The Economic Impact in Developing Countries of ... - AgEcon Search

More documents

Recommendations

Info

Most assessments of the returns on wheat researchinvestments 2 have focused on productivityenhancement. There are comparatively fewereconomic analyses of wheat maintenance research,particularly for pest and disease resistance breeding(Doodson 1981; Heim and Blakeslee 1986; Blakeslee1987; Brennan and Murray 1988; Priestley and Bayles1988; Brennan et al. 1994; Morris et al. 1994; Collins1995; Smale et al. 1998; Marasas 1999). However,research at CIMMYT indicates that resistancebreeding has generated a substantial proportion of thereturns on international wheat research over the pastdecades (Bohn and Byerlee 1993; Byerlee and Moya1993; Byerlee and Traxler 1995; Rajaram et al. 1996;Heisey et al. 1999). Analyses of trial results confirmedthat progress in protecting yield potential through leafrust resistance has been greater than advances in yieldpotential itself (Sayre et al. 1998).Smale et al. (1998) estimated the returns onCIMMYT’s investment in a breeding strategy for racenonspecificresistance, as compared to one for racespecificresistance, in the Yaqui Valley of northwesternMexico. A return of 40% was calculated for 1970-1990.The authors assumed average annual yield savings ofonly 9% and a research-to-adoption lag of five years,which is reasonable for varieties released as close toCIMMYT as the Yaqui Valley. They used detailedinformation on resistance genes and the longevity ofuseful resistance for each wheat variety grown since1968. The Yaqui Valley represents a testing ground forME1—the major environment in which CIMMYTrelatedspring bread wheat is grown. However, thatstudy covered only 150,000 of the estimated 66.5million hectares of spring bread wheat included inthis study.Similar genetic information was not available on aglobal basis to facilitate our analysis. The actuallongevity of useful leaf rust resistance is not knownfor each variety released in each productionenvironment of the developing world since 1973. Thegenetic basis of resistance is also not known for allvarieties, and the presence of resistance sources in avariety’s ancestry does not ensure that it contains therelevant gene. Even if the gene is present, interactionswith other genes and the environment eventuallydetermine the variety’s resistance level whenchallenged by pathogens in farmers’ fields. Moreover,considering that farmers in developing countries usevarieties with various types and levels of leaf rustresistance, our analysis encompassed race-specificand race-nonspecific resistance. The conceptualframework and methodology underlying theeconomic analysis is explained in the followingsections.Conceptual FrameworkThe first step in measuring the economic benefits ofagricultural research is to compare the situation withresearch to one with no research, also known as the“with” and “without” scenarios (Gittinger 1982;Alston et al. 1995). Following the backgroundinformation provided in the previous sections, weassumed that the “with” scenario is represented byresistant varieties with different leaf rust resistancecategories, and the “without” scenario by susceptiblevarieties. Given the pathogen’s ability to overcomethe effects of previously resistant varieties, we arguedthat leaf rust resistance breeding is an example ofproductivity maintenance. An economic surplusapproach adjusted for maintenance research and acapital investment analysis were applied to estimatethe returns on CIMMYT’s investment. The “with”and “without” scenarios are subsequently explainedwithin an economic surplus framework.In the basic version of the surplus approach,productivity enhancement is often treated as a costreducingrightward or downward shift in theaggregate supply function 3 of a commodity, as shownby S 1in Figure 1. This may result from yield increasesor cost savings attributable to the technology.Constant supply is assumed in the absence of2A review of previous studies, including wheat among other enterprises, can be found in Evenson (1998). Studies morerecently conducted in Africa are summarized in Marasas (1999), and impact assessment milestones of the ConsultativeGroup on International Agricultural Research are described by Pingali (2001).3The economic surplus approach for estimating the returns on agricultural research was pioneered by Griliches (1958).The progressive refinements that have since appeared in the literature vary in their complexity and data requirements,and may differ in their functional form, nature of the demand and supply curves, and the nature of the research-inducedshifts in the supply curve. These assumptions influence the magnitude of the change in economic surplus, and itsdistribution between consumers and producers. For examples, which also include adaptations to crop breedingprograms, see: Peterson (1967); Schmitz and Seckler (1970); Fishel (1971); Ayer and Schuh (1972); Akino and Hayami(1975); Hayami and Herdt (1977); Lindner and Jarrett (1978); Scobie and Posada (1978); Schuh and Tollini (1979); Rose(1980); Wise and Fell (1980); Norton and Davis (1981); Alston et al. (1988); Byerlee (1990); Voon and Edwards (1991);Brennan (1992); Johnston et al. (1992); Renkow (1993); Morris et al. (1994); Alston et al. (1995); Collins (1995);Anandajayasekeram et al. (1996); and Marasas (1999).11
