Abstract
The value of genetic resources for use in research and development (R&D)activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search. Here we develop a moregeneralised framework in which genetic resources are used in R&D at thebase of an industry that addresses recurring problems of resistance, as inthe pharmaceutical or plant breeding industries. The R&D process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction (Schumpeterian competition) andadaptive destruction (natural selection and adaptation). This frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena. We then demonstrate the important differences between firm-based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation. There are six externalitiesin private patent-based genetic resource valuation, and five of theseindicate that private valuations will under-estimate social values.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Aghion, P. and P. Howitt (1998), Endogenous Growth Theory. Cambridge, MA: MIT Press.
Aghion, P. and P. Howitt (1992), ‘A Model of Growth through Creative Destruction’, Econometrica 60, 323–351.
Arrow, K. (1962), ‘Economic Welfare and the Allocation of Resources for Invention’, in R. Nelson, ed., The Rate and Direction of Inventive Activity. Cambridge M.A.: Harvard University Press.
Barrett, S. (1992), ‘Economic Growth and Environmental Preservation’, Journal of Environmental Economics and Management 23, 289–300.
Bovenberg, A. Lans and S. Smulders (1995), ‘Environmental Quality and Pollution-Augmenting Technological Change in a Two-Sector Endogenous Growth Model’, Journal of Public Economics 57(3), 369–391.
Brown, G. and J. Swierzbinski (1988), Optimal Genetic Resources in the Context of Asymmetric Public Good', in V.K. Smith, ed., Environmental Resources and Applied Welfare Economics. Washington: RFF, pp. 293–312.
Craft, A. and D. Simpson (2001), ‘The Value of Biodiversity in Pharmaceutical Research with Differentiated Products’, Environmental and Resource Economics 18, 1–17.
Evans, L. T. (1993), Crop Evolution, Adaptation and Yield. Cambridge: Cambridge University Press.
Evenson, R. and D. Gollin (1991), Priority Setting for Genetic Improvement Research. Los Banos, Laguna, Philippines: International Rice Research Institute.
Evenson, R., D. Gollin and V. Santaniello (eds) (1998), Agricultural Values of Genetic Resources. London: CABI.
Goeschl, T. and T. Swanson (1998), Optimal Management of Agricultural Biodiversity: Genetic Resources, Gene Banks and Land Use. Paper presented at the World Congress of Environmental and Resource Economists, Venice, Italy, June 1998.
Goeschl, T. and T. Swanson (2001), Lost Horizons: The Interaction between IPR Systems and Evolutionary Races in Pathogens. Paper presented at the Annual American Economic Association Meeting, New Orleans, 2001.
Goeschl, T. and T. Swanson (2002), ‘The Interaction of Dynamic Problems and Dynamic Policies: Some Economics of Biotechnology’, in R. Laxminarayan, ed., Battling Resistance to Antibiotics and Pesticides. An Economic Approach. Washington DC: Resources for the Future Press, chapter 12.
Heisey, P.W. and J.P. Brennan (1991): ‘An Analytical Model of Farmers’ Demand for Replacement Seed', American Journal of Agricultural Economics 73(4), 1044–1052.
Heisey, P.W. (ed.) (1990), Accelerating the Transfer of Wheat Breeding Gains to Farmers: A Study of the Dynamics of Varietal Replacement in Pakistan. CIMMTY Research Report No. 1, Mexico, D.F.: CIMMYT
Hung, V., P. Chang and K. Blackburn (1994), ‘Endogenous Growth, Environment and R&D', in C. Carraro, ed., Trade, Innovation, Environment. Dordrecht: Kluwer, pp. 241–258.
Kamien, M. and N. Schwarz (1982), Market Structure and Innovation. Cambridge: Cambridge University Press.
Kiyosawa, Shigehisa (1989), ‘Breakdown of Blast Resistance in Rice in Relation to General Strategies of Resistance Gene Deployment to Prolong Effectiveness of Disease Resistance in Plants’, in K. Leonard and W. Fry, eds., Plant Disease Epidemiology. Vol. 2. Genetics, Resistance, and Management. New York: McGraw-Hill, pp. 251–283.
Mason, R. and T. Swanson (forthcoming), ‘The Costs of Uncoordinated Regulation’, European Economic Review.
Munro, A. (1997), ‘Economics and Evolution’, Environmental and Resource and Resource Economics 9, 429–229.
Oerke, E.-C., H.-W. Dhene, F. Schönbeck and A. Weber (1994), Crop Production and Crop Protection. Estimated Losses in Major Food and Cash Crops. Amsterdam: Elsevier.
Rausser, G. and A. Small (2000), ‘Value Research Leads: Bioprospecting and the Conservation of Genetic Resources’, Journal of Political Economy 108(1), 173–206.
Scheffer, R. (1997), The Nature of Disease in Plants. Cambridge University Press.
Schumpeter, J.A. (1942), Capitalism, Scoialism and Democracy. New York: Harper and Bros.
Simpson, R.D. and R.A. Sedjo (1996), Valuation of Biodiversity for Use in New Product Research in a Model of Sequential Search. Discussion Paper 96–27 (July 1996), Resources for the Future, Washington D.C.
Simpson, R.D., R.A. Sedjo and J.W. Reid (1996), ‘Valuing Biodiversity for Use in Pharmaceutical Research’, Journal of Political Economy 104(1), 163–185.
Swanson, T. (1993), The International Regulation of Extinction. New York: MacMillan, London and New York University Press.
Swanson, T. and R. Luxmoore (1998), Industrial Reliance on Biodiversity, Cambridge: WCMC.
Weitzman, M. (2000), ‘Economic Profitability versus Ecological Entropy’, Quarterly Journal of Economics 115(1), 237–263.
Zadoks, J. and R. Schein (1979), Epidemiology and Plant Disease Management. Oxford: Oxford University Press.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Goeschl, T., Swanson, T. The Social Value of Biodiversity for R&D. Environ Resource Econ 22, 477–504 (2002). https://doi.org/10.1023/A:1019869119754
Issue Date:
DOI: https://doi.org/10.1023/A:1019869119754