Economic Evaluation Of Genetic Modified R&D Investment

Since 1980s, global R&D investment in genetically modified (GM) crops increased dramatically. Although many studies on the economic effect of GM crops have been published in the literatures, however, there is no any analysis studying the effect of R&D investment in biotechnology.The objective of this research is to study the investment efficiency of the on-going experiments on GM rice, and to provide empirical evidence for China's GM crops R&D investment. It includes conducting surveys on biotechnology institutes to learn about the funds to be invested into the biotechnology and GM rice, outcome of GM rice; China's experiments of GM rice, and forecasting the welfare effects after it is approved for commercialization. The survey conducted shows that R&D investments on China's agricultural biotechnology and GM rice have been increasing dramatically since 1986. Based on the survey, we estimate the internal rates of return of GM rice R&D investments under different scenarios.The results show that the GM rice has great advantage of pest-resistant and economic, social and ecological benefits. Under the assumption that GM rice would be commercialized in 2004, 2000 and 1997, the internal rates of return to GM rice R&D are 43-45%, 57-63% and 76-84% respectively, much higher than the highest rate of commercial banks; and the ratio of benefit to cost is also very high, the smallest is 151 while the biggest is 2503. Commercialization of GM rice will bring great welfare surplus while producer and consumer welfares can be improved to a large extent.The study implies that China should further strengthen the investment of human resources and materials on GM crops, improve the bio-safety research and management of GM organism and promote industrialization of GM rice as early as possible.