esearch, as represented by S 0. The area under thedemand curve, and between S 1and S 0, shows theincreased economic surplus associated with this shift.However, the assumption of a static supply functiondoes not remain valid in the face of evolving leaf rustpathogens and the resulting depreciation of geneticresistance. Once a variety’s resistance has beenovercome by newer pathogens, its production gainswill not remain constant. They will decline and resultin lower output production per unit cost. If notconstantly replaced by newly resistant varieties witha similar productivity potential, a leftward or upwardshift in the supply curve will occur, as shown by S 2.Maintenance research within a surplus approach cantherefore be defined as the effort required to preventa cost-increasing supply shift, which results fromchanges in the physical, economic, or biologicalenvironment (Collins 1995). The economic surplusgenerated by preventing this shift is shown as theshaded area under the demand curve, and betweenS 0and S 2in Figure 1. This framework thus depicts S 0as the supply with maintenance, but withoutenhancement research; S 2as the supply withoutmaintenance or enhancement research; and S 1as thesupply with maintenance and enhancement research.The discussion assumes full adoption anddepreciation, though these are clearly dynamicprocesses.In our case, we assume that the “with” scenario is thesupply (S 0) generated by the CIMMYT-related springbread wheat varieties with different leaf rustresistance categories since 1973. The “without”scenario is the supply (S 2) that would have prevailedhad these varieties been fully susceptible. Thebenefits are estimated in terms of the productivityPriceP 2P 0Surplus generated bymaintenance researchP 1Q 0The effect of productivitymaintenanceSurplus generated byenhancement researchDQ 2Q 1QuantityFigure 1. General economic surplus approach adjusted formaintenance research.Notes: S 0= Supply with maintenance, but without enhancement research; S 1= Supplywith maintenance and enhancement research; S 2= Supply without maintenance orenhancement research; S = Supply; D = Demand; P = Price; and Q = Quantity.S 2S 0S 1losses, or the cost-increasing supply shift from S 0toS 2, which have been avoided through leaf rustresistance. Positive enhancement gains, depicted bythe shift from S 0to S 1, are not valued.Our approach is simplified methodologically in thefollowing ways, due to standard difficulties inestimating the impact of maintenance research,estimating the economic impact of agriculturalresearch in general, and limitations imposed by theavailable data :♦ The costs and benefits of maintenance andenhancement research are often difficult toseparate. Our assumptions in this regard areexplained in the Methodology section.♦ If detailed, historical farm-level data wereavailable for annual yield losses from leaf rustover the millions of hectares of spring breadwheat grown in the developing world, benefitscould be calculated directly. In the absence of thisinformation, we use trial data on relative losses fora sample of those varieties. These data arecombined with estimates from CIMMYTpathologists of the expected farm-level losses andareas affected by leaf rust.♦ We do not know the area sown to CIMMYTrelatedwheat for each year on the aggregatediffusion curve over the past three decades. Wethus estimate the annual areas sown by fitting alogistic function. Point estimates drawn fromhistorical data serve as function parameters andenable us to calibrate the shape of the curve.♦ We apply a capital investment analysis to estimatethe returns, instead of a fully developedequilibrium model based on a multi-market worldeconomy. One reason is that equilibrium modelsrequire supply and demand elasticities for allrelevant input and output markets for all affectedcountries. The benefits in this analysis areaggregated over various relatively small wheatproducingcountries in the developing world.Losses to leaf rust might have generated a shift inthe short- and long-term wheat supply curve inany one of these countries. However, thesechanges would not have been substantial enoughto affect the world wheat price in the presence ofthe large volumes traded by wheat-producingcountries in the developed world. The demandcurve is therefore perfectly elastic at the worldwheat price in our version of Figure 1. Wemeasure the supply shift avoided in units on thehorizontal axis, valued at the world wheat price,for each year and wheat-producing environmentincluded in the study. The supply curve refers toCIMMYT-related spring bread wheat only.12
Page 1 and 2: E c o n o m i c s P r o g r a m P a
Page 3 and 4: CIMMYT® (www.cimmyt.org) is an int
Page 5 and 6: TablesTable 1. Summary of parameter
Page 8 and 9: The Economic Impact in DevelopingCo
Page 10 and 11: origins or pedigrees are selected f
Page 14 and 15: MethodologyIn the capital investmen
Page 16 and 17: likely behavior was predicted based
Page 18 and 19: Table 3. Estimated yield losses fro
Page 20 and 21: esults showed that the annual progr
Page 22 and 23: decreasing percentage of the bread
Page 24 and 25: arising from this assumption may be
Page 26 and 27: Table 6. Discounted gross benefits
Page 28 and 29: our base scenario was minimal (Tabl
Page 30 and 31: esistance. It is conceptually and p
Page 32 and 33: ReferencesAdusei, E.O. 1988. Evalua
Page 34 and 35: Nagarajan, S., and L.M. Joshi. 1985
Page 36 and 37: Appendix ADefinition of CIMMYT mega
Page 38: ISSN: 1405-7735International Maize

The Economic Impact in Developing Countries of ... - AgEcon Search

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?