Using Traditional Knowledge in Economic Development Melisande Lissa Middleton

Abstract: In addition to being recognized for its cultural and social value, traditional knowledge (IK/TK) of the environment withheld by indigenous communities can be valued as human capital and integrated as such in local economic development processes. An example of this occurs in the use of a traditional irrigation technology (raised fields) in the Peruvian region of Puno. This case study allows for an evaluation of the economic benefits of TK at the community level. The analysis raises the issue put forth in recent WTO discussions regarding article 27.3(b), that IK/TK could be protected by intellectual property (IP) rights patents when it is estimated to be useful as human capital. June 2007

I Managing traditional knowledge (TK) as human capital: a case study in Puno, Peru

The Andean region of Puno, known as the altiplano, is located at 3,830 meters above sea level. The terrain is prone to flooding, and thus difficult to cultivate. In order to deal with this situation, Andean indigenous populations displaced huge amounts of soil in order to create raised fields that were better adapted to agricultural use. Raised fields (camellones in Spanish, waru waru in Quechua, suka kollus in Aymara) are elevated platforms of earth, approximately 1 to 20 meters wide, ten to hundreds of meters long, and 0.5 to 1 meter high. Canals that provided the earth for constructing the platforms surround the fields. Erickson estimated that raised fields cover more than 120,000 hectares of the Lake Titicaca basin, but that most are not currently in use 1 . Archaeological excavations have revealed that farmers began constructing raised fields at some point before 1000 BC. Raised field agriculture thrived in the Puno region during the Tiahuanaco civilization but fell into disuse around 1100 AD 2 ; most of the fields were later converted into pasture around the colonial haciendas, and then became government cooperatives in 1968. 3 Archaeological investigation and agronomic experimentation, carried out by Erickson and his colleagues between 1981 and 1987 with the participation of local farmers, revealed that raised fields resolved many of the problems that affect agriculture at high altitude 4 . The technology combines the rehabilitation of marginal soils, drainage improvement, increased water storage, more efficient use of radiant

1 Erickson, Clark, Agricultural Landscapes as World Heritage: Raised Field Agriculture in Bolivia and Peru, in Managing Change: Sustainable Approaches to the Conservation of the Built Environment, Ed. Jeanne-Marie Teutonico and Frank Matero, Getty Conservation Institute, Los Angeles, 2003, pp. 181-204. 2 http://www.unesco.org/most/bpik19-2.htm 3 Ibid. 4 Erickson, Clark and D. Brinkmeier, Raised field rehabilitation projects in the northern Lake Titicaca basin, unpublished report to the Interamerican Foundation, Washington, D.C., 1991.

energy, and attenuation of the effects of frosts. The raised platform allows farmers to double the depth of topsoil for crops, and provides dry surfaces in the wet and often flooded lake and river terrain. The waterfilled canals adjacent to the platforms provide moisture to relieve from the droughts that occur during the growing season. Sun heats the water in the canals during the day, which protects the crops against the killing frost that is often present at high altitude. The canals also capture nutrients and produce organic-rich sediments that can be added to the fields to extend the harvest period. 5 An evaluation of the result of these effects was described as follows in the UNESCO database of Best Practices on Indigenous Knowledge:

Experience shows that the minimum nighttime temperatures reached in [raised field] areas are two to three degrees centigrade higher than those of the surrounding plains. The moisture provided by the canals lowers the impact of sporadic droughts during the cycle and, in the rainy season, prevents the subsoil from becoming waterlogged by ensuring adequate drainage. Crop yields, in particular yields of potatoes and other Andean tubers, are 50% to 100% higher than the yields obtained using traditional farming techniques. () Studies carried out over the past eight years, covering rotation cycles of five years of cultivation plus three years of fallow, and estimated on the basis of an economic life of 20 years, showed a 7% annual average increase in profits even after maintenance costs were deducted. This result has been achieved in spite of two El Nios.1

