Efficient Conservation Of Crop Genetic Diversity: Theoretical Approaches And Empirical Studies 9783642055010, 9783662052129, 364205501X

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D. Virchow Efficient Conservation of Crop Genetic Diversity

Springer-Verlag Berlin Heidelberg GmbH

Detlef Virchow (Ed.)

Efficient Conservation Of Crop Genetic Diversity Theoretical Approaches And Empirical Studies with 6 Figures and 76 Tables

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Springer

DR. DETLEF VIRCHOW

ZEFBonn Center for Development Research Walter-Flex.-Str. 3 53113 Bonn Email: [email protected]

Library of Congress Cataloging-in-Publication Data applied for Bibliographic information published by Die Deutsche Bibliothek Die Deutsche Bibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available in the Internet at . This work is subject to copyright. All rights are reserved. whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. http://www.springer.de ISBN 978-3-642-05501-0 ISBN 978-3-662-05212-9 (eBook) DOl 10.1007/978-3-662-05212-9 ©Springer-Verlag Berlin Heidelberg 2003 Originally published by Springer-Verlag Berlin Heidelberg New York in 2003. Softcover reprint of the hardcover 1st edition 2003 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Product liability: The publishers cannot guarantee the accuracy of any information about the application of operative techniques and medications contained in this book. In every individual case the user must check such information by consulting the relevant literature. Camera ready by author Cover design: E. Kirchner, Heidelberg Printed on acid-free paper SPIN 10865355 30/3141/as 5 4 3 2 1 0

Preface The book reflects the work in progress regarding the analysis of the costs of crop genetic resources conservation that has been conducted at various research institutes over the last couple of years, including research conducted at ZEF and associated institutes. In addition, contributions in this publication were presented at a special session during the "Global Dialogue: The Role of the Village in the 2]'1 Century: Crops, Jobs and Livelihood" in Hannover, Germany, at the World Exposition in August 2000. The purpose of the publication is to make a general contribution to the ongoing discussion about the conservation of crop genetic resources as part of the global strategy to secure increasing food production in a sustainable way. Specifically, it discusses the costs of the worldwide efforts to conserve crop genetic resources on the basis of theoretical and applied studies. It aims to serve decision-makers at different levels with information on the costs involved in the conservation of genetic resources and hence to increase the awareness of the importance of improving the cost effectiveness of different conservation methods in order to optimize the sustainability of conservation. The quoted Leipzig Declaration, which was adopted at the Fourth International Technical Conference on Plant Genetic Resources in Leipzig in June 1996, demonstrates the close linkage of the contributions to the ongoing discussion about the implementation of the Global Plan of Actionfor the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture.

Although the contributions in this volume are partly very diverse, they all highlight two important points. Firstly, the costs implied for the conservation of crop genetic resources are important for any policy implications related to the sustainable conservation of crop genetic resources. Secondly, it is implicitly made clear that many more and detailed conservation cost surveys at the national as well as international levels are needed to support decision-making for optimal allocation of financial resources for the conservation efforts. I would especially like to thank all the authors for their efforts to prepare and revise their papers. Furthermore, for the technical assistance in editing and processing the contributions, I thank Margaret Lampe and Susanne Weidmann. Finally, I want to thank the German Research Council (Deutsche Forschungsgemeinschafi - DFG), which financially supported the research conducted at ZEF and associated institutes on: "The economics of conservation ofplant genetic resources and of biotechnology for food and agriculture in low income countries: Development of concepts and their application to selected countries." This volume is based partially on

the research conducted during this project. In addition, the financial support of the EU-funded research project BioECON (BIOdiversity and Economics for CONservation) is gratefully acknowledged. ZEF-Bonn, August 2002 Detlef Virchow

Table of Contents Preface ............................................................................................................... V Table of Contents ........................................................................................... VII List of Contributing Authors ........................................................................... IX List of Abbreviations ....................................................................................... XI

Introduction ............................................................................................................ 1 Efficient Conservation of Crop Genetic Diversity: The Costs and Implications Detlef Virchow 2 Leipzig Declaration on Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture ................................... 15 Theoretical Approach .......................................................................................... 19 3 Financing the Conservation of Crop Genetic Resources ............................ 21 Detlef Virchow 4 Economic Incentives for Conserving Crop Genetic Diversity on Farms: Issues and Evidence Melinda Smale Empirical Studies ................................................................................................. 69

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Current Expenditures on Crop Genetic Resources Activities ..................... 71 DetlefVirchow 6 Costing the Conservation of Genetic Resources: A Comparison of the CIMMYT and ICARDA Genebanks Bonwoo Koo, Philip G. Pardey and Brian D. Wright 7 The Economics of the Conservation of Crop Genetic Resources in Colombia: A Case Study for Five Specific Crops ..................................... 89 Roclo del Pilar Moreno 8 Costs of Conservation of Agrobiodiversity in India ................................. 137 Sanjeev Saxena, Vikas Chandak, Shrabani B. Ghosh, Riya Sinha, Neeru Jain and Anil K. Gupta 9 Conservation of Crop Genetic Resources in Kenya ................................ .l7 5 Mosoti Andama and E.O. Wandera 10 Conservation and Sustainable Utilization of Crop Genetic Resources: The Role of the Public Sector in Sub-Saharan Africa ............................. 213 Detlef Virchow 11 Regional Collaboration to Conserve Crop Genetic Resources ................. 231 DetlefVirchow and Murthi Anishetty

List of Contributing Authors Andama, Mosoti Ministry of Agriculture P.O. Box 7369 - GPO - 001, Nairobi Kenya Anishetty, Murthi Food and Agriculture Organization of the United Nations (FAO) Via delle Terme di Caracalla, 00100 Rome Italy Chandak, Vikas Indian Institute of Management (IIMA) Vastrapur, Ahmedabad 380 015 India Ghosh, Shrabani B. Ahmedabad 380015 India Gupta, Anil Honey Bee Network / Indian Institute of Management (lIMA) Ahmedabad 380015 India Jain, Neeru National Bureau of Plant Genetic Resources (NBPGR) Pusa Campus, New Delhi 110012 India Koo,Bonwoo International Food Policy Research Institute (IFPRI) 2033 K st. NW, Washington, DC 20006-lO02 USA Moreno, Roclo del Pilar Ohio State University 515 Montgomery Ct. Columbus, OH 43210-4002 USA Pardey, Phillip G. University of Minnesota St Paul, MN 55108 USA

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Contributing Authors

Saxena, Sanjeev National Bureau of Plant Genetic Resources (NBPGR) Pusa Campus, New Delhi 110012 India Sinha, Riya National Innovation Foundation (NIF) Ahmedabad 380015 India Smale, Melinda International Plant Genetic Resources Institute (IPGRI) Via dei Tre Denari, 472/a, 00057 Maccarese / Rome Italy Virchow, Detlef Center for Development Research Walter-Flex-Str. 3, 53113 Bonn Germany Wandera, Elisha O. Ministry of Agriculture P.O. Box 20844 - KNH, Nairobi Kenya Wright, Brian D. University of California, Berkeley CA 94720 USA

List of Abbreviations ASSINSEL CATIE

CBD CBK CCC CCD CENICAFE CENICANA CENIPALMA CGIAR CGR CIAT CIMMYT

CIP COP CORPOICA CRF EA-PGR ECP/GR EUFORGEN FAO FCCC FEDERACAFE GBK GEF GFAR GPA

GPS

International Association of Plant Breeders Centro Agron6nomico Tropical de Investigaci6n y Ensefianza Tropical Agricultural Research and Training Center Convention on Biological Diversity Coffee Board of Kenya Colombian Coffee Collection International Convention to Combat Desertification National Center of Coffee Research National Center of Cane Research National Center of Oil Palm Research Consultative Group on International Agricultural Research Crop Genetic Resources Centro Internacional de Agricultura Tropical, CGIAR International Center for Tropical Agriculture Centro Internacional de Mejoramiento de Mafs y Trigo, CGIAR International Center for Maize and Wheat Improvement Centro International de la Papa, CGIAR International Potato Center Colombia Pesos Colombian Corporation of Agricultural Research Coffee Research Foundation of Kenya Plant Genetic Resources Network for East Asia European Cooperative Program for Crop Genetic Resources Networks European Forest Genetic Resources Program Food and Agriculture Organisation of the United Nations Framework Convention on Climate Change National Federation of Colombian Coffee Producers Genebank of Kenya Global Environmental Facility Global Forum on Agricultural Research Global Plan of Action for the Conservation and Sustainable Use of Plant Genetic Resources for Food and Agriculture Global Positioning System

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List of Abbreviations

GTZ

IARCs ICA ICA-CORPOICA ICARDA ICRISAT IFPRI UTA ILRI INIBAP IPGRI IPR IRRI ITPGR KARl KEPHIS LAMP MV NARS NBPGR NGB NGO NPAB NPPGR NSSL PGRFA PQS R&D RECSEA-PGR RH RRCs

Deutsche Gesellschaft flir Technische Zusammenarbeit (GTZ) GmbH German Agency for Technical Co-operation International Agricultural Research Centers Columbian Agricultural Institute Colombian Corporation of Agricultural Research International Center for Agricultural Research in the Dry Areas, CGIAR International Crops Research Institute for the SemiArid Tropics, CGIAR International Food Policy Research Institute, CGIAR International Institute for Tropical Agriculture, CGIAR International Livestock Research Institute, CGIAR International Network for the Improvement of Bananas and Plantains, CGIAR International Plant Genetic Resources Institute, CGIAR Intellectual Property Rights International Rice Research Institute, CGIAR International Treaty on Plant Genetic Resources for Food and Agriculture Kenya Agricultural Research Institute Kenya Plant Health Inspectorate Services Latin American Maize Project Modem varieties National Agricultural Research Systems Indian National Bureau of Plant Genetic Resources Nordic Genebank Non-governmental organization Colombian National Program of Agriculture Biotechnology Colombian National Program of Plant Genetic Resources National Seed Storage Laboratory in Fort CollinslUSA Plant genetic resources for food and agriculture Plant Quarantine Station Research and development Regional Collaboration in Southeast Asia on Plant Genetic Resources Relative humidity Regional Commodity Research Centers

List of Abbreviations

SACCAR SADC SPGRC SSA TRIPs UNCCD UNDP UNEP UPOV URG USD WANANET WCMC

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Southern African Center for Cooperation in Agriculture and Natural Resources Research and Trainmg Southern African Development Community SADC Plant Genetic Resources Center Sub-Saharan Africa Trade Related Intellectual Property Rights United Nations Convention to Combat Desertification United Nations Development Programme United Nations Environment Programme Union for the Protection of New Varieties of Crops Unity of Genetic Resources US Dollar West Asia and North Africa Plant Genetic Resources Network World Conservation Monitoring Centre

INTRODUCTION

1 Efficient Conservation of Crop Genetic Diversity: The Costs and Implications Detlef Virchow The genetic diversity of many crop species, which is manifested in varieties, land races and wild relatives, is endangered by the loss of natural habitats, deforestation and land clearance as well as the growing worldwide uniformity of crop production and the introduction of new pests and diseases, to highlight only the most important reasons. Although there have been few systematic studies quantifying the genetic erosion of crop genetic diversity, genetic erosion seems to take place in most countries (F AO, 1998). This is compensated for to some extent by the fact that today's improved varieties contain considerable amounts of genetic material derived from native breeds, which incidentally explains their favorable yield at many sites. However, since wild relatives and traditional cultivars of many crops contain the genetic potential for new varieties resistant to biotic and abiotic stress factors, crop genetic resources (CGR) will remain one of the essential inputs for sustainable food production and food security for the growing world population. A loss in diversity of CGR may undermine the chances of future generations to respond adequately to increasing food demand, to potential environmental changes, to plant diseases and to other challenges we cannot foresee or predict. Not only the crop genetic diversity on farmers' fields is subject to processes of physical decline, but the genetic resources stored and conserved in ex situ conservation facilities (e.g., genebanks) are being lost, for instance, through a lack of adequate facilities and management (F AO, 1998). This has been demonstrated, for example, by the changes taking place in the former Soviet Union and other East European states, which led to the breakup of the traditional Vavilov Institute with its once widely branching network of stations. Local collections such as those in Somalia and Rwanda have also recently been subject to destruction problems. Since an awareness of the decline in agrobiodiversity has developed, programs at the local, national and international levels have been launched. Estimates indicate that there are 6.2 million accessions of 80 different crops stored in 1,320 genebanks and related facilities in 131 countries (F AO, 1998). These figures document impressively the intense efforts undertaken for the conservation of CGR. Broader attention to the topic on the institutional level emerged in the 1990s, manifested in the Convention on Biological Diversity at the UNCED Conference in 1992. In the meantime, this convention has become international law, with more than 140 countries having ratified it. Also, an intergovernmental process was initiated to revise the International Undertaking on Plant Genetic Resources in accordance with the altered international conditions. This undertaking, which was not legally binding, has, since 1983, functioned as the basis of international understanding regarding the access to and dissemination of CGR. Moreover, the Food and Agriculture Organisation of the UN (FAO) held the International Technical

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Conference on Plant Genetic Resources in June 1996 in Leipzig, Germany, adopting the first ever Global Plan of Action for the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture. In November 2001, the International Treaty on Plant Genetic Resources for Food and Agriculture (lTPGR) was approved by the Conference of the F AO, ensuring conservation and better use of crop genetic diversity by taking into consideration the particular needs of farmers and plant breeders, as well as the fair and equitable sharing of the benefits (F AO, 200 I). This new, legally binding international agreement is the follow-up to the International Undertaking and is in harmony with the Convention on Biological Diversity (CBD).

How to Secure the Conservation of Crop Genetic Resources The conservation of CGR largely developed from earlier efforts by plant breeders to collect and use crop genetic diversity in their breeding programs. The oldest and most developed ex situ conservation method is the storage of orthodox seeds in seed banks (see Table l.1). Routine operations of genebanks include collecting, storage, viability testing, regeneration, characterization/evaluation and other steps. Most of the worldwide ex situ stored accessions are stored in seed genebanks. A significant number of important food crops, however, cannot be conserved as seeds, either because they do not produce seeds (i.e., banana) or the seeds are nonorthodox (i.e., intermediate or recalcitrant), such as coffee, mango, avocado and many forestry species. In the case of clonally propagated species, conservation in field gene banks and in vitro are among the approaches currently available. Maintaining germplasm in vitro overcomes some of the disadvantages of maintaining germplasm in field genebanks. Material is kept either under slow growth conditions for short- or medium-term conservation or in liquid nitrogen for the longterm. To a lesser extent, genebanks also store pollen. Furthermore, genes may also be stored as sequences in DNA libraries. The choice of which of the different ex situ conservation methods to use is confined by the limited availability of different technologies for conservation and for the first steps in the process of utilization (e.g.: characterization, evaluation and genetic enhancement). The above-mentioned ex situ conservation methods are being increasingly complemented by efforts to maintain and use genetic diversity either in its natural habitat (especially wild relatives and forestry species) or in locations where the material has evolved, i.e., on-farm or in home gardens (in situ). In the latter cases farmers manage diversity and "conserve" it through use in their traditional production systems.

