Jose Falck Zepeda presentation Asian Regional Workshop Bangkok January 2012
Falck Zepeda Presentation MSU Course 2011
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Transcript of Falck Zepeda Presentation MSU Course 2011
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Socio-Economics Considerations, Biosafety and Decision Making
Jos Falck ZepedaResearch Fellow / Leader Policy Team Program for Biosafety Systems (PBS)
IFPRI
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 Isabelaprovince, North Luzon
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Outline1. Introduction and
Background2. Economics of GE
biotechnologies andbiosafety
3. Experiences with socio-economic assessments
4. Cost of compliance withbiosafety regulations
5. Practical socio-economic
assessmentsimplementation
6. Concluding comments
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Limits to resources and other trade-offs
We have limited Resources Capacity for risk and risk
taking
Technical capacity We learn over time
Trade-offs and alternativesStatus quo is not
necessary risk-lessTechnology deployment
and precautionaryapproaches to regulation
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Why Genetically Engineered cropsand other biotechnologies?
Embodied technologies Address specific productivity
constraints not easilyaddressed by conventional
means Can be deployed in low
resource use productionsystems
Flexible fit with otherproduction systems
Impacts can be non-monetary,indirect, and scale neutral
Scalable
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2. Economics of GE
biotechnologies and biosafety
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The basic decision making rule ineconomic impact assessment of anynew technologies
Sum ofAllBenefits
Sum ofAllCosts
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Several issues with the basic rule
We may have winners and losers at
the same time
Costs/benefits may not be monetary
Quantification issues
Externalities => persons benefitingfrom intervention may not endure allcosts
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What are socio-economicconsiderations (SEC) assessments?
Diverse research focus
Household, Farm, Communities,Industry, Consumer, Trade
Gender, health, age, institutionalissues
May be done before(ex ante) or
after adoption of the technology(ex post)
Contrast effects of interventionagainst an alternative
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Impact assessment is a scientificprocess that significantly incorporates artin its implementation
The practitioner has to in many casessubjectively address many problems
with data, assumptions, models anduncertainties
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A paper by Gruere and Pal suggests
Well conducted socio-economicassessments can
Objectively weigh benefits and cost for better
decisions Provide useful lessons that may avoid costly
mistakes
Suggest management practices to increasebenefits from use
Support economically beneficial applicationsand pave the way for promising new tech
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What drives SEC inclusion?
Knowledge creation
Understanding role oftechnology
Regional considerations
National laws and regulations
International agreements Other political, institutional and
stakeholder interests
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Socio economic considerations and Article 26.1of the Cartagena Protocol on Biosafety
1 . The Parties, in reaching a decision on import under thisProtocol or under its domestic measures implementing the
Protocol,
may take into account,
consistent with their international obligations,
socio-economic considerations arising from the impactof living modified organisms on the conservation andsustainable use of biological diversity,
especially with regard to the value of biological diversityto indigenous and local communities
Applies to decisionon import only
National measures
Voluntary NOTmandatory
Especially WTO
Strictly a specificfocus and targetgroup
Explicit impact
indicator
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Objective driving socio-economicconsideration assessments
For biosafety regulatory processes one needs to
understand: the impact of the inclusion of socio-economic issues in
decision making
The relationship / interaction with the risk assessmentprocess
Technologyassessments
Technology assessmentwithin biosafety regulatoryprocesses that lead to an
approval or rejection
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Consider impacts on
innovation,opportunities lost
due to additional regulatory hurdles
andwho
is impacted more by regulatory
actions and technology decisions
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Biosafety regulatory design impliesestablishing a balance between
Democratic societies right to know
vs.Freedom to operate
vs.
Freedom to choose
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Important distinction
What are the goal and objectives for socio-economic assessments as related tobiosafety or technology decision making?
An impact assessmentduring the biosafetyregulatory stage needsto be ex ante
For monitoring orstandard technologyevaluation purposes this
is a conventional ex-post assessment
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Specific questions about potential socio-economic consideration inclusion
Feasibility Can all socio-economicconsiderations be assessed exante and/or ex post?
Fit with decision making
process
How are assessment outputs
going to be used in a decisionmaking process?
Utility Does inclusion of socio-economic considerationsimprove societys welfare?
Regulatory impacts Are we considering allbenefits, costs, risks andpotential outcome from theinclusion of socio-economicconsiderations
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3. Experiences with socio-
economic assessments
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What do we know from the economic impactassessment literature to date?
