Genetic Resources, Traditional Knowledge and Science: an Institutional Economics Framework for...

Genetic Resources,

Traditional Knowledge and Science:

an Institutional Economics Framework

for Analysing Policy

and Defining Rights and Rules

Pierluigi BozziEnvironmental Economics

Faculty of Economics

University of Rome “La Sapienza”

Traditional Rural Societies• collective knowledges and

collective innovations

GeneticResources

Scientific-Industrialized World• privatised Knowledges and

privatised innovations

give rise to a meeting/clash between the scientific-industrialised world and traditional rural societies - between different behaviours, modes of

production, consumption and investment

Ecosystemsand

HumanIntegratedSystems

GeneticInformationsKnowledge

GeneticResources

Geneticinformation

Geneticsequences

Molecules

Applied useof

phenotype

Biotechnology

PharmaceuticalIndustry

Agro-industry

The uniqueness of genetic resources, and the consequent complexity of managing them, results from their two-fold nature: on the one hand, they are natural material resources, strongly linked to, and integrated into, “local” life cycles of ecosystems; on the other hand they are also sources of, and containers of, scientific information and knowledge - non-tangible assets that are completely detachable from the local context to which they belong.The information and knowledge set in motion by genetic resources are divided up into innumerable “fragments” of knowledge, and they are utilized “apparently detached” from the natural systems in which the genetic resources originate.

Ecosystemsand

HumanIntegratedSystems

Genetic Resources

Knowledge

ImprovedVarietes

G.M.O.

NewDrugs

“Innovative”Agricultural

Policies

Biotechnology

PharmaceuticalIndustryMarket

But in fact these “fragments” re-enter this site of origin, transported by market

forces. They take the form of improved, or genetically modified, plant varieties, of

new pharmaceutical drugs, or, more simply, of innovative agricultural policies

which have been fabricated in the international markets

Agro-industry

Genetic Resources

LocalMarkets

LocalMarkets

Ecosystems

Dynamics ofGenetic

Evolution

Use ofGenetic

ResourcesKnowledge

Human IntegratedSystems

International

Market

D i s t o r t i o n s

In this way distortions are introduced into the local markets, and these have repercussions on the use of natural resources - on those practices and traditional knowledges which have enabled human systems and natural systems to co-evolve. The dynamics of genetic evolution, which is strictly tied to the socio-economic structure of the locality, is influenced negatively

How can this viscious circle be transformed into a virtuous one that produces benefits both for local systems and for megadiverse countries?

Genetic Resources

• The meeting between the knowledge economy and the “economy of the living”• The increasing interdependence of the markets• The high rates of technological innovation in the knowledge economy, tied to a “return”

to exploitation of the “land” (i.e. genetic resources) factor of production for the generation of high profits

• The absolute novelty of a natural resource – the genetic material - as an independent source of production and reproduction of information-knowledge-innovation

• The meeting/clash between the scientific-industrialized world and the traditional worlds of “informal sciences”

give rise to unprecedented types of relationships involving

Culturalsphere

Socialsphere

Economicsphere

How can the seeming contradictions between conservation and innovation - between the knowledge and “traditional science” of rural societies and the “industrialized science” of the international markets - be tackled?

Traditional RuralSocietes

Economy of the Living

ScientificIndustrialized World

KnowledgeEconomy

Fundamental reform of the institutional structures upon which the market operates is therefore necessary. A three-stage innovative institutional framework is required:new Policies new Rights new Rules

How should we operate in the institutional arena of economic policy?

