Post on 08-Apr-2018
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
1/30
Socio-Economic Impact Assessments, The Cartagena Protocol onBiosafety and National Regulations
Jos Falck ZepedaResearch Fellow /Leader Policy Team Program for Biosafety Systems (PBS)
IFPRI
Patricia ZambranoSenior Research Analyst
IFPRI
From left to right: a) Damage by Asia corn borer and b) Bt maize plot in Barangay Conel, Mindanao, The Philippines, c) Transgenic Garden,UP-LB Los Baos, Luzon, Philippines
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
2/30
Content
1. What do we know about GM crops andsocio-economic assessments
2. Socio-economic assessments andbiosafety regulatory systems
3. Practical considerations forimplementation
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
3/30
Next Harvest and public sector R&D
Public sector in developingcountries have been
developing multipletechnologies, very few havereached farmers
Other crops and traitsentering the market place
0
20
40
60
80
Lab /Greenhouse
ConfinedField trial
Scale-up CommercialRelease
Africa Asia Latin America
All other crops
(15)
17%
Other cereals
(4)
5%
Cotton
5%
Tomatoes
6%
Other
vegetables
(14)
9%
Maize
9%
Papayas
6%
Other fruit
(6)
8%
Potatoes
11%
Rice17%
Soybeans
5%
Source: IFPRIs Next Harvest Cohen (2005)Atanassov et al(2004)
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
4/30
What do we know from the economic impactassessment literature to date?
A review of 187 peerreviewed studies
Different impact domains
Farmers, household andcommunity
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
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
5/30
Food Policy Review conclusions On average, profitablebut averages mask
variability by agro-climate, host cultivar, trait,farmer
Too few traits, too few cases/authorsgeneralizations should not be drawn yet...needmore time to describe adoption
Next decade
Cross cutting issues for further study includingimpacts of poverty, gender, public health,generational
Need for improved methods
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
6/30
Ex ante studies completed by IFPRI
staff and partners
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
7/30
Bt cotton in the U.S. First estimates
-22 -12 -14
58 37 37
141
8097
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
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
8/30
Black Sigatoka Resistant Bananas inUganda
If approval delayed,forego potential annual(social) benefits of +/-US$200 million
GM crops (food) withtangible benefits,increases consumersacceptance of GMbanana for 58% of thepopulation
Higher negativeperceptions amongst theurban elite as comparedto rural producers
Photos copyright: Kikulwe 2009
Kikulwe, E.M., E. Birol, J. Wesseler, J. Falck-Zepeda. A
latent class approach to investigating demand for geneticallymodified banana in Uganda Agricultural Economics.Publication Forthcoming 2011.
http://www.gmo-compass.org/features/zoomimage.php?image=/data/imagescontent/grocery_shopping/017_banana-blacksigatoka_zoom.jpg&width=500&height=3328/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
9/30
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
10/30
Ex ante studies at a regional level
Country Crop/Trait Representative findings
West Africa Bt cotton Countries are worse off by not adopting Smaller net benefits and returns than other
studies Negotiating downward the technology fee is key
India, China,Philippinesand otherAsian
Bt rice Adoption gains are up to 10 times the level oflosses due to potential closing of export market totrade sensitive countries
Falck Zepeda, J.B., D. Horna, P. Zambrano and M. Smale. Policy and Institutional Factors and the Distribution of Economic Benefits and Risk fromthe Adoption of Insect Resistant (Bt) Cotton in West Africa. 2008. Asian Biotechnology Development Review 11(1):1-32.
