As a production input and private good, seed is highly rival with low cost of exclusion (Fig. 5-1). The genetic resources embodied in seed are non-rival, however, and the costs of controlling their use on farms are relatively high. This means that two farmers cannot plant the same handful of seeds, but many farmers may grow the same variety simultaneously. Controlling the flow of genes among fields is difficult, especially with predominantly cross-pollinating crops as they are managed by farmers in less-commercialized agricultural systems.
The combinations of seed types grown by farmers produce a harvest that they consume and/or sell and from which they derive private value, but the pattern of genotypes across the landscape contributes to the biological diversity of the crop genetic resources from which people residing elsewhere and in the future may benefit. The public value of crop biological diversity includes insurance value for potential disasters and option value for any unforeseen events, such as changes in consumer tastes.
The private value includes utility or satisfaction from the agronomic traits and consumption attributes that these cultivars provide to farmers as producers and/or as consumers. In the special case of a commercial farmer producing for a well-defined market, that utility is related exclusively to profits derived from sales.
Since the biological diversity of crop genetic resources is never fully apparent to the farmers who provide and use it and is undervalued in markets, farmers are unable to consider the contributions of all other farmers to genetic diversity in their community or elsewhere when they make their decisions. Hence, biological diversity of crop plants has interregional and intergenerational dimensions (Fig. 5-1). Economic theory predicts that, as long as crop diversity is a (desirable) "good", farmers as a group will generate less diversity than is socially optimal (Cornes and Sandler, 1986; Heisey etal., 1997).
Institutional structures are needed to compensate for the inability of markets to provide sufficient incentives for farmers to allocate their resources in ways that are consistent with the needs of society. These structures will differ according to culture, as well as the temporal and spatial dimensions of the impure public good (Sandler, 1999). Some societies have much stronger collective behavior than others. All have norms related to management of genetic resources. At the community level, depending on the social and economic conditions farmers face, community awareness campaigns may be sufficient to ensure that certain materials of genetic importance continue to be grown. By contrast, complex structures are necessary to mediate conservation interests at the global level because actors may not perceive that they share common interests. The International Treaty on Plant Genetic Resources for Food and Agriculture and the Convention on Biological Diversity are elements of such structures, though these may not be consistent with local norms of use and access. Therefore, the extent of public investment and the policy mechanism needed to narrow the divergence between what individuals and societies perceive as optimal clearly depends on many factors.
Rivalry over use
Characteristics of impure public goods that affect the form of institutional intervention required to manage them optimally o
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