Conducting a socio-economic study will have a cost attached to its implementation.This is stating the obvious, yet the statement needs to be made, particularly when there are some actors out there who seem to be stating that society does not need to consider implementation costs as the regulatory system “needs to protect  society in spite of the cost”. The later statement would be true is we as a society had infinite resources to protect society from all risks. In practice we do not have infinite resources. Thus, we will need to examine the trade-offs between the level of protection we want to achieve, and the cost needed to provide such level of safety. This has to be complemented by carefully conducted studies on he costs and benefits of regulations. In the end, we as a society want to avoid throwing good money into issues or problems that could be addressed through careful regulatory design.

Bt/RR Maize in Isabela province, The Philippines (c) Jose Falck-Zepeda 2011

Let’s start with what we know now. The more complex and broader the selection of socio-economics issues for inclusion in an assessment, the more expensive a specific study will be to any developer, other things kept equal. In fact, it is certainly not the same level of complexity to implement an economic study focused on a very specific topic -for example impact on exports /trade or impact on small scale producers- versus one that may examine impacts on biodiversity and long term sociological / anthropological issues. The later will have a higher cost associated with its implementation.

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.

We have to remember that the components and steps in a regulatory process are usually inter-twined. One clear example, is the relationship between cost and whether the regulatory process will require a socio-economic assessment for each submission to the competent authority in a jurisdiction, versus only for the first submission of a specific event (a crop and trait combination). Requiring a socio-economic study for each submission is clearly a waste of resources and is  unnecessary, as the additional information contributed by each additional study becomes smaller. The regulatory system may think, for example, asking the first submission to have a socio-economic studies, and other submissions for the same event, to include the original study submitted by the first proponent. This in essence becomes an “event” by “event” approach which is an accepted procedure for risk assessment in many countries.

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. More on this in a later post.

References:

  1. 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.
  2. Falck-Zepeda, Jose Benjamin, Yorobe Jr.  Jose, Manalo, A., Ramon, G.,Amirsuhin, B., Lokollo, E. M., Zambrano, P. 2007. The Cost of Compliance with Biosafety Regulations in Indonesia and The Philippines. Selected Paper 175075 presented at the American Agricultural Economics Association>2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon. http://purl.umn.edu/9947
  3. Manalo, A.J., & Ramon, G.P. 2007. The cost of product development of Bt corn event MON810 in the Philippines. AgBioForum, 10(1), 19-32. Available on the World Wide Web: http://www.agbioforum.org.
  4. Pray, C. E., P. Bengali and B. Ramaswami. 2005. The cost of regulation: the India experience. Quarterly Journal of International Agriculture 44 (3): 267-289
  5. Pray, C. E., B. Ramaswami, J. Huang, R Hu, P Bengali, and H Zhang. 2006. Costs and enforcement of biosafety regulations in India and China. International Journal Technology and Globalization vol 2 (1/2): 137-157.
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