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

our base scenario was minimal (Table 10). Theinternal rate of return generated from the yield seriesnet of enhancement and other effects ( ŷ t) was 38%under the higher research cost scenario. The netpresent value at the 5% discount rate was 3.93 billion1990 US$. Although the CIMMYT trial data by Sayreet al. (1998) used to adjust the yield series were notavailable over the total study area, ME 1 clearlyaccounted for the major proportion of the benefits(Table 8). Nevertheless, we would be cautious toassume that 82% of all growth in yield potential infarmers’ fields over all environments and yearsincluded in this study could be attributed to leaf rustresistance breeding alone, as in the trials innorthwestern Mexico. We thus confined the estimatesto a sensitivity analysis rather than the base scenario.Minimum yield savings necessary to recoverCIMMYT’s investmentThe investment returns in Table 7 were calculated byemploying estimates of the expected average annualyields that would have been lost, had all CIMMYTrelatedspring bread wheat varieties been susceptible(Table 1). These in turn determined the yield lossesavoided through varieties with various leaf rustresistance categories. Within our conceptualframework, the results are likely to be most sensitiveto this assumption. Yet this parameter was the mostdifficult to estimate reliably over the largegeographical areas included in this study. Ratherthan using ad hoc methods to identify a lower yieldloss scenario to compare with our originalassumptions, an alternative approach was adopted inthe sensitivity analysis. We arithmetically calculatedthe minimum average annual percent yields thatwould have had to have been lost to leaf rust bysusceptible varieties in ME 1 to recover CIMMYT’sinvestment in wheat genetic improvement since 1967.The calculation was limited to ME 1 to render theestimates more conservative, though thisenvironment clearly accounted for the major share ofthe benefits (Table 8).The minimum yields that would have had to havebeen lost to recuperate the investment rangedbetween 0.2 and 0.8% under various assumptions onthe discount rates, research costs, and yield seriesapplied (Table 11). These minimum estimates were amere fraction of those assumed in Table 1, and theywould be unusually low for this important wheatdisease in this high-yielding zone with heavy diseasepressure. The investment returns presented in Table 7should therefore be fairly robust. By generally usedstandards, the returns were profitable even underour most stringent assumptions.DiscussionAn era characterized by a global decline inagricultural research investments increasinglyemphasizes the efficient allocation of scarceresources. This study demonstrates the substantialeconomic impact on developing country productionof efforts by CIMMYT to breed leaf rust resistantspring bread wheat varieties since 1973. Theestimated yield losses by varieties of different leafrust resistance categories were compared to theyields that would have been lost had the varietiesbeen fully susceptible. An economic surplusapproach, adjusted for maintenance research, and acapital investment analysis were used to estimate thereturns. A range of investment values was elicited byalternating assumptions on various parameters. Theinternal rate of return over 1967-2007 was 41% underour base scenario and higher research costassumptions. When discounted by 5%, the netpresent value was 5.36 billion 1990 US$, and thebenefit-cost ratio 27:1. Benefits were primarilygenerated in ME 1 and by varieties with racenonspecificresistance. The full cost of CIMMYT’swheat genetic improvement effort since 1967 wasincluded. In contrast, the benefits accounted only forthe yield losses avoided through leaf rust resistancein CIMMYT-related spring bread wheat varietiesgrown at low latitudes since 1973.This implies that every 1990 US dollar invested inCIMMYT’s wheat genetic improvement over 40 yearshas generated at least 27 times its value in benefitsfrom leaf rust resistance breeding in spring breadwheat alone. All other wheat breeding benefits areconsidered as pure benefits, such as the increases inyield potential over time (Figure 2, Byerlee and MoyaTable 11. The minimum average annual percent yield that wouldhave had to have been lost by susceptible varieties in megaenvironment1 to recover CIMMYT’s investment in wheatgenetic improvement from 1967 to 2007, for various discountrates, research costs, and yield series scenarios.Minimum yield loss (%)Yield series andresearch costs 5% discount rate 15% discount rateYield series with enhancement, maintenance to leaf rust, and other effects:Low research cost 0.18 0.48High research cost 0.26 0.66Yield series with maintenance to leaf rust, but net of enhancement and other effects:Low research cost 0.21 0.55High research cost 0.30 0.7627