RESHAPING THE CONVENTIONAL WELFARE ECONOMICS FRAMEWORK FOR ESTIMATING THE ECONOMIC IMPACT OF AGRICULTURAL BIOTECHNOLOGY IN THE EUROPEAN UNION

Some of the crucial assumptions of applied welfare economics do not hold any longer in the case of agricultural biotechnology innovations. We review some modifications to the conventional methodologies measuring the size and distribution of agricultural research benefits, which are critical for the assessment of the economic impact of agricultural biotechnology in the European Union. While some modifications are related to the specific features of modern agricultural biotechnology and technology adoption, others are related to the specific institutional settings of the European Union's Common Agricultural Policy and commodity markets.Research and Development/Tech Change/Emerging Technologies,

BIOTECH IN DEVELOPING COUNTRIES: FROM A GENE REVOLUTION TO A DOUBLY GREEN REVOLUTION?

International Development, Research and Development/Tech Change/Emerging Technologies,

IMPACT OF AGRICULTURAL BIOTECHNOLOGY IN THE EUROPEAN UNION'S SUGAR INDUSTRY

We develop a welfare framework, which explicitly recognizes that research protected by intellectual property rights generates monopoly profits. The result is a simulation model, shaped to the European sugar sector, and enabling to assess the size and distribution of the benefits of transgenic sugar beet adoption in the European Union (EU) and the Rest of the World (ROW). Our model results suggest that the ROW captures the largest share of the benefits (53 % of total welfare increase). The EU sugar industry absorbs the next largest share of the benefits (30 %), with the smallest share (17 %) accruing to seed suppliers and gene developers. Since EU intervention prices are exogenously fixed each year, EU consumers do not take part in the distribution of the gains from the innovation. However, consumers outside the EU necessarily gain due to the depressing effect of the technology on world sugar prices. The latter is costly for the cane growers in the ROW, while beet producers gain. Our results reveal an apparent contradiction. When modern (bio)technologies are introduced in commodity markets subject to obsolete trade policies, the natural flow of domestic benefits from the input industry, via farmers, to consumers is hampered and biased towards the producing sector (input industry, farmers, and processors), leaving domestic consumers unaffected. Remarkably, given the current Common Market Organization for sugar, consumers outside the EU gain while EU citizens continue to subsidize EU sugar production trough high sugar prices, despite the innovation.Industrial Organization, Research and Development/Tech Change/Emerging Technologies,

WELFARE EFFECTS OF TRANSGENIC SUGARBEETS IN THE EUROPEAN UNION: A THEORETICAL EX-ANTE FRAMEWORK

We develop a theoretical welfare framework, which explicitly recognizes that research protected by intellectual property rights generates monopoly profits. The result is a simulation model, shaped to the European sugar sector, and enabling to assess the size and distribution of the benefits of transgenic sugarbeet adoption in the European Union and the Rest of the World.Production Economics, Research and Development/Tech Change/Emerging Technologies,

IMPACT OF BIOTECHNOLOGY IN EUROPE: THE FIRST FOUR YEARS OF BT MAIZE ADOPTION IN SPAIN

In the present paper we estimate the impact of a biotechnology innovation in Spanish agriculture. Transgenic Bt maize offers the potential to control corn borers, that cause economically important losses in Spanish maize cultivation, more efficiently. Since 1998, Syngenta commercializes the variety Compa CB, equivalent to an annual area of 25.000ha, or an average adoption rate of 5,2% of Spains total land allocation to maize. The profit increase engendered by this technological change during the four-year period 1998-2001 is estimated to be E8,4 million for Spanish agriculture and E2,8 million for Syngenta and the seed suppliers. The industry appears to be able to extract only one fourth of the total benefits. The lion share, i.e., three fourth, accrues to farmers.Research and Development/Tech Change/Emerging Technologies,

THE ECONOMICS OF AGRICULTURAL BIOTECHNOLOGY: HISTORICAL AND ANALYTICAL FRAMEWORK

In this working paper we attempt to establish a general analytical framework for the calculation of the micro- and macroeconomic benefits and costs of biotechnology applications in EU agriculture. Since these innovative applications are typically protected by intellectual property rights, standard welfare analyses will overestimate total benefits generated by these innovations. On the other hand, this doesn't mean that innovators are extracting all of the benefits. A recent ex-post welfare analysis on US Bt-cotton shows that farmers have captured the largest share of benefits (Falck-Zepeda, Traxler and Nelson, 1999). Due to the importance of intellectual property rights and the consolidation of the agricultural input industry, the framework presented by Moschini and Lapan (1997) seems to be the most adequate model as it takes into account these elements.Research and Development/Tech Change/Emerging Technologies,

EX-ANTE EVALUATION OF THE ECONOMIC IMPACT OF AGRICULTURAL BIOTECHNOLOGY IN THE EUROPEAN UNION: THE CASE OF TRANSGENIC SUGARBEETS

We develop a theoretical welfare framework, which explicitly recognizes that research protected by intellectual property rights generates monopoly profits. The result is a simulation model, shaped to the European sugar sector, and enabling to assess the size and distribution of the benefits of transgenic sugarbeet adoption in the European Union and the Rest of the World.Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,

ECONOMIC IMPACT OF AGRICULTURAL BIOTECHNOLOGY IN THE EU: THE EUWAB PROJECT

Since 1995, genetically modified organisms (GMOs) have been introduced commercially into US agriculture. These innovations are developed and commercialised by a handful of vertically coordinated "life science" firms who have fundamentally altered the structure of the seed industry. Enforcement of intellectual property rights (IPRs) for biological innovations has been the major incentive for a concentration tendency in the upstream sector. On the one hand, this monopolisation may increase long-run social welfare through an increased rate of investment in R&D. On the other hand, due to their monopoly power, these firms are capable of charging a "monopoly rent", extracting a part of the total social welfare. A popular argument used by the opponents of agricultural biotechnology (agbiotech) is the idea of an input industry extracting all benefits generated by these innovations. Are life science firms able to appropriate all benefits or is there a limit to their monopoly power? In the US, the first ex post welfare studies reveal that farmers are receiving the largest part of the benefits followed by the gene developers who receive the next largest share. However, up to now no parallel ex ante study has been published for the European Union (EU). Hence, the EUWAB-project (European Union Welfare effects of Agricultural Biotechnology) aims at calculating the total benefits of selected agbiotech innovations in the EU and their distribution among member countries, producers, consumers, input suppliers and government.Research and Development/Tech Change/Emerging Technologies,

BIODIVERSITY VERSUS TRANSGENIC SUGAR BEET: THE ONE EURO QUESTION

The decision of whether to release transgenic crops in the EU is one subject to flexibility, uncertainty, and irreversibility. We analyse the case of herbicide tolerant sugar beet and reassess whether the 1998 de facto moratorium of the EU on transgenic crops for sugar beet was correct from a cost-benefit perspective using a real option approach. We show that the decision was correct, if households value possible annual irreversible costs of herbicide tolerant sugar beet with about 1 E or more on average. On the other hand, the total net private reversible benefits forgone if the de facto moratorium is not lifted are in the order of 169 Mio E per year.Research and Development/Tech Change/Emerging Technologies,