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Biotechnology
benefits and costs
Modern biotechnology is still a relatively young field, but research
results have outpaced the ability of social scientists to adequately
evaluate and explain benefits and costs to an understandably wary
public. Without informed public debate, potentially useful technologies
are lumped together with potentially harmful ones. Informing that
debate requires identification of stakeholder concerns, careful
socio-political and economic analysis of the level and distribution
of benefits and costs, and a concerted effort to educate the public.
Aspects of the agricultural biotechnology revolution requiring particular
attention are the agricultural-pharmaceutical interactions and the
benefits to low-income consumers and producers. Most productivity-enhancing
technologies place some group at a disadvantage, so it is important
to identify who might gain and who might lose, and by how much.
It is also critical to identify the counterfactual of what would
happen without further development of these technologies. Another
important issue is how to value outcomes that on the benefit side
may be high in the aggregate, but on the cost side may have negative
effects concentrated on particular groups.
Past
studies on benefits and costs of agricultural technologies
There have been many previous analyses of the benefits and costs
of agricultural technologies (See Alston, et al, 2000, and Evenson,
2000 for recent reviews) and a few economic assessments of modern
agricultural biotechnologies (e.g., Falk-Zepeda, Traxler, and Nelson,
2000; Qaim, 1999, 2000)). Most studies have focused on the benefits
of technologies generated through public sector research and extension.
The results have generally suggested significant positive benefits
to agricultural R&D in the aggregate, with producers who adopt
early and low-income consumers benefiting the most. However, biotech,
with its significant private sector participation in research, can
generate its own distinct benefit patterns, especially if imperfectly
competitive firms can retain profits from innovations (Moschini
and Lapan, 1997; Alston, Sexton, and Zhang, 1997). Furthermore,
growing consumer concern is causing government regulators to move
cautiously - perhaps justifiably - affecting the speed with which
technologies become available and are adopted. Therefore, it is
essential to evaluate public opinion with respect to agricultural
biotechnologies and to incorporate those opinions into analylses
of the benefits and costs of technological use.
Tobacco
biopharmaceuticals
Biotechnologies in tobacco and rice are chosen as the subject for
intense scrutiny in this project for several reasons. Tobacco is
a crop with major potential for producing pharmaceutical products
to replace currently expensive drugs for multiple devastating diseases.
Drugs for Gauchers disease, for example, cost about $160,000 per
patient per year. It appears that through biotechnology, tobacco
may be able to produce the same drug at a fraction of the cost (Cramer,
2001). Tobacco produces biomass very quickly, is a prolific seed
producer, and yet can process complex proteins. It is the easiest
crop to genetically engineer and is not regulated as a food. Tobacco
is a high-value crop of importance in Virginia, North Carolina,
Tennessee, and elsewhere in the Southeast, but producers have gradually
lost their market due to export competition, health concerns, and
other reasons. Pharmaceutical products produced through biotechnology
may provide an alternative use for an economically important crop
in the South.
Rice
biotechnologies
Because rice is a major staple for a large segment of the world
population, there are more biotechnologies being researched for
rice than for any other crop (Hossain et al, 2000). Technologies
for insect resistance, abiotic stress resistance, herbicide resistance,
and nutritional enhancement are under development. The research
is underway in the United States, Europe, and especially in Asia;
the United States is a participant in the international project
to sequence the genome of rice. Genetic information on rice is becoming
freely and readily available to scientists, and the International
Rice Research Institute (IRRI) in particular is heavily invested
in rice biotechnology research (IRRI, 1997; Hossain, et al, 2000).
For many years, the Rockefeller Foundation also invested in biotechnology
research and training in rice in Asia, with the result that several
developing country research systems have a small cadre of scientists
trained to interact with and build on the research at IRRI. It is
critical that public understanding of the benefits and costs of
rice biotech keep up with the science at home and abroad.
References
Alston, J.M., G. W. Norton, and PG. Pardey, Science
Under Scarcity: Principles and Practice for Agricultural Research
Evaluation and Priority Setting, (Ithaca, NY: Cornell University
Press, 1995).
Alston, J.M., R.J. Sexton, and M. Zhang, "The Effects of Imperfect
Competition on the Size and Distribution of Research Benefits",
American Journal of Agricultural Economics, 79(November 1997): 1252-1265.
Alston, J.M., C. Kang, M. Marra, P. Pardey, and J. Wyatt, "Meta-analysis
of rates of Return to Agricultural R&D: Ex Pede Herculum",
IFPRI Research Report 113, Washington, DC, June 2000.
Cramer, C., personal Communication, Blacksburg, VA, March 28, 2001.
Cuyno, L.C.M., G.W. Norton, and A. Rola, "Economic Analysis
of Environmental Benefits of Integrated Pest Management: A Philippines
Case Study", Agricultural Economics, (In Press).
Evenson, R.E., "Private and Public Research and Extension",
in B.L Gardner and G.C. Rausser, (eds.) Handbook of Agricultural
Economics, Volume 1, part 1 (New York: North Holland, forthcoming).
Falk-Zepeda, J.B., G. Traxler, and R.G. Nelson, "Surplus Distribution
from the Introduction of Biotechnology Innovation", American
Journal of Agricultural Economics, 82 (May 2000): 360-369.
Hossain, M., J. Bennett, S. Datta, H. Leung, and G.Khush, "Biotechnology
Research in Rice for Asia: Priorities, Focus, and Directions",
Chapter 7 in M. Qaim, F. Krattiger, and J. von Braun (eds.) Agricultural
Biotechnologies for Developing Countries: Towards Optimizing the
Benefits for the Poor (Dordtrecht, the Netherlands: Kluwer, 2000).
International Rice Research Institute, "Bt Rice: Research
and Policy Issues", IRRI information series No 5, Los Baños,
Laguna, Philippines, June 1997.
Moschini, G., and H. Lapan, "Intellectual Property Rights
and the Welfare Effects of Agricultural R&D" American Journal
of Agricultural Economics, 79 (Novenber 1997): 1229-1242.
Mullen, J.D. G.W. Norton, and D.W. Reaves, "Economic Analysis
of Environmental Benefits of Integrated Pest Management," Journal
of Agricultural and Applied Economics, 29 (December 1997):243-253.
Pearce, D.W., and R.K. Turner, Economics of Natural Resources and
the Environment, (Baltimore: Johns Hopkins University Press, 1990).
Pray, C.E., J.Huang, D. Ma, and F. Qiao, "Impact of Bt Cotton
in China", Dept of Agr. Food, and Resource Econ., Rutgers University,
February, 2000 (mimeo).
Qaim, M., "Potential Benefits of Agricultural Biotechnology:
an Example from the Mexican Potato Sector", Review of Agricultural
Economics", 21 (1999): 390-408.
Qaim, M., "Welfare Prospects of Transgenic Crops in Developing
Countries", Chapter 9 in M. Qaim, F. Krattiger, and J. von
Braun (eds.) Agricultural Biotechnologies for Developing Countries:
Towards Optimizing the Benefits for the Poor (Dordtrecht, the Netherlands:
Kluwer, 2000).
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