70
3 Economic Framework of Conservation
price Pi! will, however, be paid only as long as the supplied quantity equals the
expected yield resulting from the aMSS of the endangered varietl
2 •
The supply will be higher than calculated if more farmers have cultivated the
endangered variety, or if the same amount of farmers have cultivated the
endangered variety on more land, or the average yield increased. Consequently,
the price for one kg yield will be reduced, because the conservator is only
interested in his or her fixed reference system.
On the other hand, if the supply is less than expected because of a decrease in
cultivated area, the price for each kg yield of the endangered variety will increase.
Thereby, the general premises for this self-regulating system will change.
Consequently, the basic assumptions for the system must be verified every time
and - if necessary - adjusted. The regular time interval for adjusting the system's
premises depends on:
• the rate of adjustment of the system's premises;
• the rate of farmers' breeding success for the endangered variety;
• the rate of breeding success for the improved variety;
• the rate of price changes for the endangered variety;
• the rate of price changes for the improved variety;
• the rate of new scientific research results concerning the aMSS for the specific
endangered variety.
Because of the self-regulating approach there is one inherent risk in the system:
theoretically it may happen that in one year the cultivated area of the endangered
variety will fall below the aMSS. This may happen because of an over-supply of
the endangered variety in one year, with the consequence of reduced prices for the
endangered variety, which will reduce the incentives for farmers to go on
cultivating the endangered variety in the next season and the next year. Even
assuming the worst scenario that no farmer cultivates the endangered variety for
one year or a season and that all seed is therefore lost, this does not mean that the
controlled in situ conservation is failing. The conservator demanding the in situ
conserved variety will always have seed from the years before to supply the
farmers, consequently there is no risk of losing the endangered variety.
Additionally, if the regulated price for the endangered variety is not incentive
enough for the farmers to continue to cultivate the endangered variety, the
demander is always capable of increasing the incentive by increasing the risk
premium up to a level resulting in enough cultivated area.
As can be seen, the risk premium is a major element in this self-regulating
system. It is an important incentive for a secure in situ conservation of a specific
endangered variety in times of a deficiency in cultivated area. The risk premium
will encourage enough farmers to cultivate an endangered variety although some
alternatives exist. On the other hand, the risk premium serves to encourage enough
farmers to supply the yields of an endangered variety to the market site.
The higher the risk premium, the higher will be the number of more farmers
averse to risk who will maintain the endangered variety because of private benefit
" The supplied quantity is based on the actual area cultivated and the actual average yield.
3 Economic Framework of Conservation
price Pi! will, however, be paid only as long as the supplied quantity equals the
expected yield resulting from the aMSS of the endangered varietl
2 •
The supply will be higher than calculated if more farmers have cultivated the
endangered variety, or if the same amount of farmers have cultivated the
endangered variety on more land, or the average yield increased. Consequently,
the price for one kg yield will be reduced, because the conservator is only
interested in his or her fixed reference system.
On the other hand, if the supply is less than expected because of a decrease in
cultivated area, the price for each kg yield of the endangered variety will increase.
Thereby, the general premises for this self-regulating system will change.
Consequently, the basic assumptions for the system must be verified every time
and - if necessary - adjusted. The regular time interval for adjusting the system's
premises depends on:
• the rate of adjustment of the system's premises;
• the rate of farmers' breeding success for the endangered variety;
• the rate of breeding success for the improved variety;
• the rate of price changes for the endangered variety;
• the rate of price changes for the improved variety;
• the rate of new scientific research results concerning the aMSS for the specific
endangered variety.
Because of the self-regulating approach there is one inherent risk in the system:
theoretically it may happen that in one year the cultivated area of the endangered
variety will fall below the aMSS. This may happen because of an over-supply of
the endangered variety in one year, with the consequence of reduced prices for the
endangered variety, which will reduce the incentives for farmers to go on
cultivating the endangered variety in the next season and the next year. Even
assuming the worst scenario that no farmer cultivates the endangered variety for
one year or a season and that all seed is therefore lost, this does not mean that the
controlled in situ conservation is failing. The conservator demanding the in situ
conserved variety will always have seed from the years before to supply the
farmers, consequently there is no risk of losing the endangered variety.
Additionally, if the regulated price for the endangered variety is not incentive
enough for the farmers to continue to cultivate the endangered variety, the
demander is always capable of increasing the incentive by increasing the risk
premium up to a level resulting in enough cultivated area.
As can be seen, the risk premium is a major element in this self-regulating
system. It is an important incentive for a secure in situ conservation of a specific
endangered variety in times of a deficiency in cultivated area. The risk premium
will encourage enough farmers to cultivate an endangered variety although some
alternatives exist. On the other hand, the risk premium serves to encourage enough
farmers to supply the yields of an endangered variety to the market site.
The higher the risk premium, the higher will be the number of more farmers
averse to risk who will maintain the endangered variety because of private benefit
" The supplied quantity is based on the actual area cultivated and the actual average yield.