Areas of relatively low use of modern maize varieties © CIMMYT (M. Morris)

Updated Economics Bibliography

  Biodiversity Research with IFPRI
 

Economics of On Farm Conservation: Case Studies 

Conserving Valuable Crop Genetic Resources as Economies Develop

Which economic factors influence farmer management of diversity?

What is the value to farmers of genetically diverse crop varieties?

What other benefits do genetically diverse crop varieties provide to society?

Where are the least-cost sites for on farm conservation of crop genetic diversity?

Which strategies and policies serve to enhance the value to farmers of genetically enhanced crops?
 

Agrobotany Institute, Institute of Environment and Landscape Management, Faculty of Agriculture and Environmental Sciences, Svent Istvan University, Godollo, HUNGARY

National Agricultural Research Council (NARC), Local Initiatives for Biodiversity, Research, and Development (LI-BIRD), NEPAL

Institut National de la Recherche Agronomique (INRA), Hassan II Universite, MOROCCO

University of Ougadougou, University of Bobo-Dioulasso, Ministry of Agriculture, BURKINA FASO

  National Bureau of Plant Genetic Resources, INDIA

  University of Mekele, ETHIOPIA 
 

Since the 1970s, large numbers of landraces and wild relatives of cultivated crops have been sampled and stored in ex situ gene banks. An alternative form of conservation, in situ, has also received scientific attention, though it raises intricate social and economic issues. For cultivated crops, conservation of genetic resources in situ refers to the continued cultivation and management by farmers of crop populations in the agroecosystems where the crop has evolved.   Storing genetic resources in collections as back-up seed stocks in ex situ collections therefore substitutes imperfectly for the evolution of crop plants in the fields of farmers.

Not only do genetic resources evolve differently when conserved ex situ and in situ, but the distributions of their economic benefits and costs also differ in fundamental ways. The costs of genetic resource conservation in gene banks are now borne largely by public investments, and consumers (as well as farmers who are consumers) benefit indirectly from the genetic resources incorporated into improved crop varieties when output expands and prices decline. By contrast, both the costs and benefits of conserving genetic resources in situ are felt directly (and in a very immediate sense) by the farmers who grow them.  These costs and benefits change as economies develop and farmers face new opportunities. The costs of ex situ conservation involve gene bank operations and the opportunity costs of investment. 

IPGRI's economic research explores the costs and benefits of crop genetic resource conservation on farms and in gene banks.

Diversity on Farms as Economies Develop

Diverse crop genetic resources on farms can generate multiple types of benefits, including commercial and non-commercial benefits for the farmers who grow them today (private value), and benefits for the society in general (public value), such as resources conserved for future generations and support to healthier ecosystems (see Figure 1). Least cost conservation will occur in sites that are most highly ranked in terms of public benefits and where, because the private benefits farmers obtain from growing genetically diverse varieties is greatest, public interventions to encourage them to do so will be least.  At these sites, private and social costs will both be relatively low.  Combining empirical estimates of current use value and genetic diversity enables the identification of least cost sites for on farm conservation, depicted in the shaded portion below (Smale et al. 2001)

Figure 1. Least-cost sites for on farm conservation

With national partners, IPGRI is studying prospects for on farm conservation as economies develop and farmers' opportunities change.  In marginal areas of Burkina Faso where farmers produce sorghum and millet primarily for their own consumption, researchers will elicit farmers' perceptions of trait varieties and their relative importance, using matrix ranking and other social science research methods.  In Nepal, farmers choose to grow various combinations of modern rice varieties and landraces depending on differences in market development among sites (See Table 1). 

Table 1. Farmer cultivation of different rice types and allocation of rice area in Nepal.

Note: Pairwise t-tests show significant difference of means between sites at the 0.05 level with two-tailed test: (*) Bara-Ksaki; (**) Kaski-Jumla; (***) Bara-Jumla.  Chi-square tests show significant difference in percentage distributions by site at 0.05 level (+).
Source: Nepal in situ conservation project, LI-BIRD, Nepal.

As economies develop, markets play a powerful role in shaping farmers' choices and use of cultivar diversity.  In a pilot study in Bara Ecosite, Nepal-Terai, the research team found that except for traditional Basmati rice, most rice landraces are traded through small-scale, informal channels in which market signals for their superior qualities are weak relative to those expressed for modern varieties (Gauchan et al. 2001). Their market surveys suggested some causes of market failure for rice landraces:

• Limited volumes of marketed landraces result in trading volumes that are not economic.

• Lack of consumption credit and storage facilities that would enable farmers to participate in markets during periods when rice prices are more favourable.

• Information asymmetry between producers and purchasers regarding the potentially valuable traits of landraces, such as their agronomic performance and their superior eating and cooking qualities. Information problems are reflected in few, highly personal marketing channels with high transaction costs and/or marketing of mixed products.

