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Socioeconomic considerations, biosafety and decision making: The view of a practitioner”


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"Socioeconomic considerations, biosafety and decision making: The view of a practitioner” is a presentation I made at the Michigan State University 2013 short course on environmental biosafety, …

"Socioeconomic considerations, biosafety and decision making: The view of a practitioner” is a presentation I made at the Michigan State University 2013 short course on environmental biosafety, August 8 2013. The focus is on socioeconomic considerations, biosafety and decision making highlighting issues, options and approaches to such inclusion from a developing country perspective.

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  • 1. Program for Biosafety Systems – “Socioeconomic considerations, biosafety and decision making: The view of a practitioner” José Falck Zepeda Senior Research Fellow International Food Policy Research Institute – Program for Biosafety Systems (IFPRI - PBS) Presentation made at the Michigan State University short course on Environmental Biosafety, August 8, 2013.
  • 2. Outline • Biosafety regulations in practice • SEC and the Cartagena Protocol on Biosafety • Socio-economic assessments in a biosafety regulatory process • What do we know? • Practical considerations and options for implementation • Concluding comments
  • 3. Why regulate Living Modified Organisms (LMOs)? • Two relevant issues Safety: Prevent the introduction of (potentially) harmful technologies to the environment and public health. Efficacy: Prevent the introduction of unimportant or inefficacious technologies • Currently, most biosafety systems are science-based focused on safety only • Science based risk evaluation approaches provide a logical framework for decision making it a preferred approach
  • 4. Regulatory design implies establishing a balance between… Societies’ democratic right to know vs. Freedom to operate vs. Freedom to choose © Monsanto 2002-2011
  • 5. Biosafety as a process… Contained Use Experiments Confined Field Trials Deliberate Release Post Release Deregulation Regulatory decision points Familiarity Learning
  • 6. R&D and product development life cycle 1 – 3 yrs. 1 – 3 yrs. 1 – 3 yrs. Product Concept Discovery Early Product Testing & Development Integration & Product Selection Product Ramp Up Market Introduction 1 2 3 4 5 6 Confined Field Trials Author: Ramaeker-Zahn
  • 7. 2. Socio-economic assessments and the Cartagena Protocol on Biosafety and national laws and regulations
  • 8. Article 26.1 of the Cartagena Protocol on Biosafety 1 . The Parties, in reaching a decision on import under this Protocol or under its domestic measures implementing the Protocol, may take into account, consistent with their international obligations, socio-economic considerations arising from the impact of living modified organisms on the conservation and sustainable use of biological diversity, especially with regard to the value of biological diversity to indigenous and local communities • Applies to decision on import only, or • National measures • Voluntary – NOT mandatory • Especially WTO • Strictly a specific focus and target group • Explicit impact indicator
  • 9. What drives SEA inclusion • International agreements • Regional considerations • National laws and regulations – National Biosafety Frameworks – Implementing regulations, directives, administrative acts
  • 10. Different approaches to SEC inclusion Issue Argentina Brazil China Type of inclusion Mandatory Only if an SEC identified during the scientific biosafety assessment Not included in current guidelines and regulations Scope / What Economic impacts on trade and/or competitiveness. Other impacts being considered. Not clear / open Not clear Who Minister of Finance and Trade – special unit Two separate bodies: CTNBio = biosafety assessments, and National Biosafety Council: decision making. NBC commissions a third party Plus institutional biosafety committee Third parties When Commercialization Commercialization Commercialization Comments For a while..policy of only approving those already approved in trade sensitive markets Rationale for dual bodies was to separate technical assessment from the “political” assessment”. Mexico has a similar approach Use of advanced assessment methods
  • 11. 3. Socio-economic assessments in a biosafety regulatory process
  • 12. Motivations for the assessment of socio-economic considerations Biosafety regulatory processes are: • Time delimited • Mandated to render a decision or outcome • Moderators of technology flows • Sensitive to trade-offs between decisions and alternatives • Respondent to stakeholders • Subject to regulatory error impacts Technology assessments Technology assessments within a (biosafety) regulatory decision making process
  • 13. Decision making and assessments Risk Assessment Socio- Economic Assessments (plus others?) Decision Making
  • 14. Socio-economics and biosafety / biotechnology decision making BEFORE RELEASE An impact assessment during the biosafety regulatory stage to decide on the approval of a technology needs to be ex ante AFTER RELEASE For monitoring purposes or for standard technology evaluation purposes this is a conventional ex-post assessment
  • 15. Beyond knowledge generation on biosafety and socio-economic considerations – decreasing returns to biosafety investments? Necessary or sufficient knowledge to determine a product as “safe” or beneficial to society  Food/feed safety  Environmental safety  Socio-Economic impacts Other motivations • Liability • Marketing • Science and curiosity • “Excessive” precaution • Others?