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Table 1.1. Main Conservation Methods

Ex situ

In situ

Seed and pollen gene bank

On-farm conservation

In vitro genebank

Marginal land

Cryopreservation

Habitat conservation

Field genebank Botanical gardens DNA sequences storage The above-mentioned activities demonstrate that there is an international and national process underway to address the threat of CGR erosion on the institutional as well as the practical level. Still, open questions remain, the answers to which will significantly determine the conservation efforts. It is reported from many countries that the financial resources to enable a sustainable conservation of CGR are lacking. The "State of the World's Plant Genetic Resources for Food and Agriculture" indicates, for instance, that the quality of conservation facilities is poor in many cases due to scarce financial resources, increasing the risk of CGR loss (F AO, 1998). The existing scarce financial resources at the national as well as international levels are needed for various objectives. The general development towards reducing poverty and eradicating hunger calls for additional (public and private) financial resources. Furthermore, the concrete activities to improve food security through breeding for increased and more sustainable food production require additional public and private involvement. Due to the extreme competition for scarce financial resources, the fundamental issue needing to be discussed is the question concerning at which level CGR should be conserved and whether this should be done at any cost. Therefore, marginal cost benefit analyses playa vital role. Conserving CGR is not a goal in itself, but a means to maintain the potential of drawing benefits from the conserved resources now and in the future. Therefore, to make a judgment as to the appropriate level of investment in conservation, the utility of CGR has to be valued and considered in light of the cost of its conservation. Policy discussions remain confused because this question has not been solved; it has hardly even been discussed on a comprehensive basis. CGRs have been appreciated and used for a long time; however, an assessment of the value of genetic resources is still open to wide speculation due to the difficulties in measuring genetic resources, the confusing market structure and the lack of or poorly defined property rights for genetic resources. These issues have been discussed, and different approaches have been taken. Fewer efforts have been made to identify the costs connected to the conservation of CGR. The available information on the costs of CGR conservation is vague in many cases, or even non-existent in several countries. This holds true for the

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costs related to the ex situ conservation activities, but far more for those related to on-farm conservation of CGR.I Although the new, legally binding international treaty provides a framework to ensure access to CGR and to the related knowledge, technologies and internationally agreed-upon funding, the details of the funding mechanism are still open to further discussion. Bearing in mind that the main sources of today's useful crops are mostly found in low-income countries, it is obvious that no international convention or treaty can guarantee the sustainable conservation of CGR if the countries hosting the majority of genetic resources are not enabled to finance the conservation efforts. Besides the fundamental question of how to secure the financial means to conserve genetic resources, it has to be stressed that the amount of financial resources allocated to CGR conservation activities does not guarantee that they will be utilized in an efficient way. The expenditures on CGR conservation have to be correlated with the quality of the conservation activities. So far, the expenditures on CGR conservation have been regarded as similar qualitative investments into an effective conservation system. This is, however, not a valid assumption. Although international standards for CGR conservation exist, the quality of collections differs widely (Virchow, 1999b). It has been shown, for instance, that countries with the same expenditure structures have very different quality standards (Virchow, 1999). Even more threatening is the fact that countries with high agrobiodiversity and low conservation investment have in general low conservation quality, indicating the danger of CGR loss in such countries (Virchow, 1999b). In general, it seems that most countries lack sufficient financial funds to maintain their CGR collections (F AO, 1998). In addition, the amount spent to conserve CGR seems to be spent inefficiently in many conservation facilities (Virchow, 1999). Hence, increasing the cost effectiveness of CGR conservation is the most practical way of securing the sustainable conservation of these resources. Therefore, this book contributes to the discussion of how to secure and optimize CGR conservation by looking at the costs and the main cost components of CGR conservation in farmers' fields and in conservation facilities in specific countries and genebanks. In contrast to the extensive research into the values and benefits of biodiversity in general and of agrobiodiversity in specific, the costs of crop genetic resource conservation have received much less attention. There are cost aspects to be considered when studying crop diversity conservation and utilization, a field that has been neglected in the research so far. Quantitative analyses in this area are required, but are still very much in their infancy. Conservation costs include the direct cost of conservation (mainly for the ex situ conservation methods, such as in vitro, cryopreservation and seed and field gene banks ) and the indirect cost of conservation, particularly the opportunity cost of in situ methods, such as the on-farm and the habitat conservation methods. These opportunity costs reflect the foregone benefit for the farmer and for the country by maintaining the diversity of genetic IOn-farm (or in situ) conservation ofCGR is defined as maintaining "traditional" crop varieties in farmers' fields.

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resources in the field. In addition, conservation costs are not limited to the initial capital and subsequent operating costs of the conservation activity in a narrow sense only. The costs of characterization, evaluation, regeneration, multiplication and distribution of accessions may differ and must also be considered. The complementariness of all potential conservation methods has to be considered for economically efficient conservation of CGR on the national as well as on the international level. This includes regional and international collaborations. Hence, cost-effective methods for CGR conservation on the national and international levels have to be analyzed.

An Overview of the Volume This publication offers a contribution to the ongoing discussion by focusing attention on the costs of CGR conservation and the cost efficiency of conservation. The articles do not intend to give an overall picture of the conservation costs of CGR. The publication is rather an attempt to raise awareness and discuss a set of important issues about the costs of CGR conservation on the national level (in Colombia, Kenya and India), in two genebanks from two international centers (CIMMYT and ICARDA) and of in situ conservation as well as about the financing mechanisms for CGR conservation and the role regional collaborations can play. This book follows the questions raised above, arranging the contributions according to a theoretical discussion (Part I) and to specific empirical studies (Part II). The book begins with the Leipzig Declaration on Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture, which was adopted by representatives of 150 countries at the Fourth International Technical Conference on Plant Genetic Resources in Leipzig in June 1996. The Leipzig Declaration addresses the challenges of the conservation and sustainable utilization of genetic resources, focuses attention on the importance of CGR for world food security and commits countries to implement the first ever Global Plan ofActionfor the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture. Part I of the volume approaches the topic in a theoretical way. Virchow identi-

fies and discusses possible financing mechanisms that may enhance the availability, transparency, efficiency and effectiveness of the provision of financial resources to improve the conservation efforts for CGR. The conservation and sustainable utilization of CGR is based on the principle of the "fair and equitable" sharing of benefits derived from the utilization of CGR. Hence, this chapter includes a discussion on the system of benefit sharing as a source of financing for conservation efforts and thus as an incentive for sustainable conservation. Smale discusses the potential of the concept of a minimum viable reserve for CGR as an economically efficient in situ conservation system. She emphasizes that external economic incentives through public expenses of programs for conserving crop genetic diversity on farms are only needed if the farmers' opportunity costs are increasing. Hence, the least cost, minimum viable reserves of on-farm crop genetic

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diversity need scientifically based assessments of location and size combined with economic analyses of costs. The least cost conservation will occur in sites where farmers have the lowest opportunity costs because of high private incentives for conservation. Part II analyzes the costs of CGR conservation in the genebanks of two centers of the CGIAR and in several countries. To start off, Virchow summarizes the current expenditures on CGR activities at the national and intemationallevels and estimates the expenditures at the global level. Koo. Pardey and Wright compare the marginal costs of conservation of wheat and maize stored in the CIMMYT genebank and cereals, food legumes and forage legumes in the ICARDA genebank. One of the interesting conclusions they reach shows that the genebank budgets represent only a fraction of the total annual costs of conserving the collection. This has to be taken into account regarding the discussion of "cost and benefit sharing" of CG R conservation and the means of financing the global effort of CGR conservation. Contrary to the gene bank approach taken by Koo, Pardeyand Wright, three other chapters analyze the national system of CGR conservation in Colombia, India and Kenya and the costs involved in the conservation of specific crops. Moreno gives insights into the Colombian CGR conservation system, analyzing the costs for five specific crops. Saxena, Chandak, Ghosh, Sinha, Jain and Gupta focus on the components contributing to the costs of ex situ conservation in India. Although they come up with precise figures, the authors also discuss the various limitations encountered in calculating the cost of conservation. These limitations hold true for most of the cost estimates done. Andama and Wandera estimate the expenditures related to the various methods of conserving CGR in Kenya. In Kenya, in situ conservation is not yet an integrated part of general CGR conservation. It is also made clear that no cost accounting system is in place in any of the surveyed institutions involved in CGR conservation. Without a cost management strategy, however, an efficient conservation of CGR is hard to achieve. In light of the increased privatization in the breeding sector and the fact that most of the countries of sub-Saharan Africa have made little progress in the area of breeding and seed distribution in the last decades, Virchow discusses the role of the public sector in sub-Saharan Africa regarding the conservation and sustainable utilization of CGR. It is suggested that one of the main tasks for the public sector is to rationalize efforts on the regional or international levels, which will increase the efficiency of the conservation efforts. Regional collaboration to strengthen CGR conservation is highlighted in the final contribution by Virchow and Anishetty. Giving an overview of the existing regional collaborations, the authors discuss the opportunities for and the limitations of funding for regional collaborations.

General Conclusions One main aspect of securing the sustainability of CGR conservation in situ as well as ex situ is to reflect the costs of these conservation efforts and to discuss the ef-

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ficiency and the quality of conservation activities as well as to improve the institutional framework so that the existing benefits are transferred from the users and beneficiaries to the curators (those running the ex situ facilities as well as the farmers) of CGR. This is essential for the secured long-term financing of CGR conservation. "Benefit sharing" evolves to "cost sharing" and is an incentive to compensate the costs of CGR conservation and consequently to support a sustainable CGR management at a time when the decline of CGR in farmers' fields as well as in storage facilities is threatening the entire conservation effort. Hence, without detailed knowledge about the costs of conservation, the "cost sharing" cannot be implemented in a way that secures the sustainable conservation of CGR. It is the intention of this publication to further broaden the knowledge of the conservation costs. Further research is still needed on the cost aspect of CGR conservation before general conclusions and recommendations can be formed in order to contribute to the above-stated optimal conservation level. Keeping this in mind, some findings from the diverse studies in this publication can be cautiously generalized regarding the costs and the cost effectiveness of CGR conservation. The cost of various conservation methods for specific CGR and their effectiveness have been analyzed on the basis of different studies. Thereby, the cost effectiveness of CGR conservation depends on: • The labor and capital intensity of the conservation method. The investment of capital and labor necessary for the preparation of the material to be stored, for the conservation process as well as for the information processing of the stored material varies depending on the conservation method. In general, the traditional method of freezing the genetic material in seed genebanks is the least capital and labor intensive. The annual average costs for one accession is between US $ 10 to 30, depending on the crop, country and institution. The estimated marginal variable cost of conserving an accession is much lower, ranging from 17 cents to 93 cents for cereals. The field gene banks, in contrast, are much more labor intensive than the seed gene banks with similar capital intensity. The average annual costs per accession are US $ 25 to US $ 260. The most capital and labor intensive conservation method is in-vitro conservation, where the annual average unit costs for the accessions are between US $ 100 and US $ 700. Cryoconservation is currently only being used in some countries and institutes. As it seems to be a labor extensive and relatively capital extensive long-term conservation method, it holds the potential to become the most cost effective long-term conservation method for all CGR . • The biological and storage characteristics of the genetic material conserved. The biological characteristics of the genetic resources to be conserved, such as the seize of the plant material, the susceptibility to diseases and pests or the regeneration potential, determine the cost of conservation. The smaller the stored material and the less complicated and more robust the biological characteristics, the cheaper the storage of the material will be.

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• The exploitation of economy of scale effects. As the different steps of the conservation measures need specialized labor as well as specific technologies and infrastructure with partly high fixed costs, the cost effectiveness of all conservation methods is, in general, additionally determined by the potential number of accessions of the crop to be conserved. This number is in turn determined by the diversity of this crop in the country. For instance, in India or China, where up to 50,000 different species of rice exist, the unit costs can be reduced by effects of economy of scale in the conservation measures compared to other COR with only a small number of potential accessions in a country. Furthermore, the institutional costs of maintaining a national conservation system will not vary greatly in relation to the number of accessions conserved. So, for instance, a country with a small number of conserved accessions has approximately the same institutional costs as other countries with significantly more conserved accessions. • The quality of the genetic resources conserved. Due to the current and future use of conserved germplasm, it is necessary to include into the cost calculations not only the conservation activities in the narrow sense, but also the germplasm processing activities. Therefore, the hygienic and technical precautionary measures and the processing of the accessions' information content are taken into consideration for the cost analysis as well as for the quality of the conservation method. These activities, especially the molecular characterization and evaluation with highly specialized and expensive equipment, are crucial to the level of the conservation cost; however, they also determine the quality of conservation. The cost effectiveness ofthe conservation activities is high, especially when the conservation costs are low and the conservation quality is high. This is shown for rice, sorghum and maize. The studies document as well that the cost effectiveness, especially for the crops that are only vegetatively propagated (potato, banana) or the perennial crops (tea, coffee), is low. This is due to the high cost of the conservation methods combined with low conservation quality. 2 The effectiveness of the conservation is diminished when (i) the plant material is well stored concerning the phytosanitary measures, but no information on the accession exists, or when (ii) the accession has been well characterized and evaluated but is not viable anymore. • The complementariness of the different conservation methods. The studies show that, despite a variety of possible conservation methods, the different crops are being conserved mainly by using one form of conservation. The seed and field genebanks are the conservation methods most often applied. Until now, the modern and most effective conservation method, cryoconservation, has seldom been used. Because of the high capital and labor costs of field genebanks and of in-vitro conservation activities, in the long run, alternatives will be used. Cryoconservation thus seems to be a future long-term storage technology, especially for species that can easily be regenerated into whole 2

In the field of phytosanitary measures or in the processing of the infonnation content of the CGR-accessions.

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plants. As up until now this technology has only been used in a few conservation institutes for only a few crops, the average costs are still very high. As for example in India, this technology is being used to replace the complicated and therefore cost intensive conservation activities for banana and tea. It is foreseeable that the cost effectiveness will increase when the utilization of this technology has been enforced and thus more experience has been gained.

