Falck zepeda presentation on experiences with socieoconomics biosafety and biotechnology made at USDA FAS February 2014

“Experiences with Genetically Modified
Crops, Socioeconomic Assessments,
Biosafety and Decision Making”
José Falck Zepeda
Senior Research Fellow
International Food Policy Research Institute
Leader Policy Team for the Program for Biosafety Systems (IFPRI - PBS)

Photos: Bt/RR maize Isabela province, Northern Luzon, Philippines, 2012

Presentation made at USDA-FAS, Washington DC, February 25, 2014.

Program for Biosafety Systems – http://pbs.ifpri.info/

Content
• Background
• What we know
• Approaches –
Brazil &
Argentina
• Potential
implications
from SEC
inclusion

Socioeconomic Considerations (SEC)
Definition
• Slight paraphrase of International Association of Impact
Assessment (IAIA)
“All the issues of interest to humans that may be affected by an
intervention or natural phenomena following a line of causality, that is,
from cause to effect. The characterization of socioeconomics
considerations may include all the potential ways by which people and
communities interact with their socio-cultural, economic and biophysical
surroundings and the impact that such intervention or causal agent may
have on them.”

• Simplified version (author to be revealed someday…)
"Socioeconomic assessment can include examination of a variety of social
and economic factors with the objective to better understand the potential
impacts of relevant interventions on people and communities."

The Netherlands Commission on Genetic Modification
(COGEM 2009) proposal on SECs
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 be preserved
Freedom of choice – both consumers and producers should be able to choose between GMO and GMOfree products
Safety – in terms of bother personal and the environment
Biodiversity

Environmental quality


What drives SEC inclusion in
decision making
• International agreements
• Regional considerations

• National laws and regulations
– National Biosafety Frameworks
– Implementing regulations,
directives, administrative acts

• Stakeholder interests

Article 26.1 of the Cartagena Protocol on Biosafety
• Applies to decision on
import only, or
• National measures

• Voluntary – NOT
mandatory

• Especially –not limited to
- WTO

• Strictly a specific focus
and line of causality

• Explicit impact indicator
and emphasis on one
target group

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


Assessments as tools/inputs for decision making

Biosafety
assessments

SocioEconomic
Assessments

Biosafety regulatory processes are:
•

Time and budget constrained

•

Mandated to render a decision as an outcome

•

Decisions and options tradeoffs


Decision
Making

Socio-economics and biosafety &
biotechnology decision making
BEFORE RELEASE

AFTER RELEASE

An impact assessment
during the biosafety
regulatory stage to decide
on the approval of a
technology needs to be
ex ante

For monitoring purposes
or for standard
technology evaluation
purposes this is a
conventional ex-post
assessment


What can a decision maker do with the
results a socio-economic assessment?
DECISION MAKING

ASSESSMENT
OUTCOME

SEC
assessment

Biosafety
assessment

Negative Socio
– Economic
Assessment
due to
institutional
issues

Biosafety
renders
product to be
“safe”


Not approve?

Require more
information?

Approve after
resolving
institutional issues?

SEC and regulatory design and
implementation issues
Issues

Options

Type of inclusion?

• No inclusion vs. Mandatory vs. Voluntary

Who?

• Developer vs. dedicated government unit 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

How?

•
•
•
•

Will the assessment require a de novo study?
Choice of methods limited
Decision making rules and standards
Method integration, standards, tolerance to errors


2. What do we know about the socioeconomic impact of GE technologies?


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


Food Policy Review 10 conclusions
• On average GM crops have a
higher economic performance
— averages do not reflect
agro-climate, host cultivar,
trait, and farmer variability
• 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…

Food Policy Review 10 conclusions
• Address cross cutting issues for
further study including impacts
of poverty, gender, public
health, generational, cross links
with environmental and health
issues
• Develop improved methods
and multi-disciplinary
collaborations to examine
broader issues


Black Sigatoka Resistant Bananas in Uganda
 Consider irreversible and
reversible cost and benefits
 With 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.


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

Photos credit: © Horna 2009

 Probability of a negative
return can be as high as 38%
with a technology fee as
charged elsewhere
Horna, et al. (2013) . “Economic Considerations in the Approval
Process of GM Cotton in Uganda: Designing an Ex-ante
Assessment to Support Decision-making. “IFPRI Monoograph


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

Bt maize studies in Philippines led by Dr. Jose Yorobe Jr. with 466 farmers in
16 villages Isabela Province, Luzon, South Cotabato Province, Mindanao

Change in economic surplus
(mill pesos)
Producer Surplus
Seed Innovator
Total Surplus

7906
703
8609

Producer Share (%)

92

Innovator Share (%)

8


Bt/RR 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
Source: Falck-Zepeda, J., A. Sanders, C. Rogelio Trabanino, & R. BatallasHuacon. Caught Between Scylla and Charybdis: Impact Estimation Issues from
the Early Adoption of GM Maize in Honduras. AgBioForum, 15(2), 138-151.
Available on the World Wide Web: http://www.agbioforum.org.