Following the apparent success of this experimentation, Erickson and his colleagues began a smallscale development project to rehabilitate pre-Hispanic raised field agriculture in a few indigenous communities of the Lake Titicaca basin. By the late 1980s nongovernmental organizations (NGOs) and government agencies in Peru and Bolivia began to promote raised field rehabilitation projects by providing funding and assistance for their rehabilitation 6 . Estimates show that farmers from several hundred Quetchua and Aymara communities rehabilitated between 500 and 1,500 hectares of raised fields in the years before 1990 7 . A restoration project supported by CARE-Peru began in 1991 to continue using the irrigation in Puno. The central question is whether the benefits of implementing raised fields in Punos agricultural sector outweigh the costs. The interpretation of four data sets helped to determine this 8 . (I) The agricultural yield data (kg/ha) from Punos Chatuma and Caritamaya communities for 1992-93 provides an assessment of the impact of raised field irrigation compared to that of mountainside and pampas terrain. The figures reveal that in general the yields that were produced with raised fields are higher. (II) A comparison of yields with and without raised fields in the Puno region (1999-2005) show that in most cases agricultural yield was superior when raised fields were used than when they were not. (III) Average quinoa yields in the Puno region from 1979 to 1998 show a sustained increase in average yields starting in 1990, which can be interpreted as revealing a positive effect of raised fields on production, since the beginning of the increase corresponds

Informe Final del Seminario-Taller sobre Tecnologas Alternativas para Aumentar la Disponibilidad de Agua en Amrica Latina, Lima, Peru, 19-22 Sept. 1995, OAS/UNEP. See also Tapia, Mario E. and Mairano Banegas, Human Adaptation to a High-Risk Environment: Camellones or Waru Waru: Traditional Agricultural Technology of the Peruvian Andes, Journal of Farming Systems Research-Extension 1 (1): 93-98. 6 Kolata, A.L., O. Rivera, J.C. Ramirez, and E. Gemio, Rehabilitating raised-field agriculture in the southern Lake Titicaca basin of Bolivia, in Tiwanaku and Its Hinterland: Archaeology and Paleoecology of an Andean Civilization, Vol. 1, Agroecology, ed. A.L. Kolata 203-30, Washington, D.C.: Smithsonian Institution Press. 7 PIWA, Priorizacin de las reas Potenciales para la reconstruccin de waru waru en el Altiplano de Puno, Programa Interinstitucional de Waru Waru, INADE/PELT-COTESU, Puno, Peru, 1994. 8 A more complete analysis can be found in the authors masters thesis, Using TK in economic development: The impact of raised field irrigation on agricultural production in Puno, Peru, supervised by Dr. Patrick Messerlin (GEM) and Benjamin Shepherd (World Bank) at the Institut dtudes Politiques de Paris , June 2006.

with the time that raised fields started to be widely in use. (IV) Comparing the costs with the revenue yielded from the harvest of the same year from the fields managed by CARE in 1999-2000 leads to the conclusion that the benefits of using raised field irrigation outweigh the costs incurred by CARE. However, the data also demonstrates that the investment in CAREs staff participation does not result in an impressive cost/benefit outcome. These interpretations provide evidence that although the benefits of applying TK to an economic sector can potentially outweigh the costs, there are nonetheless inefficiencies in the way that the raised field technique was applied to agriculture in Puno. Two of these challenges are a tendency for farmers to abandon management of the raised fields (which explains the high standard deviation and coefficient of variation observed in data set II for the raised fields), and the shortcomings of a costly NGO staff participation in carrying out raised field rehabilitation. According to Erickson 9 , many farms abandoned raised fields in spite of the increase in crop yield. However, reasons for abandonment of the raised fields are independent of the techniques effectiveness for production. Among the reasons Erickson found are: - Competing labor demands: Constructing large blocks of raised fields requires a significant amount of labor at the start, even though this need diminishes when spread out over successive years of cultivation. However, many farmers migrate for temporary work to cities and mines during a part of the year, which reduces the availability of labor for raised field implementation. - Traditional fallow cycles: Traditionally, farmers plant crops for three years and then leave fields in fallow for up to twenty years. This rotation pattern allows for an optimization of the potential of exhausted and eroded mountain soils, at a relatively low cost. Farmers today apply this traditional rotation technique to raised field agriculture, even though it is not necessary for fields that are well managed. Thus, many raised fields that appear to be abandoned might actually be in fallow. - Competition with livestock: Livestock is a significant income source for Quechua farmers. Those who manage raised field areas must choose between rehabilitating the fields and grazing livestock. Because livestock has relatively higher market value, farmers often choose livestock over raised fields. Experiments are currently being carried out by individual farmers for integrating raised field agriculture with livestock grazing, but this integration of methods presents challenges and has not yet been widely implemented. - Political instability: The instability caused by Shining Path activities in the late 1980s and early 1990s resulted in most international aid agencies leaving Peru, including those who were promoting raised fields in Puno. NGO funding for raised field rehabilitation thus became increasingly irregular, and some fields were therefore abandoned. These reasons for abandonment of the raised fields highlight the fact that raised fields were not a structural part of agricultural life in Puno before their rehabilitation by NGOs at the end of the 1980s. The
9 Erickson, Clark, Agricultural Landscapes as World Heritage: Raised Field Agriculture in Bolivia and Peru, in Managing Change: Sustainable Approaches to the Conservation of the Built Environment, Ed. Jeanne-Marie Teutonico and Frank Matero, Getty Conservation Institute, Los Angeles, 2003, pp. 181-204.