Policy Implications The 1996 International Technical Conference on Plant Genetic Resources for Food and Agriculture in Leipzig reaffirmed and agreed that the conservation of CGR is crucial to maintaining the genetic resources required for the breeding efforts of the future. Funds are needed to achieve the goal of implementing the Global Plan of Action for the Conservation and Utilization of CGR adopted at Leipzig. It will be necessary to allocate scarce financial resources in a way that optimizes their impact. As the studies show, the efficiency of CGR conservation varies widely among countries. Consequently, the allocation of financial resources for CGR conservation through multi- or bilateral channels should be driven by an attempt to close efficiency deficits in countries' CGR conservation systems. The conservation of CGR is mainly discussed in connection to the utilization of genetic resources for breeding purposes and, ultimately, for the improvement of food security at the national as well as at the global levels. Despite this important fact, many countries seem to have significant difficulties to maintain the national genetic resources ex situ because of a lack of financial resources. Furthermore, countries, especially food deficit countries, are in a dilemma concerning the conservation ofCGR in farmers' fields due to high social opportunity costs. It is apparent that many developing countries, hosting the overwhelming amount of CGR, cannot afford to finance all necessary conservation activities without external (financial) support. Considering the benefits of CGR conservation for the various groups of beneficiaries, especially the food consumers, and the relatively low expenditures, it seems that the international community as a whole should be able to afford to conserve CGR. There are, however, five prerequisites to sustainable financing of CGR conservation. • The long-term conservation activities are often in direct competition for increasingly scarce financial resources with other, rather short-term development activities. Because of the existing uncertainties concerning the economic value of CGR, and because of the financial shortages in the households of the developing countries that provide the predominant portion of CGR, the risk of an irreversible loss of genetic resources through inadequate conservation activities exists. Without sustainable international support, such as financial resources, technology transfer as well as education and further training, the secured longterm conservation of CGR cannot be achieved. • The cost effectiveness of conservation activities has to be improved. The quality of CGR conservation should be improved by more intensive activities in the

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field of phytosanitary measures and regeneration as well as in information processing. Beside the quality improvement, the costs for the conservation activities should be reduced. This can be achieved, among other ways, by making use of the effects of economy of scale as well as the increased utilization of new conservation methods. Due to the differences in conservation quality, the high heterogeneity of the product "conserved germplasm" does not allow the cost efficiency of conservation to be assessed solely by the costs per accession. The quality of conservation facilities has to be taken into consideration. Without improving the conservation quality, sustainable financing of CGR conservation will not be secured and the financial resources will only have a sub-optimal effect. • A constant quality and cost monitoring process has to be established to ensure efficient utilization of scarce financial resources and to improve the cost efficiency of the national CGR conservation systems. Only if additional contributions significantly improve the conservation efforts and conservation quality on the national level will financial resources be spent optimally. • Improving the quality of the conserved germplasm as well as reducing the average conservation costs will increase the efficiency of the national conservation systems. This efficiency increase needs prioritized funding. It seems that improved management, including the rationalization of collections through institutional as well as international collaboration, can reduce the unit costs as well as increase the conservation quality. • And finally, only if policies and institutional arrangements for the protection and sustainable utilization are installed that enable the conservation facilities (ex situ) and the farmers (in situ) to benefit significantly from the conservation efforts or to be compensated for the costs of conservation will CGR be conserved in a sustainable manner. CGR conservation is affordable and worth doing. However, we cannot afford to wait too long for sufficient and sustainable investments to take place, the efficiency of conservation to be increased and the quality of conservation facilities to be improved. Action has to be taken immediately, at the national as well as the international levels, to sustain with efficiency the conservation of crop genetic resources.

References F AO (200 I): International Treaty on Plant Genetic Resources for Food and Agriculture. F AO, Rome. FAO (1998): The state of the world's plant genetic resources for food and agriculture. FAO, Rome. FAO (1996): Global Plan of Action for the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture and the Leipzig Declaration. FAO, Rome.

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Virchow, D. (1999a): Conservation of Genetic Resources: Costs and Implications for a Sustainable Utilization of Plant Genetic Resources for Food and Agriculture. Springer-Verlag, Berlin - Heidelberg, 1999. Pp. 243. Virchow, D. (1 999b ): Spending on Conservation of Plant Genetic Resources for Food and Agriculture: How much and how efficient? ZEF-Discussion Papers on Development Policy. Number 16. Bonn, 1999. Pp. 37.

2 Leipzig Declaration on Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture At the Fourth International Technical Conference on Plant Genetic Resources in June 1996, participants representing 150 nations gathered in Leipzig, Germany to address the challenges of the conservation and sustainable utilization of genetic resources. They adopted the Leipzig Declaration, which focuses attention on the importance of plant genetic resources for world food security and commits countries to implement the first-ever Global Plan for the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture, which was also adopted during the same conference 3 : 1. In recognition of the essential importance of plant genetic resources for food and agriculture (PGRF A), in particular for the food security of present and future generations, the representatives of one hundred and fifty States and fifty four Organizations have gathered together in Leipzig, at the invitation of the Food and Agriculture Organization of the United Nations, at the Fourth International Technical Conference for Plant Genetic Resources. We have done so to assert and renew our commitment to the conservation and sustainable utilization of these resources and to the fair and equitable sharing of the benefits arising from the use of plant genetic resources for food and agriculture, recognizing the desirability of sharing equitably benefits arising from the use of traditional knowledge, innovations and practices relevant to the conservation of plant genetic resources for food and agriculture and their sustainable use. We are convinced that these efforts can be an essential contribution to achieving the objectives, and facilitating implementation of, the Convention on Biological Diversity and Agenda 21. 2. Recognizing that states have sovereign rights over their plant genetic resources for food and agriculture, we also confirm our common and individual responsibilities in respect of these resources. 3. These resources are the basis of natural and directed evolution in the plant species most critical to the survival and well-being of human beings. All countries require plant genetic resources if they are to increase food supplies and agricultural production sustainably and meet the related challenges of changes in the environment, including climate change. We are conscious of the intrinsic value of this biological diversity and of its ecological, social, economic, scientific, educational, cultural, and aesthetic importance. 4. Plant genetic resources for food and agriculture are the product of natural evolution and human intervention. We acknowledge the roles played by generations of men and women farmers and plant breeders, and by indigenous and local communities, in conserving and improving plant genetic resources. Through their

3

The full text can be read at: http://www.fao.org/focus/e/96/06/more/declar-e.htm.

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Leipzig Declaration on Conservation and Sustainable Utilization ofPGRFA

efforts, much has been, and is still being, accomplished to collect, conserve, improve and sustainably use plant genetic resources for food and agriculture. 5. We are aware, however, of the serious threats to the security of plant genetic resources and acknowledge that efforts to conserve, develop, and sustainably use genetic diversity should be improved. This diversity is being lost in the fields and other ecosystems of virtually all countries, even in genebanks. Though the number of genebanks has increased rapidly in recent decades, many cannot meet minimum international standards. An alarmingly high number of stored accessions are in need of regeneration, indicating that much of the material collected and conserved in the past is now endangered. 6. Major gaps and weaknesses exist in national and international capacity to conserve, characterize, evaluate, and sustainably use plant genetic resources to increase world food security and contribute to sustainable development. The crucial linkage between conservation and utilization should be improved. Existing diversity in crop species is not used to the extent possible for increased food production or for improving the sustainability of production systems. Institutional capacity, structures and programmes should be reviewed to address these deficiencies. It is necessary to strengthen national capabilities, particularly in developing countries. 7. We recognize the interdependence of countries and peoples regarding plant genetic resources for food and agriculture. Access to and the sharing of both genetic resources and technologies are essential for meeting world food security and needs of the growing world population, and must be facilitated. Such access to and sharing of technologies with developing countries should be provided and/or facilitated under fair and most favourable terms, including on concessional and preferential terms, as mutually agreed to by all parties to the transaction. In the case of technology subject to patents and other intellectual property rights, access and transfer of technology should be provided on terms, which recognize and are consistent with the adequate and effective protection of intellectual property rights. We affirm the need to promote international and regional cooperation among countries, intergovernmental organizations, non-governmental organizations, and the private sector. 8. Tn particular, we acknowledge the pressing need to sustain existing ex situ collections and in situ habitats of plant genetic resources. It is important that this diversity be made more useful and valuable to breeders, farmers, and indigenous and local communities, by providing better and more accessible documentation. We recognize the need for substantial and long-term support and incentives for national and international plant breeding programmes, including initiatives to adapt and enhance genetic materials for further development by plant breeders. We call for a new and more productive partnership between scientists and farmers to build upon the ongoing efforts of farmers to manage and improve their plant genetic resources, especially in marginal areas. 9. Our primary objective must be to enhance world food security through conserving and sustainably using plant genetic resources. This will require integrated approaches combining the best of traditional knowledge and modern technologies. Means are needed to identify, increase, and share fairly and equitably the benefits derived from the conservation and sustainable use of plant genetic resources.

Leipzig Declaration on Conservation and Sustainable Utilization of PGRF A

17

10. At the Fourth International Technical Conference for Plant Genetic Resources, to help fulfill our objectives, we have adopted a Global Plan of Action for the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture. This Plan provides a coherent framework for activities in the field of in situ and ex situ conservation, in sustainable utilization of plant genetic resources, as well as in institution- and capacity-building. It will contribute to creating synergies among on-going activities, as well as more efficient use of available resources. We are convinced of the utmost importance of long-term national commitments to integrated national plans and programmes, and for indispensable national, regional and international cooperation. 11. This Global Plan of Action is an important element of the FAO Global System for Conservation and Utilization of Plant Genetic Resources. The Global System presently includes, amongst other elements, an International Undertaking on Plant Genetic Resources currently under revision. We believe it important to complete the revision of the International Undertaking on Plant Genetic Resources and to adjust the Global System, in line with the Convention on Biological Diversity. 12. We undertake to honour our commitments by taking the necessary steps to implement the Global Plan of Action in accordance with our national capacities. 13. We have gathered in Leipzig, aware of our responsibilities and the difficulties ahead, but confident that progress can and should be achieved. We stress the need for integrating the conservation and sustainable use of plant genetic resources for food and agriculture in agricultural policy as an essential element for food security. We invite attention to be paid to the Global Plan of Action at the World Food Summit, to be held in November 1996. We invite all people to join us III our common cause. Adopted this 23rd day of June, 1996.

THEORETICAL ApPROACH

3 Financing the Conservation of Crop Genetic Resources DetlefVirchow Due to the interdependencies among countries regarding the heritage of crop genetic resources (F AO, 1998), a multilateral agreement seems to be the most cost efficient way for the sustainable conservation and utilization of crop genetic diversity. The "Global Plan of Action for the Conservation and Sustainable Use of Plant Genetic Resources for Food and Agriculture" (GPA), adopted by 150 governments at the Fourth International Technical Conference on Plant Genetic Resources in June 1996 (FAO, 1996a), is accepted as an internationally agreed framework for the conservation, exploration, collection, characterization, evaluation and documentation of crop genetic resources (F AO, 2001). The contracting parties in the "International Treaty on Plant Genetic Resources for Food and Agriculture" (ITPGR) recognize in Article 13.5 that the " ... ability tofully implement the Global Plan of Action ... will depend largely upon the effective implementation of ... " the system of benefit sharing as it was agreed upon in the multilateral system, and it further depends on the implementation of the funding strategy as provided in Article 18 of the ITPGR. But how can a multi-lateral agreement finance the conservation taking place in over 130 countries without degrading to an administrative, loss-incurring Moloch? And how can the financial strategies be sustainable and efficient to assist farmers and farming communities in the long-term conservation of their crop genetic resources and to allow them and their countries to participate fully in the benefits arising from the utilization of CGR as promoted in Article 9.2 of the treaty? On the other hand, how can the financing mechanisms be flexible enough to incorporate changes on the demand as well as the supply side ofCGR? During the preparatory process for the International Technical Conference, the shortage of funding was identified as a major constraint for sustainable conservation (F AO, 1998). While many CGR conservation and utilization activities are long-term and require sustainable funding, international funding is often shortterm and thus insufficient. There is a clear need for funding on a planned and sustainable basis. This could be provided both by new and additional funding as well as by a reallocation of resources. This chapter identifies and discusses possible financing mechanisms that may enhance the availability, transparency, efficiency and effectiveness of the provision of financial resources to improve the conservation efforts for crop genetic resources. Before elaborating the potential financing mechanisms for the concrete conservation activities, including the mechanisms of contribution to and distribution of related funds, an overview of general financing mechanisms will be given.

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Overview of Financing Mechanisms The focus of this section is financial mechanisms for national and local implementation of international agreements. These have been broadly discussed in a number of fora, including the Convention on Biological Diversity, the Climate Convention and the Desertification Convention. This chapter will review some of the financial mechanisms established in these fora. These mechanisms could be of interest for the conceptualizing of a financing mechanism to improve the efficiency of CGR conservation efforts. Besides the financing mechanisms of the international conventions, mechanisms of other international organizations of the United Nations system are discussed by giving some examples. Financing Mechanisms of International Conventions The Convention on Biological Diversity (CBD) establishes that parties from the developed countries will provide new and additional financial resources to enable the parties from developing countries to meet the "agreed full incremental costs" necessary for the implementation of the convention (Art. 20.2) and that a financial mechanism will operate within a "democratic and transparent system of governance" (Art. 21.1 ).4 The financial mechanism "shall function under the authority and guidance of, and be accountable to, the Conference of the Parties" (Art. 21.1). The CBD identifies three types of funding: national or domestic resources, the financial mechanism of the convention and other bilateral or multilateral flows. 5 The Global Environmental Facility (GEF) (Art.27) is the interim financing mechanism of the CBD (Arts. 27 and 39), for which it was established. However, not only the CBD but also the Framework Convention on Climate Change (FCCC) has designated the GEF as its funding mechanism on an interim basis. The ultimate objective is to "achieve stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic inteiference with the climate systems. " (Art. 2, UNFCCC, 1992).

The Global Environmental Facility (GEF) provides grants and concessional funding to recipient countries for projects and programs that protect the global environment and promote sustainable economic growth. The facility, originally set up as a pilot program in 1991, was restructured and replenished in 1994 to cover the agreed incremental costs of activities that benefit the global environment in four focal areas: climate change, biological diversity, international waters and stratospheric ozone. GEF projects and programs are managed through three implementing agencies: the UN Development Program (UNDP), the UN Environment Program (UNEP) and the World Bank. The GEF Secretariat, which is functionally independent from the three implementing agencies, reports to and services 4

5

Report of the United Nations Conference on Environment and Development, Rio de Janeiro, 3-14 June 1992, vol. I, Resolutions Adopted by the Conference (United Nations

publication, Sales No. E.93.I.8 and corrigendum), resolution 1, annex II. Convention on Biological Diversity, Art. 20.

Financing the Conservation of Crop Genetic Resources

23

the Council and Assembly of the GEF. The GEF is striving for universal participation, and 150 countries are currently participants. According to the Memorandum of Understanding between the Conference of the Parties to the Convention on Biological Diversity and the Council of the Global Environment Facility, "in accordance with Article 21 of the Convention, the Conference of the Parties determines the policy, strategy, program priorities and eligibility criteria for access to and utilization offinancial resources available through the financial mechanism, including monitoring and evaluation on a regular basis of such utilization. GEF, in operating the financial mechanism under the Convention, will finance activities that are in full coriformity with the guidance provided to it by the Conference of the Parties. " The CBD Secretariat reviews each biodiversity project proposal to consider

the conformity of each project with the policy, strategies, program priorities and eligibility criteria approved by the Conference of the Parties. Besides the regular activities, a GEF Small Grants Program provides support for small-scale activities addressing the four focal areas. The principal objective of the pilot phase, administered by UNDP, is to demonstrate that NGO and community-based strategies and technologies can contribute to reducing threats to the global environment if they are replicated over time. The International Convention to Combat Desertification (CCD) provides for financial resources through its Article 20. It is envisaged that a multi-source and multi-channel financing mechanism will finance the implementation of the CCD, rather than a centralized financial mechanism. The convention promotes the availability of financial mechanisms through its Article 21 (Financial Mechanisms). This establishes a "Global Mechanism", which is hosted by the International Fund for Agricultural Development and is used "in order to increase the effectiveness and efficiency of existing financial mechanisms. " It provides for modalities that, inter alia, "identifY and draw up an inventory of relevant bi- and multilateral cooperation programs ", "provide advice, on request, to Parties on innovative method5 offinancing and sources of financial assistance and on improving the coordination of cooperation activities at the national level" as well as "provide interested Parties and relevant intergovernmental and non-governmental organizations with iriformation on available sources of fonds and on funding patterns in order to facilitate coordination among them. " Through the partner-

ships it will foster, the mechanism will ensure a greater role for domestic resources and private-sector initiatives and will allow a blending of grants and of concessional and other types of external finance. Financing Mechanisms of Other International Organizations 6 The organizations of the UN system are increasingly involving the private sector in mobilizing financial resources for their programs and activities. The following 6

For more information, see: Report of the Secretary General. Fifty-third session of the General Assembly, 9 October 1998: United Nations Al53/479: High-level international intergovernmental consideration of financing for development: work of the United Nations system. Agenda item 91 (b): Macroeconomic policy questions: financing of development, including net transfer of resources between developing and developed countries.

