Economic Indicator For Benefit Sharing

If, for the sake of argument, the idealized goal is to set total country contributions to the benefit-sharing arrangement proportional to the benefits derived from the commercial and other uses of plant genetic resources obtained from outside sources, then the question is how to derive this value.

Fig. 9-1 is a stylized graphical representation of the economics benefits associated with an agricultural output-enhancing set of PGRFAs, denoted as I (possible definitions of this set are discussed below).3 In the figure, equilibrium crop quantity produced and supplied without availability of I (denoted as " \/") is denoted by Qi and Ph respectively. Assuming that set I served as an input to a crop breeding program that increased the crop supply by a fixed amount at any given price, and that in this case, the equilibrium crop quantity produced and supplied with availability of I is denoted by Q0 and P0, respectively. The shaded area in the figure is the loss in economic benefits (defined in terms of consumer and producer surplus) of researchers and crop breeders not having access to this set I, say, due to loss of these crop varieties over time.

The basic difficulty in arriving at the economic value of PGRFAs, such as that depicted in Fig. 9-1, is largely due to the structure of the market for PGFLFAs. One can assume that PGRFAs are valuable: Breeders need them as input to producing new varieties and, furthermore, to the extent that downstream producers as well as consumers benefit from these new varieties, they benefit from PGRFAs as well. However, the number of suppliers of PGRFAs is high enough that the market price for PGRFAs is essentially driven to zero. Because many farmers may grow the same PGRFA, they are all potential suppliers. Plus, the number of

3 This theoretical section covers some of the same ground as in Chapter 4, but the former is more general and oriented towards institutional issues and the latter is oriented towards motivating an actual valuation exercise.

Crop Price per Unit

Supply ( / Supply

Demand

Figure 9-1. Economic losses stemming from loss ofPGRFAs set I.

Supply ( / Supply

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