ESTIMATES AND IMPLICATIONS OF COMPLIANCE WITH BIOSAFETY REGULATIONS 163
these competing issues. In terms of risk, society has a maximum level of risk that it is willing to tolerate while using innovations. In turn, the decisionmak- ing process is confined by cost considerations because of limited budgets for biosafety and biotechnology review processes. Policymakers may describe pol- icy options through risk and cost combinations offering society the same level of risk at a lower cost or the same level of cost but with a lower level of risk. These trade-offs highlight the need for societies to define a decisionmaking path that will guide their actions. The idea that risk, benefits, and cost trade-offs need to be examined during
the design and implementation phases of biosafety and biotechnology regula- tory processes is conceptually elegant and simple. However, actual risk assess- ment and eventual approval or rejection of a particular biotechnology is a complicated process. The safety profile of particular GE technologies consists of a portfolio of risk factors, each of which has a safety profile that may require its own decisionmaking process. For example, when examining food/feed safety, biosafety assessors may examine risk factors, such as allergenicity or tox- icity, whereas when examining environmental safety, they may consider impact on non-target organisms. The multifactor characteristic of the biosafety profiles of most GE technol-
ogies is further complicated as there may be different weights placed on each factor based on individual or institutional preferences. Regulators may deem the risk of one specific factor as unacceptable, whereas regulators may deem other risk factors as acceptable or manageable by risk-mitigation efforts. The multifactor characteristic of most GE technologies makes the cost–benefit and risk assessment much more difficult in practice.
Estimating the Cost of Compliance with Biosafety Regulations
Table 6.1 presents the four categories by which economists usually classify the social costs of regulations. These costs are listed in relative order of estimation from easiest to hardest. As an alternative, regulatory costs can be disaggregated into variable and fixed costs. Fixed costs are those that do not vary with the activity level of the research or production activity. In contrast, variable costs change with the level of activity. Regulations that impose high fixed costs on research institutions will hurt public-sector institutions (and small private firms), as they impose a higher per unit cost of research activity. Compared to private institutions, the public sector usually has more restrictive or less flexible budgets. Therefore, regulators need to consider “economies of scale” effects when designing and deploying biosafety regulations.
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