Components Of Value Of Plant Genetic Resources For Food And Agriculture

The previous section discussed the general concept of benefit-sharing. In this section, we discuss the composition of Vj(I). From an economic standpoint, several value categories can be ascribed to PGRFAs. The most concrete one is its use value, i.e., the value associated with the direct and indirect benefits resulting from the use of PGRFAs by plant breeders, farmers, food processors, and consumers. For plant breeders, PGRFAs are inputs to producing more productive or disease-resistant varieties. To a large extent, this use value is a function of the breeding technology and of the income achievable from productive use of the improved seed. Improvements in breeding technology, through biotechnology for example, may increase breeders' demand for germplasm and thus raise its value and market price. A share of the economic benefits of improved varieties goes ultimately to consumers in the form of lower food prices and another to farmers in the form of greater revenues due to higher yields or higher quality products.

The second-value component, the option value (Arrow and Fisher, 1974; Henry, 1974), is the value to society (their willingness to pay) of avoiding irreversible decisions on the conservation of PGRFAs. In particular, the loss of native landraces (or "traditional" varieties) is irreversible. As first noted by Hanemann and Fisher (1986) in the context of option value, other varieties may be close, but not perfect, substitutes, so once a particular landrace is extinct, its value for future plant breeding will remain unknown. In this context, option value suggests that a premium exists that is associated with actions that preserve flexibility. In other words, it is an option to be able to consume the product in the future. However, this premium is held by society, and not necessarily by private industry, which has little incentive to maintain a in situ conservation program outside of the firm's own private lines. The reasons are that the likelihood that any particular PGRFA currently in situ will yield a useful input to the breeding of a new variety is very low and, given its characteristics of nonrivalness and nonexcludability as a breeding input, one firm's conservation of a PGRFA will not necessarily exclude any other firm from conserving the same PGRFA.8 If the PGRFA-utilizing firm could be assured that the same PGRFA it has bought rights to will not be sold by the supplier to another firm as well, the price it is willing to pay could have a positive option value component to it. Depending on the structure of the market for PGRFAs, even in the case where suppliers of PGRFAs could control access, the social value of conserving PGRFAs may be higher than the private value. In other words, even in the case of a hypothetical single-market supplier for PGRFAs, the option value may still not be fully revealed in market prices for PGRFAs.

If society has a value for conservation actions that assure the potential for future use of the PGRFAs, then this value is part of the total benefits from PGRFAs. However, this option value makes sense as a part of the contributions to the fund only if distributions from the fund require conservation activities on the part of the recipients. Otherwise, it would not be equitable to make option value part of a country's contribution to the fund. The possibility of an option value component demonstrates that, at least in principle, how the money is to be distributed affects the level of contributions. At any rate, the discussion of the exclusion or inclusion of option value in contributions is an academic one at this point, given that no data exist on this value.

A third component of the value of PGRFAs is its existence value, i.e., the value one holds for a variety or set of varieties just for its own sake or for some moral or cultural reason. With respect to loss of PGRFAs, the main threat facing agriculture is the loss of intra-species diversity, and not inter-species diversity—species that may be lost are not major players in agriculture. Hence, pure existence values for conserving PGRFAs are likely to be only a small portion of their total economic value. Almost certainly, people hold a larger existence value for knowing a certain species exists than they hold for individual varieties within that species.

8 Unlike the use of PGRFAs as food, PGRFAs (as embedded in native landraces) as an input to breeding research are generally nonrival and nonexcludable. In this case, what is being purchased is the knowledge contained, and not the physical product itself. Because so little of any PGRFA is needed by a breeder as a research input and because it is a renewable product, for all practical purposes, most PGRFAs exist in sufficient quantities that all breeders could use it as a research input without bidding up its price. Native landraces are generally nonexcludable because property rights over them are not assigned and because there are usually many potential suppliers of the same landrace. Note that these two properties do not apply to a breeder's private lines, given that the breeder can effectively restrict the distribution of these lines.

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