Economic Benefits and Costs of Biotechnology Innovations in Agriculture

GianCarlo Moschini
June 2001  [01-WP 264]

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Moschini, G. 2001. "Economic Benefits and Costs of Biotechnology Innovations in Agriculture." Working paper 01-WP 264. Center for Agricultural and Rural Development, Iowa State University.


The conceptual model necessary for an assessment of biotechnology's economic benefits and costs is outlined, emphasizing the need to account for the proprietary nature of biotechnology innovations. The model is illustrated with an application to Roundup Ready soybeans. The estimated value of this innovation is sizeable, with consumers and innovators claiming the larger share of net benefits. Also, disparities in intellectual property rights protection across countries affect the distribution of benefits. Consumer resistance toward genetically modified organisms (GMOs) and the issues of labeling and market segregation complicate the economic evaluation of biotechnology innovations, and a number of related regulation and public policy issues are discussed. Emerging output-trait GMOs are potentially less controversial and ma y bring more benefits to all participants in the agri-food sector, but this outcome depends crucially on the development of an effective, credible, and internationally harmonized regulatory system.