Let me explain the argument of the cost of compliance with biosafety regulations and its impact on innovation. I have described these issues in much more detail in the article Falck-Zepeda et al. (2012).
The issue per se is not really who is paying the cost of conducting a socioeconomic study (and/or the environmental and food/feed safety studies). As an aside, one of the consequences of requiring the proponent to pay for all of these studies is that it does have a negative impact on public sector and smaller domestic private firms as they usually have more budget limitations than multinational corporations. Whether public sector that is likely to develop those technologies of a public nature (e.g. tar spot complex fungal resistant corn, fungal/bacterial wilt resistant bananas, viral/drought tolerant cassava) will be able to comply with these additional costs is debatable.
The issue is really that including additional regulatory requirements such as requesting a socioeconomic unequivocally increase the cost of development. As I have shown with colleagues in a paper for four technologies in the Philippines (Bayer, Norton and Falck-Zepeda 2010), this is usually not a problem as the proponent may incorporate these cost and pass it over to farmers if feasible. If the cost is excessive, however, beyond the value of potential market for private firms or the value to society of the damage (i.e. from the pest or disease) then the proponent will not enter the market and thus farmers or society will lose a potentially valuable technology.
In as much the cost may be important; in reality the time delays are even more important. As shown in the same paper before (Bayer, Norton and Falck-Zepeda 2010) even small time delays (three years) can have significant impacts on the value of net benefits to society. A similar argument is made in the Ph. D. thesis of Kikulwe (2010) for the potential development of a fungal resistant banana by the public sector in Uganda considering irreversibility. Important noting, that both papers were ex ante projections of potential economic and societal benefits.
The decision to enter a market or for a public sector research organization to develop a public crop will be based on the feasibility and/or the net benefit from developing such product. If a regulatory system is not transparent, costly or where there is uncertainty about the timelines involved, this will have a deleterious effect on the development of technologies. This state of affairs affects both the public and private sector.
A quite controversial issue for further debate is: Who in the end is the best judge of value about these technologies? Is it a regulator, a decision maker, an impact assessor (like me) or farmers who vote with their purse and feet? Although I am confident that what I do in terms of socioeconomic assessments are state of the art in terms of methods, I am not so sure that it would have contributed to making better decisions on behalf of farmers. After all, in spite of the existing ex ante socioeconomic assessments or lack thereof, farmers continue to purchase the seed year-after year because they know of the value of the seed. Granted in many places there is very little choice about seed availability, but the response should be then to improve choice, not reduce it and let the better judges of the technology to make such choice.
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. http://www.agbioforum.org/v13n1/v13n1a04-norton.htm
Falck Zepeda, J., J. Yorobe, Jr., B. Amir Husin, A. Manalo, E. Lokollo, G. Ramon, P. Zambrano and Sutrisno “Estimates and Implications of the Costs of Compliance with Biosafety Regulations in Developing Countries: The case of the Philippines and Indonesia,”. GM Crops and Food: Biotechnology and Agriculture in the Food Chain. Volume 3, Issue 1 January/February/March 2012 http://www.landesbioscience.com/journals/gmcrops/article/18727/?nocache=668315680
Kikulwe, Enoch (2010) On the introduction of genetically modified bananas in Uganda: Social benefits, costs, and consumer preferences. PhD-Thesis. Wageningen University.