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Team:ULB-Brussels/ESIssues2
From 2010.igem.org
The Extra-Scientific issues of Hydrocoli
The following chapter examines the question of intellectual and industrial property. This is one of the core issues of the IGEM competition. This pragmatic aspect of science and technology is relevant for every person taking part in the contest. As we’ve already mentioned, synthetic biology is a young field which is expanding at an incredible rate, making property rights a major issue.
Firstly, what exactly does the term “intellectual property” refer to? Intellectual property is anything that the human mind creates which takes a material form. It includes artistic creations in general and author’s rights, on the one hand, and on the other hand, industrial property. Patents, brands, logos, models, and controlled designation all are intellectual property. Anything that can be patented will be referred to as an “invention” in the epistemological analysis that follows. An invention, as opposed to a discovery, can be patented. Discoveries concern pre-existing phenomena whereas inventions are the product of an innovative intellectual process. Among others things, products, processes (for example biological processes) and information technologies can be patented, whereas recipes and mathematical proofs cannot.
IGEM is mainly concerned with directly applied research, but theoretical research can also lead to results with potential commercial value. In any case, IGEM brings up certain questions surrounding patents. Patents are a very interesting epistemological subject, both from a practical and a philosophical point of view. They are what links theoretical science to applied science. valorization, both industrial and commercial, is in fact one of the primary goals of universities, along with research and education. The valorization of research often contributes to the societal good. This valorization is not a secondary goal, it is present as a driving force from the start, and is evident in the call to tender and the search for sponsors. This issue is present from the first results, making protection of these results imperative until they can be exploited.
Depending on the expected economic end result of a project, the funds which finance it will come from different bodies. Obviously, private firms will be more likely to finance research which leads to commercial applications. Intrinsic research conditions are thus not always sufficient for it to be carried out. Very often, the successful accomplishment of the research depends on exterior conditions.
Three criteria must be fulfilled if a result is to be patented: firstly, the invention must be innovative. Secondly, the invention must have a technical effect which is non evident or resolve an old problem which remained unsolved. This is known as “inventive activity”. Lastly, the point of an invention patent is to make the invention exploitable industrially. For example, a new surgical technique does not fulfill this last criterion because its application is not industrial.
The results of research conducted at a university are the property of that university. However, the researchers are named as inventors and have the right to a third of the financial returns. To be considered an inventor, one must furnish proof that one’s contribution played a crucial role in the development of the patented product. Students and technicians alike can be inventors. The university may have the property rights on all results, but this goes hand in hand with being responsible for all fees accruing from the patenting process.
Declaring an invention is a lengthy and costly process. A patent has extremely important advantages though. Firstly, it protects the inventors’ rights from unscrupulous competition. This is one of patent law’s raison d’être, because it encourages economic growth by providing an incentive to innovate. An exploitation monopoly is rarely the goal of the patenting process though, mostly, firms want to be compensated in the form of monetary permits.[11]Patents also encourage partnerships between the public and the private sectors. The first, universities generally, get financing from these partnerships, the second, businesses, get access to innovations. Patenting records also serve as a performance indicator and are used as criteria for allocating research contracts. Patenting also ensures financial returns from an innovation and makes the creation of spin-offs possible.
Obtaining a patent involves a complicated process which must be followed closely. If the innovation has been divulged, be it orally or in writing, to anyone before patenting, obtaining a patent is extremely difficult. Divulgation refers to any description detailed enough to make it possible for a member of the profession to recreate the invention. Depending on the field, divulgation can consist of a single sentence or several pages of complex instructions.
IGEM promotes open source knowledge, relying on intellectual honesty. However, certain unscrupulous businesses actually hire spies whose job is tracking down any unwary information leak which can make patenting difficult for the innovator. This involves tracking the internet, posters, articles, thesis, papers but also calls to tender and contests. This means that any team who presents their project at IGEM risks compromising the exclusivity of their research if they haven’t done the necessary paperwork beforehand.