Falck Zepeda, J., D. Horna and M. Smale. Distribution of economic benefits and risk from the adoption of insect resistant co tton in West Africa
2008. African Journal of Agricultural and Resource Economics.
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
11/30
Ex post studies completed by IFPRI
and partners
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
12/30
Bt maize in the Philippines
Growing Bt maizesignificantly increasesprofits and yields
Significant insecticide
use reductions Adopters tend to be
larger, use hired laborare more educated,
have more positiveperceptions of currentand future status
Change in economic surplus
(mill pesos)
Producer Surplus 7906
Seed Innovator 703
Total Surplus 8609
Producer Share (%) 92
Innovator Share (%) 8
Bt maize studies in Philippines led by Dr. Jose Yorobe Jr. with 466 farmers in16 villages Isabela Province, Luzon, So. Cotabato Province, Mindanao
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
13/30
Bt cotton in Colombia
Evidence of yieldenhancement rather thanpesticide reductions
Bt farmers benefitedwhere the target pest iseconomically important
Sampling biasimportant: adopters were
betteroff farmers
Institutional contextcrucial
Photos credit: Zambrano 2009
Source: Zambrano, P., L. A. Fonseca, I. Cardona, and E. Magalhaes. 2009. Thesocio-economic impact of transgenic cotton in Colombia. In Biotechnology andagricultural development: Transgenic cotton, rural institutions and resource-poor
farmers, ed. R. Tripp. Routledge Explorations in Environmental Economics 19.London: Routledge. Chapter 8. Pp. 168-199
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
14/30
Bt maize in Honduras
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.
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
15/30
Bt cotton impact studiesParameter India China South
Africa
Argentina
Mexico
Yield Advantage
(n)
40 11 41 9
Min (%) -17 -6 -36 -3
Average (%) 42 6 56 32
Max (%) 92 55 129 65
Insecticide
applications (n)
29 7 29 8
Min (%) -83 -82 -95 -81
Average (%) -3 -66 -53 -51
Max (%) 83 -56 68 -2
Profit (n) 16
Min (%) -65
Average (%) 47
Max (%) 136
Notes: 1) Source is a compilation by Zambrano & Niane, 2) n = sites or years
when/where data collected
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
16/30
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
17/30
Socio-economic considerations and theCartagena Protocol on Biosafety (Article 26.1)
especially with regard to the valueof biological diversity toindigenous and local communities.
socio-economic considerationsarising from the impact of living
modified organisms on theconservation and sustainableuse of biological diversity,
Voluntary it is
notmandatory
Strictly anarrow scope
may take into account,
consistent with their internationalobligations,
1. The Parties, in reaching adecision on import under thisProtocol or under its domesticmeasures implementing theProtocol,
SOCIOECONOMIC CONSIDERATIONS
Especially WTO
Impactparameter??Focus??
Relate to importdecisions Domestic lawsand regulations
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
18/30
Motivations for the assessment ofsocio-economic considerations
For biosafety regulatory purposes one needs tounderstand:
the impact of the inclusion of socio-economic issues indecision making
The relationship /interaction with the risk assessment process
Consider technology flows, opportunities lost due to
additional regulatory hurdles and who is impacted more
Technologyassessments
Technology approvalwithin biosafety
regulatory processes
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
19/30
Important distinction
What are the goal and objectives for socio-economicassessments as related to biosafety or technology decisionmaking?
Democratic societies right to know vs. Freedom to operate
vs. Freedom to choose
An impact assessmentduring the biosafetyregulatory stage needsto be ex ante
For monitoring orstandard technologyevaluation purposes this
is a conventional ex-post assessment
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
20/30
Another important distinction
Article 26.1 of theCartagenaProtocol and
(future) derivedagreements
National laws,regulations, policiesand implementing
regulations
Relatively fewlimitation except
bindinginternationalagreements (WTO)and existing laws,regulations, policies
Limitation is the textof Article 26.1, other
international bindinginternationalagreements (WTO)
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
21/30
Onelist of potential socio-economicconsiderations
Distributions of benefits Public sector research
Labor
Global markets
Competition Organic markets
Intellectual Property Rights
Public opinion
Ethics, culture, religion
Can these considerations be assessed?
How are they going to be used in a decision making
process?