Puno case study is particular in this regard, since knowledge of the traditional irrigation technique was reintroduced into farmer communities after centuries of disuse and was not an inherent part of community life. This characteristic is exceptional: in the majority of cases in which TK is used in development, the knowledge is held by community members and passed on between generations instead of being reintroduced by exterior research or development organizations such as Ericksons archaeological team, CARE and PIWA. This exceptional status of the Puno case study may account for a large part of why raised fields were often abandoned. Based on these facts and the results of data set IV concerning CAREs financial contributions toward rehabilitating raised fields, it becomes apparent that NGO participation in applying TK to development implies certain challenges that need to be accounted for. For example, NGOs failed to provide farmers with individual incentives for rehabilitating the raised fields. The USAID PL480 program provided surplus food, which was given to farmers in exchange for participating in raised field development projects 10 . In the mid1980s the government of Peru encouraged rehabilitating raised fields using a system by which farmers contributed their labor to building the fields for a low daily wage. To supplement this low income, the payment of additional incentives (food, tools and seed) ensured the farmers participation in projects, thereby creating bidding competition between development agencies 11 . However, as a result of this system, farmers ended up in a position where they were working for a development agency or NGO rather than for their own farming enterprise. It is therefore not surprising that most of the rehabilitated raised fields that were abandoned in the 1990s had been constructed by communities or by large groups of farmers working together and not individually 12 . In the community projects, poor organization and leadership, internal tensions, and land tenure problems within communities worked against long-term sustained commitment to communal farming of large raised field plots 13 . This happened because individual farmers were not educated on the potential value that the raised fields had for their crops, so they lacked individual incentive to implement them. These facts led to adverse results in managing the raised field projects, in spite of the irrigations potential to increase yields substantially. In response to these difficulties, PIWA initiated its activities in August 1989: through a community outreach system, PIWA provided technical and scientific knowledge to sustain the operation and dynamic of raised field systems. 14 PIWA incorporated various local organizations such as rural communities, mothers clubs, families and schools, to spread knowledge of raised field technology throughout the communities. 15 A few Peruvian governmental organizations also provided
10

Erickson, Clark and D. Brinkmeier, Raised field rehabilitation projects in the northern Lake Titicaca basin, unpublished report to the Interamerican Foundation, Washington, D.C., 1991. 11 Garaycochea, I., Community-based organizations and rural development with a particular reference to Andean peasant communities, Masters thesis, Reading University, Reading, England. 12 Erickson, Clark and D. Brinkmeier, Raised field rehabilitation projects in the northern Lake Titicaca basin, unpublished report to the Interamerican Foundation, Washington, D.C., 1991. 13 Erickson, Clark, Agricultural Landscapes as World Heritage: Raised Field Agriculture in Bolivia and Peru, in Managing Change: Sustainable Approaches to the Conservation of the Built Environment, Ed. Jeanne-Marie Teutonico and Frank Matero, Getty Conservation Institute, Los Angeles, 2003, pp. 181-204. 14 This was done with the financial support of the Swiss Agency for the Development and Cooperation (COSUDE). Ibid. 15 Ibid.

