined as the total benefits estimated using the economic surplus minus total regulatory costs.
developing countries
risk
Introduce and promote system flexibility Innovative approaches to assessments Performance rather than prescriptive
regulations
Rationalize and streamline application and
Honduras
Jos Falck-Zepeda
Research Fellow / Leader Policy Team PBS
IFPRI 2033 K Street NW Washington, DC 20006-1002 USA j.falck-zepeda@cgiar.org Tel. +1.202.862.8158 Fax. +1.202.467.4439 Skype: josefalck