  • 16. • Impact assessment is a scientific process that significantly incorporates art in its implementation • The practitioner has to in many cases subjectively address many problems with data, assumptions, models and uncertainties
  • 17. 4. What do we know about the socio-economic impact of GE technologies?
  • 18. What do we know from the economic impact assessment literature to date? • A review of 187 peer reviewed studies • Examined studies with a focus on: – Farmers, household and community – Industry and markets – Consumers – Trade Citation: Smale, Melinda; Zambrano, Patricia; Gruère, Guillaume; Falck-Zepeda, José; 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
  • 19. Food Policy Review 10 conclusions • On average LMO crops have a higher economic performance — but averages do not reflect the variability by agro-climate, host cultivar, trait, farmer • Too few traits, too few cases/authors— generalizations should not be drawn yet...need more time to describe adoption These conclusions are no different than those for most technologies released to date…
  • 20. Food Policy Review 10 conclusions • Address cross cutting issues for further study including impacts of poverty, gender, public health, generational • Develop improved methods and multi- disciplinary collaborations to examine broader issues
  • 21. A meta-analysis paper by Areal, Riesgo and Rodriguez-Cerezo (2012) “GM crops perform better than their conventional counterparts in agronomic and economic (gross margin) terms” “GM crops tend to perform better in developing countries than in developed countries, with Bt cotton being the most profitable crop grown”
  • 22. How does a producer benefit? Insect resistance traits The case of Bt cotton Producer Profit Producer Surplus Cost to Benefit Additional Cost of Using the Technology Tech fee: US$80/ha 0 + - Decrease pesticide application cost -Insecticide -Machinery & Equipment Yield / Reduction in damage -Timing applications -Reduced damage bolls Price change due to increase in supply Additional cost of controlling secondary pests Amenable to IPM and/or controlled easily Labor Labor
  • 23. Black Sigatoka Resistant Bananas in Uganda  Consider irreversible and reversible cost and benefits by using the Real Option model  One year delay, forego potential annual (social) benefits of +/- US$200 million  A GM banana with tangible benefits to consumers increases their acceptance for 58% of the population Photos credits: Kikulwe 2009 and Edmeades 2008 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.
  • 24. Bt cotton in Uganda  Positive yield impacts and net benefits  Smaller rate of return probably explained due to low base yields  Need to improve overall cotton productivity  Probability of a negative return can be as high as 38% with a technology fee as charged elsewhere Photos credit: © Horna 2009 Horna, et al. (2011) . “Economic Considerations in the Approval Process of GM Cotton in Uganda: Designing an Ex-ante Assessment to Support Decision-making. “IFPRI Policy Note, Under review.
  • 25. Bt maize in the Philippines • Growing Bt maize significantly increases profits and yields • Significant insecticide use reductions • Adopters tend to be – Cultivate larger areas – Use hired labor – More educated – have more positive perceptions of current and 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 in 16 villages Isabela Province, Luzon, South Cotabato Province, Mindanao
  • 26. Bt cotton in Colombia  Evidence of yield enhancement rather than pesticide reductions  Bt farmers benefited where the target pest is economically important  Sampling bias important: adopters were better–off farmers  Institutional context critical Photos credit: © Zambrano 2009 Source: Zambrano, P., L. A. Fonseca, I. Cardona, and E. Magalhaes. 2009. The socio-economic impact of transgenic cotton in Colombia. In Biotechnology and agricultural 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
  • 27. Bt maize in Honduras  Excellent target pest control  Bt yield advantage 893- 1136 Kg ha-1 yield (24- 33%)  Bt maize yields preferred even by risk averse producers  100% higher seed cost than conventional hybrid  Institutional issues important Photos credit: © Sanders and Trabanino 2008 “Small “Resource-Poor” Countries Taking Advantage of the New Bioeconomy and Innovation: The Case of Insect Protected/Herbicide Tolerant Maize in Honduras.” Jose Falck Zepeda, Arie Sanders, Rogelio Trabanino, Oswaldo Medina and Rolando Batallas-Huacon. Paper presented at the 13th ICABR Conference “The Emerging Bio-Economy”, Ravello, Italy June 17-20, 2009.