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provides some examples of partly innovative sources of financing. Together with the public sector, the private sector is becoming the dominant partner in the mobilization and utilization of investment resources from both international and domestic sources for UNIDO's activities on building capacities for the promotion of investment and technology. UNIDO has also developed a network of partners who are in contact with the donor governments and the private sector as well as other international funding agencies involved in promoting the flow of investment and technology to developing countries. UNDP's Regional Bureau for Latin America and the Caribbean has been helping to organize venture capital for programs and activities. For instance, in collaboration with the South-North Institute, a nongovernmental organization, a pilot program to involve the local private sector in creating employment opportunities for the low-income population was designed. By creating an enabling environment for private sector investment in areas that would otherwise not be seen as attractive opportunities for generating revenues, UNDP is promoting direct private capital investment flow to areas of critical importance to sustainable development, namely water and sanitation, waste management and energy. Besides direct private investment of financial resources, there exist different indirect ways of mobilizing finance resources. For instance, UPU has undertaken an important project in a large developing country to reform that country's postal system as a "self-financing fund." Innovative sources of financing are of increasing importance, and very different instruments are utilized. A NGO in Japan undertakes fund-raising campaigns and provides the funds to the United Nations International Drug Control Program (UNDCP) for use exclusively in small grants to NGOs working on drug abuse prevention in developing countries. The government of Luxembourg, as another example, donates a portion of the revenues it receives from assets forfeited in drug trafficking/laundering cases to UNDCP. These funds are used for developmentbased initiatives in rural areas where illicit crops are grown as a means of removing the economic dependence on drug crops. The FAO, as a further example, is placing increased emphasis on public/private partnerships as a way to increase the effectiveness of its activities, as well as to leverage additional resources for its activities and programs. Its collaboration with the private sector involves direct private sector support for its activities. Increased trade, technology transfer and investment in developing countries have also been facilitated through the F AO's cooperation with international industry associations. For instance, the International Fertilizer Industry Association has supported a wide range of FAO initiatives and is now a partner with the FAO, the World Bank and others in the Soil Fertility Initiative. The World Heritage Fund of the UNESCO-sponsored World Heritage Convention provides a useful model. Funds are provided on a continuous basis in return for the continued conservation of sites on the World Heritage list. Funds are raised as mandatory assessments on developed countries, and, in effect, are forms of international income tax on countries, assessed according to their ability to pay.

Financing the Conservation of Crop Genetic Resources

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Another program, which is more applicable to the conservation of CGR in situ, is the system of biosphere reserves under UNESCO's Man and the Biosphere Program. Such approaches as briefly characterized in the given overview might be effective for the in situ conservation of crop genetic resources as well as the protection of traditional farming systems.

The Financing Mechanisms for the Conservation and Sustainable Utilization of CGR An International Fund as a Core Element As has been shown, there are a vast number of potential financing mechanisms to be utilized for any international convention. However, not all possible mechanisms are well adjusted to the specific challenges of CGR conservation and utilization. Based on the outcome of the Fourth International Technical Conference and on the ITPGR, the financing mechanisms for CGR conservation should be multi-source and multi-channel systems. In this section, an international fund as the core element to finance the conservation and sustainable utilization of CGR will be discussed. As an essential element, an actual fund ought to be established with contributions from various financial sources (see Fig. 3.1). An actual fund for the conservation and utilization ofCGR can be seen as a further and major component of the FAO's Global System for the Conservation and Utilization of PGRF A. Its main function is to provide a channel among other channels for countries, intergovernmental and non-governmental organizations, private industry and individuals to support and promote sustainable CGR conservation and use at a world level (F AO, 1996b, para. 17). This fund can be utilized on the one hand as a financing instrument to provide additional financial resources to national, regional and international plant genetic resources activities for the implementation of the GP A. On the other hand, the actual fund can be used for financial transfers as compensations for countries, specific farmer groups or individuals that have offered their in situ conservation areas to the international community for bioprospecting. The actual fund is expected to become a key mechanism for sharing benefits and a critical element in ensuring the equitableness of the FAO's Global System for the Conservation and Utilization of PGRF A. As the core element of the funds, the actual fund could be complemented by a "virtual fund." This fund monitors all financial resources that are invested for CGR conservation and sustainable utilization, no matter what their sources and funding channels are. In this way, all private, bi- and multilateral investment into implementing any activity related to conservation activities can be recorded.

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Fig. 3.1. An International Fund to Finance the Conservation of CGR international fund: additional fund

virtual fund

conservation of crop genetic resources

other, non-related financial transfer

+--

private technology transfer

+--

multilateral agreements: - financing GPA - technology transfer

+--

~

financial transfer for compensation

+--

r/

actual fund

+--

bilateral agreements: - financing GPA - technology transfer contribution of financial resources: - mandatory contribution - voluntary contribution

The actual fund as well as the virtual fund are based partly on mandatory contributions and partly on voluntary or ex gratia contributions in cash as well as in other means of engagement. Technology transfer will be - besides the financial contributions - the most important alternative resource for conservation and utilization activities. The additional fund can be classified as such resources as are transferred for activities with other objectives, but have a positive impact on the conservation and utilization of CGR. These non-related expenditures, for instance, development assistance, may be listed in the financing mechanisms because of their positive effects on the conservation and utilization of CGR. The annual total of the funds contributed through the actual as well as the virtual fund to the implementation of activities related to the conservation and sustainable utilization of CGR ideally should add up to the estimated funding needs. This is the amount that can be distributed to countries in need of (financial) resources to improve their conservation and sustainable utilization efforts. How to Finance an International Fund

An international fund has been discussed as being a core element for improving the conservation and sustainable utilization of CGR worldwide. On the one hand, this fund should be able to distribute the necessary (financial) resources for sus-

Financing the Conservation of Crop Genetic Resources

27

taining the ongoing and required efforts to conserve and sustainably utilize CGR. On the other hand, this fund should attract sufficient (financial) resources to enable the required distribution. Thus, the first issue to be discussed is the question of how to finance the international fund. Utilizing Existing Funds In general, two categories of possible funding sources for conservation activities can be identified: existing funds and new funds. Utilizing existing sources means to reallocate existing funds, to increase the cost efficiency of conservation and utilization activities as well as to reduce misallocation. Existing sources of funding that may be applicable to CGR conservation activities are listed in Table 3.1. The multitude of existing independent channels for financing CGR conservation and sustainable utilization also means that there is almost certainly duplication of efforts and loss of effective development financing through fragmentation of project planning and supervision. A significant increase in effectiveness would result from more coordinated decision-making and priority setting. Some savings would result from the full implementation of the recommendations and initiatives of the GP A as an institutionally accepted framework· for the conservation and sustainable utilization of CGR. These savings are difficult to estimate, because, firstly, they would depend on the manner and degree to which the GP A was implemented; secondly, they would be associated with different activities, and, thirdly, they might be experienced at different levels among different institutions. Tracking such savings would be difficult. Were these savings applied to other aspects of the GPA, however, the need for net additional resources would be correspondingly reduced. Supplemental resources for CGR could also be obtained from are-prioritization of existing bilateral and multilateral financing from such fields as agricultural and rural development and from a reallocation of domestic agricultural expenditures. Some of the proposed activities, such as securing existing ex situ collections and restoring agricultural systems following disasters, might be reasonably financed through such reallocations. All potential funding sources could contribute to specific conservation activities related to the GP A. Besides all organizations already involved in the funding of activities related to the conservation and sustainable utilization of CGR, organizations not yet involved as well as all beneficiaries of CGR utilization are targeted as funding sources. These sources would contribute partly to the actual fund but partly as well to the virtual fund by contributing on a bi- or multilateral level.

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Table 3.1. Potential Sources of Funds Domestic sources of fu nding

Public sector funding

- National governments

UN system

- University-based research institutes

Public financial institutions

- Government-based research institutes - Independent research institutes - National NGO-related research institutes

Private sector funding

External sources of funding

- Regional development banks Regional economic bodies - International/multilateral financial institutions - Industry-related research institutes - Investment promotion agencies

- Religious organizations

- Stock exchange agencies

- Charitable foundations

- Private-sector banks

- Microfinaoce funds

- Private-sector financial institutions

- National companies

- Transnational corporations

Utilizing Potential New Funding Sources In addition, increased attention is being given lately to possible alternative sources for financing. The International Technical Conference on Plant Genetic Resources urged that "every effort should ... be made to seek new, additional and innovative sources offonding within the process of the implementation of the Global Plan of Action. " (F AO, 1996d , para. 27). Meanwhile, a number of possible new and potentially complementary options for funding for CGR conservation have been identified. These are opportunities for increasing financial flow through non-ODA channels on an essentially bilateral basis (debt reduction), on the basis of international private financial resources (tax credits) and some international taxation as additional sources of financing. Discounted Interest Rates on Publicly Held Debt Developed countries currently provide loans to developing countries for agricultural development. A portion of the interest rate on these loans could be discounted in conjunction with a commitment by the national government of the developing country to allocate the savings to the conservation and sustainable utilization of CGR. Alternatively, a portion of the loan could be considered repaid

Financing the Conservation of Crop Genetic Resources

29

if programs for the conservation and sustainable utilization of CGR were implemented during the lO-year lifespan ofthe GP A. As a further non-aid bilateral financing mechanism, it is easy for countries to adopt this approach or to choose other mechanisms. However, the complexity of debt reduction negotiations, additional conditionality and domestic priorities may hinder this approach. Tax Credits Governments often use fiscal instruments when they wish to redirect financial resources. In this case, tax credits or other benefits could be offered by developed countries to businesses that carry out programs for the conservation and sustainable utilization of agricultural biodiversity domestically and in third countries in line with the GP A. As a means of non-aid bilateral financing, tax credits are a very flexible system in which different developed countries can establish different forms of tax incentives in line with their national tax policies. Furthermore, only those countries willing to and capable of implementing this credit scheme can adopt this approach, while others can adopt other means to carry out the GP A. However, each transfer is not easily measurable, and the market decisions on the beneficiaries or the size of the benefits in specific regions will not be transparent in the global arena and, consequently, may not be transparent for intergovernmental fora. Furthermore, it is not likely that the selection of beneficiary countries will be able to be specified by donor governments in their tax code. International and National Taxation New international funding bodies could be independently financed and managed. For example, the basic financing for an international fund could come from a taxation system. There are some basic principles of taxation that are usually applied when looking at any new proposal for a tax. It should not distort the free operation of normal economic incentives, unless this is necessary to correct market imperfections ("externalities"). It should be easy and inexpensive to collect and difficult to evade. Its distributive effects should be neutral or deliberately slanted to benefit a particular group. Food exports or imports could be a source. A levy on currency transactions - the "Tobin Tax" - has been discussed at international fora numerous times. Another option might be a tax on seed exports or an international taxation system on the sale of plant varieties and products of plant origin protected under intellectual property systems (F AO, 1996c, recommendation 3). The revenue collected would be used in part to pay royalties to the country providing the genetic resources as well as the traditional knowledge for the development and production of the patented products or "protected" plant varieties and in part to support an international fund. To contribute to a benefit-sharing system, the possibility to collect a tax before or after one of the relevant steps in the processing chain of CGRs seems a practical solution. Which step to choose depends on the transaction costs of imposing a tax or charge as well as on the correlation between the processing step of CGRs and its contribution to the added value. At the first step from the conservation of CGRs to the plant breeder, a kind of royalty can be imposed if the utilization of

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D. Virchow

the CGRs is successful. Between the breeders and the seed producers and farmers, a tax or a royalty of a certain percentage can be charged. Farmers, for instance, could be taxed on seed purchases. From the farmers onwards, only different kinds of taxes can be imposed: an income tax between the farmers and food processors, a general tax between food processors and consumers on all food or a general sales tax or an income tax irrespective of the user. Secured CGR Bonds Rights to use and access, secured by CGR bonds, could be a new source of funds for CGR in some countries. Pharmaceutical companies have already entered into agreements with several countries to conduct exploratory research on potential drugs derived from indigenous flora and fauna. Although similar opportunities in the field of food and agriculture are likely to be limited, multinational agribusinesses might, in certain cases, enter into similar agreements on access to the genetic variation among indigenous plants (and animals) of importance for food production. The principal concept is that governments pay costs today for the conservation and sustainable utilization of high levels of agricultural diversity in a region, but the potential benefits may not appear for a number of years. The private sector also has an interest in the conservation and utilization of the agricultural diversity in those areas. A contractual agreement could provide for annual payments to the government for a specific period of time secured against an international bond. In return, the businesses would get the exclusive right to work with local farmers in collecting and maintaining CGR in a given area or crop. In the pharmaceutical industry, bioprospecting is a growing business activity. In the agricultural community, governments similarly could give the rights to use genetic material and future products for a period of time. The company, in tum, would post a bond that would guarantee the royalty payments. It seems that the transaction costs for imposing a tax or charge are comparatively low wherever taxes are charged that do not reflect the specific CGRs utilized. In countries with an operational tax system, imposing taxes as sales or income taxes only increases existing taxes for a certain percentage. Charging royalties for the utilization of selected CGRs may disproportionately increase the transaction costs as a result of the establishment and maintenance of a control system. Taking into consideration the directness of interlinkage between the utilized CGRs and the tax imposed, the directness decreases following the processing chain from breeder to consumer. Consequently, from the view of a single country, the low transaction costs for a diffuse taxation compete with the efficient system of the allocation of scarce resources with higher transaction costs. If the system is assessed from a global perspective, the transaction costs for imposing some kind of royalties on the breeding companies will be reduced, because the number of companies is limited. If one wants to tax the breeder level, a tax that minimizes transaction costs would be the collection of a specific percentage of the breeders' profit to finance the international fund. Furthermore, the fund should be distributed according to the number of varieties "exported" through a country. In light of this, the varieties are suggested as the measurement, because, for now, there is no better unit of

