Researchers have long been aware of the importance of genetic diversity in agroecosystems. At one level, diversity can provide ecosystem services to agriculture: for example, beneficial insects and soil organisms can contribute to crop health and reduce the need for agricultural chemicals.1 At another level, plant breeders and other scientists rely on genetic resources for crop improvement and other technological advances. Traditional plant breeding and newer biotechnologies make it possible to incorporate desirable traits into crop varieties; this implies that crop landraces, wild relatives, and other species have value as sources of desirable genetic traits.

To many agricultural scientists and other biologists, it seems self-evident that genetic diversity has economic value and that genetically diverse ecosystems are valuable resources. Many biologists take the view that, since all life depends on genetic resources, their value must be infinite. The protection of all biodiversity (and certainly of diversity in crop plants) should be a fundamental priority, in this view. For example, Frankel et al. (1995) write that, "[T]he species serving humanity and the communities safeguarding life and its diversity are of immense value. The highest priority the human species can confer must go to their conservation. ..." Other authors voice similar views. Ehrenfeld (1988) argues specifically that economic criteria are inadequate and inapplicable to thinking of the broader "value" of biological diversity:

Value is an intrinsic part of diversity; it does not depend on the properties of the species in question, the uses to which particular species may or may not be put, or their alleged role in the balance of global ecosystems. For biological diversity, value is. Nothing more and nothing less. No cottage industry of expert evaluators is needed to assess this kind of value. (p. 214; author's emphasis)

Ehrenfeld goes on to argue that economists are fundamentally unable to account for many of the most important aspects of value. One reason is the lack of adequate biological knowledge about the functions of genes, species, and ecological commu

1 See, for example, Tilman's studies of the contributions that biodiversity makes to the level and stability of biomass production per unit area (e.g., Tilman, 1997).

nities. A second reason that Ehrenfeld cites is the difficulty of putting values on such intangible benefits as the satisfaction that people derive from the continued existence of pristine environments. A third reason he gives is that the utilitarian principle underlying economic valuations (the insistence on measuring net benefits to humans) is inherently inadequate as a way to value the natural world. "The very existence of diversity is its own warrant for survival," Ehrenfeld argues. "As in law, long-established existence confers a powerful right to a continued existence."

Arguments such as Ehrenfeld's have power, dignity, and deep ethical appeal. Without taking issue with such viewpoints, this chapter will add to the "cottage industry" of discussing the economic value of genetic resources. We focus specifically on the case of agroecosystems. Perhaps the justification for an economic perspective is more readily apparent in the case of agroecosystems. Since agriculture inherently involves the management of ecosystems for the benefit of humans, there can be little reason to dispute the utilitarian premise of economic analysis. By the same token, we have relatively little hesitation valuing genetic resources for agro-ecosystems in terms of their current and potential use values.

Ehrenfeld's first point, however, has substantial relevance for our work. Economists and agricultural scientists do not yet have much information about the extent or potential value of genetic diversity for agroecosystems. There are few data yet available about the degree of genetic variation within the Oryza genus for rice, for example, or within the Triticum genus for wheat. Researchers are currently working to map the rice genome, but it will be some time before the genetic bases for resistance to major diseases and pests will be well understood. For more-complex traits, such as yield potential, this understanding will require even longer.

In the meantime, important decisions must be made about the allocation of resources for the protection and conservation of genetic diversity for agroecosystems. How much is it worth to collect the remaining varieties of wheat from farms in eastern Turkey? Should we build additional gene banks for ex situ storage of barley varieties? Does the rationale for conserving wheat and rice varieties extend to spelt? Does it extend to eggplant? To parsley? Is there a reason to encourage the cultivation of "genetically diverse" plots of crop varieties or to encourage the conservation of traditional varieties in farmers' fields? Economists tend to approach such questions with a particular concern for costs and trade-offs. Unlike some environmentalists, economists generally believe that the costs of conserving genetic resources should be viewed seriously, and that the benefits should be quantified to the greatest possible extent (see, for example, Brown, 1990).2 Generally speaking, economists have been more skeptical than biologists concerning the need to protect all forms of genetic diversity. As Brown (1990) notes, "[I]f we can't save all species, we need a ranking based on one or more criteria, from which we select the highest ranked for conservation." This view — which would undoubtedly be considered heretical by most biologists — is readily accepted by many economists.