Institutions are a society's “game rules”, or, more formally, the constraints that humans have defined to discipline their relationships (North, 1994)

The methodologyof institutional

economics

evolution and developmentof the economic system

Genetic Resources

Traditional RuralSocieties

Scientific-IndustrialisedWorld

Traditional rural societies tend to be characterised by a structure based on informal institutions: behaviours derived from the cultural traditions, moral codes etc. Industrialised societies are characterised by formal institutions: constitutional, political and economic rules and contractual regulations

formal institutionsinformal institutions

Genetic Resources


ScientificIndustrialised World

Two institutional systems

Two distinct productive processes in the life cycle of genetic resources and innovation

Traditional rural societies are characterised by:• informal institutions

• behavior deriving from cultural traditions

• common and collective laws• “public domain” and social

networks for the production and transmission of knowledge and “informal traditional science”

• absence of financial capital investment and the dependence on “natural capital”• aversion to risk

The industrialized society is characterised by: • formal institutions

• behavior modeled on the rules of the market

• private law• private laws of intellectual property

and commercial channels of production and purchase knowledge, “formal industrialized science”

• dependent on financial capital and risk capital (venture capital in

biotechnology)• propensity for risk

Genetic Resources



• Interest in the conservation of biodiversity and in the maintenance of ecological niches having an “insurance value”

• local markets with a multiplicity of diversified “ecological-commercial niches”

• a group of highly-substitutable goods (a multiplicity of available local variety to satisfy similar or alternative uses)

• a natural adaptive-evolutionary dynamic of freely available scientific innovation and output

• Interest in the fragmentation of biodiversity and of related knowledge, to make possible, by means of financial instruments, the withdrawal, the purchase, and the industrial management of a single resource, without territorial-environmental limits

• international markets offering a limited range of homogeneous goods

• a group of minimally-substitutable goods (think of the scarcity and vulnerability of the plant varieties available on international agro-industry markets)

• scientific-industrial dynamics of innovation. Scientific output is “enclosed” by the law of privacy of intellectual property and by the rules of industrial secrecy

The productive economic organization is inseparable from

the socio-institutional-environmental organization

Entrepreneurial economic organization is independent of

socio-environmental organization

Genetic Resources



The socio-economic structure of rural society optimizes biodiversity conservation

Transference of industrial scientific modes of production to traditional rural societies is not conceivable

In the formulation of policy we must therefore tackle the following questions:

• How to link the two worlds and the “two sciences”?

• How to avoid the distortions and failures of the market from inevitably contaminating traditional systems?

• How to benefit from the advancement of “formal science” in connection with the evolution of the “informal science” of rural systems, in order to reach the goals of conserving biodiversity and reducing poverty?

• In other terms, how to optimize the benefits for society?

Genetic Resources



The need arises of creating a unified policy for science and for conservation in order to

1. promote the “local integrated systems” of biodiversity and knowledge

2. exploit the comparative advantages offered by the wealth of biodiversity, of endemism, of ecosystems and of integrated human systems, which effectively are unique “intergenerational high technology scientific laboratories” that cannot be found elsewhere

3. oppose the distorting power of international markets by means that derive from the conservation of, and utilization of, local resources – both natural and social. These may include incentives and utility in addition to monetary profits accruing to others

Genetic Resources



1. the production of local varieties are directly more competitive, in terms of price and/or utility value

2. and/or if the life cycle of local varieties involve clear and measurable external economies for the entire structure of the socio-economy of the area; if, that is, the local integrated system is more competitive in its totality in comparison to what agro-industry can offer, because it receives more benefits, even of a different nature and not only monetary, from the maintenance of the production of this local variety

Genetic Resources

LocalMarkets

LocalMarkets

Ecosystems

Dynamics ofGenetic

Evolution

Use ofGenetic

ResourcesKnowledge


International

Market


The power of international markets, as an offer of an improved variety on behalf of agro-industry, can be stopped only if

But the two conditions can come about if:

A) the entire socio-economic structure of the area is respected and conserved, legitimating the institutional order, “the rules of the game” that supports that community, with a consequent form of recognition of collective-community rights and of customary law on genetic resources and on the related knowledge

The same considerations can be made for medicinal plants or for non-timber forest products

Ecosystems

EntireSocio-Economic

Structure


Collective

Rights

ScientificIndustrialised

World

Private IntellectualProperty Rights


OfficialDecentralised

Science

TraditionalKnowledge

BiodiversityResearch

Trajectories

RightsRules

ScientificCapabilities

Power ofNegotiating

+

B)

1) If there is the adoption of a policy and institutional organization for a “official decentralized science”, that accompanies the evolution of “informal science”, responding to the needs of the community and local markets,