Orally, divulgation can happen during a speech, a congress or even a professional conference if a confidentiality clause has not been signed. A tour of a laboratory or mailing of equipment can also be ways of revealing too much. Divulgation removes information from ownership and puts it in the public domain. Anyone is then free to use it and share it. Secrecy until the patent is applied for is thus the best way to avoid this problem. Ideally, any information published prior to the research should contain no more information than what is in the patent application. Once a patent is applied for, there is an 18 month delay before the invention can be safely fully divulged.
The laboratory journal
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Declaring an invention involves several steps. A form describing the invention must be filled out in order to determine if the innovation is covered by a previous patent. This is made possible by the existence of databases. Once this is ensured, the inventors are named. this process relies on the laboratory manual. An invention patent is characterised by the following caracteristics :
- It is an intellectual property title, giving the inventors the right to authorize or not the exploitation of the invention by another party. The right conferred is not a right to exploit, but a right to stop others from exploiting.
- It is limited geographically. The inventor determines which national markets must be covered by the patent. For thirty months prior to the choice of countries, the patent covers the entire world.
- It is limited in time. 20 years is the standard period for all inventions except drugs which have five extra years to make up for the time lost on trials.
- It is non-renewable; once its time has run out, the invention automatically becomes a part of the public domain.
Patents are usually applied for with the aim of getting monetary returns from inventions. There are different ways in which patenting helps to achieve this goal. Through licensing agreements, the invention can be exploited by a second party who “rents” the property rights. Patents can also be sold, or spin-offs created. Spin-offs are new firms which can exploit the patent but which depend on the mother firm. New research contracts are also more likely if successful patents have been applied for in the past. Monetary compensation can take three forms: upfront payments, royalties (a percentage of the profits), or milestones, which are fixed amounts to be paid when certain benchmarks are hit. The inventor can thus ensure that his or her licence will benefit him or her even in the case where the other party doesn’t manage industrial exploitation of the product.
To sum up, patenting is a difficult process and as such, may seem like a burden to engineers. Furthermore, the fact that the driving force of research is pecuniary means that research without industrial applications can sometimes be left by the wayside. However, without the legal protection of intellectual property rights, there would be no incentive to innovate and hence no demand for engineers.
“There is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new order of things… whenever his enemies have the ability to attack the innovator they do so with the passion of partisans…”
Niccolo Machiavelli, The Prince[12]
The purpose of this chapter is not to provide a complete marketing plan for hydrocoli. This type of market study requires quantitative data that our team cannot fund. The purpose here is to show the difficulties of marketing even a seemingly sure thing and to give entrepreneurs food for thought. On today’s “small is beautiful” business horizon, many R & D professionals attempt to save money by bringing their products directly to the market, without consulting management and marketing professionals. This is not inherently dangerous, but it is always useful to stop and think before attempting to patent and sell a good. In this paper, we review a series of articles and case studies which we hope will provide an overview of the main issues of marketing biotechnologies. we have focused on those which relate to our team’s project, in the hope that bio-engineers will come away with a sense of the complexity of consumer attitudes and the difficulties of getting consumers to accept an innovation.
The following analysis of likely consumer attitudes towards the end result of the ULB project is largely based on consumer attitudes towards genetically modified foods. The reason for this is that a lot more research has been done in the area of food production than in other areas where synthetic biology is applied.
The focus on foods in the literature can be explained by the fact that what consumers eat affects them directly, and they are therefore likely to have stronger, and easier to measure, opinions on this subject than on more obscure applications of biotechnology. Extending the research on GM foods to hydrocoli seems reasonable however when you consider that a fair share of consumer dissatisfaction with GM foods stems not from the experience with the product as such, which is in fact likely to be on average more satisfactory than experience with non-GM foods, but from concerns about genetic modification and biotechnologies generally.
These concerns range from a vague uneasiness with the idea of genetic manipulation to full-blown terror of the consequences for the environment and for our health. Consumer attitudes towards gene technologies, even if originally studied in the context of foodstuffs, can clearly be extended to include consumer attitudes towards hydrocoli. Furthermore, as a technology that could eventually be directly applied by individual heads of households, it could be argued that hydrocoli fits into the category of consumer goods and services.