2 See also Evenson, R. E., Genetic resources: assessing economic value, manuscript, Yale University, Department of Economics, New Haven, CT, 1993; also Wright, B. D., Agricultural genetic resource policy: towards a research agenda, paper prepared for presentation at the Technical Consultation on Economic and Policy Research for Genetic Resource Conservation and Use, International Food Policy Research Institute, Washington, D.C., June 21-22, 1995.

To an economist, it is of central importance to consider the value of genetic resources and genetically diverse agroecosystems (and even to assign dollar values, where possible). Without such information, we are forced to make decisions on an arbitrary basis. Even crude economic methods can offer valuable insights and can help in setting priorities.

This chapter reports on recent conceptual and empirical work concerning the valuation of genetic resources for agriculture, with particular attention to the role of diversity within agroecosystems. The next section reviews current concerns over diversity and summarizes economic theory and concepts pertaining to the valuation of genetic resources. The third section reviews some of the empirical studies that have sought to value genetic diversity for agriculture. The fourth section assesses the implications of these empirical studies and other research for programs of conservation of agricultural biodiversity. The last section offers some assessments and concluding remarks.


Economists have long recognized the importance of biologically diverse farming systems and have helped to draw attention to the multiple objectives of farm households. A substantial literature in household economics and farming systems analysis has analyzed farm-level decision making. Much of this literature has studied the portfolio choice of farm households: in other words, the ways in which different farm and on-farm activities are chosen to achieve multiple objectives, including high economic returns and reductions in risk. Implicit in this literature is an interest in farmers' efforts to diversify production of agricultural crops through mixes of species and varieties. In recent years, a number of studies have sought to assign a value to genetic diversity in agriculture by showing how diversity is a private good; in other words, how individual farmers benefit from incorporating genetic diversity into their farming systems.3 A related question is the social benefit that is derived from diversity (for example, reductions in aggregate production variability that may be obtained if different farmers choose different varieties, so that an aggregate level of diversity is maintained).

But genetic diversity has values that extend beyond the static function of diversifying production and consumption choices. Increasingly, economists are focusing their attention on the value of genetic diversity as an input into the production of new crop technologies. Genetic resources are used to breed new crop varieties and to improve agricultural technologies (e.g., pest control through Bacillus thuringien-sis). Landraces and other crop varieties can be important future sources of disease and pest resistance, and hence can be viewed as forms of insurance.4 For all these reasons, the total economic value of genetic diversity extends beyond the short-run private value that farmers attach to it.

3 For example, farmers might benefit from growing varieties with different taste or consumption characteristics, or from choosing varieties that are adapted to different microclimates or production locations.

4 Perrings (1995) articulates the view that biodiversity conservation should be viewed as a form of insurance payment.

The following sections describe some of the concerns and directions of recent economic research. We begin by considering the issues that have focused public attention on genetic diversity in agriculture. We then ask how the concepts and methods of resource economics can help to assess the value of genetic resources in agroecosystems. Finally, we discuss the limitations of these methods.

Popular Concerns: Perception and Misperception

Much of the concern over genetic diversity for agroecosystems involves three widespread (and related) perceptions. The first is the notion that modern agriculture has caused genetic erosion, a term which encompasses the loss of traditional varieties. The second is the idea that modern crop varieties and agroecosystems are increasingly uniform, rendering crops extremely vulnerable to pests, diseases, and other pathogens. The third is the view that genetic resources are scarce in agriculture, i.e., that there is a problem with the adequacy of genetic resources for agriculture. This last view is most commonly expressed in terms suggesting that modern agriculture is based on a precariously narrow stock of genetic diversity.