2) if the “innovation in situ” is the result of the participation of farmers, or healers, “informal researchers” that know, experiment and spread scientific findings

3) if the research trajectories are delineated in function of the wealth of biodiversity of the area

4) if there are economic-institutional regimes, contractual laws and rules:• that consent to the acquisition of the scientific capabilities that are necessary to

overcome the gap which penalizes the traditional rural societies and of non-industrialized countries and

• that give to local communities and non-industrialized countries, the power of negotiating and the tools to reduce the cost of transactions and asymmetrical information, in order to keep, in international markets, commercial exchange relationships that are fair and equal

If then the economic-institution reference framework is that of collective rights of the traditional rural society, how do we define the rights and rules of international relations, where the opposite regime of private law of intellectual property is currently the propulsive platform of the economic system?To confront this question we need to analyze the function and the effects of private intellectual property

The market can operate if there are defined and assigned property rights on the goods subject to exchange. If in nature the genetic resources (subject and container of knowledge) are freely available, the regime of intellectual property becomes the instrument that makes possible the fragmentation, the appropriation and the exchange.

MarketIntellectual

Property

GeneticResourcesKnowledge

Intellectual PropertyGenetic Resources

Knowledge

In other words the real objective of intellectual property would be that of generating a constant dynamic process of the production of knowledge and invention to the benefit of society

MarketIntellectual

PropertyGenetic

ResourcesKnowledge


Knowledge

Intellectual property rights create for the owner“an artificial monopoly”

that determines an extra-profitjustified as incentive-remuneration of the creativity and of the innovation (or of the investment necessary for its production)

and by the presupposed of continual spill over of knowledge and creative capability fed by this mechanism and otherwise not realizable

The respective realities in each of these case are, of course, anything but identical, but in spite of this, the obligatory application of the same model is envisaged.

But problems arise from the rigidity and standardized way this model is imposed upon all economic sectors, both industrial and agricultural, upon all the sciences, and, indiscriminately, upon all countries. It is done as if the methods of education, training and scientific advance in the aerospace industry, for example, were identical to those in the agricultural industry; as if the way research was organised in both industries were identical, as if both required the same time periods to develop an innovation, and had identical requirements regarding investment funding. It is done as if the level of scientific research and the need to protect inventions were identical in Nepal and in Japan

MarketIntellectual

PropertyGenetic

ResourcesKnowledge


Knowledge

MarketIntellectual

PropertyGenetic

ResourcesKnowledge Intellectual Property

Genetic ResourcesKnowledge

The model of exclusive private property rights (absolute ownership) over inventions gives the following entitlements:

1. The power of an individual to use, or not to use, an invention, and as a consequence, to use or not to use, a “body, or pathway, of knowledge”

2. the power to transfer ownership of an invention to others3. the power to prevent others from using that “body, or pathway, of knowledge”,

thereby blocking any form of further scientific investigation, or alternative lines of research, with regard to it. The patent holder may therefore block any alternative research that is not in accordance with its business strategy, even if the research would prove useful to the country of origin of the resource

4. Ownership for a fixed term (20 years in the majority of cases), rather than variable, as logic would demand, according to the different modes of operation, or the different rates of technological innovation, or the unequal times required for returns on investment in the different markets

All of these are factors that not only vary between industry and agriculture, but can also be completely different even within the same sector, or for the same plant variety in different geographical areas

And above all, what follows from this is the impossibility of the society or state to control how and if these scientific findings and resources are used.In other words, a community or country loses control over their own resources, over the scientific and commercial potential of these resources. But happens specifically in the biologic-biotechnology field? A farmer in agriculture is “field researcher”, an industrial aerospace worker is not a researcher.In other words, if the real objective of the intellectual property model would be that of generating a constantly dynamic productive process of knowledge and invention for social benefit, in biologic-biotechnological sector this model is not applicable because this objective is attained in completely different way that in other sciences

GeneticInformationsKnowledge

? ?

??

