Economic metaphors can be ironic, unexpectedly so. The 15th Conference of the Parties (COP15) to the 1992 UN Convention on Biological Diversity (CBD) established a “multilateral mechanism for benefit-sharing from the use of digital sequence information on genetic resources, including a global fund” (Decision 15/9). The Acting Executive Secretary of the Secretariat heralds the mechanism as a “landmark.” Hope runs high. Global biotechnology sales will soon reach $1 trillion per year. Hundreds of billions are needed to finance the conservation of biodiversity. Decision 15/9 could be a goldmine. But for whom?

Industries that use genetic resources are dismissive. They may point to Brazil, the most biodiverse country in the world, where legislation allows royalties as low as 0.1%. The WiLDSI Project, funded by the German Government, contemplates a benefit one order of magnitude lower than that: on a billion-dollar blockbuster biotechnology, 0.01% translates to $100,000. Why bother?

A goldmine exists only if industry pays an ‘economic rent’ for commercially successful biotechnologies. The rent in any good is the difference between what one pays and what one would have paid in a competitive market. Industry enjoys rents through intellectual property rights (IPR), such as patents and copyrights. These limited-in-time monopolies allow IPR-holders to offset the costs of bringing artificial information into existence.

By contrast, mega-diverse nations which are Parties to the CBD compete in ‘natural information,’ which is embodied in genetic resources and diffused across species and jurisdictions. Brazil is again a good example: nine countries lie in the Amazonian tropics, some 27 in the new-world tropics, and 92 in the global tropics. Except for genetic resources unique to Brazil, nine, 27 or even 92 countries would be competing to conclude a biotech contract for access and benefit sharing.

Competition eliminates rent for natural information and thereby misaligns incentives between consumers and suppliers. This asymmetric treatment of artificial and natural information is as inefficient as it is unfair.

At the suggestion of the Ecuadorian delegation, COP9 incorporated rent as a question to consider, in preparation for what would become the Nagoya Protocol. En route to Japan, the question disappeared, not to re-appear in COP10 or in any subsequent COP.

Terminology is crucial. The COP has never explored natural information as the scientific interpretation of how genetic resources are used in R&D. Instead, Decision 15/9 deploys the placeholder of “digital sequence information on genetic resources.” Why?

The cynical answer is bad faith: natural information is taboo because the economics of information justifies rent-rich royalties, where distribution among Parties would be proportional to the geographic range of the terrestrial species used in an IPR-protected biotechnology. Unlike natural information, the placeholder DSI is not associated with the economics of information. COPs 13, 14 and 15 commissioned more than a half-dozen studies on DSI, despite the consensus opinion of experts convened by the UN Secretariat that DSI “is not the appropriate term.” The cart was placed not only before the horse, but out of sight of the horse.

See related: Bankrolling biodiversity: How are private philanthropists investing in nature?

Bad faith suggests that DSI is artful. If one prints or films a genetic sequence, then the printout or celluloid is no longer digital. The sequence would be, prima facie, out of scope. These and other deficiencies make Decision 15/9 a goldmine for stakeholders plying ‘flagship projects’ to develop the “multilateral mechanism…including a global fund.” In a meeting held at the Rockefeller Foundation venue in Bellagio, Italy, a group of deliberately unidentified experts, organized by The Meridian Institute, recommended a demonstration case for a multilateral mechanism with a $250 million price tag. The intended audience was apparently the Bezos Earth Fund, which has since provided some funding.

Royalty percentages in the mechanism of Decision 15/9 would be negotiated under the premise that only physical genetic resources are within the scope of the CBD. Mega-diverse Parties would have no leverage to extract rents for DSI. Once royalties are negotiated for DSI at, say, 0.1% or 0.01%, Decision 15/9 will afford extension to physical genetic resources through the Global Multilateral Benefit-Sharing Mechanism of Article 10 of the Nagoya Protocol. The ‘experiment’ has the contours of bait-and-switch. A feeding frenzy will erupt should just one billionaire bite.

An Informal Advisory Group on DSI meets monthly online. Membership exceeds 100 individuals. Decision 15/9 can be either a goldmine for the mega-diverse Parties to the CBD or a goldmine for select stakeholders, but not for both. Fairness and efficiency require that economic rents be vetted there, and at COP16.

 

Joseph Henry Vogel is professor of economics at the University of Puerto Rico-Río Piedras. He has published widely on the Convention on Biological Diversity and served as advisor to the Ecuadorian delegation at COP2 and COP9.

Banner image: Jaguar drinking from a river in Mexico. Photo courtesy of Gerardo Ceballos/Universidad Nacional Autónoma de México, National Alliance for Jaguar Conservation.

See related commentaries:

What’s next for the new Global Biodiversity Fund? (commentary)

Biodiversity credit market must learn from carbon offset mistakes (commentary)

Citations:

Cooper, H. D. (2023). Foreword to the special issue on access and benefit sharing and biological control genetic resources. BioControl, 68(3), 221-223. doi:10.1007/s10526-023-10202-9

Sara, R., Wyss, M., Custers, R., In ‘t Veld, A., & Muyldermans, D. (2021). A need for recalibrating access and benefit sharing. EMBO reports, 23(2). doi:10.15252/embr.202153973

Halewood, M., Bagley, M. A., Wyss, M., & Scholz, A. H. (2023). New benefit-sharing principles for digital sequence information. Science, 382(6670), 520-522. doi:10.1126/science.adj1331