Photos credit: © Sanders and Trabanino 2008

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”

3. How are socioeconomics included in

decision making ….or not…


The case of Brazil
In Brazil, Law 11.105, of 2005, an several normative resolutions from CTNBio –
National Technical Commision on Biosafety regulate the processes for the evaluation,
import authorization, transport, research and deliberate release (limited or
commerical) of LMOs

Proponent
(legal entity)
CIBio

ANVISA (Health)
IBAMA (Environment)

CNBS
Ministries of
Health, Agriculture,
and Environment

CTNBio
Society

Source: Paulo Paes de Andrade, 2012


Risk Assessment
Biological Aspects

CIBios

CTNBio

Research institutions,
universities, private and
public companies

Multidisciplinary
body with 54
members

CNBS
11 Ministries

Proponent

Research

Comercialization

Public
consultation

Risk
management

Risk
communication

Federal monitoring entities –
Ministries Agriculture and
Program for Biosafety Systems – http://pbs.ifpri.info/ Health

Source: Paulo
Paes de Andrade,
2012

Issue

Brazil

Type of inclusion

Only if an SEC identified during the scientific biosafety
assessment

Scope / What

Not clear / open

Who

• Three separate bodies Institutional Biosafety
Committee, CTNBio = biosafety assessments, CNBS
(National Biosafety Council): decision making body.
• CNBS commissions a third party

When

Commercialization

Comments

• Rationale for dual bodies was to separate technical
assessment from the “political” decision making

• Mexico has a similar approach

Source: based on Falck Zepeda, Wesseler and Smyth, 2010 and Pray, 2010

Permits for GM crops in Brazil (cultivation,
importation, export)
Old regulatory framework

New regulatory framework

Number of approved events

Maize

Simple majority voting

Cotton

Soybeans

Beans

Year of approval
Source: Paulo Paes de Andrade, 2012


Argentina – Key regulatory steps
• CONABIA: Evaluates agricultural and environmental
impacts through trials
• SENASA: Food safety evaluation
• DNMA: Evaluates potential commercial impact
focusing on export markets
• CONABIA makes final report

Regulatory activity
• Number of evaluated applications 1991-2011
– Soybeans: 703
– Cotton: 123

• Basic biosafety measures
– Isolation distances
• Soybeans: 3-30 meters
• Cotton: 800 meters

– Year post release monitoring
• Soybean: 1
• Cotton: 3

Issue

Argentina

Type of inclusion

Mandatory

Scope / What?

Economic impacts on trade and/or
competitiveness. Other impacts being
considered.

Who?

Minister of Finance and Trade – special
unit

When?
Comments

Commercialization
For a while..policy of only approving
those already approved in trade sensitive
markets

Source: based on Falck Zepeda, Wesseler and Smyth, 2010 and Pray, 2010

3. Potential implications

Photos: KARI –Kenya glasshouse, KARI-Thika confined field trial of Bt cotton, IRRI
conventional rice trials Los Baños, Philippines


Potential implications from SEC inclusion
into decision making
• Gain more and/or better information about
technology impacts for decision making - may
support valuable technologies

• Balance gains in information, additional costs &
effort, and impacts on innovation
• Potential for introducing uncertainty that can lead
to an unworkable system if rules and standards are
not clear

Potential implications from SEC inclusion
into decision making
• 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

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.


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.


Risk impacts and the stream of benefits
• Regulatory delays have a negative
impact on returns to investments

40
20

• With a 20% rate of return, expect
year 6 of regulatory delay to be the
trigger point for suspending
investment in new R&D

Values in Millions

0
-20
-40
-60
-80
-100

• Investment risk increases over time

-120
1

• Likelihood that investments will not
be made increases with no
information about probability of
success

Source: Smyth, McDonald and Falck-Zepeda, 2013


2

3

4

5

6

7

Years after the onset of benefits
5% - 95%

+/- 1 Std. Dev.

Mean

8

Summarizing
• Socioeconomic consideration inclusion in decision making is not
mandatory
• Inclusion of socioeconomics in decision making
–
–
–
–

Can have positive and negative impacts linked significantly to implementation
Increase the cost of compliance
Time delays are significant
Investment risk can increase

• GM crop adoption impacts have been mostly positive with some caveats
• There are feasible approaches for implementation but need to focus on
options and processes
• Prudent for countries to consider carefully whether the gains in
information and assurance are actually outweighed by the cost and other
implications from the inclusion of socioeconomics

José Benjamin Falck-Zepeda, Ph.D.
Senior Research Fellow / Leader Policy Team Program for
Biosafety Systems
IFPRI
2033 K Street NW
Washington, DC 20006-1002
USA
j.falck-zepeda@cgiar.org
Brief bio/pubs: http://www.ifpri.org/staffprofile/jose-falck-zepeda
Blog: http://socioeconomicbiosafety.wordpress.com/
Follow me on Twitter: @josefalck


Falck zepeda presentation on experiences with socieoconomics biosafety and biotechnology made at USDA FAS February 2014

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Falck zepeda presentation on experiences with socieoconomics biosafety and biotechnology made at USDA FAS February 2014