In all three cases, popular concerns are based largely on anecdotes. With regard to the first concern, no causal relationship between the Green Revolution and genetic erosion can be established for bread wheat, given the difficulties in measuring genetic erosion on such a large scale and of demonstrating causality. The patterns of genetic variation in farmers' wheat fields have undoubtedly changed over the past 200 years with increasing cultivation of varieties released by plant-breeding programs, but the implications of these changes for the scarcity of useful genetic resources are unclear. As expressed succinctly by Wood and Lenne (1997), the assumption that the spread of modern varieties has been mainly responsible for an overall loss of traditional varieties "goes beyond our knowledge of the facts of genetic erosion." Historical sources also demonstrate that most of the areas in which the Green Revolution has had its greatest impact are high potential areas (not ancient centers of crop diversity) which were targeted by local plant breeders and widely planted to the products of their efforts since at least the early years of this century (Gill, 1978; Pray, 1983; van der Eng, 1994).

With regard to the second concern, the evidence assembled in Smale (1997) and Smale and McBride (1996) suggests that, in the major wheat-growing areas of the developed and developing world, concentration among leading cultivars has tended to decline as agricultural research and seed systems have matured. Semidwarf varieties of bread wheat are in general more resistant to major pests and diseases, such as the wheat rusts, than either traditional varieties or the taller varieties previously released by breeding programs. They now incorporate broader and more-durable types of resistance (Rajaram et al., 1996).

Finally, the stock of genetic diversity for agriculture remains relatively untapped. There are many varieties (indeed many species) that have not yet been exploited. Given the size of the genomes of agricultural crops and given the increasing feasibility of incorporating genes from wild relatives or unrelated species through biotechnology and other breeding techniques, it does not seem useful to think of genetic combinations as determinate in number. In a recent study, Rasmussen and Phillips

(1997) show that genetic gains were made in barley based on a very narrow genealogical base. They question the generally held belief that the variation on which selection is based in elite gene pools is provided only by original ancestors, and hypothesize that the contributions of newly generated variation and gene interactions are underestimated. On all three counts, then, current concerns appear misplaced.

Conceptualizing the Sources of Economic Value

To point out the possible inaccuracies of popular concerns about the "loss" of genetic material for agriculture is not to argue against the value of crop genetic resources. From an economic perspective, genetic diversity has multiple sources of value. A number of surveys have discussed these sources of value. (See, for example, Brown, 1990; Pearce and Cervigni, 1994; Pearce and Moran, 1994; or Perrings et al., 1995.5)

Perrings et al. (1995) suggest that it is useful to consider the total economic value of genetic diversity as consisting of "use values" and "non-use values," with perhaps a broader valuation including noneconomic or "nonanthropocentric instrumental value." Use values can be further disaggregated. One form of use value is the direct benefits of genetic diversity to consumers and producers, such as the increased satisfaction that comes from having a dozen apple varieties from which to choose, or the increased productivity that arises through genetic crop improvements. A second category of use value is the indirect benefits that people receive from ecosystem functioning. Examples include the contribution of earthworms to soil tilth, or of wetlands to flood control (e.g., Brown, 1990). A third type of use value would include the future "option value" and "quasi-option value" of retaining for the future the possibility of using a resource or of acquiring information about that resource.

Use values are distinguished from non-use values (sometimes called "existence values"), which reflect the pleasure that people derive from the sheer existence of genetic diversity (without any regard for the usefulness of diversity). Thus, people may derive some value simply from knowing that elephants exist or that rain forests are being conserved. In considering genetic resources for agriculture, however, such existence values are seldom of much importance. Relatively few people derive satisfaction from the sheer existence of 80,000 rice varieties, but the use values are substantial. By the same token, for other biological resources, existence values may greatly outweigh use values. Few people derive much direct productive value from the Bengal tiger, but many people value its continued existence.6

In most cases, then, it is use values that are relevant for agricultural genetic diversity. More specifically, we will be interested in genetic diversity as it contributes to expanded consumer choice and satisfaction and as it directly or indirectly enhances

5 See Swanson, T., The values of global biodiversity: the case of PGRFA, paper prepared for presentation at the Technical Consultation on Economic and Policy Research for Genetic Resource Conservation and Use, International Food Policy Research Institute, Washington, D.C., June 21-22, 1995.

