Biotechnology in Agriculture and Forestry: Economic Perspectives

Economists are rarely brought into the interdisciplinary research until the biophysical scientists have developed their models, made their measurements or completed their research task. The research economist is then brought in to do what amounts to a consulting task – provide some numbers that indicate impacts on the economy and employment. In this paper, I begin by illustrating cases from forestry where this leads to erroneous and costly policy outcomes. However, the main objective of this paper is to examine the role of genetic engineering in forestry and agriculture. In forestry, planting of genetically-modified (GM) tree species is nearly non-existent, with the exception of hybrid poplar that is used to produce pulp or fuel. However, as explored here, there is a role for GM tree varieties, particularly ones that are resistant to such things as the mountain pine beetle which has adversely impacted forests in British Columbia. I also examine the role of GM crops in addressing concerns about future food scarcity. As discussed here, there are various factors that suggest the world might encounter future scarcity. These include on the demand side a growing and wealthier global population, and greater demand for energy crops. On the supply side, there are fewer opportunities to expand farmland at the extensive margin, a decline in the rate of increase in productivity, limits to the amounts of inputs that can be applied at the intensive margin, and the closing of the gap between actual and potential crop yield. GM crops are one way to circumvent the potential shortages. However, there are many obstacles that need to be overcome before farmers globally can take advantage of transgenic research, including most importantly barriers put up by the European Union and various environmental NGOs on the grounds of the precautionary principle. These are discussed in some detail.