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Measuring the benefits from R&D investment beyond the farm gate: the case of the WA wine industry

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  • Radhakrishnan, Manju
  • Islam, Nazrul
  • Ward, Glynn
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    Abstract

    Evaluations of public sector agricultural research and development (R&D) often focus on farm level benefits. Flow-on benefits that accrue to other sectors such as processing and marketing typically are ignored. This paper however includes these benefits. Using the Western Australian wine industry as an example this paper highlights the relative importance of farm and flow-on benefits generated by farm-level R&D. A wine industry value chain model is used to measure these benefits. The benefits per dollar of R&D investment are found to be $2.8 at the farm level compared to $14.9 when flow-on benefits are taken into account. In this case, solely reporting farm level benefits hugely understates the returns to the R&D investment. The R&D policy implications of the inclusion of flow-on benefits are discussed briefly.

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    File URL: http://purl.umn.edu/48169
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    Bibliographic Info

    Paper provided by Australian Agricultural and Resource Economics Society in its series 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia with number 48169.

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    Date of creation: 2009
    Date of revision:
    Handle: RePEc:ags:aare09:48169

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    Postal: AARES Central Office Manager, Crawford School of Public Policy, ANU, Canberra ACT 0200
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    Related research

    Keywords: R&D investment; Benefit cost analysis; Value chain modelling; wine.;

    This paper has been announced in the following NEP Reports:

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    1. Julian M. Alston & John W. Freebairn & Jennifer S. James, 2004. "Levy-funded research choices by producers and society," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 33-64, 03.
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    7. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-38, March.
    8. Zvi Griliches, 1958. "Research Costs and Social Returns: Hybrid Corn and Related Innovations," Journal of Political Economy, University of Chicago Press, vol. 66, pages 419.
    9. Findlay, Christopher C & Jones, Robert L, 1982. "The Marginal Cost of Australian Income Taxation," The Economic Record, The Economic Society of Australia, vol. 58(162), pages 253-62, September.
    10. Duncan, Ronald C., 1972. "Evaluating Returns To Research In Pasture Improvement," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 16(03), December.
    11. Browning, Edgar K, 1987. "On the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 77(1), pages 11-23, March.
    12. Marra, Michele C. & Pardey, Philip G. & Alston, Julian M., 2002. "The payoffs to agricultural biotechnology: an assessment of the evidence," EPTD discussion papers 87, International Food Policy Research Institute (IFPRI).
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