6 It is worth noting, however, that economists have made great use of models in which consumers are thought to have a "preference for variety," such that they prefer to consume many different varieties of a single product. Thus, for example, many people do appreciate (and are willing to pay for) diversity of coffee varieties, apples, wine, etc.

producer profitability and security. These are private benefits that are obtained by consumers and producers, and economic theory suggests that markets should do an adequate job of meeting the demands for diversity that originate from these sources. For example, consumers will be prepared to pay extra for exotic varieties of fruit or (indirectly) for wheat varieties with special milling and baking characteristics. Farmers will decide efficiently which varieties to cultivate and how to allocate land and resources so as to achieve multiple production objectives.

But markets do not always work efficiently to provide genetic diversity. Genetic diversity may generate benefits that cannot be captured by individual actors. In such cases, markets may not provide diversity at adequate levels. Such cases are discussed below.

The Concept of Public Goods

For most goods, market prices serve as measures of value. Prices reflect the amount that people are willing to pay to purchase goods and services and the amount that others are willing to accept in compensation for producing those commodities.

For some categories of goods, however, market prices are poor measures of value. When consumers can benefit from a good without having to pay for it, the market price will tend to understate the value of the good. Consider, for example, an open-air concert in a public park. Many people can benefit from such a concert without paying, and those who do pay (out of some sense of civic virtue perhaps) will tend to contribute less than they might pay to hear the same concert in a concert hall. Economists characterize goods such as this concert as "public goods." Economic theory predicts that freely operating markets will place too low a price on public goods and will provide them at inefficiently low levels.7

Genetic diversity is a classic example of a public good. Although individuals may benefit themselves from maintaining diverse farming systems, with multiple species and varieties, their actions may also benefit others. For example, one farmer may benefit from having her neighbor cultivating a diversified array of varieties, reducing the attractiveness of their adjacent lands to certain kinds of pests or patho-gens.8 But there is generally no mechanism through which diversity can be "purchased" to ensure that it is provided in sufficient quantities.

Similarly, genetic resources themselves can be seen as a public good. Farmers cultivate many traditional landraces of rice, wheat, and other crops. These landraces represent resources that can be used by the whole world in the creation of new varieties with desirable properties. But at present, there are no incentives beyond

7 The concept of public goods is discussed in any introductory economics textbook. The problem of people sharing the benefits of public goods without paying for them is called the "free rider program."

8 For example, suppose that there is a particular wheat variety that performs better than all other varieties in a particular region (say, Minnesota). If every farmer in Minnesota grows this high-performance wheat variety, it may increase the chance that a variety-specific pathogen will emerge. Each farmer then benefits if some fraction of the farm population chooses to grow other varieties. But no farmer has an individual incentive to grow a lower-performance variety. Moreover, there is no vehicle through which some farmers can compensate others for growing the lower-performance varieties, even though everyone would expect to benefit from such an arrangement. This is a common problem with public goods: the absence of a market for a public good (genetic diversity, in this case) implies that the good will be provided at inefficiently low levels.

their own private profit for farmers to cultivate these landraces. Although the global community benefits from the conservation of genetic resources, there is at present no market or other mechanism that would enable farmers to receive a share of the global benefits. Without such an incentive, farmers will grow landraces only when these varieties provide sufficiently high private benefits. The result may be inefficiently low rates of conservation of landraces.

A Caution: The Myth of Enormous Value

Markets may undervalue genetic resources and genetic diversity, but an equally serious problem is that many people overvalue genetic resources. It is commonplace for biologists and agricultural scientists to argue that genetic diversity has enormous value. But such overvaluation of genetic diversity poses as much of a problem as undervaluation by the market. If genetic diversity is indeed of enormous value, then it becomes extremely difficult to establish priorities or to make trade-offs regarding diversity. Without some estimates of relative value, we have no way to set priorities for conservation or conversation. Some may argue that setting priorities is, in itself, an unethical act of "picking winners" biologically. But as Swaney and Olson (1992) write, "We are valuing biodiversity. We can choose to continue to undervalue [biodiversity], or we can change our valuations, but we cannot choose to not value it."

Several arguments are advanced for the infinite value of genetic diversity. It is worth looking briefly at these in turn. It is not possible in the space of a chapter to characterize all of the arguments adequately, nor is it possible to refute them convincingly. Instead, what follows is an attempt to explain the reasons economists are skeptical about the alleged enormous value of genetic resources.