• Less desirable and heterogeneous appearance of coarse-grained landraces on local markets is reflected in lower prices offered by consumers due to diminished consumer demand.

Project partners come from countries that represent a range of economic classifications. Burkina Faso and Nepal are classified as low- income countries according to Gross National Product (GNP). Morocco, where related economic research will begin, is classified as a lower–middle income country.  

By contrast, Hungary is categorized as an upper-middle income country with an industrialized economy.  There, an economics research team will investigate the role of landraces in promoting multifunctional agriculture—a term which refers to the provision of private and public benefits such as those depicted in Figure 1. Multifunctional agriculture includes biodiversity, amenity values, cultural heritage, food safety, and food security. The European Union's Common Agricultural Policy is moving towards a multifunctional approach and away from an emphasis on agricultural intensification. Hungary is currently seeking accession to the European Union. The project team will examine ecosystem health and agrobiodiversity benefits associated with landraces grown on small farms in environmentally-sensitive areas. In the meantime, they will begin to look for niche markets for specialized products, such as quality range-fed poultry, in which grain from landraces serves as an input. 

In-depth studies based on survey data and genetic analyses lead to the recommendation of policies that effectively support the conservation of crop genetic resources on farms.  For example, research teams in Morocco and Nepal are investigating the costs and benefits of various strategies designed to enhance the value of landraces to farmers, including improved seed preparation and farmer participatory plant breeding (Jarvis et al. 2000).  Other policies, such as trademarks or labels designating origin, are already under discussion in advanced market economies.

Aside from support from IPGRI's In Situ Project, many of these case studies are funded through the BioEcon: Biodiversity and Economics for Conservation project, funded by the EU.  The BioEcon project has three overarching objectives:

• Advancing economic theory on incentive mechanism design

• Applying economic analysis in biodiversity conservation case studies

• Developing policy implications and dissemination

Some priorities of BioEcon are to reconcile the conservation of biodiversity with economic development, and to encourage compatibility between international environmental policies and links with trade. IPGRI's case studies help to evaluate the ways that varying economic and environmental contexts affect the conservation of agricultural diversity.

  Link to IPGRI's In Situ Project page

  Link to IPGRI's Socioeconomics page

Sources:

Gauchan, D., P. Chaudhary, B. Sthapit, M.P. Upadhaya, M. Smale, D. Jarvis. 2001.  An analysis of market incentives for on farm conservation of rice landraces in Bara Ecosite, Nepal-Terai.  Manuscript, LI-BIRD, Nepal.

Jarvis, D.I., L. Myer, H. Klemick, L. Guarino, M. Smale, A. Brown, M. Sadiki, B. Sthapit, and T. Hodgkin.  2000.  A Training Guide for In Situ Conservation On-Farm.  Version 1.  IPGRI, Rome, Italy.

Smale, M. and M.R. Bellon.  1999. A conceptual framework for valuing on-farm genetic resources. In D. Wood and J. Lenne (eds.), Agrobiodiversity: Characterization, Utilization, and Management.  Wallingford, CAB International.

Smale, M., M.R. Bellon, D. Jarvis, and B. Sthapit.  2001. Economic concepts for designing policies to conserve crop genetic resources on farms.  Manuscript, IPGRI, Rome.

Assessing Value and Efficiency in Gene Banks

Although an estimated 6 million samples of plant genetic resources are held in national, regional, international and private gene bank collections around the world, our understanding of the costs of maintaining these collections and the utilization of materials from these collections is limited.  What is the nature of the demand for germplasm by the global scientific community? How does this demand vary by the economic conditions in which scientists work and the needs of the countries and communities they serve?

Conservation Costs. The cost of maintaining crop genetic resources in ex situ collections is currently being analysed for crops with self-, cross-, and clonal breeding systems in a selection of CG centers, by SGRP and IFPRI.  IPGRI is also investigating other cost implications of conservation strategies, such as lumping or splitting accessions (Sackville-Hamilton et al. 2001).  The cost structures for national banks are likely to differ from those of the CG centers because of physical conditions, size, materials and labor. They are also likely to differ tremendously between developing and advanced economies. 

CGIAR Systemwide Genetic Resources Program (SGRP)
International Food Policy Research Insitute (IFPRI)

Conservation Benefits. To assign monetary value to the benefits generated by crop genetic resources conserved in ex situ collections is exceedingly difficult because they have multiple dimensions. The use of germplasm in plant breeding leads to changes in crop output, and breeders' requests represent the demand for germplasm that is derived from the demand for the crop in production and trade. But there are many other uses to which germplasm samples may be put that contribute to the advancement of scientific knowledge. Furthermore, requests for materials held in banks are only an indicator of their current value in use. The value of crop genetic resources conserved in ex situ collections includes not only current use value and expected future use value, but also option value, associated with the flexibility to respond to some unknown, future event.

