The Economics Of Biosafety: Implications For Biotechnology In Developing Countries

There is a growing body of literature on the safe use of biotechnology and the need for an international biosafety protocol and national regulations to facilitate the safe development and transfer of biotechnology. Most of these studies, however, address the issue of biosafety from a scientific, legal, environmental and organizational perspective. The purpose of this paper is to add to this discussion by providing an economic perspective on regulating products of agricultural biotechnology, with special emphasis on implications for developing countries who are under increasing pressure to put a biosafety framework in place. The paper provides a brief discussion on the economic rationale for biosafety regulations, explains the economic benefits and costs of biosafety, and discusses the appropriate form of biosafety policy and the effects of regulation on resource allocation. The benefits of biosafety discussed include - the reduction of possible human and environmental risks of biotechnology products and "accident" costs to the society; increased predictability for a research organization of the expected time and money to get a new product on the market; making the products of biotechnology accessible to a country; and the provision of certainty and stability to the social framework, necessary for the development of biotechnology research and development activities. Developing countries should balance these potential benefits with the tangible costs of biosafety regulation to the biotechnology organizations and the society. To a biotechnology organization, biosafety will increase the research lag, production costs, transaction costs and marketing costs. Given the scarcity of human and physical resources, setting up a biosafety system also poses opportunity costs to the society. The following issues need careful examination in designing a biosafety policy in a developing country: the goal of biosafety policy; the appropriate means of controlling risk; the impact of biosafety on scientific development and private investments; the impact of biosafety on the international transfer of technology and international trade; the incidence of biosafety costs; and the size of biosafety system.