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measure for the contributions ofCGRs. The utilization ofCGRs has contributed to the welfare of all involved stakeholders. However, the genetic resources were utilized inefficiently as a result of the free and bona fide access. With a "price tag", the breeders will start to use the genetic resources more economically, i.e., the dynamic of scarce resources allocation and substitution will increase the efficiency of utilization. The higher the benefit sharing, i.e., the higher the costs for the breeders, the more attractive are substitutions of: • CGRs from modem lines for CGRs from traditional varieties; • improved breeding technology for CGRs from traditional varieties; • intensive use of knowledge, information and other capital inputs. This concept reflects the dynamic method of benefit sharing, i.e., benefit sharing only if genetic resources are utilized. It is recommended that breeders be taxed, not because they might siphon off the highest benefit deriving from the utilization of CGRs, but because the number of breeders is the lowest compared to all other stakeholders in the chain. Therefore, the transaction costs for additional taxes may be minimized. However, it has to be considered that by taxing the breeders, two effects will be taking place. On the one hand, the breeders will utilize the genetic resources more efficiently, including the option of substituting CGRs; on the other hand, the breeders will shift the additional costs to the next in the chain by increasing the seed price. This will have a similar impact at the farm level: the farmers - especially in developing countries will reduce their number of modem seed varieties as well as try to increase the price of their products. These consequences indicate the flexibility in reaction if benefit sharing is related to the implied costs. As stated above, for the time being, the variety is the most useful unit to measure the contribution of CGRs. It has to be reflected, however, that to base the benefit-sharing system merely on the number of species or varieties contributed to the multilateral system's common collection, an internationally accessible pool would be too simple a solution for the distant future: it would bear the threat of an adverse selection. Not all varieties will have the same valuable level of information. Some varieties will have more unique information than others. Hence, varieties with important, i.e., higher valued, genetically coded information will be underpriced and will subsidize the less valued varieties if all traditional varieties are treated as having the same value in a multilateral exchange system. Consequently, besides the efforts put into the development and implementation of a benefitsharing system, technologies for screening and identifying the genetically coded information have to be improved and developed. If at any time in the distant future when the Intellectual Property Rights (IPR) will be defined according to genetically coded information and, consequently, the countries or other suppliers of CGRs will be able to obtain the differences, they will try to take the more valuable species and varieties out of the multilateral exchange market and try to sell them independently on the basis of bilateral agreements, expecting higher benefits. Therefore, the average quality of the CGRs in the multilateral benefit sharing system will be reduced, which would lead to a reduction in the net benefits derived from those genetic resources, reducing the

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available amount of financial resources for conservation and sustainable utilization. The proposed multi-lateral system, as a framework in which different kinds of agreements can be signed, including bilateral contracts, increases this tendency. Hence, because of the high demand, the incentive will cause the countries to negotiate the most valuable germplasm in bilateral agreements, and the less-demanded germplasm will be left over in the multilateral benefit sharing pool. The System of Benefit Sharing as an Incentive for Sustainable Conservation The financing of activities related to the conservation and sustainable utilization of CGR is based on the principle of the "fair and equitable" sharing of benefits derived from the utilization of CGR. The distribution of (financial) resources is accepted on the basis that groups and individuals (countries, farmer communities or individual farmers) have made CGRs available that are worth being utilized. However, distributing (financial) resources is only possible if they have been contributed. The continuous threat of CGR loss makes it obvious that the existing multi- and bilateral funding for conservation and sustainable utilization of CGR is not sufficient to maintain the genetic resources. Thus, as stated at the Fourth International Technical Conference on Plant Genetic Resources, the ODA is not accepted as a sufficient contribution for a "fair and equitable" sharing of benefits derived from the utilization ofCGR (FAO, 1996a). Consequently, there is a need for additional financial resources to be distributed and, thus, for higher contributions. Benefit sharing in economic terms is based on the economic surplus concept. The demand side (the consumer of CGRs) as well as the supply side (the producer of CGRs) share the benefit if the competitive price for a given unit measures the value of that unit to the demand and supply side, respectively. However, the present situation of CGRs is characterized by an imperfect market, causing some specific transaction costs. This market is imperfect on the one hand because externalities have not yet been internalized (the social benefits of CGR conservation are higher than the private benefits). On the other hand, the market is immature, because, so far, the whole CGR conservation system is based on non-market, i.e., public interactions. The demand side for CGRs, especially the breeders, the biotechnology industry and the farmers, has been benefiting from the present system. It has participated only partially in the costs of conservation and exchange and, above all, has shared only a minor part of the existing transaction costs of running the conservation and exchange system. Asymmetric and rudimental information as well as an institutional framework lacking a legal system that defines the individual property rights for CGRs as well as their transfer are further specific problems hindering the development of a market system with minimal transaction costs for CGR conservation and exchange. The present structure of the conservation and exchange system is changing because of the emerging awareness that CGRs have a value not captured in the market place and because of changes in intellectual property rights. Especially countries with high agrobiodiversity and where genetic resources are utilized for new

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varieties or pharmaceutical products on which increased intellectual property protection has been placed (e.g., patents) are calling for a share of the benefits derived from the utilization ofCGRs. Two aspects must be highlighted in this context: In theory, "benefit sharing" can be understood as an incentive for present and future conservation efforts at the national level (for the ex situ conservation) and at the farmer level (for the in situ conservation). Incentives for the conservation of CGRs are needed because of the loss ofCGRs in storage facilities as well as in the farmers' fields. Furthermore, "benefit sharing" can be understood as an equity issue in light of the positive external effect produced by farmers and by its utilization by private (and public) breeders. As the supply-side of CGRs, countries are attempting to enforce their property rights and to derive benefits resulting from the supply of germplasm. They do so by establishing a market power and threatening to close the access to their national germplasm pools. This attempt is supported by the Convention on Biological Diversity (CBD), which reaffirms countries' sovereignty over their genetic resources. The system promoted by CBD for sharing the benefits derived from the utilization of CGRs is based on the assumption that the value of CGRs is known. However, this value is neither reflected in a market price nor is it easily assessed. Besides non-exclusionary use as the characteristic of public goods, also the intergenerational value of genetic resources, the uncertainty of this future value and its relevant discount rates are some of the main reasons for the difficulties in estimating the value of genetic resources (Pearce et ai., 1991). Conventional instruments are of limited use when it comes to assessing genetic resources. They are essentially different from other economic public goods on account of the concern of the public, the irreversibility of extinction, the difficulty of substituting them and their intergenerational existence (Hampicke, 1991). Furthermore, the ecological threshold effect of diversity extinction complicates the valuation (Perrings and Pearce, 1994). Despite their vital importance, it is therefore difficult to assess the overall economic value of any certain species, especially if this is to include their not (yet) usable value or their value over a period of generations. An additional problem arises with the concept of benefit sharing, because the value of any utilized CGRs can seldom be determined a priori, but only observed a posteriori, i.e., as a result of their success on the market. Hence, the internalization of benefits, as payment on account (a priori), will seldom reflect the true use value of specific CGRs. However, the internalization of benefits as royalties (a posteriori) for individuals is also not possible because of the intergenerational structure of benefits. As long as the diversity of genetic resources still exists and as long as these resources are accessible at low costs, CGRs will contribute significantly to the use value of new varieties and new pharmaceutical products. However, the value of genetic resources, i.e., the costs of extinction, can be overestimated if the opportunities to find substitutes are not recognized (von Braun and Virchow, 1997). As the prices of particular CGRs increase past certain thresholds that make existing substitutes more economical, the use of particular CGRs will decrease.

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In the long run, new and improved methods of biotechnology as well as the reproduction of existing and the design of new genes will lead to the establishment of a virtual genetic base (e.g., preparation of amino acid sequences) and a combination of genetic information (von Braun and Virchow, 1997). This could curb the demand for genetic resources as a raw material for genetic information, particularly if in vitro reproduction of genetic information becomes cheaper than the conservation of genetic resources. This in tum could lead to the substitution of biotechnologically (in vitro) duplicated genes for natural genes and agents, reducing the economic (present) value of a genetic resource. Nevertheless, as long as the benefit sharing among countries is "cheaper" than any substitute technology, the above-mentioned products will not be substituted for CGRs as inputs for producing new products. This also applies as long as the in situ and ex situ conservations of genetic resources are still the more cost-effective methods. Therefore, the assessments of the efficacy of substitutes lead to the speculation that this substitution effect will only apply to certain products. The increased potential for substituting virtual genetic bases for natural CGRs may have a significant impact on the benefit-sharing system for CGRs. The improved technologies may completely overcome the boundaries between species. Therefore, the incorporation of genetic resources from wild plants, microorganisms and animals into crops will reduce the use value of CGRs. This has already been achieved by introducing insect resistance genes from bacteria into crop plants (Smith and Salhuana, 1996). If the cost-benefit ratio is positive, the process of an inter-species substitution will proceed until the demand side substitutes virtual genetic information for natural genetic resources. Thus, the benefit-sharing system must be capable of reacting to changing values of specific genetic resources. By doing so, the benefit-sharing system may become a sound economic system of internalizing social (international) benefits and at the same time keeping its flexibility for changing values, consequently enabling an efficient allocation of scarce financial resources.

Indicators for Determining the Contributions to an International Fund Up until now, the funding sources are supposed to represent a part of the "fair and equitable" benefit sharing that is called for in the ITPGR. However, the specific amount contributed by the various sources through multi- or bilateral agreements is determined arbitrarily. There is no specific relation to the benefits obtained by a specific country or company through the utilization of CGR. For the future, therefore, the task is to design a financing mechanism for an international fund that will be acceptable to countries adhering to the ITPGR and will provide an adequate level of contributions for fund operations. Such a contribution mechanism should have the following characteristics:

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• Simplicity: the formula for the determination of each country's or company's contribution should be as straightforward and as simple as possible. The formula for contribution should use as few variables or weights as possible. Indeed, the preferred formula would be a single indicator applicable to all nations. • Accessibility and accuracy of data: whatever the formula used to determine contributions, the data that go into that formula must be accessible and accurate. Ideally, the formula would be based on accurate primary data that are easily collected annually by the personnel of an institution in which all nations adhering to the ITPGR have confidence. • Fairness of assessments: each nation should contribute to the fund according to the degree to which it benefits from access to the global pool of crop genetic resources. This will not be easy to determine, but it is crucial to recognize that all nations do not have the capacity to benefit equally from access to a common resource because of widely differing technical capabilities. • Stability of assessments: the manner in which contributions are determined should provide a continuity of fund programs and avoid unpredictable fluctuations in contributions. Given these parameters, what mechanisms might be used to see that an international fund actually acquires revenues and that it does so equitably? In fact, many international organizations - and especially those whose memberships consist of nations - have faced exactly this problem. The general solution has been to assign each member a proportion of the total organizational budget. The precise proportion assigned to each member is often determined through the use of an indicator variable that - with varying degrees of specificity - relates to two factors: (i) the willingness to pay (i.e., each member's involvement in the activity that the organization was established to oversee) and (ii) the ability to pay (i.e., relative affluence). Such an approach could plausibly be applied to support an international fund for CGR conservation. Each nation adhering to the ITPGR and participating in an international fund would be assessed according to some variable or combination of variables that represent the degree to which that nation benefits from access to CGR. The problem is that no direct indicator of benefit exists in the case of CGR. Detailed documentation of plant breeding activities, for instance, is simply not available. Even in those cases where it is possible to follow genetic material from a landrace all the way through to its incorporation into a commercial variety, it is both time consuming and extremely difficult to quantify the benefits associated with that material with any precision. The benefits derived from a disease resistance gene, for example, would depend on the amount of seed sold that incorporated the gene, on the value of the crop saved by the gene (which in tum is a function of the incidence of the disease) and on the price for the crop at the point of sale. Additionally, each of these variables would change annually. Prior to discussing the contribution mechanisms for an international fund as a benefit-sharing system, the various stakeholders and their shares of global benefits from the utilization of crop genetic diversity are analyzed.

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The Various Stakeholders and Their Shares of Global Benefits

The following section is limited to identifying the beneficiaries of CGR conservation on the basis of the anticipated benefits of CGR conservation derived from the different values. For the time being, the best quantifiable value of CGRs (the breeding value) is passed on indirectly to the beneficiaries as a positive external effect from mainly marginalized farmers maintaining agrobiodiversity. These resource-poor farmers in marginal environments have adopted risk-averse cropping strategies based on both intraspecific and interspecific crop genetic diversity (Weltzien and Fischbeck, 1990; Haugerud and Collinson, 1990; Van Leur et aI., 1989; Ceccarelli et aI., 1987; Ceccarelli, 1984). One reason for this is that they are not currently serviced by the seed industry (Sperling, 1993), while the formal seed industry and distribution sector can only effectively meet the need of commercial farmers in areas of high potential. As will be seen, some of the beneficiaries of CGRs playa vital role on the demand side. Others, however, benefit from CGR conservation but are not directly involved in the demand for genetically coded information. The stakeholders can be divided into three groups, which will be discussed in the following sections. The Upstream Users The breeders are the most important beneficiaries from the first group, called the upstream users. They provide modem varieties by utilizing CGRs as raw material for their breeding activities. Professional breeding as well as farmers' plant breeding are the instruments to convert the present and future needs of the farmers, of the agricultural production processing industry and of the consumers into new, improved varieties. When farmers replace the traditional varieties with these improved ones, the traditional varieties are at risk of being lost. The breeding industry, deriving from the private or public sector, is involved in national (NARS7), regional and international (lARCs 8, CGIAR9) breeding activities. This industry is aware of the interaction between genetic resources as raw material for new breeding lines and the displacement of landraces by new varieties, which lead to the decline of the amount of genetic resources as raw material in the field for further breeding activities. Therefore, it acknowledges the ex situ and in situ conservation as an essential task, particularly to preserve the processes of crop evolution (LeBuanec, 1996). Furthermore, the private sector is interested in the conservation, characterizing, evaluation and regeneration of CGRs (Cambolive-Piat, 1996), but it does not see any necessity to privatize the conservation of CGRs and their processmg. Because constant breeding improvements can be made even within a very narrow base (Wych and Rasmusson, 1983), breeders will access other sources of genetic resources only if they are easily accessible and if they are searching for a NARS: National Agricultural Research Systems. IARCs: International Agricultural Research Centers. 9 CGIAR: Consultative Group on International Agricultural Research. 7

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single specific trait or characteristic. Some studies analyzing the germplasm base of crop species support the idea that breeders in the past have only used a fraction of the existing CGRs (Fischbeck, 1992; Goodman, 1985). According to a survey carried out by the World Conservation Monitoring Centre (WCMC), however, approximately 7% of the utilized germplasm for breeding is incorporated annually from the ex or in situ conserved supply into the existing breeding material (WCMC, 1996). Even though this result seems to overestimate the importance of genetically coded information from landraces, the turnover of landraces in breeding activities is increasing. SMALE (1996) points out that since the late 1970s, wheat crosses in 800 different samples of wheat released by breeding programs in developing countries contained an average of one new landrace per year in their pedigrees. The biotechnology industry, as another upstream user, is one of the major players on the demand side of biodiversity in general. The biotechnology industry utilizes genetically coded information originating from CGRs as raw material for new, genetically engineered plants for agriculture as well as for other products (von Braun and Virchow, 1997). Benefiting from the breeding value, the biotechnology industry is not only improving agronomically interesting traits, but it is creating food crop varieties with strong medical impact as well, such as varieties enriched with micro-nutrients, for example. The seed producers, who are not always a part of the breeding companies, are benefiting from CGRs through the developments in breeding technology. A higher turnover of seed sold on the market can be identified because of increased seed improvement, besides the future possibility to sell sterile seed only. The more rapid seed improvement leads to a higher turnover of seed on the farm level, leading to the second group of beneficiaries, the so-called downstream users. The Downstream Users

Although normally only seen as losers in the increased utilization of CGR, the farmers are benefiting from the existing diversity of CGR. Resource-poor as well as resource-rich farmers cultivate farmers' varieties because of the anticipated benefits derived both from their diversity relative to modern commercial varieties and because the desired traits are not necessarily found in modern commercial varieties. Examples of this are: • the intra- and inter-species diversity as an insurance against yield fluctuations and unforeseeable events, balancing considerations of yield maximization and yield stability (insurance value) (Alderman and Paxson, 1992); • the agronomic adaptation to local conditions and the possibility - and in marginalized areas without access to seed and other input markets the only means to select seed according to individual and site-specific requirements (breeding value) (Weltzien- Rattunde, 1996); • the quality, e.g., taste, cooking quality, storability and other qualities as well as other material values derived from the direct use of the produced food (consumptive value) (Brush and Meng, 1996);