All Human Life Depends on Genetic Diversity

Some people argue that genetic diversity for agroecosystems is priceless, essentially that it has infinite value. Without the genetic diversity of our crops, it is claimed, humans would be unable to survive as a species; our agroecosystems depend on the continued availability of a range of genetic resources. Although this is true, the high total value of genetic resources should not be confused with the marginal or incremental value of adding or subtracting one more species or gene. We are in no danger of losing all the genetic diversity available to people, so the issue is best understood as: How costly is it to lose some of the species or varieties now known to us (or, equivalently, to protect some of the species or varieties now in danger)? The cost is surely not infinite, but it is also not negligible.

Some Species and Varieties Have High Value to Humans

Lovejoy (1997) cites a number of instances in which genetic resources have proved extremely valuable, from the directly useful genes found in penicillin and perennial corn to the water filtration services provided by oysters in the Chesapeake. There is no doubt that these examples are valid, but it is misleading to argue on the basis of these examples that all genetic diversity is equally valuable (or even that the average value is high). Many species have little potential for direct contribution to human welfare, and many are sufficiently similar to other species that humans might, realistically, suffer little from their loss. The valuable attributes of a particular species might, upon search, be found to occur elsewhere or in other forms. Thus, it is difficult to extrapolate at all from the "success stories" of biological resources that currently have high values.

Extinction is Irreversible and, Hence, Infiniteyy Costly

Biologists usually argue that the extinction of a species imposes losses on humans. Two distinct effects are noted. First, an extinct species is "lost" for future use, in the sense that its genetic materials cannot be put to utilitarian purposes. If a species is extinct, we can never know whether or not it might have offered a cure for cancer or — more prosaically — a gene that could be used in crop improvement. Second, the loss of any species can perturb the delicate ecological balance of a natural system. This in turn can cause damaging effects for humans.

In both cases, however, the costs of extinction can be overestimated if we do not recognize the opportunities for people to find substitutes. As Simpson et al. (1996) have pointed out, people can often find alternative sources of desirable genes. There are arguably very few cases where a particular useful trait can be found only in a single species or variety. More commonly, the compound occurs in several species or varieties; or perhaps similar compounds are found in (related or unrelated) species occupying similar ecological niches; or people can develop synthetic compounds with the same attributes as the natural material; and so forth. The scope for humans to substitute and adapt to extinction is remarkable. From the woolly mammoth to the passenger pigeon, humans have survived the loss of economically important species without irreparable material losses.9

Agricultural Genetic Diversity Protects Against Disastrous Disease and Pest Outbreaks

Within the agricultural sciences, a commonly cited justification for conserving genetic diversity is the need to guard against potential outbreaks of diseases or pests. Diversity gives farmers and scientists the resources with which to respond to emerging disease and pest problems. A related issue is the danger of genetic uniformity in crops. Where cultivated varieties of a crop are closely related, it is suggested, new pests and diseases can spread rapidly and with enormous destructive potential. As evidence, several historical episodes are cited: the Irish potato famine, the Southern corn leaf blight epidemic in the U.S., and a handful of other well-documented cases (e.g., National Research Council, 1972; Ryan, 1992).

9 The passenger pigeon is often cited as an example of an economically important species that was forced into extinction by the failure of markets to reflect its increasing scarcity. Although it is certainly true that market forces did not operate to encourage the conservation of passenger pigeons, it is equally true that little long-term material harm to humans has resulted. This is not to deny that our lives are, in some sense, poorer because passenger pigeons no longer fill the skies of North America.

Although genetic diversity undoubtedly is valuable for "maintenance breeding," it is probably not the case that the associated value of genetic resources is particularly large. Typically, multiple sources of resistance can be tapped, and relatively small arrays of genetic diversity would suffice to provide adequate resistance to many diseases. Gollin et al.10 investigate this topic quantitatively, looking at the actual distributions of resistance to diseases and pests in bread wheat. They conclude that bread wheat landraces will be used for maintenance breeding on relatively rare occasions, and they calculate as a consequence that these varieties have significant but modest value.

