Panel Paper: Policy and Economic Considerations for Global Public Goods Provision in Agriculture and Health in Developing Countries

Tuesday, June 14, 2016 : 11:30 AM
Clement House, 3rd Floor, Room 04 (London School of Economics)

*Names in bold indicate Presenter

Travis W Reynolds1, C. Leigh Anderson2, Jordan Clarke2, Matthew Fowle2 and Pierre Biscaye2, (1)Colby College, Environmental Studies Program, (2)University of Washington, Evans School of Public Policy & Governance
Public and philanthropic support of research and development (R&D) in agriculture and health is premised on the assumption that because it is costly to exclude non-payers from the benefits of knowledge produced through these endeavors, less than the optimal amount will be provided by private markets alone. Socially efficient provision of agricultural and health R&D is further compromised by the often very low marginal costs of provision to additional potential beneficiaries – what is termed low rivalry of consumption. These two conditions – the costliness of excluding non-payers, and low rivalry of consumption – together define a public good.

Public goods with an especially broad reach, such as knowledge, climate stability, or global security, are termed global public goods (GPGs). Because GPGs span countries with vastly differing public resources and individuals with vastly different income and market potential for private investment, the problem of under-provision is exacerbated. This research examines the efficiency of alternative funding options for providing agricultural and health GPGs in Sub-Saharan Africa and South Asia. We consider the trade-offs among public (domestic and external ODA), philanthropic, and private funding incentivized through property rights and/or other means for internalizing social returns.

Efficiency is defined in terms of crudely ranked private and social costs and benefits derived from four factors: (1) the size and scale of potential benefits (e.g., the optimal achievable scale for the efficacy of an improved crop variety - within some confidence level - given agro-ecological variation in a growing region, or the optimal achievable scale for a vaccine given human genetic or demographic variation); (2) the ratio of social benefits (marginal external benefits not reflected in market prices) to financial returns (as a function of market size and willingness to pay); (3) estimated costs of providing the good; and (4) risks associated with non-provision (e.g., risks of a pest or disease outbreak) and provision (e.g., risks of sunk costs from unsuccessful research) of the good.

We also discuss inequality by region and sub-population of beneficiary. For example, regional public goods (RPGs) - such as investments in crop improvements or in cures for human diseases that affect, and are confined to, a particular area - are not truly global. Similarly, some public goods are global in scale, but may be more relevant for women, such as those related to reproductive health, or particularly vulnerable populations such as children or the elderly. Whereas true GPGs might be able to attract international or private sector investments in the presence of enabling conditions, RPGs and public goods providing benefits to demographic subsets might be more reliant on local/regional governments or philanthropic investment.