A review of 137 peerreviewed 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
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Food Policy Review 10 conclusions
On average profitable but averages maskvariability by agro-climate,
host cultivar, trait, farmer Too few traits, too few
cases/authorsgeneralizations should notbe drawn yet...need moretime to describe adoption
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Food Policy Review 10 conclusions
Next decade
Cross cutting issues forfurther study including
impacts of poverty,gender, public health,generational
Need improved
methods to examinebroader issues
R l i hi b d
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Relationship between genderdifferentiated adoption and impact
Farmers
Technology
developers
Regulators
Attitudes
Perceived and actual risk
Social norms
Gender roles
Access and control
Time
AssetsInputs
Credit
Market
Prices
Technolo cost
Knowledge
Crop and trait
Economic
Health
Nutrition
Labor
Farming practices
Impacts
By crop- trait
Economic
Health
Nutrition
Labor
Social norms
Policy
Regulations
Governance
Institutions
A joint study onthe Bt/RR maizein the Philippinesdone by UP-LBand IFPRIexaminingrelationshipbetween gender
andbiotechnologyadoption andimpact
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Impact on Farmers / Household / Community
Value of biodiversity to indigenous communities
Value of biodiversity to individual farmers, households, and communities
Profits and benefit/cost ratios
Net income
Use of productive inputs (pesticides,)
Production practices
Gender differentiated access and control, knowledge and/or attitudesHealth impacts
Safety first, downside risk, minimum production for survival
Irreversible costs and benefits
Freedom of choice and freedom to operate
Potential issues for a socio-economic assessment
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Lists of potential issues should not beviewed as check lists
Prudent to carefully choose whichissues are relevant to the technologydecision making process
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How does a producer benefit? Insectresistance and herbicide tolerant traits
The case of Bt/RR maize
Impacts on:
Producer Profit
Producer Surplus
Cost to Benefit
LivelihoodsAdditional
cost ofusing the
Technology
Tech fee
0
+
-
Decrease
pesticide
application
cost-Insecticide
-Machinery &
Equipment
Increase
Yield
-Timing
applications-Reduced
damage bolls
Price change
due to increase
in supply
Additional
cost of
controllingsecondary
pests
Amenable to
IPM and/or
controlled
easily
Labor
Labor
The
management
conveniencefactor
Allow use of
alternative
productiontechnologies
- No-till low-till
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A bit of historyThe case of Bt
cotton in the U.S.
-22 -12 -14
58 37 37
141
80
97
63
8593
-50
0
50
100
150
200
250
300
1996
Industry
US Farmers
Consumers
Foreign Farmers
1997 1998
Industry
36%
Consumers19%
US Farmers
45%
Total benefit estimates(Millions US $)
Falck-Zepeda, Traxler & Nelson 1999, 2000
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Black Sigatoka Resistant Bananas in Uganda:An ex antestudy
One year delay foregopotential annual (social)benefits of +/- US$200million
A GM banana with tangiblebenefits to consumersincreases their acceptancefor 58% of the population
Photos credits: Kikulwe 2009 and Edmeades 2008
Citations:Kikulwe, E., J. Wesseler and J. Falck-Zepeda. 2008. Introducing a Genetically Modified Bananain Uganda: Social Benefits, Costs, and Consumer Perceptions. IFPRI Discussion Paper 767,Environment and Production Technology Division, International Food Policy Research Institute,Washington, D. C. USA.
Kikulwe, E.M., E. Birol, J. Wesseler, J. Falck-Zepeda. A latent class approach to investigating
demand for genetically modified banana in Uganda Agricultural Economics. 2011.
http://www.gmo-compass.org/features/zoomimage.php?image=/data/imagescontent/grocery_shopping/017_banana-blacksigatoka_zoom.jpg&width=500&height=332 -
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Bt cotton in West Africa: An ex antestudy
Impact of adoption in Burkina Faso, Benin, Mali,Senegal and Togo
Conclusions
West African countries are worse off by not adopting
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 assumptionsused in the model
Citation: Falck-Zepeda, Horna and Smale, African Journal of
Agricultural and Resource Economics, 2008
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Bt maize in the Philippines: An Ex poststudy
Growing Bt maizesignificantly increasesprofits and yields
Significant insecticide usereductions
Adopters tend to: Cultivate larger areas
Use hired labor
More educated
have more positive perceptionsof current and future status
Change in economic surplus
(mill pesos)
Producer Surplus 7906
Seed Innovator 703
Total Surplus 8609
Producer Share (%) 92
Innovator Share (%) 8Bt maize studies in Philippines led by Dr. Jose Yorobe Jr. with 466 farmers in16 villages Isabela Province, Luzon, South Cotabato Province, Mindanao
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Bt maize in Honduras: Ex post study
Excellent insect control
Bt yield advantage 893-1136 Kg ha-1 yield (24-33%)
Bt maize yieldspreferred even by riskaverse producers
100% higher seed costthan conventional hybrid
Institutional issuesimportant
Photos credit: Sanders and Trabanino 2008
Small Resource-Poor Countries Taking Advantage of the New Bioeconomyand Innovation: The Case of Insect Protected/Herbicide Tolerant Maize inHonduras. Jose Falck Zepeda, Arie Sanders, Rogelio Trabanino, Oswaldo
Medina and Rolando Batallas-Huacon. Paper presented at the 13th ICABRConference The Emerging Bio-Economy, Ravello, Italy June 17-20, 2009.
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4. Cost of compliance with
biosafety regulations
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Tension between safety andinnovation
Innovation as a path to address poverty andpromote sustainable growth
How precautionary an approach is
necessary/sufficient for society to accept atechnology?