subsidies to PIWA, as a result of the observation that raised fields were improving crop yield 16 . These organizations enabled the reconstruction of 500 hectares of raised fields in 72 rural communities in the Puno region. After they were constructed, operating and maintaining the systems became the sole responsibility of the farmers who benefited from using the technology. 17 However, in the case of both CAREs involvement that was financed by international sources 18 , and PIWAs involvement financed by regional government subsidies, this financial link between development organizations and the farmers led to the dependence of farmers on the outside institutions 19 . Provided with the expectation that these institutions would continue to fund these projects, there was limited motivation from the farmers themselves to consolidate their knowledge of how raised fields must be built and managed. The predominance of institutional investment over individual sacrifices to make the construction of raised fields possible, meant that when the outside funds were suspended there was not a sufficiently solid foundation in the community for the raised fields to be maintained. CARE and PIWA have now ceased managing raised field rehabilitation in Puno, largely due to lack of continued funding from their respective international and governmental sources 20 . Both the abandonment of raised fields and the inefficiencies of NGO participation in Puno demonstrate that TK is more likely to be beneficial to local economic growth if it is maintained within the community itself rather than promoted by detached organizations. Ultimately, educating each new generation in the community on its TK can optimize the potential for this knowledge to produce economic benefits.

II - Placing TRIPs on tradition: patenting traditional knowledge to maximize its economic benefits

Among different forms of traditional knowledge, that of genetic resources draws a significant amount of economic benefits. For example, it is not uncommon that plant varieties used in pharmaceutical products are discovered through asking local indigenous groups to share their knowledge. When sold on the market, financial gains are substantial. According to estimates carried out in 2000 by the Convention on Biological Diversity Secretariat, the world market for such medicines has reached US$60 billion, with annual growth rates between 5 and 15 per cent 21 . World Health Organization studies show that at least 25 per cent of prescription pharmaceuticals in the United States are derived from traditional medicine 22 . With

16 Among these were the Instituto Nacional de Investigacin Agropecuaria y Agroindustrial (INIAA), the Centro de Investigacin Agropecuaria Salcedo (CIAS) and the Centro de Proyectos Integrales Andinos (CEPIA). 17 Source Book, IETC Technical Publication Series, UNEP International Environmental Technology Centre, Osaka/Shiga, Japan, 1997. 18 in large part the Netherlands, with the support of the NUFFIC or Netherlands Organization for International Cooperation in Higher Education. See www.unesco.org/most/bpik19-2.htm 19 Middleton, M., interview with Jaime Villena, Executive Director for PIWANDES, Feb. 2006. 20 Ibid. 21 Carlos Correa, Protection and Promotion of Traditional Medicine: Implications for Public Health in Developing Countries, University of Buenos Aires, August 2002. 22 Robert Lettington and Kent Nnadozie, A Review of the Intergovernmental Committee on Genetic Resources, TK and Folklore at WIPO, South Centre, December 2003.

