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A Market for Genetically Coded Information as an Efficient Exchange Mechanism between the Biotechnology Industry and the Holders of Genetic Resources: Some Conceptual Considerations.
Detlef Virchow (Ph.D. Agric.)
Center for Development Research
Rheinische Friedrich - Wilhelms – University of Bonn

The importance of the genetic resources as an input for the biotechnology industry is receiving increasing attention in the economic analysis. The main reason is the increasing demand for genetic resources as a consequence of developments in biotechnology, while at the same time the natural supply of genetic resources is declining, because of the decline in diversity of species and varieties.

A new, potentially large market, in which a formerly free public good is going to be traded as a privately owned, scarce one, is in the process of emerging. Up to now, the exchange and utilization of genetic resources was subject to no kind of restrictions. Because of the increasing scarcity of genetic resources and the attempt of mainly developing countries to rearrange the institutional access to and utilization of genetic resources, efficient exchange mechanisms have to be developed. Market solutions may be an appropriate means of exchanging genetic resources and for the benefit of the biotechnology industry.

So far, the political discussion concentrates on multi- or bilateral agreements. These agreements do not, however, have a direct assignment to the utilization of the demanded good of ‘genetic resources’ and to its costs. If used undifferentiatingly the term "genetic resources" provides no concept for defining what is meant by scarcity of genetic material as well as how to apply market-oriented concepts to problems of access to and utilization of genetic material for the biotechnology industry. Consequently, concepts should not refer to genetic resources in general but rather to the function and rarity of genetic information.

The paper presented is a contribution to bridge the gap between the conservation of genetic resources and their utilization in the biotechnology industry. The suggested creation of a free and operational (information-) market for genetic resources is seen as a link between biodiversity and biotechnology. This market should be based on the real good in demand by the biotechnology industry: the genetically coded information. The institutional concept of a market for genetically coded information will be judged with regard to its transaction efficiency. The concept will additionally be compared to the bi- and multilateral mechanisms of regulation, and the advantages and disadvantages will be elaborated.