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The economic effect of genomic technology on the forestry industry

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  • Wang, S.
  • An, H.
  • Chang, W.-Y.
  • Gaston, C.

Abstract

In response to threats from climate change, such as an increased likelihood of droughts and insect outbreaks, significant investments in forestry genomics research have been made. The main advantage of genomic technology is that it greatly reduces the amount of R&D time to come up with a new product, and it is much more precise than traditional breeding techniques. However, the technology also comes with higher upfront R&D costs. Thus, whether the research effort would result in a worthwhile use of scarce research resources remains unknown. To help quantify the economic effect, we assess the welfare consequences of the forestry genomic research by estimating a timber supply model and a dynamic global forest products trade model. Using the forest industry of Alberta as our empirical setting, we find that the research program can yield an increase in total economic surplus of 400 million CAD in present value and the benefit-cost ratio of the research program is 43.9, indicating that more resources can be allocated advantageously to genomics-assisted tree breeding programs. The findings provide a justification for adopting genomic technology in the forestry sector and are useful in supporting genomics-enhanced reforestation policies and investment decisions. Acknowledgement : We acknowledge cash funding for this research from Genome Canada, Genome Alberta through Alberta Economic Trade and Development, Genome British Columbia, the University of Alberta and the University of Calgary. Further cash funding has been provided by Alberta Innovates BioSolutions, Forest Resource Improvement Association of Alberta, and the Forest Resource Improvement Program through West Fraser Ltd. and Weyerhaeuser Timberlands. In-kind funding has been provided by Alberta Agriculture and Forestry, Blue Ridge Lumber West Fraser, Weyerhaeuser Timberlands Grande Prairie, and the Thomas, Wishart, and Erbilgin labs in support of the Resilient Forests (RES-FOR): Climate, Pests & Policy Genomic Applications project.

Suggested Citation

  • Wang, S. & An, H. & Chang, W.-Y. & Gaston, C., 2018. "The economic effect of genomic technology on the forestry industry," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277443, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae18:277443
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    References listed on IDEAS

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    1. Naseem, Anwar & Singla, Rohit, 2013. "Ex Ante Economic Impact Analysis of Novel Traits in Canola," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), pages 1-21, August.
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    5. Munisamy Gopinath & Terry Roe, 2000. "R&D Spillovers: Evidence from U.S. Food Processing, Farm Machinery and Agricultural Sectors," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(3), pages 223-244.
    6. van Kooten, G. Cornelis & Johnston, Craig, 2014. "Global impacts of Russian log export restrictions and the Canada–U.S. lumber dispute: Modeling trade in logs and lumber," Forest Policy and Economics, Elsevier, vol. 39(C), pages 54-66.
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    Keywords

    Resource/Energy Economics and Policy;

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