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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
1993; Rajaram and van Ginkel 1996; Rajaram et al.1997), and resistance to other biotic and abioticstresses. 10 We generally understated the areas towhich benefits were accrued, because we focusedonly on the MEs where spring bread wheat is grownat low latitudes (Appendix A). This excluded winterand facultative habit bread wheat and durum wheats,and the spring bread wheat grown in ME 6, eventhough these areas are also affected by leaf rust.Whereas the numerical values of the estimatedbenefits are sensitive to assumptions aboutunderlying parameter values, they remain substantialenough to satisfy stringent investment criteria, evenunder conservative cost and benefit assumptions.Within the conceptual framework of this analysis, theresults are likely to be most sensitive to assumptionsregarding the extent of yield losses avoided throughleaf rust resistant cultivars. This was partly dictatedby the relative magnitude of the expected yields thatwould have been lost by susceptible varieties in agiven environment and year. This has twoimplications. First, in environments where yieldlosses in susceptible varieties are lower, the benefitsof leaf rust resistance should also be lower. This maypartly explain why farmers in 1997 still used varietiesthat were almost fully susceptible, or carried racespecificresistance, albeit on the minor proportion ofthe study area (Table 4). Second, even though leafrust resistance is an important consideration, yieldremains a critical breeding objective. Yield levels,either saved through maintenance or gained throughenhancement research, remain a vital factor affectingthe economic value of pest and disease resistance inwheat (Smale et al. 1998; Marasas 1999). Assumptionson yield parameters exert a major influence on themagnitude of the supply shifts associated withresearch investment in an economic surplusapproach, such as that depicted in Figure 1.Yet the yield loss in susceptible varieties was the mostdifficult parameter to estimate reliably over the largegeographical areas included in this study. Wetherefore arithmetically calculated the minimumaverage annual yields that would have had to havebeen lost by susceptible varieties in ME 1 to recoverCIMMYT’s wheat breeding investment since 1967.The calculation was limited to ME 1 to render theestimates more conservative, though thisenvironment clearly accounted for the major share ofthe benefits. The minimum yield loss estimatesranged between 0.2 to 0.8%, which would beextremely low for this important wheat disease inthis high-yielding zone with heavy disease pressure.ME 1 accounted for 86% of the gross benefits by ME.When the full burden of the higher research costscenario was charged against these gross benefits, theinternal rate of return was 39% (Table 8). When theresearch costs were charged against the combinedbenefits for MEs 2, 3, 4a, 4b, 4c, and 5 in a similarmanner, the rate of return was 17%. Though still ofconsiderable magnitude, the returns were lower thanthose reported for ME 1. The results indicate thatCIMMYT’s investment in wheat geneticimprovement could be justified by the benefits fromleaf rust resistance breeding in ME 1 alone. Severalcharacteristics of this immense wheat-producingenvironment are likely to determine favorableinvestment returns. It accounted for 54% of the studyarea, and historical patterns have shown that newwheat varieties spread rapidly in ME 1. Thisfavorable wheat-growing environment is alsofavorable for disease. Since average yields are higher,the production savings from genetic resistance arealso greater.Varieties with race-nonspecific resistance accountedfor 91% of the gross benefits and for the major shareof the benefits generated in MEs 1, 2, 4a, 4c, and 5.Varieties with race-specific resistance and thoseclassified as essentially susceptible accounted for 7and 2% of the benefits, respectively (Table 5). Thoughcomprising a minor share of the total, the benefitsfrom these varieties were not insignificant in absolutemagnitude, and they increased the returns onCIMMYT’s wheat improvement effort. Varieties withrace-specific resistance appeared to be associatedwith specific environments and accounted for themajor proportion of benefits generated in MEs 3 and4b. Considerations other than race-nonspecific leafrust resistance might be more important in theseareas, such as septoria leaf blotch, fusarium headscab, or aluminum toxicity. These environments alsodemonstrated larger annual yield and areafluctuations over time (Figures 2 and 4). Inenvironments where yields lost by susceptiblevarieties are lower, the advantage of leaf rustresistance should also be lower.Albeit on the minor proportion of the study area, andmostly in areas where leaf rust might be of lessimportance, some farmers appeared to continuegrowing varieties assumed to lack durable leaf rust10Appendix A Table A1 shows examples of other CIMMYT wheat breeding objectives for spring bread wheat.28
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
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Page 10 and 11: origins or pedigrees are selected f
Page 12 and 13: Most assessments of the returns on
Page 14 and 15: MethodologyIn the capital investmen
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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 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

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