Assessing Future technologies and Assessing Future technologies and Infrastructure (T&I) investmentsInfrastructure (T&I) investments

David Zilberman

University of California Berkeley

C-FARE planning for Priorities workshop

San Antonio,Texas

October 30 2003

Technological change : a key driver Technological change : a key driver of the evolution of agricultureof the evolution of agricultureTechnological innovations and capital

investments were crucial contributors to increased agricultural productivity that enabled feeding– a fast growing global population – with ever declining share of the population in

farming– With a smaller expansion of the agricultural

land base thus protecting environmental amenities

Science economics and Technological progressScience economics and Technological progress

Innovations do not evolve randomly-they are induced by economic realities-

– Labor scarcity led to labor saving innovation

– Water scarcity led to water conservation Research and education policies and

investments in infrastructure contribute to productivity growth.

Innovation Productivity & infrastructureInnovation Productivity & infrastructure major major areas of agricultural economic researchareas of agricultural economic research Key areas of Production and farm economics:

– Production functions estimation (relations between input & outputs)

– Factor productivity– efficiency of resource allocations – Adoption of new technologies (reflecting the emergence

of discreet choice technique and Panel data sources)

Studies are at different levels of aggregation– Farm– Region

– nation

Major areas of innovation researchMajor areas of innovation researchStudy of innovations as economic activities

– Analysis of factor that contribute to research productivity

– Analyzing allocation of research funding.Rate of return(ROR) studies

– Ex ante is used for project selection– Ex post studies find ROR of public research

higher than interest rate.Thus ,Under-investment in research

– There is a distinction between public and private rate of return

Research on research policyResearch on research policy– Role of public research-when is it appropriate– Distributional effects of public research

• Between consumers and producers and among regions

– Political economy of research• -Why there is under investment in research• How politics affect research funding

– The economics of alternative mechanisms • competitive funding vs.• formula funding vs• Performance based mechanism

Research on Research on Technology transfer and IPRTechnology transfer and IPR Use and ownership of IPR of public sector research

results– What is done and what should be done

Properties and performance of Public vs private research– University research frequently identify concepts but

requires investment in development and commercialization by private sector

– Rights to university IPR is sold to private sector, professors as entrepreneurs -university becomes part of industrial educational complex

The economics and productivity of extension

Research on Public investment & infrastructureResearch on Public investment & infrastructure

Evaluation of infrastructure project considering

– Dynamics including Irreversibility– Uncertainty

Finance of infra structure investments– Role of public and private sectors– Alternative mechanisms for public good finance

Specific public good investments – Roads and communication infrastructure– Storage facilities– Water resource infrastructure(Dams, canals)– Pest-control and food security systems

Factors affecting research on T&I-IFactors affecting research on T&I-I Information and communication technologies (IT)

– Internet and web– Wireless telephony– GIS and GPS

Bio-technologyExpansion of agriculture

– Farming medicines and chemical productsEnvironmental and health concerns

– Diversity of attitudes about farm technologies– Regulation of waste and pollution– Promotion of resource conservation

Institutional changes research on T&I Institutional changes research on T&I Consumerism -desire for convenience

&qualityIndustrialization

– Contracting and vertical integration– Transition from commodities to

differentiated products – branding and proprietary food products

Privatization– Transfer of patents rights to private sector– Emergence of private consultant sector

Persistent Low farm incomes

Priorities for Research on T&I ThePriorities for Research on T&I The

The changing institutional and technological set up provides many research opportunities

We will select some of the ones that seems to have high rate of return and signify new avenues in terms of methods

The economics & management of information technology (IT) in farming

Establishing decision-making rules for precision farming systems

Precision farming is long on Hardware and short on software-

Precision farming systems generates much data-economics method can put it to good use. Needed– Methods for estimation with mass data– Methods for adaptive decision making

The economic impact of IT in farmingThe economic impact of IT in farming

The private and public benefits to precision farming -including impacts on environment

Sorting out various new IT -what to adopt Actual adoption patterns of Precision

farming and other information intensive technologies – Impacts of these technologies in terms of

yields, costs profitability and the environment– Factor affecting extent and intensity of adoption

IT and marketingIT and marketing

IT potentially expands marketing opportunities in ag. We need– Adoption of IT agricultural marketing – Does the technology benefits farmer?others?

• To what extent farmers sell and buy online• The use and impacts of electronic exchanges• The distribution impacts of information technology

– how it affects various farm sizes and region,– its contribution to industrialization

New institutional set ups for ag marketing resulting from the IT revolution

IT and ag information networksIT and ag information networks

The economics and performance of the agricultural information sector

Benefits from investment in and subsidization of information infrastructure

Methodology and estimates of return to extension and technological information

IT and redesign of extension What type of informational infrastructure are

needed to be developed?-who should pay?.

Biotechnology in agricultureBiotechnology in agriculture

Adoption of biotech in plants and livestock, domestically and internationally

Gainers and losers from ag biotech Impacts in terms of profitability, yields costs,distribution and the environment

The Economics of non-traditional agricultural biotechnology.

Regulations of Ag biotech and their Regulations of Ag biotech and their impacts impacts Impacts of alternative regimes of

registration labeling and regulation on evolution of bio-technologies and their adoption

Assess the role and impacts of alternative IPR arrangements- on various type of products.

Provision of IPR and regulation of biotech in specialty crops

Public research in era of privatization Public research in era of privatization and industrialization -Iand industrialization -IContracting and vertical integration

dominate the production of poultry, swine, fruits and vegetables. Agribusiness develop proprietary knowledge.

– Do these industries under or over invest in R&D?

– What are the patterns of transfer &use of public research results by private sector? What are public and private rates of return to public research in these cases?

– To what extent public R&D subsidized industrialized agriculture?

Public research in era of privatization Public research in era of privatization and industrialization -IIand industrialization -II What are the ag research gapes to be pursued by

public sector and their rates of return? Evaluate public research on environmental

impacts of industrial ag and for regulatory purposes

What is the role and productivity of extension in industrialized sectors of agriculture

To what extent public research and extension serve the fringe ands specialized niches of agriculture-organic etc.– What are public and private rates of returns?– How to improve access and utilizations of public

research results?

The stewardships of innovation: from the laboratory to the fieldStages of innovation-research-development-

production marketing adoptionProductivity of research depends on the system Optimal division of responsibility to product

development between public and private sectors.– Relation between private marketing &extension

Transfer of rights of technology from public to private sector

Identification of Niches for public support for product introduction

Needed improvements in research on Needed improvements in research on research research More Interdisciplinary cooperation-

– Cooperation with scientists will provide• better understanding of alternative research

strategies• Improve management stategies • Will lead to more inclusion of economic principles in

research management

Increased Policy relevance– More familiarity of economists with problems of

research policy making may lead research to answer more relevant question

Feed back and learning in research on Feed back and learning in research on research research We should evaluate performance of ex-ante

studies and modify methods accordingly Develop impact studies of various durationProduce non-technical output for policy

makers and establish a dialogue to understand their choices

Compare performance of alternative mechanisms to finance research

Funding ag econ research Funding ag econ research

Our bread and butter is the AES and USDA Formula and competitive grants

Cooperative agreements with ERSEPA non ERA agencies in USDA,interior EPA,IntriorNIHStatesPrivate sectorIntellectual agencies