Technische Universität München H ERBICITE TOLERANTE (HT) GENETICALLY MODIFIED RAPESEED IN GERMANY – A S OCIO -E CONOMIC A SSESSMENT 1 P HILIPP W REE AND J OHANNES S AUER Department: Agricultural Production and Resource Economics, Technische Universität München, Germany Presentation at the 19th ICABR Conference “Impacts of the Bioeconomy on Agricultural Sustainability, the Environment and Human Health” Ravello (Italy): June , 2015 Copyright 2015 by author(s). All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.

Technische Universität München Introduction 2 Rapeseeds -Usage: animal feed, human consumption, industrial production, biofuel -Main producer: Europe, North America, China, India and Australia -GM HT rapeseed cultivated in Canada, U.S., Australia and Chile - 24% of the global annual rapeseed production in 2013 (James, 2013) -Farmers in the EU cannot experience possible benefits from cultivating GM HT rapeseeds  socio-economic ex ante assessment of GM HT rapeseeds in Germany

Technische Universität München Theoretical model and methods 3 Objective function

Technische Universität München Theoretical model and methods Private (farmer) aspects Non-private (non- farmer) aspects Social aspects Symbol Benefits/ hectare Incremental, irreversible Irrelevant Reduction in CO 2 emission ∑(private aspects + non-private aspects) Incremental, reversible Higher yield (10%) Reduction in cultivation costs (no-till), ((flexibility)) Irrelevant Costs/ hectare Incremental, reversible Irrelevant Incremental irreversible Irrelevantpossible negative effects for society (e.g. increasing health cost, loss in biodiversity) 4 Reversible and irreversible incremental private and social benefits and costs Table 1 Reversible and irreversible incremental private and social benefits and costs

Technische Universität München Theoretical model and methods 5 Maximum incremental social tolerable irreversible costs (MISTICs)

Technische Universität München Theoretical model and methods 6 Social reversible net benefits: Table 1 Reversible and irreversible incremental private and social benefits and costs Social incremental irreversible benefits: Adoption: (Griliches, 1957) Maximum incremental social tolerable irreversible costs (MISTICs)

Technische Universität München Theoretical model and methods 7 Option value - The option to deregulate has a value itself as it gives a possibility to reduce social losses by postponing the action.

Technische Universität München Data -Benefits from GM HT rapeseed: 10% yield increase (Brookes & Barfoot (2012)), no-till -Time series for the incremental, achievable gross margins per hectare with respect to rapeseed cultivation in Germany for the period 2007–2013 for a situation in which GM HT rapeseed cultivation had been adopted. -We compare conventional rapeseed cultivation incorporating ploughing to that using a no- till cultivation system. -Adoption process similar to the adoption of hybrid rapeseeds by German farmers -The differences in CO 2 emissions between conventional and no-till cultivation are, on average, 89 CO 2 equivalent/kg rapeseed (IFEU, 2014). -CO 2 evaluated with €65.18/tonne of carbon (Tol, 2011) 8 Main assumptions

Technische Universität München Results and discussion SocietyPer citizenPer household Per hectare rapeseed MISTICs for 2013 (for infinite time horizon) in € 1,135,317, Possible forgone benefits in 2013 in € 416,026, Monetary effect GM HT rapeseed cultivation in Germany Note: Maximum incremental social tolerable irreversible cost (MISTICs) are calculated for German society comprising a population of 80.5 million citizen (DESTATIS, 2014d), million households (EUROSTAT, 2014) and a total rapeseed cultivation area of 1.47 million hectares. To calculate a value per hectare rapeseeds we assume that rapeseed cultivation on the same field is only possible every third year.

Technische Universität München Conclusion The low MISTICs value of GM HT rapeseeds for consumers (€14.10) in combination with consumer’s current generally negative attitude towards GMOs (European Commission, 2010) indicates a low political probability for the approval of GM HT rapeseeds in the short term. Regarding MISTICs, we only calculated a threshold value. The remaining question is whether the actual incremental irreversible costs will exceed the MISTICs. 10 Introducing GM HT rapeseeds in Germany

Technische Universität München References James, C. (2013). Global status of commercialized biotech/GM crops: 2013: International Service for the Acquisition of Agri-biotech Applications (ISAAA) Ithaca, NY, USA. Demont, M., Wesseler, J., & Tollens, E. (2004). Biodiversity versus transgenic sugar beet: the one euro question. European Review of Agricultural Economics, 31(1), Wesseler, J., Scatasta, S., & Nillesen, E. (2007). The maximum incremental social tolerable irreversible costs (MISTICs) and other benefits and costs of introducing transgenic maize in the EU-15. Pedobiologia, 51(3), Dixit, A., & Pindyck, R. (1994). Investment Under Uncertainty. Princeton, New Jersey: Princeton University Press. Brookes, G., & Barfoot, P. (2012). GM crops: global socio-economic and environmental impacts PG Economics Ltd.. Dorschester. Tol, R. S. (2011). The social cost of carbon. Annu. Rev. Resour. Econ., 3(1), ifeu. (2014). ENZO2 Greenhouse Gas Calculator from