Wright points out further that plant disease epidemics are rare and that their costs are often overstated.11 Although the Irish potato famine was associated with a blight, recent histories downplay the importance of blight as a cause of the famine.12 More recently, the Southern corn leaf blight epidemic barely caused a ripple. Although this was due in part to the ready availability of resistant cytoplasm in plant-breeding programs, it also reflects the inherent resilience of modern agriculture. Trade, storage, crop diversification, and consumer substitution all serve to mitigate the impacts of crop failures. Even in developing countries with imperfect markets, farmers and consumers can rely on a variety of ex post consumption-smoothing techniques to make up for the income losses associated with crop failures. (See, for example, Rosenzweig, 1988; Rosenzweig and Stark, 1989; Udry, 1990; Alderman and Paxson, 1992; Rosenzweig and Wolpin, 1993; Townsend, 1995.) As Sen (1981) has argued in his seminal study of famines, crop failure does not correspond to famine. Famine instead depends on a variety of other institutional and market failures — often involving war, violence, or deliberate exploitation.

Genetic Diversity for Agroecosystems: Distinctive Features

The analysis presented in the preceding sections suggests that we should be somewhat skeptical of exaggerated claims for the value of genetic diversity. But in recent years, a sober literature has begun to seek theoretical and empirical measures of the value of diversity. The dollar figures are not very precise, but they provide a focus for discussion. The most common approach has been to value genetic resources based on their "rareness" or their potential contribution to the development of new or improved products. Among the more widely known efforts, Weitzman (1992; 1993) focuses on the measurement of diversity and on an application to the conservation of crane species. Simpson et al. (1996) consider the likelihood that a new species discovered in the rain forest will have value for pharmaceutical research.

10 See Gollin, D., Smale, M., and Skovmand, B., The empirical economics of ex situ conservation: a search theoretic approach for the case of wheat, paper presented at the international conference: Building the Basis for Economic Analysis of Genetic Resources in Crop Plants, sponsored by CIMMYT and Stanford University, Palo Alto, CA, August 1997.

11 Wright, B. D., Agricultural genetic resource policy: towards a research agenda, paper prepared for presentation at the Technical Consultation on Economic and Policy Research for Genetic Resource Conservation and Use, International Food Policy Research Institute, Washington, D.C., June 21-22, 1995.

12 It is also interesting that few historians of the Irish potato famine consider the potato blight to have been an important factor in the famine. For example, Mokyr (1983) does not include plant disease among the seven "factors of importance" in explaining the Irish famine.

Similarly, Mendelsohn and Balick (1995) attempt to value undiscovered pharmaceuticals in tropical forests. This literature is hampered, however, by the paucity of empirical data, which makes it difficult to move from models to empirically relevant conclusions.

In contrast, the agricultural sector offers unique opportunities for describing the value of genetic diversity. Agriculture has long used genetic resources to achieve increases in productivity. Scientific plant breeding has been well developed in the U.S. and Europe since the start of the 20th century, and organized systems for collecting and conserving new genetic materials date back even further (Plucknett et al., 1987). Government-sponsored systems of plant selection and varietal improvement date back still further in Japan and China. Agriculture thus offers a logical setting in which to examine the value of genetic resources. Moreover, data on plant breeding and crop improvement are readily available for many crops, and much of the research for the most important crops (wheat, rice, and maize) has taken place in the public sector, so that data are accessible to researchers. By contrast, much of the data on the utilization of genetic materials in, say, pharmaceutical research are proprietary.

Studies of genetic diversity for agriculture must recognize some important differences from the broader biodiversity literature. First, genetic diversity in agriculture is in large measure a matter of intraspecies diversity, rather than interspecies diversity. Second, agroecosystems are largely human managed; thus, the extent of diversity is purposefully chosen, not the result of natural accident. Third, the conservation of diversity (and, more generally, the conservation of genetic resources for agriculture) intimately involves human communities. Agricultural diversity cannot be conserved simply by setting aside tracts of uninhabited land; it necessarily involves people. Rain forest biodiversity can be maintained (in principle) by conserving habitat. But agricultural diversity can only be maintained in farmers' fields as long as incentives are appropriate.13

These distinctive features of agricultural genetic diversity have been recognized in a growing literature concerned with valuing diversity. The next section of this chapter summarizes some of the approaches and findings of this literature.

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