Concerns about hydrocoli are likely to stress risks to bio-diversity and the environment rather than health risks, but the risk aversion analysis remains relevant. Having said this, perceptions of what is unhealthy to ingest are not straightforward but depend on complex cultural conditions, which means there may be consumer concern over drinking water which was purified using genetic technology. These specific concerns are therefore directly relevant to the research on GM foods.
While many activist environmental groups are lobbying against genetically modified foods, most members of the general public do not seem to have strong opinions on the subject (Scholderer and Frewer, 2003). This is true especially in the US, where GMO’s are mostly regarded neutrally or favorably. In Europe, public opinion tends to be more firmly against GMOs, which explains the partial moratorium on their cultivation and sale
Although the use of transgenic crops was approved in the EU in 1995, following the “mad cow” outbreak in the late nineties, food origin became a major public concern. This resulted in a halt on approving new GMOs for import and cultivation in 1998. The ban was partially lifted in 2004 after protest from the US, who claimed the ban was a protectionist measure, violating trade agreements between the two powers. Despite these protests, the EU is still moving slowly and reluctantly to approve the cultivation of transgenic crops. European pressure groups, made up mainly of bio-tech firms and farmers, are now lobbying for an easing of anti-GMO measures.
Things are moving slowly, but they are moving. For now, even if only one kind of transgenic seed is currently legal for cultivation in the EU, the farmer’s unions have been adding steadily to the list of permitted transgenic imports, despite powerful lobbying from NGOs such as Greenpeace. European farmers argue that the partial ban on GM crops makes it impossible for them to attain sufficient yields to keep their prices competitive.
US consumers look upon GMOs much more favorably than their European counterparts, making the US the leading pioneer in terms of novel food technologies. Before the public outcry at the beginning of the millennium, biotechnology was seen by many as a panacea which would end food and energy shortages as well as pollution of all stripes. Executive Order 13134, signed by President Bill Clinton in 1999, stipulated the goal of tripling the US’s use of bio-based products by 2010 through an increased use of biotechnologies. Indeed, since 1990, bioengineered products have been a part of the consumer landscape.
The FDA is currently looking into the approval of the first genetically modified animal to be marketed: the salmon pioneered by AquaBounty, referred to by critics as “frankenfish”, is destined to appear on supermarket shelves in as little as two years. All is not smooth sailing however on the biotech horizon, as there remains significant difficulty regarding the commercialization of “frankenfoods”, due to lobbying from environmental groups and to consumer unease.
Such environmental activism is not difficult to understand, as the true risks of biotechnologies for biodiversity are not currently known. Consumer unease leaves some baffled, but it is generally considered that it stems from a lack of information, which leads biotech firms to emphasize the information-deficit aspect in their advertising. Since less than 2% of the US population is currently involved in the agricultural production process, it stands to reason that a large portion of the general public feels left out of the food production realm and perceives itself as insufficiently informed. Indeed, many aspects of biotechnology remain mysterious to the general public. Many laymen even believe that, following widely mediatised issues such as the monarch butterfly controversy[13] biologically engineered foods are not sold commercially to the general public. This is clearly not the case, as it is estimated that up to 70% of processed foods sold to American consumers contain at least one ingredient produced through biotechnology. In fact, corn and soybean crops rely heavily on bioengineered strains which are more pest resistant. In addition, cheese production relies on an engineered enzyme and bioengineered yeast is widely used in breads. The fact is that misinformation or information gaps tend to drive perceptions and slow the potential payoffs from R&D in bioengineering.
The science behind bioengineering is complex, but questions of regulation, labeling and the risks inherent to synthetic biology are no less hazy for the average consumer than the organic chemistry behind the product. There is clearly an informational asymmetry[14] here which may indeed explain in part the public’s resistance to the notion of bioengineering. One could, and many do, argue that there has been insufficient effort made to educate consumers about bioengineering, when a sincere discussion of the risks and benefits of such technologies would perhaps have led to a more favorable image.