  • 28. 5. Practical considerations and implications for implementation
  • 29. Considerations for regulatory design Issues Options Type of inclusion? • No inclusion vs. Mandatory vs. Voluntary Who? • Developer vs. Dedicated unit within Government vs. third party experts 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 vs. class of events When? • Laboratory/greenhouse vs. CFTs vs. Commercialization • For post release monitoring • At all stages? How? • Choice of methods for ex ante assessments is much more limited than for ex post • Decision making rules and standards • Method integration, standards, tolerance to errors
  • 30. Attributes of functional biosafety regulatory process – Assessment hurdle proportional to risk – Risk assessment is science based – Predictable process – Transparent – Feasible – Cost and time efficient – Fair – Explicit rules and decision making standards
  • 31. Potential implications from SEC inclusion into decision making • Potential for introducing uncertainty that can lead to an unworkable system if rules and standards are not clear • Gain more and/or better information about technology impacts for decision making • Balance gains in information, additional costs & effort, and innovation
  • 32. Potential implications from the inclusion of socio-economic considerations into decision making • Potential for a unworkable system if rules and standards are not clear • Cost of compliance costs will increase • Potential regulatory delays – Reduction in the number of technologies especially those released by the public sector and crops/traits of a public good nature – Some public sector institutions may not be able to deploy technologies due to fixed costs necessary to enter market
  • 33. Contrasting baseline net benefit levels from GE crop adoption with higher costs in the Philippines Notes: 1) Source: Bayer, Norton and Falck Zepeda (2008), 2) Baseline values for each technology expressed in millions US$ using a discount rate for the estimation of Net Present Value = 5%, 3) Change in Net benefits defined as the total benefits estimated using the economic surplus minus total regulatory costs.
  • 34. Contrasting benefit levels from GE crop adoption with larger regulatory lags in the Philippines Notes: 1) Source: Bayer, Norton and Falck Zepeda (2008), 2) Baseline values for each technology expressed in millions US$ using a discount rate for the estimation of Net Present Value = 5%, 3) Change in Net benefits defined as the total benefits estimated using the economic surplus minus total regulatory costs.
  • 35. Potential roadmap • Evaluate tradeoffs with socioeconomic considerations into decision making – …even just to provide intellectual justification about the policy decision • Focus on the inclusion and implementation processes • Consider having a basic requirement of a standard economic review/assessment with a defined evaluation criteria – Producers’ net income – Smallholder net income – Downside production/financial risk – Trade – Others….
  • 36. Potential Roadmap (continued) • Critical allowing completion of biosafety risk assessment/analysis process ( Brazil experience) • Ensure there are no authority conflicts between regulatory agencies – maximize collaboration synergies • Ensure there are no conflicts with international obligations especially WTO • Goal is to have a transparent, feasible, fair and time/cost efficient and protective process
  • 37. The way forward: implementation issues • Prudent to have a well-defined process – Steps – Timelines – Triggers – Scope and issues – Standard of proof / evidence for claim validation and review • SEC assessments can be most useful for commercialization approvals, not before
  • 38. The way forward: Implementation issues (2) • If process is mandatory, minimum requirement should be an economic impact study – Prudent policy would require then that the minimum information portfolio would include an economic impact assessment. – Broader socio-cultural considerations would not be assessed in isolation, requiring a companion (and robust) economic study. • Consider the assessment of macro level assessments based on broader technology groups rather than specific events
  • 39. Has the country included SEC in a binding legal document (law or regulation)? YES NO Conduct an inward-looking of goals and objectives for inclusion of socioeconomics
  • 40. José Falck-Zepeda, Ph.D. Senior Research Fellow/Leader Policy Team, Program for Biosafety Systems International Food Policy Research Institute (IFPRI) 2033 K Street NW, Washington, DC 20006-1002, USA Tel.: +1.202.862.8158 Fax: +1.202.4674439 Cell: +1.301.787.2586 Skype: josefalck Brief bio: Publications: Blog: Socioeconomic, Biosafety and Decision Making Follow me on Twitter: @josefalck