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• the advantage of farmers' varieties regarding ecological functions, e.g., the prevention of soil erosion (functional value) (Berg et aI., 1991). Reflecting these points, farmers derive private benefits from the different values at the local level. However, the value of the intra- and inter-species diversity as an insurance usually diminishes with economic and therefore infrastructural and technological development. With the overall development, farmers need to rely less on crop diversity, as they are able to offset the effect of crop failure by selling labor (particularly in urban areas), by drawing upon accumulated assets or by other insurance mechanisms. Furthermore, and most important for those with access to markets, farmers may benefit from COR conservation by having the possibility to buy the seed of modern varieties that may have been produced using conserved CORs, which will enable them to increase or stabilize their income. This seed is partly based on the incorporation of traits or - technically speaking - genetically coded information derived from farmers' varieties. Consequently, the benefit farmers receive from maintaining CORs today is the supply of improved and income-increasing varieties as well as the improvement of food quality and the improvement and diversification of agricultural production. However, their introduction will result in the loss of farmers' varieties. Besides the farmers, agriculturally based industries, such as handling, storage and processing services, benefit from the improved breeding technologies and the diversity of genetic resources. Thus, they belong to the group of downstream users benefiting from COR diversity. The breeding objectives of new varieties are increasingly determined by the demand of the processing industry to improve the quality for the processing of agricultural products and for the final product by changing and modifying the product's components. Especially the production of "nutraceuticals" - a combination of food and pharmaceuticals - will increase the demand for genetic resources. Consumers of the Final Products Countries involved in the conservation of CORs and the international community expect benefits for the national and international breeding activities. These benefits derive from the raw material as well as from the improvement in the efforts for food security through the insurance value (stabilized or increased food production) and the functional value (reduced degradation of natural resources) as part of the breeding value. Furthermore, breeding and the utilization of adopted varieties can reduce the degradation of natural resources. In addition to those directly benefiting from the conservation of CORs, the consumers are the main secondary beneficiaries and have to be mentioned as well. Although the consumers in developed and developing countries as well as in rural and urban areas do not have a direct role on the demand side, they constantly demand more and higher quality food for the same or lower prices. The stability or decrease of consumer prices for agricultural products is due to a complex system of innovations that led to increased agricultural production and food availability

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(Wright, 1996). In the long run, the improvement of health, wealth and welfare and therefore the reduction of poverty in mainly rural areas will be possible through increased food security. One of the determining components for this development is the use of CGRs as the raw material for modern varieties. Summarizing the benefits of the CGR diversity and its conservation, the flow of benefits is identified as inter-sectoral (between farmers in marginal and high potential areas) and inter-temporal (between the farmers who presently utilize modern varieties and farmers who have bred and maintained CGR diversity in the past). Not only farmers are benefiting from the conservation of CGRs, but also other actors in the chain between food production and food consumption. As WRIGHT points out (1996), the social benefits derived from the use of CGRs, however, are far greater than the profits of the breeding companies. One major group of beneficiaries from the use of CGRs is the food consumers in developed and developing countries. Even though the part of the social benefits captured by the consumers cannot be quantified, it is obvious that the constant or decreasing (real) prices over the last decades have resulted partially from the breeding success in that period and therefore from the utilization of CGRs. There may be some social benefits for others in this group of stakeholders, but these are hard to assign. Even though three groups of stakeholders have been identified and described, the more distant from the "source ofCGRs", the smaller and more unpredictable is the quantifiable impact of CGRs. For instance, eliminating poverty may derive partially from modern varieties, but it can be achieved even without these varieties. From the breeders to the consumers, it is becoming harder to trace back to whether and what part ofthe benefits is derived from CGR utilization. Thus, while it is accurate to say that CGRs provide enormous benefits annually and to say that those nations with well developed and funded plant-science capabilities benefit the most from access to crop genetic resources, it is exceedingly difficult to provide detailed quantification of these benefits or of their distribution. Thus, indicators have to be identified that will be acceptable proxies for the actual levels of contributions to the benefit-sharing system and as patterns of distribution of the benefits through an international fund. An analysis of possible indicator variables is discussed in the next section. Indicators as Proxies for Benefit Sharing It is important to understand the dynamic process of creating benefits and to take it

into consideration when discussing a "fair and equitable sharing of benefits" and identifying proxies for the level of contribution to a benefit-sharing system as well as mechanisms for the distribution of benefits. Only in this case can benefit distribution serve as an incentive to conserve and use CGRs in a sustainable manner and to allocate scarce (financial) resources in an economical way. Thus, benefitsharing indicators are needed that can balance the interests and contributions of the stakeholders at present and in the future in a manner that is politically acceptable and results in a sustainable outcome. These indicators are not necessarily tied to the value of CGRs. However, the sustainability of the benefit-sharing system

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will depend on the flexibility of the system, taking into account the changes of CGR utilization and value. Contributions to an international fund as part of the benefit-sharing system mean increasing the costs somewhere in the line between the producers of CGRs (the farmers) and the consumers. Whenever costs are increasing, there is the reaction of changing the utilization system with the aim of utilizing scarce resources as efficiently as possible. Whenever the indicators of benefit sharing do not reflect changing scarcities, the contribution and distribution system becomes inefficient and will not be sustainable in the long run. In other words, a generally accepted benefit-sharing system will be based on a compromise of nationally driven interests. Those countries that will contribute significant amounts to an international fund or similar instrument will do so only as long as the contribution somehow reflects their anticipated benefits from the deal. If technical changes or economic development in a country induces far fewer breeding activities as a whole or fewer breeding activities based on CGRs, this country will not be willing to continue contributing a large amount. Consequently, the specific country will back out of the system, or new negotiations will have to start all over again - with high transaction costs involved either way. Following this argumentation, a successful benefit-sharing system with its defined contribution and distribution mechanisms needs to fit the criteria of being fair and equitable for the supply side as well as for the demand side. Therefore, it has to reflect flexibility on both sides, accepting competition between the supply and demand sides. Furthermore, accepting the difficulties of assessing and quantifying the benefits of CGRs today and in the future, the best possible indicators have to be selected. They need to be currently available and to cause minimal economic costs. A benefit-sharing system without any elements of incentive and competition among the participants on the supply side as well as on the demand side will not be a sustainable system. Choosing the Optimal Indicator As discussed, for the time being, it is not possible to quantify the additional value of the utilization of CGRs for any of the different groups of stakeholders. Consequently, it is not possible to identify the stakeholders benefiting the most from the utilization of CGRs. Therefore, indicators have to be utilized that are somehow correlated to CGRs' contributions and can serve as proxies. There are three categories of indicators: A.

B. C.

Those indicators directly correlated to the value of the utilization of CGRs. Those indicators correlated to the utilization of CGRs in some specific, non-value indicating way. Those indicators correlated to CGRs in a more or less hypothetical or farfetched way.

From category A to C, the accuracy of the correlation to the utilization of the (not yet quantifiable) value of CGRs is decreasing. Even though the indicators from

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category B do not directly correlate to the (monetary) value of the contribution of CGRs, it can be said, on the basis that the utilization of CGRs increases the value of new varieties, that an increased number of CGRs in a breeding program will increase the value of the new variety. For the near future, the landraces/farmers' varieties will be the dominating unit for CGRs, mainly reflecting the upcoming systems of IPR. Consequently, although other units, e.g., genetically coded information, are more relevant for the conventional or genetically engineered breeding, the "variety" will remain. Even though this system will bear the risk of equalizing different valuable varieties, it is the most practicable solution for now. For choosing the optimal indicator, it is necessary to identify the criteria that are subject to the task. Therefore, indicators are needed that: • show which utilization causes minimal economic costs; • are available now or are at least easily collectable for an instant implementation of the benefit-sharing system; • are fair and equitable; • guarantee a certain degree of flexibility so that the same indicators may be utilized in the future as well. The two inherent problems of benefit sharing are the differentiation of the impact of a new variety on production by capital and human resources on the one hand and by the genetic resources on the other hand. Furthermore, the impact of "foreign", i.e., non-national CGRs on the R&D success should be identified as well, which is very difficult due to the high interdependency of origin. One basic problem of fair and equitable benefit sharing lies in the origin of CGRs. The benefit sharing among countries as the sharing of benefits because of the utilization of CGRs originating in one country and utilized in another requires data about the international flow of CGRs. All indicators not based on the specific number of varieties (or whatever unit measure is used) cannot differentiate between CGRs originating in the country of utilization or from abroad. The differentiation between domestic sources and those of other countries is, however, essential if benefit sharing is to be fair and equitable. A country, for instance, with the technological capacity for improved breeding programs and rich in CGRs may be mainly utilizing its own genetic diversity. Consequently, the sharing of benefits would be limited only to some imported CGRs. However, taking other indicators into account, e.g., the number of released varieties, this country would have to share many more benefits than actually necessary and than would be equitable. In addition, benefit sharing has to be analyzed in depth. Because of the current system of access, including the breeder's exemption, a kind of "benefit diffusion" - geographically and institutionally - can be described. Any breeder can utilize each new variety, including the benefits from the incorporation of interesting CGRs for further research and development. Consequently, the benefits of different CGRs were accumulated through further breeding and, at the same time, spread among different newly developed varieties. However, the new developments in IPR are leading to a "benefit concentration." For instance, through patents on genes, the utilized CGRs are owned by one company, and further distribution depends solely on the company and its strategic planning and management.

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All macroeconomic indicators (e.g., the GNP, GDP or FAO scale) as proxies for the level of contribution to an international fund are easy to measure and easy to reject, because without any serious link to the CGR utilization, they ultimately jeopardize any sustainable system of benefit sharing. So, for instance, even though the GNP and GDP may "indicate a nation's overall capacity to process and commercialize raw materials, including PGRFAs" (Kloppenburg, 1998), they do not determine that the potential capacity is truly used for CGR utilization. For instance, Switzerland's overall contribution to a benefit-sharing system referring to GNP equals that of Mexico (1.13% and 1.23%, respectively), but the value of its internal commercial seed market is only 25% of that of Mexico - just because agriculture (crop production) is of minor importance in Switzerland, even though this country has a high GNP. Benefit sharing according to the GNP/GDP would mean that Switzerland would pay as much as Mexico for something that the country does not utilize as much as Mexico. Furthermore, the above-discussed flexibility in the system is needed and is not implemented by using the macroeconomic indicators. Countries with a high GDP per capita may have the best opportunities for breeding, but they therefore may be the first to improve their breeding technology in a way that substitutes raw CGRs from agrobiodiverse countries. They then still have to continue paying for a benefit-sharing system even though they do not utilize the resources anymore. Although the agricultural indicators include all sorts of other inputs besides new varieties - and therefore germplasm - they have a closer relation to the utilization of CGRs than the macroeconomic indicators do. The value of all crop production in a given country is probably not the best agricultural indicator for benefit sharing. The reason for the limited use is on the one hand that a lot of crops are not yet included in any breeding schemes and, on the other hand, that the value of all crop production does not differentiate in any way between the "foreign" and national CGRs utilized. The most suitable indicators as proxies for a country's level of (financial) contribution as part of the benefit-sharing system can be identified for the different groups and are listed according to their appropriateness. Thereby, the criteria of the existing data, and thus the feasibility of the utilization of a specific indicator, is not the determining factor of the listing. Benefit-Sharing Indicators for the Upstream Users

For the conventional breeders, several indicators can be identified: • "Foreign" landraces in the newly released modem varieties (MV) per year: The number of "foreign" landraces utilized in a country reflects the national involvement in the international "CGRs trade." Based on three assumptions, this indicator embodies one of the best proxies for the attempt to determine a country's contribution to a benefit-sharing system. The three assumptions are: - the benefits in monetary terms related to the utilization of CGRs will not be identifiable in the near future;

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the number of varieties utilized in a breeding process is positively correlated to the expected monetary benefits derived from the utilization of CGRs; consequently, the utilized landraces in a breeding program will be the only visible unit of CGRs for the near future, even though the limitation of this unit is known.

This indicator is non-existent for the time being. It is, however, potentially available. Especially with increasing patenting activities, the breeding companies (private and public sectors) have to reveal their breeding process or the inputs of their varieties. This indicator, on the company basis, is a more distinguished one than the major indicator suggested for the country level. • Plant breeder titles issued per country in the referenced year (see, e.g., data from UPOY, 1995) or plant breeder titles in force at the end of the referenced year (see, e.g., data from UPOY, 1995): At a more aggregated level, these two indicators assume that each new variety derives from CGRs. Consequently, the more titles that are issued, the higher the benefits derived from the utilization of CGRs and therefore the higher the assumed contribution to a benefit-sharing system. Due to the aggregated level, it is not possible to differentiate: ~ ~

between "foreign" and "national" CGRs; whether a variety has been improved only by further selection (no other CGRs incorporated), by incorporating only the breeder's own elite line or by incorporating other CGRs or other genetic material (from microorganisms or from germplasm from wild plants or animals ~ all of which is not covered by the ITPGR).

