In the latest issue of UC Berkeley’s Department of Agriculture and Resource Economics’ bimonthly publication, the ARE Update, Justus Wesseler, Scott Kaplan, and David Zilberman analyze the economic impacts of regulatory decisions to delay the adoption of golden rice. This interesting discussion in “The Cost of Delaying Approval of Golden Rice” explores the controversial role of genetically modified (GM) crops in developing countries.
Every year, vitamin A deficiency causes 250,000 to 500,000 children to go blind, half of whom die within a year of losing their sight. The majority of people around the world who suffer from vitamin A deficiency live in countries, like India or Bangladesh, where rice is a staple crop. In addition to blindness, the 125 million children under the age of five who suffer from this deficiency have an increased vulnerability to common childhood infections, such as higher likelihood of anemia and poor growth.
A solution to this problem has been to add vitamin A to rice through genetic modification. The Golden Rice prototype was first developed in 1999. In 2000, the Golden Rice Humanitarian Project and Syngenta Corporation established a public-private partnership with the aim of Golden Rice passing regulatory approval process and bringing it to market. This goal hasn’t come to fruition, as India and Bangladesh still have not approved the product. Many opponents of Golden Rice fear that it’ll serve as a “Trojan Horse” for GM crops, leading to the wide-scale adoption of GE food in developing countries. A wide body of literature has shown that so far Golden Rice and other GE varieties do not produce greater health or environmental risks than non-GE varieties.
In order to assess the economic impacts, the authors have quantified the costs and benefits of the regulators’ decision to delay regulatory approval. If the regulators are indeed rational, then the benefits of improved information through delaying decision outweighs the cost of delay, which are the net benefits from adoption of Golden Rice. The net benefits are the sum of discounted net benefits of reduced incidents of vitamin A deficiency induced health problems minus the cost of introduction and adoption of technology. The estimated foregone benefits are measured starting in 2002 assuming an adoption rate of 30%. The unit of measurement for foregone benefits is a disability-adjusted life year (DALY). The estimated number of DALYs lost due to lack of Golden Rice since 2002 is between 1.4 – 2 million people. If we assume the very low value of DALY at USD $500, then the net present value (NPV) of a ten-year delay is USD $707 million. This is a very conservative estimate; if we increased DALY to USD $2000, then the NPV would be USD $2.83 billion. The cost of introduction and adoption of technology is minimal compared to the benefit from improved health of Golden Rice adoption.
In comparison, the calculated benefits of delay (the perceived risks) are only USD $1.7 billion since 2002. This figure is lower compared to the cost of delay (net benefits) of USD $2.38 billion. So where does this irrational perceived cost of Golden Rice originate? As mentioned before, many environmental groups, such as Greenpeace, fear that introduction of Golden Rice would accelerate adoption of other GE crops. However, a growing body of literature suggests that GE varieties have produced significant benefits worldwide. Although the GE varieties are mostly limited to corn, soybean and canola in the US, Canada, Brazil and Argentina, it has had an immense impact in increasing productivity. In the absence of GE crops, soybean prices would have been 33% higher and corn prices 13% higher. GE adoption in African and European countries would lead to decreased land footprint and use of energy intensive inputs, such as fertilizer and water.
The full potential of GM crops to save human lives and benefit the environment has yet to be realized. Wesseler, Kaplan and Zilberman conclude that the delay in Golden Rice adoption has been costly in both economic terms and number of human lives. In this fight over GM crops, it has been the poor in developing countries who have paid the price.
What is your experience with Golden Rice? What are your thoughts on the introduction of GM crops in developing countries? Share your thoughts and comments below.
To read the original article, view it here at: http://giannini.ucop.edu/media/are-update/files/articles/V17N3_1.pdf
 Professor of Agriculture and Food Economics at Technical University Munich, Center of Life and Food Sciences Weihenstephen
 Research Assistant at Energy Biosciences Institute (EBI) at UC Berkeley
 Professor in the ARE Department at UC Berkeley