Linking investment decisions and future food security to the regulation of genetic-based technologies

Abstract

The paper makes explicit the link between regulation of genetic-based technologies and long run food security through the effect on investment decisions related to these technologies using a real options model. Of all the drivers of social change, alterations in food security status are one of the most disruptive to societies. Improvements can release individuals and groups from chronic hunger, malnourishment, anxieties stemming from continually having to search for the next meal and obtaining food being a full time occupation. Deterioration can lead to declining productivity, mass migrations, famine and death – all of which can spark social change. Forecasting changes in food security is, hence, important for policy makers. Improving food security requires increases in agricultural productivity. New plant breeding technologies based on genomics do not rely on controversial transgenic technology. It is important to understand the link between regulatory policy and firm's decisions to invest in the development of new crop varieties. By making the link between regulation and investment explicit suggests that the regulatory regime chosen for technological advance in genomics and associated enabling techniques should be considered carefully in the context of the need for investments in productivity enhancing technology and for forecasting food security challenges.