The indicator "plant breeder titles issued per country in the referenced year" represents only the newly issued titles and does not take into account all the other titles that are still in force but were issued one or more years ago. Taking this indicator implies that the benefits of a variety are only calculated in the year of issue in the specific country. Consequently, the contribution to a benefit-sharing system would be based more on the annual breeding activities of the countries. Furthermore, each variety would be treated equally, even though one variety may have been on the market only for a few years and another, more successful variety for two decades or more. The indicator "plant breeder titles in force at the end of the referenced year" will base the system on the average breeding activities of a country and will reflect the different results of the various varieties. • Estimated values of the commercial markets for seed and planting material (see, e.g., data from AS SINSEL, 1998): This indicator belongs to category C and is based on the same assumption as discussed above, namely, that there is a positive correlation between the utilization of CGRs and the benefits derived from the breeding activities in general. However, the extent of the share of the contribution of CGRs cannot be identified and therefore cannot be credited. In addition. the value of the commercial

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markets for seed and planting material depends on quite different inputs, and the amount of the value is not compelling evidence for whether a country is utilizing more or fewer CGRs than another country with a lower amount of estimated value. In other words, a high value in the markets for seed and planting material does not imply that the benefits derived from the utilization of CGRs have to be high as well, and a low value does not conclusively mean low benefits from the utilization of CGRs. Furthermore, the noncommercial markets for seed and planting material (including the public markets) comprise two-thirds of the whole market for seed and planting material (Rabobank, 1994) and also benefit from the utilization of CGRs. The commercial-world seed market is assessed by International Association of Plant Breeders (AS SINSEL) at US $ 30 billion, of which approximately 25% of the value is not assigned to specific countries. • Export turnover of the main exporting countries (see, e.g., data from AS SINSEL, 1998): The export turnover of seed and planting material could be utilized as an indicator for the contribution to a benefit-sharing system if the benefit sharing is based only on the amount derived from the international trade of seed and planting material. The same limitations as for the previous indicator can be applied here as well. • Sales of major international seed companies (see, e.g., data from James, 1997): Based on the idea that not the countries but rather the national and international seed companies are the major stakeholders in the utilization of CGRs, it could be important for the future to base the contribution to a benefit-sharing system on the sales or the benefits of the private and public breeding companies. • The value and/or amount of seed consumption (see, e.g., Rabobank, 1994): This indicator can be applied at the end of the first level (the seed producers) and the beginning of the second level (farmers). It characterizes more precisely what amount the farmers and other users of seed are consuming and therefore their share ofthe utilization of CGRs. At present, however, it is not available. Besides the indicators for the conventional breeders, indicators can be identified for the biotechnology industry as a further upstream user: • Area cultivated with transgenic crops (see, e.g., data from James, 1998): Fair and equitable benefit sharing is essential in the new development of IPR, characterized as the process of "benefit concentration" resulting from patents on specific genes and processing. The area cultivated with transgenic crops identifies the countries that are involved in utilizing CGRs by excluding others from the benefits with patents, etc. These countries are utilizing CGRs in an exclusive way, and the biotechnology industry is the exclusive sector, benefiting from the utilization of these varieties. Even though the area cultivated with transgenic crops identifies the countries that are leading the technology development in this field and are benefiting from the most modem methods for the utilization of CGRs, this indicator does not reflect the origin of the genetic resources in any way. They may have been domestic CGRs incorporated into the transgenic crops, but they also may have been non-CGR genetic resources, as

Financing the Conservation of Crop Genetic Resources

45

mentioned above. Consequently, even though indicating the implemented contribution of genetic resources for specific countries, it is only a rough proxy for any benefit-sharing system. • The number of transgenic crop field trials (see, e.g., data from James and Krattiger, 1996): The area cultivated with transgenic crops indicates the output of modem, transgenic breeding activities and correlates the CGRs' contribution to success, whereas the number of transgenic crop field trials records all breeding activities, no matter whether they are successful or not. Because transgenic crops are characterized by the incorporation of alien genes and genetic resources, this indicator may be utilized to estimate the potential of genetic resources' contributions to transgenic breeding. The same restriction of interpretation as for the area cultivated with transgenic crops applies to this indicator: the genetic resources utilized will derive from more than only "imported" CGRs and CGRs as such, and this will even increase over time with improved transgenic technologies. • Number of patents related to crops: This indicator, if all countries have established an IPR system and the data information is systematized and available, could be a worthwhile proxy for the number of CGRs utilized in the biotechnology industry. However, this indicator is not operational for the time being. Furthermore, all patents related to genetic resources other than CGRs and to processing should be excluded (if not based on traditional knowledge derived from other countries). • Turnover or profit of transgenic crops: The final proxy for indicating the benefits derived from the utilization of CGRs in the biotechnology industry is the most sensitive and probably most difficult to use. Due to the companies' rights to secrecy, a company's profit related to one specific transgenic crop will not be freely available, not to mention the fact that in the majority of companies, the profit assignment according to the respective breed and produced varieties is not recorded at all. Two indicators for the group of seed producers can be proposed as the final upstream user. In some countries, especially in developing countries, the breeding and seed multiplication activities are not combined in one company, particularly in countries with a high degree of public-sector breeding activities. Consequently, the seed producers have to be taken into account as well. The applicable proxies to somehow indicate the additional benefit could be: • Turnover or profit of seed producing companies or turnover or profit of seed in general: However, these proxies indicate far more than only the contribution of CGRs. The seed producing companies' additional benefits based on the utilization of additional CGRs seem to be only marginal; consequently, they are listed more for the sake of completeness. The difficulties in raising this data are equal to the difficulties described for the business data of the biotechnology industry.

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Benefit-Sharing Indicators for the Downstream Users

For the farmers, as one of the major downstream users, several indicators exist. Besides the breeding sector, the farmers, especially those in high-potential areas, are gaining additional benefits by utilizing modem varieties in which different CGRs have been incorporated. Consequently, for defining the contribution to a benefit-sharing system at the national level, some proxies for the system can be identified: • The area under modem varieties and the amount of seed utilized from modem varieties: By comparing the countries according to their areas under MV or the amount of seed utilized, one can identify those countries that are utilizing MV the most and are consequently benefiting the most from the contribution of CGRs. • The percentage of area under modem varieties compared to the area under all crops: This indicates the degree of saturation of each country. A country with a high percentage of traditional varieties will have less benefit from MVs compared to a country with a high percentage of area using modem varieties. • Farmers' commercial seed turnover: In developing countries, 80% of the total seed requirements is met by farmsaved seed or is supplied by public improvement institutes (Le Buanec, 1995). In the EU, the amount is around 50%, depending on the crop and region. The higher the rate of the farmers' commercial seed turnover, the more farmers benefit from the improvement of new varieties, based partially on the utilization of CGRs. Furthermore, indicators are needed to assess the benefits of CGR diversity for the agriculturally based industry: • Proportion of processed food to directly consumed food: This indicator, as the only one feasible, still seems very weak for the task. The assumption is based on the fact that breeding, i.e., incorporating CGRs in existing varieties, is undertaken increasingly for the sake of the food processing industry and for the processing of other agricultural products. Consequently, the larger the proportion of processed food is compared to directly consumed food, the higher the share of MV, especially transgenic crops and products, in agricultural production will be. In other words, the higher the rate of MV in agriculture is, the larger the share of processing will be. But the agriculturally based industry is not only benefiting from the higher rate of processed food compared to whole produced food and agricultural products; it is also benefiting from the incorporation of CGRs by other means. Breeding is aimed at the demands of the processing industry. The agricultural product has to fulfill certain criteria for the processing process. These criteria are achieved mainly by incorporating CGRs or other genetic resources into existing varieties. Consequently, the share of processed food compared to directly consumed food may serve as a weak (but the only) indicator for ranking countries' contributions to a

Financing the Conservation of Crop Genetic Resources

47

benefit-sharing system according to the different benefits for the agriculturally based industry. Benefit-Sharing Indicators for the Consumers of the Final Products

As part of the third group, the consumers of the final product benefit from CGR diversity as well. This benefit can be indicated by: • Consumer prices for agricultural products (Index) (see, e.g., data from WDI, 1998): The stabilization of food prices is partially a benefit of higher yields resulting from CGR utilization. Consequently, where the food price index is the lowest, the benefits derived from CGR utilization may be high. However, consumer prices may be determined by policies of subsidies of agricultural inputs as well as food; therefore, the consumer prices do not necessarily reflect the real prices. Consequently, the index is only a weak indicator for the consumers' benefits derived from the utilization of CGRs. Furthermore, the benefit of the countries can be assessed by: • The international flow oflandrace ancestors (see, e.g., data from Gollin, 1996): Especially the number of "borrowed" landraces gives an indication of the benefits for countries utilizing the respective countries' CGRs. The number of a country's landraces used by others is one of the rare possible indicators to identify the amount that a country receives from the international "trade" in CGRs. Even though up until now the data are only available for some countries and for some crops, it should be quite simple to raise all of the necessary data from all of the relevant countries. All the following indicators reflect the correlation between other agricultural inputs and the modem varieties. This assumption is based on the "package idea" that modem varieties are part of a package of inputs and only all inputs together (modem varieties, fertilizers, pesticides and irrigation along with good farm management) contribute to increased production. • Agriculture value added per hectare of agricultural land as a measure of agricultural productivity (see, e.g., data from WDI, 1998): This may indicate some relation to the utilization of CGRs through modem varieties. The correlation is limited by the fact that besides the external inputs the agricultural productivity is determined significantly by the quality of farm management. Farmers' varieties, for instance, can have a higher agricultural productivity than MV if the management of the farmer utilizing the farmers' varieties is better than that of the farmer utilizing MV (von Blanckenburg, 1994), especially if labor is substituting the modem inputs. Contributions to an international fund as a system of benefit sharing is discussed only as an issue among the countries hosting the utilized CGRs as well as the mainly industrialized - countries demanding the CGRs. In times of increasing

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globalization, CGR utilization (from breeding to farming to food processing and consumption) is a trans- and multinational activity. Consequently, it seems antiquated to place an obligation on the countries to contribute to the benefit-sharing system. For instance, if a transnational breeding/biotechnology company is breeding and selling modem seed (derived from Indian CGRs) in India, which country should take over the benefit sharing for that company? Or if an Indian breeding company is active in the USA selling seed derived from Indian CG Rs, is the USA supposed to contribute to the benefit sharing for another country's company? To complicate the situation even more: if an Indian company is active in India but with seed mainly derived from US genetic resources (e.g., maize hybrid), who has to contribute? If one follows an indicator such as the GOP or the value added to agricultural production, India has to contribute in the first as well as in the last example. Which indicator can balance the interests and contributions of the stakeholders in a manner that is "politically acceptable and results in a sustainable outcome?" This benefit-sharing system would be the closest to a market system that is possible for the time being. Combining several variables into a joint measure may be appealing as a compromise, but it also complicates the matter, requires more study and negotiation and may give unexpected and even inaccurate results. Moreover, improving the accuracy of these measures means trying to acquire data from private companies that jealously guard this information. There is therefore reason to believe that such information would be difficult to acquire and that its collection would entail substantial costs. This is not to say that these options should not be pursued, but simply that it must be recognized that they may well entail administrative and political costs that substantially reduce the effectiveness of an international fund by drawing off financial and intellectual resources into unproductive debate and negotiation as well as into heavy administrative costs because of the yearly accounting that would be necessary in order to calculate national assessments. Different indicators have been discussed and assessed, and some have been prioritized. By implementing a benefit-sharing system fueled by (financial) contributions and based on these indicators, one major problem will emerge. Most of the prioritized indicators are not available for all countries at the moment. On the one hand, the data can easily be collected in less than a year (e.g., "own landraces used in other countries"), because it is more or less existent, but not yet systematized at the national or international levels. On the other hand, however, there will be no data existent for specific indicators, e.g., "foreign landraces in newly released MV." In some cases, the data will be able to be collected in the foreseeable future and could then be integrated into the normal surveys. In other cases, the data cannot be collected at all, because the specific countries do not have such activities, e.g., "areas cultivated with transgenic crops." Following such indicators as the best for fair and equitable benefit sharing means accepting that specific countries will not be part of an overall benefit-sharing system. The contributions to an international fund can be determined by the indicators discussed above. By calculating the share from each relevant country into the total of the respective indicator, each country's contribution can be defined. If the indicator is based on annual data, the contributions will be kept flexible, adjusted to

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the most recent actual data. It has to be kept in mind, however, that all discussed indicators are only proxies. The correlation between benefits arising from the utilization of CGR and the contributions to a benefit-sharing system is seldom significant and often only vague. This also holds true for the FAO contribution scale, which appears to meet the desirable criteria listed at the beginning ofthis section: • First, the scale is simple. A single figure is available for each country that is a member of the F AO. The figure could be expressed as a percentage of the FAO budget for which that nation is responsible. • Second, the figures are both accessible and accurate. They are computed at regular intervals by the FAO and can be obtained with great ease. • Most importantly, the FAO scale is already accepted as a legitimate means of apportioning global responsibility for agricultural development. This means that complex negotiations should not be necessary for determining a formula for contributions to the fund. • Fourth, tying contributions to the F AO scale provides a stable basis for the fund, while avoiding many of the political problems that would certainly accompany the use of many of the other variables. The FAO scale of contributions is simple, straightforward, applicable to all nations and perhaps the most readily available of any of the indicators discussed here. Still, it does not represent the benefits derived from access to plant genetic resources as closely as other variables, such as cropland planted with improved varieties. On the other hand, the FAO contributions incorporate a political commitment to development, which variables closely tied to benefit proxies do not approximate. There are different possibilities for raising resources for the conservation and sustainable utilization of CGR. Financial contributions from a country, a private company or some other funding resources may be channeled directly to the actual fund. However, they may also be contributed by a bi- or multilateral agreement to the activities of a country or to a local, national, regional or even international organization working in the field of the conservation and utilization of CGR. On the one hand, a decision system is needed to efficiently allocate funds to the various countries and organizations that are improving the conservation and sustainable utilization of CGR. On the other hand, based on their own priorities, countries, organizations and all other funding sources can choose to foster specific activities for the conservation and utilization of CGR. This could keep the system flexible.

A Mechanism for Determining the Distribution of Funds One objective of a benefit-sharing system is to identify those who have to contribute to the international fund as the instrument for benefit sharing and to identify the amount of the contributions for each involved country and company. This can be undertaken either by utilizing the already-mentioned indicators or by imposing a tax, as has been discussed above. The other question is to identify the recipients

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of the benefit-sharing contributions and the amount each of them should receive, i.e., the distribution mechanism. It is far more difficult to identifY the recipients according to the utilized indicators than it is to determine the contributors and their share of the contribution. Those indicators correlated to the utilization of CGRs in some specific, non-value indicating way (the indicators from category B) are the most helpful for this exercise (category A would be the best, but is not available, and category C lacks any concept of fairness and equitability). If a fair and equitable sharing of benefits is the aim, only those countries can receive contributions that are able to supply the specific CGRs. Consequently, only indicators directly relating to the supply ("export") of CGRs should be utilized for the distribution mechanisms of the benefits derived from the utilization ofCGRs. The debate over which mechanism should be implemented to distribute the (financial) resources from an international fund will be difficult because of the heterogeneity of the developing countries. This debate about which mechanism should be chosen is between the agrobiodiversity-rich and diversity-poor countries as well as between the technologically-rich and -poor countries. The uneven distribution of agrobiodiversity among developing countries and the different grades of technological development disclose the fundamental controversy concerning the decision to follow a multi-lateral system (in which the existing funds are distributed evenly across all countries) or a more market-like solution (in which countries receive funds according to their supply of CGR) for the benefit sharing from the utilization of CGR. Each country will favor a distribution system depending on its stock in CGR as well as on its ability to utilize their genetic resources, which are maintained ex situ and in situ. The national capacity for the utilization of genetic resources depends on the technological state of the country's crop improvement programs at present and in the future. Knowledge, infrastructure and financial potential for meeting the requirements of further breeding activities are the main determinants, which differ from country to country. Consequently, the prospects for the technological capacity for the utilization of plant genetic resources in countries are diverse. According to their breeding capacity and the availability of genetic resources, the national utilization potential differs greatly from one country to another (see Table 3.2). Developing countries, rich in CGR and with high technological potential, presently have comparative advantages for an internalization of the benefits resulting from CGR utilization and could win with a market-like solution. Developing countries, rich in CGR but poor in technological potential, could win with the internalization of benefits (market-like solution) if adequate enforcement systems are implemented. On the other hand, because of high transaction costs for such an enforcement, these countries could also win in a very broad multilateral system. CGR-poor developing countries, however, will push a compensation solution based on a multilateral system in which compensation is allocated by unspecified criteria. This would be the only means by which these countries could benefit from the international exchange of CGR, besides benefiting in the supply of modem varieties through international public and private channels.

