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Assessing the returns to R&D on perennial crops: the costs and benefits of Pierce’s disease research in the California winegrape industry

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  • Alston, Julian M.
  • Fuller, Kate B.
  • Kaplan, Jonathan D.
  • Tumber, Kabir P.

Abstract

Several complicating issues arise in evaluating the returns to research into varietal improvements for perennial crops compared with annual crops. We elucidate and address these issues in the context of a case study of research aiming to develop varieties that are resistant to Pierce’s disease (PD) of grapevines. PD imposes costs of over $100 million per year on the California grape industry, even with public PD control programs in place. Research projects to develop PD resistant varieties of grapevines are at various stages of completion. We describe the economic problems posed by PD, document the research programs undertaken to address the disease and present an economic assessment of the returns to the investment, which are conditional on other policies. Using a simulation model of the market for California wine grapes, we estimate the benefits from research, development and adoption of PD resistant vines as ranging from $4 million to $129 million annually over a 50-year horizon, depending on the length of the R&D lag and the rate of adoption. In addition to these specific quantitative results the paper offers insight into the broader question of economic evaluation of damage-mitigation technology for perennial crops.

Suggested Citation

  • Alston, Julian M. & Fuller, Kate B. & Kaplan, Jonathan D. & Tumber, Kabir P., 2015. "Assessing the returns to R&D on perennial crops: the costs and benefits of Pierce’s disease research in the California winegrape industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(1), January.
    • Handle: RePEc:ags:aareaj:280230
    DOI: 10.22004/ag.econ.280230
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    1. Glyn Wittwer & Simon McKirdy & Ryan Wilson, 2006. "Analysing a hypothetical Pierce's disease outbreak in South Australia using a dynamic CGE approach," Centre of Policy Studies/IMPACT Centre Working Papers g-162, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Erik Lichtenberg & David Zilberman, 1986. "The Econometrics of Damage Control: Why Specification Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 261-273.
    3. Cook, David & Proctor, Wendy, 2007. "Assessing the threat of exotic plant pests," Ecological Economics, Elsevier, vol. 63(2-3), pages 594-604, August.
    4. Alston, Julian M. & Fuller, Kate B. & Kaplan, Jonathan D. & Tumber, Kabir P., 2013. "Economic Consequences of Pierce’s Disease and Related Policy in the California Winegrape Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), pages 1-29, August.
    5. Fuller, Kate B. & Alston, Julian M. & Sanchirico, James N., 2011. "Spatial Externalities and Vector-Borne Plant Diseases: Pierce’s Disease and the Blue-Green Sharpshooter in the Napa Valley," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103865, Agricultural and Applied Economics Association.
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