7.3 Compensation or Internalization?
181
defined, or badly enforced, adequate incentives for the conservation of PGRF A
are not provided.
There are two alternative ways of implementing the idea of benefit sharing:
either a system of compensation for the utilization of PGRF A or the
internalization of existing or expected benefits. Different legal systems support
different approaches. TRIPS represents the possibility to internalize the social
benefits on the one hand, by developing some kind of protection system for
genetic resources (sui generis). On the other hand, the concept of Farmers' Rights
is aiming at a compensation solution testifying the moral right of farmers to be
acknowledged for the past, present, and future breeding efforts.
In principle, the internalization would be the most efficient way of organizing
and financing the conservation of PGRF A, if the transaction costs for developing
and maintaining a conservation and exchange system are smaller than the resulting
benefits. An appropriate response to the loss of biodiversity is the reduction of the
size of the feedback loops so that those who make decisions about resources use,
quickly feel the impact of their decisions (McNeely, 1996). This means, if the
expected value of PGRF A is internalized, the decisions at the farm level and at the
national level would take into account agrobiodiversity as a value. Hence, the
fixed link between the level of PGRF A diversity and state of production system
could be broken up. To reduce the size of the feedback loops in agriculture is,
however, more complicated than for biodiversity in general. The feedback loop for
the benefits resulting from one specific landrace will be too long for the normal
time frame of an individual decision-making process on the farm level 100.
Consequently, the dilemma is obvious: the value of genetically coded
information can seldom be determined a priori but only observed a posteriori, i.e.,
as a result of their success on the market. Hence, the internalization of benefits as
royalties (a posteriori) for individuals is not possible because of the
intergenerative structure of benefits. The internalization of benefits, as payment on
account (a priori), will seldom reflect the true use value of specific genetically
coded information.
A full internalization of the social benefits for the in situ conservation carried
out by individual farmers is impossible. Hence, without an internalization, the
incentive for farmers will not be high enough to conserve the social optimum. In
order to maintain a minimum area under each crop variety in situ, the conservation
and exchange system must provide mechanisms adequate to the situation sooner
or later.
At a national level, an internalization can be realized in a bilateral exchange
system. A complete internalization of the social benefits is, however, not feasible
at the moment, because of the intergenerational aspect of benefit arising as well as
the high transaction costs of enforcing a control system. Hence, a multilateral
exchange system (MUSE) with some bilateral elements, based on the concept of
compensation, seems to be the most operational system for the time being.
100 The benefits may arise after 15 and more years, representing the normal time lag in a
breeding program (Smith and Salhuana, 1996). In other words, the expected private benefit in
15 or more years will be discounted resulting in a very small or no present benefit.
181
defined, or badly enforced, adequate incentives for the conservation of PGRF A
are not provided.
There are two alternative ways of implementing the idea of benefit sharing:
either a system of compensation for the utilization of PGRF A or the
internalization of existing or expected benefits. Different legal systems support
different approaches. TRIPS represents the possibility to internalize the social
benefits on the one hand, by developing some kind of protection system for
genetic resources (sui generis). On the other hand, the concept of Farmers' Rights
is aiming at a compensation solution testifying the moral right of farmers to be
acknowledged for the past, present, and future breeding efforts.
In principle, the internalization would be the most efficient way of organizing
and financing the conservation of PGRF A, if the transaction costs for developing
and maintaining a conservation and exchange system are smaller than the resulting
benefits. An appropriate response to the loss of biodiversity is the reduction of the
size of the feedback loops so that those who make decisions about resources use,
quickly feel the impact of their decisions (McNeely, 1996). This means, if the
expected value of PGRF A is internalized, the decisions at the farm level and at the
national level would take into account agrobiodiversity as a value. Hence, the
fixed link between the level of PGRF A diversity and state of production system
could be broken up. To reduce the size of the feedback loops in agriculture is,
however, more complicated than for biodiversity in general. The feedback loop for
the benefits resulting from one specific landrace will be too long for the normal
time frame of an individual decision-making process on the farm level 100.
Consequently, the dilemma is obvious: the value of genetically coded
information can seldom be determined a priori but only observed a posteriori, i.e.,
as a result of their success on the market. Hence, the internalization of benefits as
royalties (a posteriori) for individuals is not possible because of the
intergenerative structure of benefits. The internalization of benefits, as payment on
account (a priori), will seldom reflect the true use value of specific genetically
coded information.
A full internalization of the social benefits for the in situ conservation carried
out by individual farmers is impossible. Hence, without an internalization, the
incentive for farmers will not be high enough to conserve the social optimum. In
order to maintain a minimum area under each crop variety in situ, the conservation
and exchange system must provide mechanisms adequate to the situation sooner
or later.
At a national level, an internalization can be realized in a bilateral exchange
system. A complete internalization of the social benefits is, however, not feasible
at the moment, because of the intergenerational aspect of benefit arising as well as
the high transaction costs of enforcing a control system. Hence, a multilateral
exchange system (MUSE) with some bilateral elements, based on the concept of
compensation, seems to be the most operational system for the time being.
100 The benefits may arise after 15 and more years, representing the normal time lag in a
breeding program (Smith and Salhuana, 1996). In other words, the expected private benefit in
15 or more years will be discounted resulting in a very small or no present benefit.