The Optimal Time to License Biotechnology: An Example from the Canadian Wheat Industry

Hartley Furtan, Richard Gray, and Jeff Holzman, University of Saskatchewan

Abstract

Canada is faced with the decision whether to license Genetically Modified (GM) spring wheat developed by Monsanto Inc. The introduction of this type of GM wheat would allow for the substitution to a low cost broad- spectrum herbicide Roundup. However, there are two major concerns with the decision to license GM wheat.

First, there is uncertainty over the impact GM wheat will have on the demand for Canadian wheat. Importing countries such as Japan and the European Union who purchase high quality spring wheat from Canada have already stated they will not buy GM wheat.

Secondly, once the GM wheat technology is released into the environment it is not easy to reclaim all of the novel genes without a substantial cost i.e. the technology is irreversible.

We show that there is a value in waiting to license GM wheat due to the uncertain benefits/costs of the technology and the irreversible nature of the licensing decision.

Corresponding author: Hartley Furtan furtan@duke.usask.ca