Intellectual PropertyResearch

In the biologic-biotechnological area, research and development experience a constant forced reciprocity:

• with field research• with the organisms that contain genetic material• with their natural environment• with the selective knowledge-experimentation-pressure accumulated in time

by the local population A dynamic human evolution mutation-selection-adaptability-innovation natural-innovation that makes up the research and development engine that is not repeatable in the laboratory.An ecological niche cannot be “moved to a research centre”.

Genetic ResourcesField Research



In the biological disciplines the confining of knowledge and of invention in the closed areas of intellectual property and industrial secrets is contrary to the scientific dynamism and to the same interests of “official science”

Enormous opportunities are offered by this exceptionality of biologic-biotechnology science: non-industrialized countries and rural societies in general, perhaps for the first time in history, can possess the “scientific structure and capacity of high technology”.

An ecosystem, integrated with the cultural diversity of the place, has the same meaning, for the biological disciplines, of a “technological pole of excellence” with researchers specialized in nuclear physics.In so much as there exists an organization and institutional order, laws and rules, that optimize this potentiality.

But what happens in the negotiations relative to genetic resources and traditional knowledge?Bio-prospecting contracts, or other similar agreements, are subject to the intellectual property regime, to which they are directed: and therefore guarantee to those who perform the research (i.e. international companies) the exclusive ownership of future scientific results

Genetic Resources



MarketIntellectual

PropertyGenetic



Therefore the companies are interested, once the contract is signed, in not disclosuring the research goals and activity, and to keep them under the protection of “industrial secrets”. But companies are interested in “maintaining industrial secrets” in general on all scientific knowledge and commercial information that they possess.More information about contractual dealings on the other side, the community or provider country, would empower them in the negotiating process.“The market” before being “a place” where goods are exchanged is “a market of information”, that is, a place where information is exchanged in order to evaluate the different benefits of the commercial exchanges. “Asymmetric information” favours unjustly, and inefficiently economically, only one side in comparison to the other, who can never conclude just and equal contracts.

All of the resources that the sides possess can never be adequately utilized and therefore the benefits for the whole society cannot be optimized

MarketIntellectual

PropertyGenetic



This interest in “maintaining industrial secrets” is extended to scientific knowledge and to all commercial information relative to plant variety and to molecular and genetic sequencing that is not yet subject to contractual agreements, but which can in the future become part of the business strategy of the company.And then why disclosure information that favours the competition?

In other words, the bio-prospecting agreements are subject to the contractual power of the “strong side”, which currently comes from the scientific industrialized world.

But wasn’t the objective of intellectual property that of generating a constantly dynamic production of knowledge and invention?

What spill over of knowledge and creative capacity can ever be achieved between the industrial world and the traditional rural systems?

In this framework, the international companies, or the centres of specialized research, do not control the genetic resource material, nor of the indispensable “traditional scientific capabilities” of rural society, but they exploit the consequential distortions of an inappropriate and inefficient regime of intellectual property rights in order to perpetrate an “artificial comparative advantage”.

In these cases the same rules of the market economy prescribe a correction of the inefficiency by means of institutional economic policy intervention that defines new policies, new rights and new rules

Genetic Resources

LocalMarkets

LocalMarkets

Ecosystems

Dynamics ofGenetic

Evolution

Use ofGenetic

ResourcesKnowledge


International

Market


One amongst a variety of possible work strategies is as follows:

First Stage

Policies and Objectives:As we noted earlier, a unified policy for science and conservation should aim to:

1. recognize the value of, add value, and promote local integrated systems of biodiversity and knowledge.

2. exploit the comparative advantages accruing to richness of biodiversity, of endemism, of ecosystems and of human integrated systems.

3. acquire the scientific capabilities needed to bridge the gap (reduce the inequalities) penalizing traditional rural societies and non-industrialised countries.

4. oppose the distorting power of the international markets, by means deriving from the conservation of and utilization of, local resources, both natural and social (these may include incentives and use values accruing to some biodiversity products, in addition to monetary profits accruing to others).

