The International Consortium on Agricultural Biotechnology Research (ICABR)

 

Uncertainty and the Timeliness of Regulatory Information Flows in Canada:
The Case of Biotechnology as a Disruptive Innovation

Paul J. Thomassin, Associate Professor
McGill University

L. Martin Cloutier,

Regulatory agencies in Canada are in the process of adjusting public policy to take into account the disruptive innovations in biogenetics and from emerging fields such as proteonomics, pharmacogenomics, and bioinformatics (Burrill & Company 2000; Christensen, 1997; The Economist, 2000). Current agricultural and food policy pertaining to biotechnology innovations (for example transgenic crops and food products) is based on previously existing legislation and regulation developed for natural breeding (plant breeders’ rights). This regulatory framework does not address the informational needs of consumers and investors. Regulatory adjustment has become necessary because governments need to balance the emerging tensions between informational needs of consumers and investors. The Government of Canada has recently announced a $CND 90 million initiative to address biotechnology-based regulatory issues as a means to respond to both consumers and investors demand for regulation (Industry Canada, 2000).

The literature suggests that consumers and investors concerns, with respect to the regulatory framework, are a source of Knightian uncertainty (Hobbs & Plunkett, 1999). Consumers are reluctant to embrace the availability of transgenic-based agricultural and food products given a lack of information about potential health risks, and also, unforeseen long-term consequences of consumption (Huff & Owen, 1999; Hobbs & Plunkett, 1999). Similarly, investors want a regulatory framework that is clear, consistent, and predictable so that investments are protected and there is a level playing field with international competition (Huff & Owen, 1999: 399). The choice of public policy will impact the tradeoffs between efficiency and the distribution of benefits and burdens.

The objective of the paper is to evaluate alternative public policy choices using a generic dynamic simulation model. The generic nature of this dynamic model provides a means to support the prototyping of policy alternatives (Schrage, 2000). This model is employed to clarify informational requirements, define causal relationships, and identify key information feedbacks and time delays that influence the dynamic behavior in the regulatory process. The knowledge obtained from the simulation is useful to support the decision process in regulatory change in agriculture and food biotechnology. The model provides a greater understanding of the pressures that consumers and investors exert on this process. In addition, it clarifies the key policy levers. The simulated results from the model emphasize the dynamic patterns of key changes in parameters effecting outcomes. The scenarios analyzed are based on three important regulatory levers: (1) intellectual property rights, (2) consumer acceptance, and (3) regulatory timeliness. Each of these levers, and their associated time delays, will influence the efficiency of the industrial sector and the distribution of benefits and costs.


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