An economic evaluation of the osmoregulation gene technology to the Australian wheat industry

Episodes of rainfall irregularity and soil moisture deficit have focused attention on the widespread limitation of water supply on winter cereal crop production in Australia. This has motivated a number of efforts at breeding for improved drought tolerance. A recent example involves a cellular adaptation which mitigates water loss through solute accumulation (osmoregulation or osmotic adjustment). An assessment of the performance of osmoregulation yield response in the presence of climate change found that wheat cultivars with this gene are unlikely to be adversely affected by hotter and drier conditions across the wheat belt. The results of an economic evaluation of potential future innovations (wheat cultivars) from the osmoregulation gene technology are that for Australia the net present value could range from $388 million to $3.6 billion, depending on the adoption of wheat cultivars with the gene. Associated benefit-cost ratios ranged from 43:1 to 390:1, and internal rates of return were 16% to 27%. Even under pessimistic assumptions the returns are quite healthy. For NSW-only adoption, internal rates of return ranged from 10% to 22%. This osmoregulation technology has the potential for inclusion in wheat cultivars bred for other purposes, and for other crops. As such it has implications for agricultural plant breeders and farmers both in Australia and overseas, and there are substantial potential spillover benefits.