Some studies support the idea that fear of biotechnology is a direct consequence of an information asymmetry (see Traill et al., 2004; Baker et al., 2001). Traill used experimental auctions in the US, England and France, to show the effect of information shocks on willingness-to-accept[15] money in exchange for consuming GM foods. Subjects were recruited and given two cookies, one clearly labeled as containing GM foods. Researchers then measured, through bidding, how much money the subjects demanded in exchange for having to eat the GM cookie. The subjects were then randomly assigned to one of four treatments: information focusing on the environmental benefits of biotechnologies, information concerning health benefits, information concerning a world benefit in the form of drought resistant crops or no information at all. Following these treatments, their willingness-to-accept was measured again. Traill found that information about world, health and environmental benefits significantly decreased the monetary compensation that subjects demanded to eat the GM cookie. The primary conclusion of this study was that information concerning the benefits of GM foods makes consumers more willing to consume them. This is perhaps not surprising; it gels with the common sense view that if consumers do not want to eat GM foods it is because they just don’t know how good they really are. However, this study also found that the influence of attitudes adopted by the subjects before the study began had a significant influence on their reaction when faced with information treatments.
Another study supporting this standard view is Boy, 2001. Boy surveyed the attitudes of European consumers by using the Eurobarometer results to establish the relative importance in attitude formation of the perceptions of utility [16] and risk. He found that, no matter how great or small the risk perceived, consumers will not even consider a product if a minimum of utility has not been shown. The econometrics used by Boy clearly showed that the perception of utility is more important than the perception of risk in forming attitudes towards products which result from biotechnologies.
This view explains the lack of consumer enthusiasm for first-generation biotech goods entirely with the lack of directly perceivable benefits for consumers, making a case for the usefulness of the traditional biotech marketing strategy which aims at informing consumers of all the benefits in store for them (Marris, 2001). This position can be linked to the “deficit model” of public understanding of science, which basically assumes that any failure of consumer attitudes to align with those of R & D professionals can be blamed on an insufficient effort to “educate” an ignorant public.
There are many tools available to those who wish to close an information gap. Assuming that information is the way to consumers’ ‘hearts’, choosing the public-consultation mechanism is no simple task for the policy maker. Special committees are often established to make these decisions. These are usually made up of technicians, scientists, ethical experts and laymen. Their main roles are testing public opinion, informing the public if requested to do so and consulting the public when necessary. There are different mechanisms one can use to accomplish these tasks. For an analysis of these mechanisms and their respective advantages, see Leroux et al, 1998.
Putting aside the question of how to consult and inform the public effectively, research from sociology and consumer science shows that the solution to consumer mistrust may not be as simple as designing communication mechanisms that will reach a maximum of consumers. The literature shows that attitude formation is a highly complex process. Scholderer and Frewer (2003) reached the highly counter-intuitive conclusion that consumers will actually be less likely to choose GM foods after an information shock, regardless of whether the information highlights the risks of GM foods, their benefits or both in equal measure. This communication paradox highlights the important difference between product choice and attitudes.
Scholderer and Frewer found that information brought about no significant change in attitude, be it positive or negative, whereas it did affect willingness to choose GM products. This willingness turned out to be negatively correlated to information received, regardless of what kind. This can be explained by an “attitude activation process”. This means that information, negative or positive, activates attitudes that were already held prior to the confrontation. Moreover, those who hold positive attitudes are found to be more likely to accept new information than those who hold strong negative attitudes. Putting aside the econometrics involved, this can be explained by a cursory examination of human nature. It seems obvious that adoption of a negative attitude can be both a consequence and a cause of mistrust of the authorities involved. The findings of this team seem to indicate that current biotech advertising strategies may in fact increase consumer aversion to buying bioengineered products, without having a significant influence on their attitudes.
