Agricultural productivity enhancements have often been based upon development and dissemination of a small number of highly competitive plant varieties or animal species and, thus, have been associated with a decrease in crop genetic diversity (CGD) (FAO, 1998). Mechanical innovations such as tractors and combines, supported by breakthroughs in chemical fertilizers and pesticides, have facilitated the mono-cropping of vast areas of land, so it is not surprising there is concern that the advent of agricultural biotechnology may exacerbate these trends.1 In this chapter, we argue that agricultural biotechnology may instead offer unique opportunities to preserve CGD, but the speed and extent to which this potential is realized depend upon institutional factors, including the distribution and level of protection afforded to intellectual property rights (IPRs), transaction costs associated with licensing, technology transfer, and biosafety regulations.

As is common in the literature (FAO, 1998), CGD is used to describe the genetic diversity of agricultural crops. The number of different varieties or landraces being used by farmers is an important indicator of the in situ CGD of a particular crop species.

Biotechnology introduces a fundamental change in the way that seeds and other genetic materials can be produced. With traditional breeding techniques, existing varieties are selectively combined to develop new varieties or hybrids. This is a lengthy process and involves a significant degree of randomness. The outcome is usually a novel variety that has a number of new traits and characteristics, not all of which are desirable. Biotechnology, however, allows the targeted introduction of selected genetic materials into existing crop varieties. Once the genetic sequence coding for a desirable trait such as insect resistance has been identified, a "transformation event" is created by transferring this genetic sequence to a particular receptor variety. Additional genetically modified varieties (GMVs) are then developed by crossing existing conventional varieties with this transgenic receptor variety.2 Although several backcrossing generations are necessary to eliminate unwanted characteristics, this process is far quicker, easier, and cheaper than developing a new conventional variety through cross-breeding (Traxler, Falck-Zepeda, and Sain, 1999). It usually results in GMVs that are virtually identical to their conventional counterparts except for the new desirable trait. In other words, biotechnology permits a separation between the act of developing a specific agronomic trait and the breeding of a particular, locally adjusted variety. As such, it has important institutional and economic implications that will affect the diversity of crop plants in agricultural production.

In this chapter, we evaluate the potential for adoption of seeds and genetic materials developed using biotechnology and assess the impact on the diversity of crop varieties produced under alternative industrial and policy structures. We examine the roles of IPRs and the research capacity and efforts of private and public sectors in determining the utilization of

1 We use the term "biotechnology" to refer to the subset of techniques associated with modern molecular biology that allows the selective introduction of specific genes into crop plants, in a manner that leads to the transmission of the input gene (transgene) to successive generations (FAO, 1999).

2 Exceptions are clonally propagated, complex heterozygous species, such as potato and cassava. Because cross-breeding in these species is difficult, each GMV is usually created through a separate transformation event.

agricultural biotechnology to obtain policy implications for agricultural research efforts.

The next section provides an overview of our framework and main findings. It is followed by a detailed mathematical derivation of the main results. The final section presents a summary of our results, and it demonstrates their validity using available information on a number of GMVs of various crops grown in different countries.

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