SEARCA Seminar Jose Falck Zepeda July 2011

8/6/2019 SEARCA Seminar Jose Falck Zepeda July 2011

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Socioeconomics, Biosafety, and Biotechnology Decision-making: Implications for Developing Countries

Jos Falck ZepedaResearch Fellow /Leader Policy Team Program for Biosafety Systems (PBS)

IFPRI

A Special Seminar of the SEARCA Agriculture & Development Seminar Series (ADSS) co-organizedby the Department of Agricultural Economics, College of Economics and Management, University ofthe PhilippinesLos Baos and National Institute of Microbiology and Biotechnology (BIOTECH), 2

August 2011. This presentation is partially funded by IDRC Canada and USAID, through the Genderand Biotechnology and the Program for Biosafety Systems (PBS) projects. Author is the only entity

responsible for content in this presentation, which does not constitute the opinion of either donor.


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Core message from thispresentation

The assessment of socio-economic considerations asrelated to the adoption of genetically engineered crops,provides extremely useful knowledge for decision makers.

However, within the scope of a biosafety regulatoryprocess that leads to a decision whether to release a GEtechnology

-and if a decision has been reached as to the

usefulness/desirability of SEC assessments to a country-then proper implementation and inclusion of suchprocedures is critical for achieving the goal of a functionalbiosafety system.


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Content

I. Discuss socio-economic consideration(SEC) assessments as related tobiosafety regulations

II. SEC assessments: What do we know?

III. SEC inclusion in decision making:Country experiences

IV. Practical considerations for regulatorydesign


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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 afteradoption of the technology (ex post)

Contrast effects of intervention againstan 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 Palsuggests

Well conducted socio-economicassessments can

Objectively weigh benefits and cost for betterdecisions

Provide useful lessons that may avoid costlymistakes

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 of technology

Regional considerations

National laws and regulations

International agreements

Other political, institutional andstakeholder 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 riskassessment process

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 regulatoryhurdles and

who

is impacted more by regulatoryactions and technologydecisions


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Biosafety regulatory design

implies establishing a balancebetween

Democratic societies right to knowvs.

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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II. Socio-economic

assessments: What do weknow?


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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 shouldnot be drawn yet...needmore time to describeadoption


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Food Policy Review 10 conclusions

Next decade

Cross cutting issuesfor further study

including impacts ofpoverty, gender,public health,generational

Need improvedmethods 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 on the

Bt/RR maize in thePhilippines done byUP-LB and IFPRIexaming relationshipbetween gender andbiotechnology

adoption and impact


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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 ratiosNet 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 notbe viewed 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 of

using 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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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

Kikulwe, E.M., E. Birol, J. Wesseler, J. Falck-Zepeda. Alatent class approach to investigating demand for genetically

modified 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=332


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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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III. Biosafety and socio-economic considerations

inclusion: Countries experience


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European Union vs.USA/Canada

Issue European Union USA / Canada

Type ofinclusion

Mandatory (?) Not required. Proponents may submitstudy with application dossier butregulators are not mandated to considersocio-economic considerations

Legal philosophy used to be to leaveconsideration of socio-economicconsiderations to the marketplace (andcourts)

Scope / What Not clear still negotiating None

Who Proponent (?) None

proponent may include report on socio-economics in application dossier

Regulatory agency does not have anobligation to consider SEC assessment

When Approvals and Post-release monitoring(?)

None


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The Netherlands Commission on Genetic Modification(COGEM 2009) proposal: Issues for consideration of SEC

Benefits to society e.g. yield increase or food quality improvement

Economics and prosperity such as increased employment and productivity

Health and welfare for workers, the local population and consumers

Local and general food supply these should remain at the same level or improve

Cultural heritage if desired, specific elements of cultural heritage or local customs should bepreserved

Freedom of choice both consumers and producers should be able to choose between GMOand GMO-free products

Safety in terms of bother personal and the environment

Biodiversity

Environmental quality


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R&D and product developmentlife cycle

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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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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Potential implications from SECinclusion into decision making

Potential for introducing uncertainty thatcan lead to an unworkable system if rulesand standards are not clear

Gain more and/or better informationabout technology impacts for decisionmaking

Balance gains in information, additionalcosts & 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 besafe

Not approve

Require moreinformation

SEC assessment

Approve afterresolving

institutional issues

Biosafety assessment

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 Philippines

Difficulties for private and public sectorinvestments


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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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Key messages

Countries need to clearly articulate:

Why they want to include socio-economics?

Does inclusion improve societys welfare?

Additional regulatory burden and innovation

Clear decision making rules and standards


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Key messages

Careful evaluation of benefits, costs,risks and outcomes from inclusion ofSEC assessments

No approvals carry risk. there is also riskin the status quo

Countries have many options andchoices

Worst possible outcome is a processwith a mandate but with noimplementation guidance


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Key messages

In the end, SEC inclusion needs to contribute toa functional biosafety assessment and decisionmaking process

Predictable Transparency

Assessment hurdle proportional to risk

Cost and time efficient

Explicit rules and decision making standards Maximize the benefits

SEARCA Seminar Jose Falck Zepeda July 2011

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