these quantities of revenue in sight, the question of sharing profits naturally arises: can and should intellectual property (IP) rights patents be applied to TK in indigenous communities? The answer is far from straightforward. On the one hand, this type of knowledge deserves compensation. From an ethical as well as utilitarian standpoint, the human capital value that patents place on TK of genetic resources has the potential to help these communities. Patents reinforce the capacity for this knowledge to generate economic and medical advancement. In this sense, they can provide communities with avenues for sustainable development, and even incentive for biodiversity conservation. However, even some of the most fervent defenders of indigenous rights plead against granting patents to TK-holders. One argument is that injecting such quantities of financial revenue as these patents generate could disturb the socio-economic equilibrium that traditional communities strive to maintain. On another level, Dr. Carlos Correa suggests that knowledge-holders might prefer compensation in the form of moral recognition rather than monetary payments 23 . An article in The Economist 24 from June 2001 maintained that these two conflicting views have turned intellectual-property rights such as patents, copyright, trademarks and trade secrets into one of the most contentious areas in international development. The issue of putting a market value on TK by granting IP rights patents to its holders has been broadly addressed in the past decade by international agencies such as the FAO, the Convention on Biological Diversity (CBD) and the World IP Organization (WIPO). Most saliently, discussions on the topic have taken place at the World Trade Organization (WTO) in the context of its 2001 Doha Ministerial Declaration. Paragraph 19 of this Declaration brought up the issue granting patents to TK of genetic resources as part of article 27.3b of the TRIPS agreement 25 .

We instruct the Council for TRIPS, in pursuing its work programme (), to examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of TK and folklore, and other relevant new developments raised by members pursuant to Article 71.1. In undertaking this work, the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension 26 .

Further TRIPS council discussions documented in a WTO paper from February 8th 2006 provide more specific directives for implementing an IP rights system that can protect TK 27 :
Members appear to share several broad policy objectives, including those of ensuring authorized access to genetic resources, achieving equitable sharing of benefits arising from the use of TK and genetic resources and preventing the grant of erroneously issued patents, and that the most effective means to achieve these objectives is through tailored national solutions, including contracts, to meet practical concerns and actual needs. () The importance of both the prevention of biopiracy and misappropriation of genetic resources and TK, as well as the promotion of a balanced patent system that benefits patent applicants and the public interest should be recognized.
23 Carlos Correa, Protection and Promotion of Traditional Medicine: Implications for Public Health in Developing Countries, University of Buenos Aires, August 2002. 24 The Right to Good Ideas, The Economist, June 21st 2001. 25 Doha Ministerial Declaration, paragraph 19, Nov. 20 2001: http://www.wto.org/English/thewto_e/minist_e/min01_e/mindecl_e.htm. 26Ibid. 27 WTO IP/C/W/368/Rev. 1, p. 5-7.

In view of its economic potential, placing patents on TK could provide an incentive measure for the development of small-and-medium sized business enterprises in indigenous communities. However, practical obstacles still come in the way of TK being valued as a form of IP, thus hindering its potential to produce economic gains 28 . First of all, patents are expensive: it costs $20,000 to obtain a patent in the US, and $1.5 million to challenge one 29 . Local communities in developing countries are rarely able to produce that sum, and even if they have it available, are not likely to spend it on a patent about which they know little. Another challenge is the discrepancy that exists between patterns of customary law honored in local communities and positive law that is designed and applied at the national level. For example, an invention attributed to an individual in positive legislation might be attributed instead to a group of people or an entire community according to traditional customary law. Attempts have been made to codify customary law so that it may be considered alongside and at the same level of authority as national law, such as in the case of Ecuador: a legislation synthesizing collective rights was drafted in 1996 to implement traditional principles pertaining to water management among the Kichwa peoples, therefore enabling the application of a form of juridical pluralism. However, such cases are an exception; in general, the incompatibility between legislations based on individual and collective rights persists. In addition, a countrys compliance with TK patents depends on its legal infrastructures ability to ensure and defend IP rights for its citizens. However, in the case of many developing countries, some of them failed states, the legal system is insufficient and unreliable. Dr. Keith Maskus estimates that a developing country needs about US$1.5 to 2 million to provide the juridical backing needed for implementing and enforcing IP patents 30 . Certain international agencies such as WIPO provide technical assistance to governments in drafting IP legislation. But costs are high, and an IP rights system is not a priority in poor countries devastated by war or disease. According to recent WTO discussions on the topic, the practical hurdles in the process of implementing patents on TK might be most efficiently overcome through tailored national solutions outside the IP system that directly and effectively regulate the conduct in question 31 . Working documents based on these talks suggest following standards set by the CBD, according to which countries could incorporate requirements in their national legislation that regulate access to TK by those individuals or groups who wish to make use of it 32 . National laws are indeed more specific than international legislation, and thus better able to govern an IP rights regime according to local characteristics and demands. A national regime might
28

