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Importance and Limits of the Cost-Benefit Analysis for GMOs Regulation

Listed author(s):
  • Charlier, Christophe
  • Valceschini, Egizio

New technologies and innovations suspected to affect environment or public health need to be regulated. Scientific risk assessment is considered as a key element for the regulation. Its role is reinforced when the regulation has the potential of constraining the international trade. The Sanitary and Phytosanitary Agreement of the WTO dealing with this kind of issues gives primacy to scientific risk assessment. Interesting situations arise with small risks that is to say situations where the probability of damage is tiny and/or expected damages are very small. If risk assessment is the only scientific element considered, the mere presence of risk – even small - should give reason for regulation. Does it rationalize the public decision for all that? If the social benefits associated with the blocked activity are consequent accepting the risk could be worthwhile. Recent works from the economic literature have shown that in order to get a good ‘risk governance’ cost-benefit analysis should be considered together with risk assessment (Bureau et al. 1998, Turvey and Mojduszka 2005). The aim of cost-benefit analysis is indeed to help public decision making. It consists in a set of methods that enables to evaluate the relevance of a regulation, comparing it with other possible options (from other types of regulation to the absence of any regulation). For that purpose cost-benefit analysis aims at estimating a monetary valuation, on the one hand, for environmental (or public health) degradation and, on the other hand, for the expected benefits implied by environmental conservation and technologies’ development.

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Paper provided by European Association of Agricultural Economists in its series 110th Seminar, February 18-22, 2008, Innsbruck-Igls, Austria with number 49839.

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Date of creation: Oct 2008
Handle: RePEc:ags:eea110:49839
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  1. Marks, Leonie A. & Kalaitzandonakes, Nicholas G. & Vickner, Steven S., 2003. "Evaluating Consumer Response to GM Foods: Some Methodological Considerations," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 04.
  2. Bureau, Jean-Christophe & Marette, Stephan & Schiavina, Alessandra, 1998. "Non-tariff Trade Barriers and Consumers' Information: The Case of the EU-US Trade Dispute over Beef," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(4), pages 437-462.
  3. Turvey, Calum G. & Mojduszka, Eliza M., 2005. "The Precautionary Principle and the law of unintended consequences," Food Policy, Elsevier, vol. 30(2), pages 145-161, April.
  4. Charles Noussair & StÈphane Robin & Bernard Ruffieux, 2004. "Do Consumers Really Refuse To Buy Genetically Modified Food?," Economic Journal, Royal Economic Society, vol. 114(492), pages 102-120, January.
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