All biosafety processes/regulations are bydefinitionprecautionary
Precaution is really a matter of degree Need clear bounds, decision making rules, time
limitations
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Biosafety as a process
Contained Use
Experiments
Confined
Field Trials
Deliberate
Release
Post
Release Deregulation
Regulatory decision points
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R&D and product development lifecycle
1 3 years 1 3 years 1 3 years
Product
Concept
Discovery Early Product
Testing &Development
Integration
& ProductSelection
Product
Ramp Up
Market
Introduction
1 2 3 4 5 6
Confined Field Trials
Author: Ramaeker-Zahn
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Why study the cost of compliance?
Focus is to explore balance between a country-defined acceptable level of safety and thenecessary cost to achieve it
Critical to include all direct and opportunity
benefits and costs of adopting and not adoptingbiotechnologies and alternatives
Identify which areas contribute more overall tosafety and net benefits in order to focusinvestments
Avoid investing (good) money in issues that
are trivial, manageable or irrelevant
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An (old) compilation of cost studies
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Cost of Compliance with Biosafety Regulationsin Indonesia and the Philippines: A PBS study
Citation: Falck Zepeda et al. 2007
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Opportunity and direct costs ofregulation are important to society
Direct and indirect effects High costs are a special concern
for Public sector
Small private (domestic) firms Crops and traits of interest to
developing countries
Countries without significantinnovative capacity
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5. Practical socio-economic
assessments implementationissues and implications
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Considerations for regulatory design
Issues OptionsType of inclusion No inclusion vs. Mandatory vs. Voluntary
Scope Narrow interpretation article 26.1 Narrow set of socio-economic issues Broader set of assessments (SIA or SL)
Approach Concurrent but separate vs. Sequential vs. Embedded Implementation entity
Assessment trigger Each submission vs. Event-by-event
When Laboratory/greenhouse vs. CFTs vs. Commercialization For post release monitoring At all stages?
How? Choice of methods for ex anteassessments is much more limitedthan for ex post Decision making rules and standards Method integration, standards, tolerance to errors
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My blogSocio-economics, biosafetyand Decision Making
http://socioeconomicbiosafety.wordpress.com/
P i l i li i f SEC
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Potential implications from SECinclusion into decision making
Potential for introducing uncertainty that canlead to an unworkable system if rules andstandards are not clear
Gain more and/or better information abouttechnology impacts for decision making
Balance gains in information, additional costs &
effort, and innovation What to do with SEA results?
What can a decision maker do with the results
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What can a decision maker do with the resultsa socio-economic assessment?
ASSESSMENT
OUTCOME
Negative SocioEconomic
Assessment dueto institutional
issues
Biosafety rendersproduct to be
safe
Not approve
Require moreinformation
SEC assessment
Approve afterresolving
institutional issues
Biosafety assessment(environmental and
food/feed safety)
REGULATORY
DECISION
?
?
?
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Potential implications from SECinclusion into decision making (cont..)
Cost of compliance will increase
Time to completion may increase
Reduction in the ability for the country toinnovate
Consider impacts on public sector and crops
and traits of interest to developing countries Difficulties for private and public sector
investments
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Contrasting benefit levels from GE crop adoption withhigher costs and regulatory lags in the Philippines
Bt eggplant MVR tomato Bt rice PRSV resistantpapaya
Net Benefitsbaseline (NPVUS$)
20,466,196 16,748,347 220,373,603 90,765,793
Impact on net benefits due to an increase in the cost of compliance with biosafety
75% higher 0% -1% 0% 0%
200% higher -2% -3% 0% 0%
400% higher -5% -7% -1% -1%
Impact on net benefit due to an Increase regulatory time lag
1 year longer -28% -36% -12% -27%
2 years longer -56% -71% -23% -49%
3 years longer -79% -93% -34% -67%
Notes: 1) Source: Bayer, Norton and Falck Zepeda (2008), 2) Discount rate for the estimation of NPV = 5%, 3) Changein Net benefits defined as the total benefits estimated using the economic surplus minus total regulatory costs.
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6. Some concluding reflections
Adoption of GE biotechnologies has beenoverall positive, but not in each and everycase
Benefit variability a function of institutionalissues rather than the technology itself
Prudent to judge technology by its own merits
Think about crops and traits of interest todeveloping countries
N d t ffi i t d t ti
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Need smart, efficient and protectiveregulatory systems
Match the level of regulation to the level ofrisk
Introduce and promote system flexibility
Innovative approaches to assessmentsPerformance rather than prescriptive
regulations
Rationalize and streamline application and
decision making processes
Ensure understanding of regulatory impacts
Pursue regional approaches
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Jos Falck-ZepedaResearch Fellow / Leader PolicyTeam PBS
IFPRI2033 K Street NWWashington, DC 20006-1002USA
Tel. +1.202.862.8158Fax. +1.202.467.4439Skype: josefalck
Honduras
mailto:[email protected]:[email protected]:[email protected]:[email protected]