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Genetic Resources, Traditional Knowledge and Science: an Institutional Economics Framework for Analysing Policy and Defining Rights and Rules Pierluigi.

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Presentation on theme: "Genetic Resources, Traditional Knowledge and Science: an Institutional Economics Framework for Analysing Policy and Defining Rights and Rules Pierluigi."— Presentation transcript:

1 Genetic Resources, Traditional Knowledge and Science: an Institutional Economics Framework for Analysing Policy and Defining Rights and Rules Pierluigi Bozzi Environmental Economics Faculty of Economics University of Rome La Sapienza

2 Traditional Rural Societies collective knowledges and collective innovations Genetic Resources 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

3 Ecosystems and Human Integrated Systems Genetic Informations Knowledge Genetic Resources Genetic information Genetic sequences Molecules Applied use of phenotype Biotechnology Pharmaceutical Industry 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.

4 Ecosystems and Human Integrated Systems Genetic Resources Knowledge Improved Varietes G.M.O. New Drugs Innovative Agricultural Policies Biotechnology Pharmaceutical Industry Market 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

5 Genetic Resources Local Markets Ecosystems Dynamics of Genetic Evolution Use of Genetic Resources Knowledge Human Integrated Systems 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 ?

6 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 Cultural sphere Social sphere Economic sphere 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 Rural Societes Economy of the Living Scientific Industrialized World Knowledge Economy

7 Fundamental reform of the institutional structures upon which the market operates is therefore necessary. A three-stage innovative institutional framework is required: new Policiesnew Rightsnew 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 methodology of institutional economics evolution and development of the economic system Genetic Resources Traditional Rural Societies Scientific-Industrialised World 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 institutions informal institutions

8 Genetic Resources Traditional Rural Societes Scientific Industrialised 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

9 Genetic Resources Traditional Rural Societes Scientific Industrialised World 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

10 The productive economic organization is inseparable from the socio-institutional- environmental organization Entrepreneurial economic organization is independent of socio-environmental organization Genetic Resources Traditional Rural Societes Scientific Industrialised World The socio-economic structure of rural society optimizes biodiversity conservation Transference of industrial scientific modes of production to traditional rural societies is not conceivable

11 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 Traditional Rural Societes Scientific Industrialised World

12 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 Traditional Rural Societes Scientific Industrialised World

13 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 Local Markets Ecosystems Dynamics of Genetic Evolution Use of Genetic Resources Knowledge Human Integrated Systems International Market D i s t o r t i o n s The power of international markets, as an offer of an improved variety on behalf of agro- industry, can be stopped only if

14 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 Entire Socio-Economic Structure Human Integrated Systems Collective Rights Scientific Industrialised World Private Intellectual Property Rights D i s t o r t i o n s

15 Official Decentralised Science Traditional Knowledge Biodiversity Research Trajectories Rights Rules Scientific Capabilities Power of Negotiating + 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

16 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. Market Intellectual Property Genetic Resources Knowledge Intellectual Property Genetic Resources Knowledge

17 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 Market Intellectual Property Genetic Resources Knowledge Intellectual Property Genetic Resources Knowledge Intellectual property rights create for the owner an artificial monopoly that determines an extra-profit justified 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

18 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 Market Intellectual Property Genetic Resources Knowledge Intellectual Property Genetic Resources Knowledge

19 Market Intellectual Property Genetic Resources Knowledge Intellectual Property Genetic Resources Knowledge 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 others 3.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

20 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 Genetic Informations Knowledge ? ? ? ? Intellectual Property Research

21 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 Resources Field Research Traditional Rural Societes Scientific Industrialised World 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

22 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 Traditional Rural Societes Scientific Industrialised World

23 Market Intellectual Property Genetic Resources Knowledge Intellectual Property Genetic Resources Knowledge 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

24 Market Intellectual Property Genetic Resources Knowledge Intellectual Property Genetic Resources Knowledge 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 wasnt 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?

25 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 Local Markets Ecosystems Dynamics of Genetic Evolution Use of Genetic Resources Knowledge Human Integrated Systems International Market D i s t o r t i o n s

26 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 of Local Integrated Systems Richness of Biodiversity Scientific Capabilities

27 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 Collective Rights Legislation of the Country of Origin Contractual Regulations in International Dealings

28 Third Stage Definition 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. Distortions of the Market Legislation of the Country of Origin Licences of Use and/or Research

29 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 Licences of Use and/or Research Flexibility Flexible Time Period to Provide Incentives Distortions of the Market

30 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 material b)in different ecosystems c)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) Licences of Use and/or Research Contextual Licenses on the same Genetic Resources Imposed Trajectories of Research Distortions of the Market

31 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 Scientific Industrialised World Provider Country Traditional Societies Provider Country Traditional Societies Scientific Industrialised World Genetic Resources Commodities

32 These are just a few proposals for working strategies which, if re-interpreted and adapted to the specific circumstances of local communities and provider countries, could lead to the drawing up of environmental-economic policies directed not only towards "conservation in situ", but also towards "science in situ". Genetic resources are also scientific resources. Access to resources andbenefit sharing can have a real significance if they are interpreted also asaccess to science and sharing of the benefits of science Conservation in situ Science in situ Access to Genetic Resources Access to Science

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