Principles Of Valuation Of The Conservation Investment

A reduction in biodiversity matters for two reasons (Chapter 5): (1) the vulnerability of a crop and its current productivity; and (2), the potential for farmers to cease cultivating a variety with untapped, potential use value. Any variety, whether bred with conventional methods or with techniques of genetic transformation, will be widely grown by farmers if they view it as superior to those they currently cultivate. With respect to the first concern, if that variety, or a set of varieties, is uniform with respect to certain genes conferring biotic resistance, then cultivation of these varieties over a widespread area increases the probability of a mutation in the disease pathogen that overcomes the source of genetic resistance. Once that occurs, widespread cultivation of varieties with that same source of genetic resistance also contributes to more rapid spread of infection. In other words, uniformity with respect to resistance genes can make a crop more vulnerable to economically meaningful crop losses—but this would be true for conventional and genetically modified seed, as well as for traditional varieties. Though traditional varieties or landraces are typically composed of more heterogeneous populations or mixtures, historically there are important cases of epidemics in landraces such as in the Indian subcontinent for the rusts of wheat.1 In fact, these epidemics were part of the motivation for early scientific plant breeding programs. Furthermore, diversity in genetic backgrounds and other resistance mechanisms (not confined a single gene) are often very important in explaining different disease reactions among varieties.

1 Otherwise known as farmers' or traditional varieties, landraces are the product of farmers' breeding and selection carried out over many generations. They tend to be more heterogeneous populations that are selected for traits conferring local agronomic adaptation and value rather than commercial value (Melinda Smale, undated).

Depending on how modern breeding techniques are used, they can maintain or decrease genetic diversity. These techniques may contribute to maintaining diversity in systems dependent on traditional varieties if they enable the insertion of traits to overcome specific disadvantages into landraces that developing country farmers value for their consumption traits or agronomic performance. If so, the relative economic value of these landraces to local farmers may be enhanced (Smale et al., 1999). On the other hand, if a company with breeding skills purchases a seed company and inserts the desired traits only in a subset of varieties that become dominant, then biotechnology may reduce the diversity of genetic materials used in plants (Yarkin, 1998).2

The economic value of PGRFA stems from its value as an input to the agricultural production process. Genetic erosion is the loss of genetic diversity, including the loss of individual genes, and the loss of particular combinations of genes such as those manifested as locally adapted landraces. The term can be used in a narrow sense, i.e., the loss of genes or alleles, and in the wider sense, including the loss of varieties (for example, see FAO, 1998, Annex 1.1; Reid et al., 1993). The main cause of genetic erosion in crops is the replacement of local varieties by improved or exotic varieties and species (FAO, 1998). Erosion can occur when a smaller number of varieties replace a larger number of older varieties and/or the newer variety has a different gene base from the old one. This chapter defines genetic erosion as the loss of genetically distinct varieties.

Chapter 9 provides the general economic background behind the economic valuation of the genetic resources for agriculture. The appendix to this chapter presents a more detailed, and hence, more complex, analytical model of the economics of the conservation of PGRFA. In the model in the appendix, an increase in accessions to a gene bank is a function of conservation investment, and the change in agricultural supply is a function of the change in accessions. According to the model, a reasonable criterion for choosing the optimal level of conservation investment is to choose the level of investment that maximizes producer plus consumer surplus in a dynamic context.

The comparative statics of the model show that the marginal value of an additional dollar of conservation is a function of the marginal change in varieties conserved per additional dollar of investment as well as being a direct function of the change in welfare due to a change in accessions. The economically efficient allocation of conservation funds among regions would be the one in which the marginal value of conservation investments is

2 In production systems with both modern and traditional varieties, or ones that are still dominated by traditional varieties, it is not necessarily the case that traditional varieties will be entirely replaced. There are many empirical examples where both coexist because it suits the interests of the farmers who grow them (Brush, 1995).

equated across regions. The marginal value of an additional dollar of conservation investment is not only a direct function of the marginal change in welfare due to a change in accessions, but it is also a function of the marginal change in cultivars conserved per additional dollar of investment. The latter is certainly higher in areas of high diversity than in areas of low diversity. Hence, the analysis in the appendix can be seen as making a case for concentrating limited conservation resources in areas of high diversity, especially when little is known about the quality of the diversity with regards to agricultural uses. Note that it is likely easier in principle to generate data on the marginal change in the number of cultivars conserved per additional dollar of investment than on the marginal change in welfare due to the change in the number of these accessions.

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