3.4 Incentives for the Conservation of PGRFA
71
considerations. Consequently, the area utilized for the cultivation of the
endangered variety will increase and will exceed the required aMSS and will
therefore increase the social opportunity costs, i.e., the social costs for foregone
increased food production by not utilizing the improved variety. The increased
social costs will be reflected in lower prices for the endangered variety in the next
planting season or year. On the other hand, the lower the risk premium, the lower
the number of farmers who will maintain the endangered variety due to private
benefit considerations.
In spite of the key position of the incentive price for the endangered variety
conserved in situ, the calculations are based on the expected total yield for the
defined aMSS. This gives an incentive for farmers to improve their "old" variety,
i.e., the endangered variety. Increasing the individual farmer's area productivity,
i.e., increasing yield per area, will payoff in terms of higher gross margins for
supplying the yield to the demander of genetic resources.
As a side-effect of the conservation of this variety, the improvement of the
endangered variety has private benefits for the farmer or group of farmers working
with the endangered variety. In addition to receiving higher gross margins by
supplying the yield to the demander, the improvement of a variety may have social
benefits as well. If the breeding process carried out by farmers results in the
change of the genetically coded information of the variety, the farmers will have
then produced an additional value, which must be credited as we1l
33 •
The flexibility of the prices, as determined by the annual or seasonal supply of
the endangered variety, is necessary for the self-regulating approach of the system.
The alternative to a self-regulating system with flexible prices would be either a
system handing out incentives to every farmer cultivating the endangered variety
by equalizing the differences in benefits of the endangered and improved variety
or to construct a fixed system distributing quota to the farmers. The first
alternative is a reduction of the incentive for agricultural improvement and
development, accepting a level of food production and consequently national food
security, which would be lower than the existing potential. The applied
opportunity costs of this alternative would be higher than the additional costs
arising from the introduction of the risk premium by the self-regulating system.
The second alternative to a self-regulating approach with flexible prices must
be analyzed more closely. Assuming that the objective of in situ conservation lies
in minimizing the utilized area for endangered variety to the aMSS without risking
the extinction of the variety and therewith allowing the highest possible
agricultural improvement and development to take place, an administration for
distributing and controlling quotas must be constructed or set up. The opportunity
costs of this alternative would therefore consist of the administration costs of the
system. In addition to these transaction costs, the opportunity costs would be
increased by the inflexibility of this system in reacting to changes on the supply
side.
" For more detail about protecting the breeding work of farmers see the discussion on
intellectual property rights in Chap. 4.
71
considerations. Consequently, the area utilized for the cultivation of the
endangered variety will increase and will exceed the required aMSS and will
therefore increase the social opportunity costs, i.e., the social costs for foregone
increased food production by not utilizing the improved variety. The increased
social costs will be reflected in lower prices for the endangered variety in the next
planting season or year. On the other hand, the lower the risk premium, the lower
the number of farmers who will maintain the endangered variety due to private
benefit considerations.
In spite of the key position of the incentive price for the endangered variety
conserved in situ, the calculations are based on the expected total yield for the
defined aMSS. This gives an incentive for farmers to improve their "old" variety,
i.e., the endangered variety. Increasing the individual farmer's area productivity,
i.e., increasing yield per area, will payoff in terms of higher gross margins for
supplying the yield to the demander of genetic resources.
As a side-effect of the conservation of this variety, the improvement of the
endangered variety has private benefits for the farmer or group of farmers working
with the endangered variety. In addition to receiving higher gross margins by
supplying the yield to the demander, the improvement of a variety may have social
benefits as well. If the breeding process carried out by farmers results in the
change of the genetically coded information of the variety, the farmers will have
then produced an additional value, which must be credited as we1l
33 •
The flexibility of the prices, as determined by the annual or seasonal supply of
the endangered variety, is necessary for the self-regulating approach of the system.
The alternative to a self-regulating system with flexible prices would be either a
system handing out incentives to every farmer cultivating the endangered variety
by equalizing the differences in benefits of the endangered and improved variety
or to construct a fixed system distributing quota to the farmers. The first
alternative is a reduction of the incentive for agricultural improvement and
development, accepting a level of food production and consequently national food
security, which would be lower than the existing potential. The applied
opportunity costs of this alternative would be higher than the additional costs
arising from the introduction of the risk premium by the self-regulating system.
The second alternative to a self-regulating approach with flexible prices must
be analyzed more closely. Assuming that the objective of in situ conservation lies
in minimizing the utilized area for endangered variety to the aMSS without risking
the extinction of the variety and therewith allowing the highest possible
agricultural improvement and development to take place, an administration for
distributing and controlling quotas must be constructed or set up. The opportunity
costs of this alternative would therefore consist of the administration costs of the
system. In addition to these transaction costs, the opportunity costs would be
increased by the inflexibility of this system in reacting to changes on the supply
side.
" For more detail about protecting the breeding work of farmers see the discussion on
intellectual property rights in Chap. 4.