The Quandary of Agricultural Biotechnology, Pure Economic Loss, and Non-Adopters: Comparing Australia, Canada, and the United States
44 Pages Posted: 19 Sep 2012
Date Written: 2011
Innovations impact societies in a variety of ways. Successful innovations are utility enhancing, in that they create a higher degree of benefits that offset any of the potential disadvantages of the innovation. Unsuccessful innovations suffer from the reverse, in that they result in more disadvantages than benefits and therefore, are ultimately rejected by society. The innovation of agricultural biotechnology and genetically modified (GM) crops has triggered substantial discussion regarding the advantages and disadvantages of the technology. Numerous financial and economic benefits are starting to be recognized by adopters, but some non-adopters are growing increasingly concerned about their ability to profit given the high levels of GM crop adoption. While some might argue that non-adopters of GM crops are the conventional economic losers of this innovation, the reality is that demand for non-GM products is higher, in large part, because of consumer desires to avoid GM food products. The concept of pure economic loss in relation to innovation posits that those negatively impacted by the innovation of GM crops are entitled to compensation that offsets the externality. In undertaking a thorough assessment of pure economic loss and GM crops, this article evaluates the logic for, and efficiencies of, having compensation funded via the use of courts versus government regulations. This article considers whether non-adopter rights are developing in the case of GM crops and what governance response mechanism is best suited to those claims. It is concluded that the decision over whether to support or reject an innovation is too important to the larger society as a whole to be decided by the courts.
Keywords: innovation, agricultural biotechnology, law, compensation, government regulation, non-adopter rights
JEL Classification: K00, K10, K19, K20, K29, K23, K30, K39, K32, K40, K49
Suggested Citation: Suggested Citation