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Table 3.2. Country-Specific Preferences for a Distribution System Country's supply ofCG R: Degree of technological potential:

Large supply:

Small supply:

High potential :

Market-like solution

Market-like sol ution (mu ltilatera l system)

Low potential:

Multilateral system (market-like solution)

Multilateral system

Nevertheless, regardless of which distribution system dominates, a key requirement for any system is an adequate incentive system that: • ensures the crediting of the supplied CGR, • secures the conservation of CGR (in situ as well as ex situ) on the national and international levels and, foremost, • enables the reduction of transaction costs for CGR exchange with a comprehensive information system. In the market-like solution, either the countries or the farmers, individually or as a community, will profit directly from any exchange of genetic resources. Meanwhile, the multilateral distribution system suggests a more general, non-targeted approach. Regardless of how the international exchange system and financing mechanisms for the management and utilization of agrobiodiversity are ultimately framed, the value of genetically coded information can never be determined a priori but rather only from an a posteriori observation. This value of genetically coded information will be determined by its success in breeding and biotechnology. In order to remain viable any system must therefore sooner or later provide mechanisms of profit sharing. The benefits will be not only shared between those who maintain genetic resources and those who utilize these resources, but there will also be a competition among those maintaining genetic resources for the best quality of genetic resources and the most efficient ways of distributing the genetically coded information. Without such a mechanism there is a high risk that eventually the conservation of genetic resources will be suboptimal, the financial resources spent inefficiently or consumed by high transaction costs and the demand side will not be supplied with the best quality of genetically coded information in the optimal amount.

References Alderman, H. and C.H. Paxson (1992): Do the Poor Insure? A Synthesis of the Literature on Risk and Consumption in Developing Countries. Research Program in Development Studies, Discussion Paper 164. Princeton, New Jersey.

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AS SINSEL

(International

Association

of

Plant

Breeders)

(1998):

http://www.worldseed.org/~assinsellassinselg.htm.

Berg, T., A. Bjornstad, C. Fowler and T. Skroppa (1991): Technology Options and the Gene Struggle. NorAgric Occasional Paper, Norwegian Centre for International Agricultural Development, Agricultural University of Norway. von Blanckenburg, P. (1994): Large Commercial Farmers and Land Reform in Africa. Avebury. Aldershot. von Braun, J. and D. Virchow (1997): Conflict-Prone Formation of Markets for Genetic Resources: Institutional and Economic Implications for Developing Countries. Quarterly Journal for International Agriculture, 111997. Pp. 6-38. Brush, S.B. and E. Meng (1996): Farmers' Valuation and Conservation of Crop Genetic Resources. Paper presented at the CElS - Tor Vergata University, Symposium on the Economics of Valuation and Conservation of Genetic Resources for Agriculture, 1315 May 1996. Cambolive-Piat, M. (1996): Proposed Basel Action Plan. Presentation at the Industry workshop: The Conservation and Utilisation of Plant Genetic Resources for Food and Agriculture. 15-16 February 1996, Base!. Ceccarelli, S. (1984): Utilization of landraces and H spontaneum in barley breeding for dry areas. Rachis 3(2). Pp. 8-11. Ceccarelli, S., J. Valkoiun, W. Erskine, S. Weigland, R. Miller and J.A.G. van Leur (1992): Plant genetic resources and plant improvement as tools to develop sustainable agriculture. Experimental Agriculture. 28. Pp. 89-98. Ceccarelli, S., S. Grando and lA.G. van Leur (1987): Genetic diversity in barley landraces from Syria and Jordan, Euphytica, 36. Pp. 389-405. Fischbeck, G. (1992): Barley cultivar development in Europe. Success in the past and possible changes in the future. In: L. Munk (ed.): Barley Genetics VI. Vo!' II. Pp. 885901. Munksgaard Int!. Pub!. Ltd., Copenhagen. F AO (2001): International Treaty on Plant Genetic Resources for Food and Agriculture. FAO, Rome. FAO (1998): The state of the world's plant genetic resources for food and agriculture. F AO, Rome. F AO (1996a): Global Plan of Action for the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture and the Leipzig Declaration. FAO, Rome. FAO (1 996b): The Fourth International Technical Conference in the Context of the FAO Global System for the Conservation and Utilization of Plant Genetic Resources for Food and Agriculture. International Technical Conference on Plant Genetic Resources. ITCPGRl96/INF/2. FAO, Rome. FAO (1996c): Sub-regional preparatory meeting for South and Southeast Asia and the Pacific recommendation 3. Submitted to F AO in the preparatory process for the International Technical Conference on Plant Genetic Resources, 1996. FAO (1996d): Report of the International Technical Conference on Plant Genetic Resources, Leipzig, Germany, 17-23 June 1996. Document: ITCPGRl96IRep. FAO, Rome. Go11in, D. (1996): Valuing crop genetic resources for varietal improvement: the case of rice. Paper presented at the CElS - Tor Vergata University, Symposium on the Economics of Valuation and Conservation of Genetic Resources for Agriculture, 13-15 May 1996.

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Goodman, M.M. (1985): ExoticMaize Germplasm: Status, Prospects and Remedies. Iowa State Jour. Res., 59. Pp. 497-527. Hampicke, U. (1991): Naturschutz-Okonomie. UTB. Haugerud and Collinson (1990): Plants, genes and people: improving the relevance of plant breeding in Africa. Expl. Agric, 26. Pp. 341-362. James, C. (1997): Progressing Public-Private Sector Partnerships in International Agricultural Research and Development. ISAAA Brief No. 4-1997. James, C. (1998): Global Review of Commercialized Transgenic Crops: 1998. ISAAA Brief No. 8-1998. James, C. and A. Krattinger (1996): Global Review of the Field Testing and Commercialization of Transgenic Plants: 1986 to 1995, The First Decade of Crop Biotechnology. Kloppenburg, J.R. (1998): Possible formulas for the sharing of benefits. Based on different benefit indicators. Draft for FAO. Le Buanec, B. (1996): Seed Trade in WANA, EU and Other Countries. van Leur, lA.G., S. Ceccarelli and S. Grando (1989): Diversity for disease resistance in barley landraces from Syria and Jordan. Plant Breeding 103. Pp. 324-335. Pearce, D.W., E.B. Barbier, A. Markandya, S. Barrett, R.K. Turner and T. Swanson (1991): Blueprint 2. Earthscan, London. Perrings, C. and D. Pearce (1994): Threshold Effects and Incentives for the Conservation of Biodiversity. In: Environmental and Resource Economics, 4. Pp. 13-28. Rabobank (1994): The World Seed Market. Rabobank Nederland and Ministry of Agriculture, Nature Management and Fisheries. LEI-DLO (Agricultural Economic Institute). Smale, M. (1996): Global Trends in Wheat Genetic Diversity and International Flows of Wheat Genetic Resources. Part I of: CIMMYT World Wheat Facts and Trends, 1996. CIMMYT, Mexico, D.F. Smith, S. and W. Salhuana (1996): The Role oflndustry in the Conservation and Utilization of Plant Genetic Resources. Presentation at the Industry workshop: The Conservation and Utilisation of Plant Genetic Resources for Food and Agriculture. 15-16 February 1996. Basel. Sperling, L. (1993): Analysis of Bean Seed Channels in the Great Lakes Region: South Kivu, Zaire, Southern Rwanda, and Select Bean-growing Zones of Burundi (summary report), Butare, Rwanda: CIAT Regional Programme. UNFCCC (United Nations Framework Convention on Climate Change) (1992): Framework Convention on Climate Change. http://unfccc.intiresource/conv/conv.html. New York. UPOV (Union for the Protection of New Varieties of Crops) (1995): Plant Variety Protection Statistics for the Period 1990 - 1994. Document prepared by the Office of the Union. WCMC (World Conservation Monitoring Centre), Faculty of Economics, Cambridge University (1996): Industrial Reliance upon Biodiversity. WCMC, Cambridge. WDI (World Development Indicators) (1998): World Development Indicators. World Bank. Weltzien, E. and G. Fischbeck (1990): Performance and variability oflocal barley landraces in Near-Eastern environments. Plant Breeding, 104. Pp. 58-67. Weltzien-Rattunde, E. (1996): Personal Communication. ICRISAT, Senior Scientist, Breeding. Wright, B.D. (1996): Intellectual property and farmers' rights. Paper presented at the CEIS - Tor Vergata University, Symposium on the Economics of Valuation and Conservation of Genetic Resources for Agriculture, 13-15 May 1996.

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Wych, R.D. and D.C. Rasmusson (1983): Genetic improvement of malting barley cultivars since 1920. Crop Science. 23. Pp. 1037-1040.

4 Economic Incentives for Conserving Crop Genetic Diversity on Farms: Issues and Evidence Melinda Smale

The Decision to Make Scientific methods of genetic improvement, building on millennia of farmers' selection in their own fields, are the basis for changes in the supply of food on which societies depend. Whether farmer selection practices, conventional breeding methods or techniques of genetic transformation are the principal means of seed technological change, genetic improvement of crop plants depends on the exploitation of allelic diversity and genetic recombination. Since the 1970s when conservationists first raised public concern for the loss of plant populations believed to contain rare alleles, large numbers of landraces and wild relatives of cultivated crops have been sampled and stored in ex situ genebanks. An alternative form of conservation in situ has also received some scientific attention, though it raises intricate social and economic issues. For cultivated crops, conservation of genetic resources in situ refers to the continued cultivation and management by farmers of crop populations in the agro-ecosystems where the crop has evolved (Bellon et aI., 1997). Since the genetic diversity of populations evolves differently in situ and ex situ, the units conserved by these two strategies are not perfectly substitutable. This contribution organizes evidence on the problem of in situ conservation for rice, wheat and maize around the decision-making criterion of the minimum viable reserve (Krutilla, 1967). Put simply, KRUTILLA argued that while technological change can compensate for the depletion of some stocks, amenities that members of advanced economies (and developing societies) consume may be lost. Acknowledging that too little was known about the instrumental variables in this dynamic problem, he recommended the identification, based on scientific assessments, of a minimum reserve. To implement this criterion even in simple terms we need to be able to answer several questions. First is the question of location. Based on past experiences in breeding for crop improvement, theories of population genetics, ecosystems and geography, scientists have prior beliefs about the relative probabilities of finding rare alleles of a given crop species in different geographical areas. Though genetic analyses from samples drawn in the field are necessary to test and refine these hypotheses, these may be taken as the best available estimate of the relative ranking of expected, future, direct use benefits from on-farm conservation. Indirect future use benefits and existence values of crop infra-specific diversity are not likely to

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be great. Option values other than those subsumed in scientists' assessments of information value are not likely to be estimable (Brown, 1990). Second is the question of size. Determining the minimum effective size of onfarm crop genetic reserves involves some complex considerations since: (I) isolating crop populations may destroy the very genetic structure that makes them potentially valuable and (2) identifying this underlying genetic structure and its evolutionary potential from the varieties named by farmers is a nontrivial scientific problem (Jarvis and Hodgkin, 1997; Brown, 2000). A third issue is the nature of the costs. Why should farmers choose to grow those populations believed to be of great potential value to future crop improvement? While the costs of species preservation in protected reserves consists primarily of the opportunity costs of land use and enforcement, the cost of conserving crop genetic resources on farms is the opportunity cost to farmers who grow them, which varies according to their economic opportunities and shifts over time as economies change. Briefly, least cost conservation will occur in sites that are most highly ranked in terms of expected future benefits to producers and consumers and where, because farmers' private incentives for conservation are greatest, public interventions to encourage them to do so will be least. In these sites, private and social costs will be lowest. The next section summarizes the evidence on the location and size of on-farm crop genetic reserves for the world's three major cereals: rice, wheat and maize.

Evidence on the Location and Size of Reserves Historical Location of Reserves Our first candidates for reserves might be the areas where the crops were domesticated, based on popular notions of centers of origin and diversity. However, crop origins and centers of diversity are subjects of continuing scientific research rather than established fact. V AVILOV' s famous hypothesis (1926) was that the centers of origin of crop species are the areas that exhibit the greatest observed genetic variation. HARLAN (1971, 1992) proposed instead that although some crops exhibit centers of diversity, a number of ecological, natural or social factors cause genetic variation to accumulate in secondary centers. Of the three major cereals (rice, maize and wheat), only African rice (Oryza glaberrima) seems to have originated in a delineable center in the upper Niger river. The origins of Asian rice (Oryza sativa) are still disputed. Maize evolved rapidly in its dispersion from a limited geographical area of southern Mexico across the Americas and the Caribbean (Goodman, 1995); wheat is an extreme example of a crop with "diffuse" (Harlan, 1992) or "confused" (Zohary, 1970) origins. We might then propose as sites the areas of the world where modern varieties are not grown, based on the assumption that they are narrower genetically than earlier plant types. Yet the timing and cause of genetic narrowing in the major ce-

Economic Incentives for Conserving Crop Genetic Diversity on Farms

57

real crops is also a matter of historical and scientific perspective. Modern cereal cultivars have developed through three main phases of selection. In the first phase they were selected by earlier food growers to make the crop more suitable for planting and harvesting by humans, for threshing or shelling and for consumption. In the second phase, many farmers exerted (and continue to exert) pressures continuously in numerous directions, resulting in variable populations that were adapted to local growing conditions and consumption preferences. These are broadly known as "landraces." During the third phase, fields of cereals have become more uniform in plant types with less spontaneous gene exchange and more planned gene migration through the worldwide exchange of germplasm. The products of this third phase are loosely referred to as "modern varieties," and the selection pressures are largely those of professional breeders using scientific methods. The last two phases are concurrent today. In plant breeding, the same scientific breakthrough that widens the gene pool at one point in time can lead to the widespread cultivation of a single, outstanding variety. When many farmers choose to grow the variety, the germplasm base of the materials grown in fields may narrow temporarily until the next popular variety comes along. HAWKES (1983) cites the introduction of Rhtl and Rht2 genes into Western wheat breeding lines, which led to the development byN. Borlaug of the semi-dwarf wheat varieties, as an example of how diversity has been broadened by scientific plant breeders. These and the rice varieties of the green revolution have been cited elsewhere by scientists as the cause of genetic erosion. The term "genetic erosion" was used by HARLAN (1972) to describe what he viewed as a potentially disastrous narrowing of the germplasm base required for the improvement of food crops. Since major crop species of wheat, rice and maize are not likely to disappear in the foreseeable future, the term probably signifies a dramatic shift in population structure within a crop species that can result from a range of natural or human-led processes. "Genetic erosion" has become synonymous with the displacement of landraces by modern varieties. HARLAN asserted that the "destruction of genetic resources is caused primarily by the very success of modern plant breeding programs" (Harlan, 1972: 212). FRANKEL called for urgent collections to forestall "the loss of ancient patterns of diversity in the Vavilovian centers, " since modern varieties contain "a minimum of genetic variation," and "in many instances .... have a narrow genetic base" (Frankel, 1970: 11). The next section summarizes some evidence on these hypotheses. Effective Location and Size of Reserves

Have the world's rice, wheat and maize landraces been displaced by modern varieties? Recent estimates of the extent of the area planted to modern varieties and landraces are shown in Table 4.1. Based on CIMMYTIO data, roughly 80% of the wheat area in the developing world was sown to semi-dwarf varieties in 1997, 10

CIMMYT: Centro Internacional de Mejoramiento de Mais y Trigo, CGIAR; International Center for Maize and Wheat Improvement.

58

M. Smale

with the remainder split almost equally between improved tall varieties and landraces or varieties with unknown ancestry. IRRIll estimates that about three-quarters of the rice area in Asia, which produces most of the world's rice, is sown to semi-dwarf varieties. These varieties dominate the irrigated rice ecosystems and cover large areas in the rain-fed lowlands. In sub-Saharan Africa, landraces are still planted to a greater proportion of rice area than modem varieties, while in Latin America, they occupy a very small niche. Table 4.1. Percentage Distribution of Rice, Wheat and Maize Areas by Type of Germp1asm in the 1990s Wheat

Region

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