For a comprehensive discussion of this issue, specifically pertaining to the case of traditional medicine, see Carlos Correa Update on International Developments Relating to the IP Protection of Traditional Knowlegde including Traditional Medicine, South Centre, March 2004 and Protection and Promotion of Traditional Medicine: Implications for Public Health in Developing Countries, University of Buenos Aires, August 2002. 29 The Right to Good Ideas, The Economist, June 21st 2001. 30 Maskus, Keith; Saggi, Kamal; Puttitanun, Thitima, Patent Rights and International Technology Transfer Through Direct Investment and Licensing, in International Public Goods and Transfer of Technology Under A Globalized IP Regime, Ed. Keith Maskus and Jerome Reichman, Cambridge University Press, July 2005. 31 WTO IP/C/W/368, February 8th 2006. 32 Ibid.

include the use of permits, contractual obligations, visa systems and civil or criminal penalties to fix cases of non-compliance 33 thus employing a series of legal instruments that are more targeted and tangible than what can be enforced, at least for the time being, at the international level provided by the WTO. In 2002, Peru became the first country to implement a legal system that protects TK 34 . Since August 2002, Peruvian Law No. 27811 provides a regulatory framework that allows indigenous peoples to assert their rights over collectively-held knowledge, and includes the right to prevent unauthorized use of such knowledge 35 . This new law adopts article 8(j) of the CBD and article 63 of the national Industrial Property Law from 1996; its main objective is the protection of collective knowledge for the benefit of its holders or communities (article 5) 36 . It recognizes that collective TK is part of the communitys cultural heritage and results from a social learning process transferred by past generations to the present ones, who are its custodians (article 12) 37 . Along with India, Latin American countries have been especially active in discussions on TRIPS and TK at the WTO. As Correa specifies, Latin American countries were bound to amend, in a very short period, their IP legislation and to introduce laws in areas where there were no specific regulations before (such as integrated circuits, geographical indications and trade secrets). In addition they needed to put in place or improve the administrative and judicial capacity to grant or enforce IPRs. 38 In addition to Peru, Brazil has pioneered the way in this field39 , carrying through implementation of patents on TK in its national legislation 40 . A national decree (5.459) from the Ministry of Public Affairs of Brazil states in article 30 that a violation of rights over genetic resources and associated TK will be sanctioned 41 . In June 2005, a cooperation agreement was signed by the Federal police, the Brazilian Intelligence Agency and IBAMA 42 . However, national laws still fail to recognize explicitly that TK might have potential economic benefits that justify the need for its protection independently of its value as cultural heritage. At the level of international institutions such as the WTO, legislation has not been formally implemented and the issuing of patents on TK is still at the stage of discussion.

33

Ibid. Ruiz, Manuel and Lapea, Isabel, New Peruvian Law Protects Indigenous Peoples Collective Knowledge in Bridges, ICTSD, year 6, September 2002. 35 Ibid. 36 Ibid. 37 Ibid. 38 http://old.developmentgateway.org/download/142983/081502_Interview_Carlos_Correa.pdf 39 See WTO member documents IP/C/W/356; IP/C/W/403; IP/C/W/420; IP/C/W/429; IP/C/W/438; IP/C/W/442; IP/C/W/443; IP/C/W/459; IP/C/W/474; IP/C/W/475 at http://www.wto.org/english/tratop_e/trips_e/art27_3b_e.htm. 40 This prominent role is motivated by the extent of Brazils biodiversity and indigenous communities: it contains 20 percent of the worlds species as well as 200 indigenous communities that speak 170 languages. In 1994, Brazil was also the first country to sign and finally ratify the CBD which was put together at the 1992 UN Conference on Environment and Development in Rio de Janeiro. 41 "Defesa do conhecimento tradicional prioridade no Brasil", Deutsche Welle Brasil, June 13 2006. 42 Ibid. IBAMA: Brazilian Institute for the Environment and Renewable Natural Resources
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