Here I present some of the potential implications from the inclusion of socio-economic consideration assessment in biosafety and biotechnology decision-making processes. Whether a specific implication applies to a specific country will depend on its regulatory context and status. Furthermore, the intensity level of each implication will also vary from country to country. Note that in many situations some implications listed here can be managed or mitigated through flexible and intelligent regulatory design.
- Regulatory costs of compliance with biosafety regulations will increase.
Conducting a socio-economic study will have a cost attached to its implementation. The more complex and broader the selection of issues to include in an assessment, the more expensive a specific study will be to any developer, other things kept equal. It is certainly not the same level of complexity to implement an economic study focused on a very specific topic (i.e. impact of exports /trade or impact on small scale producers) versus one that may examine impacts on biodiversity and long term sociological/anthropological issues.
Choice in terms of scope will have different cost implications. A broader set of issues incorporated into a study will likely require a multi-disciplinary team and is likely to need additional time and more resources than a narrow set of issues. This fact has clear implications for capacity strengthening in those countries who want to implement socio-economic assessments as part of a regulatory process.
Cost is usually not as important as time delays. The exception would be in those situations where cost is high enough that it becomes an insurmountable hurdle to a developer. I am thinking specifically on the public sector in developing countries that are likely to develop technologies of a public good nature. In essence, introduction of additional regulatory hurdles can impact national and international public investments in research and development.
Introduction of socio-economic considerations can have another important impact and that is a reduction in the number of potential technologies available to producers and society. This may be a result of additional regulatory complexity, cost implications and/or uncertainty (see below).
- Potential regulatory delays can have a major impact in terms of economic benefits to society.
In a paper that I co-wrote with Jessica Bayer and George Norton (Bayer, Norton and Falck Zepeda 2010) we showed in a simple experiment that delays can have a big impact on the net benefits from four LMO applications in the Philippines. In this paper, we showed that even small delays of three years compared to the baseline can decrease significantly net benefits to producers. Increases in cost of compliance had a very small effect on net benefits.
- Society does gain knowledge and information on technology impacts and potential issues that may affect such outcome.
The issue is then to compare the immediate costs of compliance with biosafety regulations -this does apply not only to socio-economic considerations but also to the environmental and food/feed safety assessment- with the delays in the onset of benefits, and both with the future gains in knowledge. The examination of these issues should consider the uncertainty surrounding these issues.
In a paper Kikulwe, et al. ( 2011) examined all some of these issues and trade-offs within the scope of cost and benefit irreversibility in a real options model with an application to fungal (Black Sigatoka) resistant bananas in Uganda. Interestingly enough, the authors found out that even when considering all of these issues, every year that Uganda delays in approving such technologies, society loses 200-300 million US$. Bananas are a staple crop in Uganda having large food security and poverty impact implications. The fungal resistant banana is being developed by the public sector.
Decision makers in practice may face two distinct set of situations with increased knowledge. One where additional knowledge may help weed out unsafe and/or undesirable technology or product, as is may have a negative socio-economic impact. Second, a situation may exist were a technology that has been deemed as “safe” by the biosafety assessment process can actually be not approved due to a “negative” ex ante socio-economic assessment. These two cases open a lot of discussions in terms of the reliability/verifiability of SEC studies and who is the appropriate entity to make decisions about technology (i.e. producers versus SEC assessors versus regulators/decision makers).
- Potentially introduce more uncertainty to the process
A workable system can be defined as one where all elements of society are able to define, describe and trust the process and its outcome. Society actors can thus judge the system based on transparency, participation ability, predictability and robustness. These attributes are important for society actors’ decision making processes.
For example, if developers (be it public or private sector) face a predictable regulatory system, they can attach a value on outcome and the respective probabilities of success into their decision making process. If developers cannot attach such probabilities the likelihood is that they will not make investments in such jurisdiction. The potential impact of uncertainty on the public sector will be of relevance to many developing countries who have already invested in developing products of their own (See Atanassov 2003). Uncertainty is connected directly with rules and standards for implementation and decision making.
- Inclusion of SEC may lead to an unworkable system if rules and standards are not clear or are open ended and subject to many interpretations
In most situations, the best alternative is to have rules and standards for implementation and decision making in implementing regulations. This is extremely important as the need may arise of changing procedures later on as the regulatory system gains experience and familiarity with products in the regulatory pipeline. Having an unworkable system, or one that cannot render a decision in a timely, cost efficient manner and whose decision is robust, protective and accepted by society; is not a desirable outcome and is a questionable use of scarce societal resources.
- Bayer, J. C., G. W. Norton, and J. B. Falck-Zepeda. (2010). Cost of compliance with biotechnology regulation in the Philippines: Implications for developing countries. AgBioForum 13(1): 53-62.
- 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. Publication Forthcoming 2011.
- Kikulwe, E.M. 2010.”On the introduction of genetically modified bananas in Uganda: Social benefits, costs, and consumer preferences” A published Ph.D. dissertation at Wageningen University, The Netherlands. Thesis committee Prof. dr. E.C. van Ierland, Dr. J.H.H. Wesseler, Dr. J.B. Falck-Zepeda, Prof. dr. ir. A.G.J.M. Oude Lansink, Prof. dr. R.L. Paarlberg, Dr. M. Smale, Prof. E. Tollens.