Source: Fransen, La Via, Dayrit, Gatlabayan, Santosa, Adiwibowo, WRI 2005
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
22/30
3. Practical considerations for Socio-
Economic inclusion in decisionmaking
P ti l t t l d d i i f
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
23/30
Practical structural and governance decision forsocio-economic inclusion in the decision makingprocesses
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 limited than forex post
Decision making rules and standards Method integration, standards, tolerance to errors
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
24/30
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
25/30
What can a decision maker do withthe results a socio-economic
assessment?
What is the decision making rule and the standard by which toguide such decision?
Who is the best person to make this decision? Is it a regulator,decision makers, or the persons who will endure the risk and the
benefits of the technologyfarmers?
Negative Socio Economic
Assessment+
Biosafetyassessmentrenders product
as safe
Not approval
Require moreinformation
SEA
BA
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
26/30
What can a decision maker do with the resultsa socio-economic assessment?...continued
Considering that.
Socio-economic assessment include quite a bit of art in a process thatuses science and scientific tools
Lots of uncertainties and subjectivities
Negative Socio Economic
Assessment dueto institutional
issues
+Biosafetyassessment
renders productas safe
Not approve
Require moreinformation
SEA
Approve afterresolving
institutional issues
BA
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
27/30
Estimates cost of compliance withbiosafety regulations from a PBS study
GE crop Country Developer Present value of total costcompliance with biosafety
regulations (US$, 2005 base
year)
Insect resistant rice (Bt) Indonesia LIPI 64,730
Drought tolerant
sugarcane
Indonesia PTPN XI 94,389
Insect resistant cotton(Bt)
Indonesia Monsanto 99,870
Herbicide tolerant corn
(RR NK603)
Indonesia Monsanto 112, 480
Bacterial blight resistant
rice (Xa21)
Philippines PhilRice 99,213
Golden Rice Philippines IRRI 104,698
Insect resistant corn(Bt)
Philippines Monsanto 1,700,000
Delayed ripening
papaya
Philippines Institute of Plant Breeding (IPB),
University of the Philippines Los
Baos (UPLB)
180,384
Note: Summarized from Falck Zepeda et al.2007
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
28/30
Another set of estimates from thePhilippines
Activity Bt eggplant MVR tomato Bt rice PRSVresistant
papaya
R&D 580,000 434,000 888,750 120,370
Containment 180,000 180,000 20,800 48,000
Limited field trial 100,000 100,000 446,700 86,600Multi-location field
trial
100,000 100,000 210,000 82,400
Approval for
commercialization
95,000 95,000 13,180 31,500
Total regulatory
costs
475,000 475,000 690,080 248,500
Source: Bayer, Norton and Falck Zepeda (2008)
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
29/30
Contrasting benefit levels from GE cropadoption with higher costs and regulatory lags
Bt eggplant MVR tomato Bt rice PRSV resistant
papaya
Baseline NPV of
change in Net
Benefits
20,466,196 16,748,347 220,373,603 90,765,793
Changing cost of compliance with biosafety
75% higher 20,550,612 16,529,580 219,976,847 90,633,007
200% higher 20,128,529 16,164,968 219,315,587 90,411,698
400% higher 19,435,196 15,581,590 218,257,570 90,097,124
Changing regulatory time lag
1 year longer 14,707,235 10,656,533 193,926,128 66,362,939
2 years longer 8,931,527 4,854,806 168,738,056 46,060,500
3 years longer 4,242,285 1,110,757 144,749,416 29,540,365
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.
8/7/2019 Jose Falck Zepeda Indonesia Delegation March 2011
30/30
Key messages
Documented benefits from the technology but alsoinstitutional issues
Article 26.1 of the Cartagena Protocol
is not mandatory
has a very specific scope, target and objectives focused onbiodiversity
National regulations may incorporate socio-economics
In decision is inclusion then need to focus on
Implementing regulations and consequences from inclusion of
socio-economic Addressing transparency, feasibility, decision making standards
Ensure capacity to conduct feasible socio-economicstudies in a cost efficient and timely manner