"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.

1. Program for Biosafety Systems – http://pbs.ifpri.info/
“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: http://www.ifpri.org/staffprofile/jose-falck-zepeda
Publications:
http://josefalckzepeda.pbworks.com/w/page/9007235/FrontPage
Blog: Socioeconomic, Biosafety and Decision Making
http://socioeconomicbiosafety.wordpress.com/
Follow me on Twitter: @josefalck