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Cost-benefit analysis of agricultural biotechnology

Definition of biotechnology Any technological application that uses biological systems, living organisms, or derivatives thereof, to make or modify products for specific use (Secretariat of the Convention on Biological Diversity in 1992) Applied to agriculture, it encompasses a range of tools that scientists use to understand and manipulate the genetic make-up of organisms in the production or processing of agricultural products. It has the potential to increase the quantity as well as quality of products that required years of laborious plant and animal breeding. Therefore, it may be considered as an important means to address poverty, increase productivity of marginal lands, etc. Even though it is a very promising technology, it has many potential consequences that may be expressed as costs. History of Agro-biotechnology From the discovery of genetic transformation by Frederick Griffith in 1928 to date. Development Status of Agro-biotechnology Research that is underway in the U.S, Europe, Asia as well as some developing countries. Development of property rights which fosters the private sector to invest in agro-biotech and then, controls the research and development in this field. Commercial applications and the dominant crops. Some aspects of the agro-biotechnology supply chain Investments at the Research and Development level: the impacts of the monopolization such as licensing agreements, acquisitions, mergers.

Investments at the Production level: price uncertainties associated with genetically modified crops cultivation according to the consumer preference and also the release of biotech into the environment can be delayed by regulatory bodies until more information is available about the environmental and health risks.

Investments at the Consumption level The increase of the price of GM products according to the price of primary products. Methods to assess the benefits and costs of Biotechnology This is a theoretical section which introduces two common methods used to calculate Net Present Value of an investment. Ex-post assessment model / Deterministic model: very complex because it takes into account the whole economy. It is difficult to incorporate uncertainty and irreversibility in this model.

Ex-ante assessment model / Stochastic model: It is based on probabilistic theory. The one with non-stationary variables allows to take into account, the uncertainties, irreversibilities and the fact that an investment can be delayed until information on the risks are available,

Uncertainty and irreversibility

Cost-benefit analysis of agricultural biotechnology


Debate regarded the release of agro-biotechnology into the environment Environmental benefits, Economic benefits Social benefits, Ecological impacts, Environmental impacts, Human and Animal Health impacts Analysis of the situation The following analysis will be carried out at the three mentioned levels, Research and Development, Agricultural and Consumer level, using established scientific and economic techniques. At the Research and Development level, a scenario will be used to provide some insights about the decision whether to release immediately or delay the release of genetically modified crops into the environment. Thus, if reasonable parameter ranges are chosen, it may be possible to define areas of rejection and approval of investments in agro-biotechnology. At the agricultural level, the costs and benefits a producer could experience if a select group of genetically modified crops is cultivated will be analyzed through a case study.

At the consumer level, the environmental and human health impacts of growing a particular genetically modified crop will be analyzed using a case study. Conclusion and recommendations