Through quantitative analysis of the types of materials requested by different countries and institutions, we gain insights into the nature of benefits generated by ex situ collections. A first logical step is to document in a quantitative way the number of requests for germplasm of different types and the purpose for which they were requested. Such information is being compiled for CGIAR collections by SINGER, the CGIAR Systemwide Information Network for Genetic Resources.  For large national collections, a combination of database records and requestor surveys can provide essential information. The next step would be more detailed investigation of how such germplasm has been utilized through a focused survey of requestors, such as those implemented through the IPGRI Project 'Linking Conservation and Use'.  For smaller banks, records may not be fully assembled or digitized.  Studies of this type generate important information about where the value of conserved resources lies--for example, in generating new scientific knowledge that contributes indirectly to technical change or in generating more direct production benefits through contributing to the release of improved varieties. 

Relatively few case studies have attempted to estimate the benefits from conserving accessions in gene banks. Gollin et al. (2000) studied several cases of the search for resistance among germplasm stored in the CIMMYT wheat collection, drawing inferences about the optimal size of collections and the conditions under which marginal accessions may or may not have high value. Figure 2 below shows that where the probability of finding resistance is high, as in the case of resistance to Russian Wheat Aphid in a group of landraces, the optimal size of search may be relatively small (slightly over 9000 accessions). The optimal size of search is given by the intersection of the marginal cost and marginal benefit curves. In the most favorable scenario, however, the authors found that the optimal size of search is larger than the number of landraces in the CIMMYT collection and the benefits are so great relative to costs that a search of all accessions is justified. Even if breeders were to use materials held in collections only rarely, these events may be associated with exhaustive searches and substantial economic value for large collections. 

Figure 2. Probabilities of success, marginal costs, and marginal benefits of searching for Russian Wheat Aphid resistance in a sample of Triticum aestivum landraces.

IPGRI's economics research is attempting to advance these valuation methodologies.

Sources:

Fowler, C., M. Smale, and S. Gaiji. 2000. Germplasm flows between developing countries and the CGIAR: An initial assessment.  Paper prepared for the Global Forum on Agricultural Research, FAO and IPGRI, Rome.

Gollin, D., M. Smale, and B. Skovmund. 2000. Searching an ex situ collection of wheat genetic resources. American Journal of Agricultural Economics 82(4): 812–827.

Sackville-Hamilton, N.R., J.M.M. Engels, J.L. van Hintum, B. Koo and M. Smale. 2001.  Optimising the genetic composition of genebank accessions.  Draft Technical Bulletin, IPGRI, Rome. 

Smale, M., A. Zohrabian, K. Day-Rubenstein, and T. Hodgkin.  2001.  Generating multiple benefits from an ex situ collection: A survey of international users of the U.S. National Plant Germplasm system. Manuscript, IPGRI, Rome.

Activity Coordinator and Staff

Dr Melinda Smale, Senior Economist, IPGRI, and Visiting Research Fellow, IFPRI.
See below some of Melinda Smale's selected publications: 

• Benin, S. M. Smale, B. Gebremedhin, J. Pender, and S. Ehui. 2003. The determinants of cereal crop diversity on farms in the Ethiopian highlands. EPTD Discussion Paper No. 105. Washington D.C.: IFPRI.

• Gollin, D. , M. Smale, and B. Skovmand. 2000. Searching an Ex Situ Collection of Wheat Genetic Resources. American Journal of Agricultural Economics, 82 (4): 812-827.

• Smale, M; Bellon, M. R.; Aguirre, J. A.; Rosas, I. Manuel; Mendoza, J.; Solano, A. M.; Martínez, R.; Ramírez, A.; Berthaud, J. 2003. The economic costs and benefits of a participatory project to conserve maize landraces on farms in Oaxaca, Mexico. Agricultural Economics, 29(3): 265-275.

• Smale, M., M. Bellon, and A. Aguirre. 2001. Maize Diversity, Variety Attributes, and Farmers' Choices in Southeastern Guanajuato, Mexico. Economic Development and Cultural Change, 50(1): 201-225.

• Smale, M., and K. Day-Rubenstein. 2002. The Demand for Crop Genetic Resources: International Use of the U.S. National Plant Germplasm System. World Development, 30(9): 1639-1655.

• Smale, M., M.P. Reynolds, M. Warburton, B. Skovmand, R. Trethowan, R.P. Singh, I. Ortiz-Monasterio, J. Crossa. 2002. Dimensions of Diversity in Modern Spring Bread Wheat in Developing Countries since 1965. Crop Science, 42: 1766-1779.

• Smale, M. and B. Koo (eds.) Genetic Resources Policies: What is Gene Bank Worth? Research at a Glance. Briefs 7-12. IFPRI, 2004.

• Smale, M., M. R. Bellon, D. Jarvis, and B. Sthapit. 2004. Economic concepts for designing policies to conserve crop genetic resources on farms. Genetic Resources and Crop Evolution 51: 121–135.

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