Value ofLocal

IntegratedSystems

Richnessof

Biodiversity

ScientificCapabilities

Second Stage

Definition of Rights:Consequent upon the First Stage, the definition of rights requires the following:1. the “game rules” of the traditional rural society and local communities should be

respected, with the recognition of collective community rights (including customary laws) over genetic resources and associated knowledge, treated as a single juridical entity

2. the national legislation of the country of origin of a genetic resource and related knowledge should be recognized as applying in all relationships/dealings (both scientific and commercial) at the national-international level regarding that resource:

• in order to render collective community rights “indirectly operative” at the level of international scientific and commercial relationships/dealings

• in order to make the contractual provisions and regulations drawn up by the country of origin binding in scientific and commercial relationships/dealings at the international level. Such contractual provisions and regulations will be devised by the country of origin in accordance with its own interests and objectives concerning policies for science and conservation

CollectiveRights

Legislationof the

Country ofOrigin

ContractualRegulations

in InternationalDealings

Third StageDefinition of Rules

In order to correct the distortions of the market and achieve its policy objectives regarding science, a provider country could provide for a reversal in the paradigm of the current regime of intellectual property rights, in such a way as to:

1. not allow private intellectual property rights over living matter;2. allow only the granting of “licences of use and/or research” in

national and international relationships/dealings.

In the case that an international agreement on bioprospecting has been stipulated, even if the law of the country in receipt of the genetic material provides for patent rights over it, this can not be freely obtained, owing to the prohibition existing in the legislation of the country of origin.In other cases, a foreign company would have to respect the obligation, imposed by local legislation, of joint holding rights over the patent.

Distortionsof the

Market

Legislationof the

Country ofOrigin

Licencesof Useand/or

Research

The granting of such licences would lead to greater flexibility, in contrast to the rigidity of the current system of intellectual property rights

The concession of a license would bring about greater flexibility in comparison to the rigidity of the current system of intellectual property rights:

A) for a time period: a) flexible and inferior to those foreseen by the current regime

b) with the possibility of creating concession time periods in order to provide incentives for research and commercialization. Give sufficiently short deadlines to force the company or specialized centre to really perform the research activity, without running the risk and uncertainties of the long time periods in the current regime of intellectual property


ResearchFlexibility

FlexibleTime Periodto ProvideIncentives

Distortionsof the

Market

B. Greater flexibility in the possibility of conceding more contextual licenses on the same genetic resource, or to set different limitation on each one, according to the specific goals the country wants to achieve:

a) in the different countries that receive the genetic materialb) in different ecosystemsc) in different industrial sectors (pharmaceutical industry or agro industry,

interested in, for example, the same genetic sequence or in the same plant variety).

C. the provider country could agree or impose in the negotiations specific trajectories of research otherwise not commercially interesting (we could imagine two trajectories of alternative research on the same molecules, one on a neglected disease of local interest and the other on a commercially viable pathology)


Research

ContextualLicenses on

the sameGenetic

Resources

ImposedTrajectories of

Research

Distortionsof the

Market

D. The provider country could impose by legislation that in the bio-prospecting agreements there should be a compulsory provision for: a) the participation of local centres of research and researchers in the

scientific activity, in situ and ex-situ, in order to control and lead the partnership in the research activity;

b) financial and scientific assistance for the construction of research centres in situ and for the training of researchers.

The inclusion in a single negotiation and in a single licensing contract of both the concessions for the use of the genetic resource as well as the acquisition of scientific capabilities would avoid other negotiations, other contracts, and the subsequently high cost of the transactions. But, above all, this would increase the negotiating power of the provider country or the local community in their claim to scientific compensation without having conceded anything in respect to their own resources


WorldProviderCountry

TraditionalSocieties

ProviderCountry

TraditionalSocieties


World

Genetic Resources

Commodities

These are just a few proposals for working strategies which, if re-interpretedand adapted to the specific circumstances of local communities and providercountries, could lead to the drawing up of environmental-economic policiesdirected not only towards "conservation in situ", but also towards "sciencein situ".Genetic resources are also scientific resources. “Access to resources” and “benefit sharing” can have a real significance if they are interpreted also as “access to science” and “sharing of the benefits of science”

Conservationin situ

Sciencein situ

Access toGenetic

Resources

Access toScience

Date post:	26-Mar-2015
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