We do not mean to suggest that consumers should not demand and receive relative transparency concerning biotechnologies, but merely that constantly bombarding the public with reminders of the benefits of biotechnologies is perhaps not an efficient marketing strategy. Anyone who can potentially be affected by a new technology should be allowed to express concern, request information and be involved in the decision-making process. To deny this basic right is to deny the merits of democracy. The problem arises because this decision-making process is not clearly defined in time or in space. Our society is ruled by supply and demand. Whether one accepts this as beneficial to us all or sees it as a nail in our collective coffin, it is undeniable that we are seeing the end of big government, and markets are taking its place. Ultimately, the market will determine what can or cannot be produced and consumed. We do not mean to adopt a holistic approach; the market is made up of individual consumers. However, in terms of consumer concerns, the rule of supply and demand has the same basic flaw as democracy: namely, majority rule is not synonymous with representation. This fundamental issue makes it almost impossible for concerned consumers to take any real action in the face of global acceptance.
This is a serious quandary in the case of biotechnology because it may have the potential to change the world by providing resources that are so renewable as to be virtually inexhaustible. At this stage, many reason that we cannot afford to ignore this kind of opportunity. Others however fear biotechnology. Whether this fear is justified remains to be seen, but either way, in practice, it is no match for the imperative of change.
It is interesting to note that some more or less harmful technologies slip by potentially influential consumers without causing a stir, whereas others, such as biotechnology and nuclear energy, fall prey to negative buzz. While we in no way wish to denigrate the concerned consumer or her right to play a part in the debate, it is interesting to note that the appearance of, for example, the SUV raised no ruckus at first, despite risks of possibly the same magnitude, at least when applying the precautionary principle[17], as those of biotechnologies.
Standard dogma explains this with the hypothesis that agents are more likely to accept risk when it is perceived as being voluntarily taken. Empirically, the illusion of agency or lack thereof when it comes to risk taking has a huge impact on risk aversion. Wildavsky (1998) points to the example of a socially minded public health worker who will gladly work intimately with patients infected with HIV and AIDS, but expresses absolute refusal when it comes to GMOs in her food intake. The standard interpretation of this phenomenon is as follows: the public health worker accepts any risk inherent to her chosen activity because she feels responsible for those risks; she alone has weighed the pros and cons and made her decision. However, the attempted introduction of GMOs on the market without an ex-ante public discussion leads to the loss of this feeling of agency, leaving the consumer feeling as though a force stronger than her has been trying to “put one over” on her and consequently to an overestimation of the risk involved.
Wildavsky modifies this standard interpretation of risk aversion, pointing out that the line between a voluntary and an involuntary risk is very fine. He states that the way one perceives risk depends in fact on ones ‘culture’[18] and that according to the adopted culture, the agent will define her risks a posteriori as voluntary or involuntary. This is interesting because in the standard interpretation of risk aversion, the consumer can be the object of an involuntary risk and the subject of a voluntarily taken risk. Once she notices the risks she did not sign up for, she will resist being subjected to them.
In Wildavsky’s interpretation, the crucial difference is that the consumer exercises a subconscious agency in her determination of which risks are voluntary or not. For example, the public health worker in question is likely to be politically left-leaning; in Wildavsky’s terms, she believes in a non-hierarchical culture. She perceives big business as being more powerful than she is and this in turn bothers her. The products of this business will be subjected to closer scrutiny than for example someone she perceives as needing her help. In this scenario, her non-hierarchical belief system will lead her to take greater risks and she may gladly stand between them and a bullet.
Our purpose here is to show that the issue of consumer mistrust is far from being a simple one and is not easily solved; the image of a product, of the business which produced it, the area in which it is produced and the market it is aimed at are all factors that can have a significant influence on the levels of transparency and accountability that the public will expect, demand, and for which they will lobby.
A lot of legislation exists to protect the consumer’s right to relative transparency, but consumers are seldom fully informed. Despite this, a vague awareness of the existence of labeling restrictions may give them the illusion of agency. We can read the word “organic” on a label, and then decide to put that object into our cart or to opt for a cheaper brand. We then accept the health risks of non-organic food because we it was our decision to buy that product.
However labels refer to ingredients and nutritional content, and in certain cases origin, but not to method of production. This is a central issue in the case of biotech products, because studies have fa€iled to find any unwanted difference in the actual composition of the foodstuff, hence in the health risks, making labeling a moot point under current directives. In the EU however, any food containing more than 0.9% of GM ingredients must be labeled as such.
In addition to perceived health risks, there is the issue of general technophobia. Bernett et al (2009) point to two prevailing myths surrounding technology. One of the two prevailing myths about technology is that is it can lead only to evil. The argument goes something like this: Man was born in a state of purity, close to nature, and was then brought increasingly further and further away from this innocent state by technology and science, leading to the imminent extinction of a fallen species. While this position does not rely on hard facts, it should not be dismissed or disrespected. Researchers and those responsible for the commercialization of the products of technological research should accept part of the responsibility for consumer mistrust. In fact, historically, the consumer has had no agency in the appearance of innovations on the market; her agency relies solely on her actions as a buyer.
Moreover, Bernett makes the important point that the other prevailing myth is just as false, just as dangerous and also to be avoided: that which states that technology is the panacea, the perfect way to work out the kinks of modernism. This position is exemplified by the current enthusiasm for “bridging the digital divide”[19].
Bernett argues that the hard data does not point to the introduction of technological innovations as necessarily bringing social benefits. In fact, case studies showing the opposite are not hard to find (see Dutton et al., 2005 or Saint-Paul, 2008). In his seminal book, Diffusion of Innovations, Rogers (1995) uses several important case studies[20] to show that innovation can have devastating effects and makes a case for the need for a complete study of the circumstances of said innovation before implementation.
We make this point not only in the interests of avoiding unexpected social costs, but also from a purely commercial point of view. Consumers resist innovation; in laymen’s terms, people do not like change. This is the point made by the introductory citation and the quantitative data support Machiavelli in this. This phenomenon is known as inertia. Decisions and attitudes, once made, are hard to turn back, although certain influential agents can aid this process, which explains the focus on “buzz”[21] advertising and attempts at garnering the favor of “e-fluentials”[22]. Brand image is inert, and genetically modified products currently have a negative brand image, especially in the face of the growth of the market for “organic” or “natural” foods.
For any business, innovation can mean survival. Innovation has even been called the industrial religion[23]. In view of this, it seems that biotech entrepreneurs and businesses should have no trouble sailing prosperously through the 21st century in a context where the old ways have proven unsustainable and the stage is set for new ways.
The validity of the innovation itself however, does not guarantee prosperity or even survival. Public resistance is hard to predict, and start-ups do not tend have the marketing expertise or resources needed to gather all the necessary data or to put this data to good use. Examples of seemingly sound investments which did not deliver as expected include the Concorde and the Dvorak typing keyboard[24]. Why wouldn’t consumers want to travel twice as fast? Why not switch to a more efficient keyboard?
Rogers’ book opens with a case study which is particularly relevant to us, that concerning the attempted introduction of boiling water prior to drinking it in a village in Peru. The Peruvian government planned to significantly reduce the incidence of water-contamination related diseases in the country by sending social workers to isolated villages to teach the locals to boil their water before consumption. The plan seemed straightforward enough; the technology was simple, accessible, free and had clear benefits to the policy makers. However, the attempt at introducing water boiling failed. Two main issues, ignored by the planners, contributed to this failure.
Firstly, local customs and beliefs included a complex understanding of food temperature. Some foods were perceived as inherently hot, others as inherently cold. The idea of germs as explained by the social worker was not as convincing as these age-old customs. This mistrust of new information was aggravated by the second cause of failure: the insider-outsider phenomenon[25]. The social worker, as a native of a big town, was perceived as intrusive and her attempts at advising the locals as sheer arrogance. Indeed, this is perhaps understandable after a long history of a “daddy knows best” approach to humanitarian aid. The level of trust that people place in the innovator is perhaps the most important factor influencing adoption or refusal.
This case is directly relevant to hydrocoli for two reasons: firstly, because in this case, cleaner water was made available through the use of a straightforward technology, but this presumably fail-proof innovation still failed. Secondly, the importance of trust in the innovator has direct consequences in the case of big biotech businesses, whose profit-seeking nature causes many to suspect their motives at all times, even when they are involved in humanitarian work. It has been shown that French consumers actually mistrust companies who engage their social responsibility by doing charity work more than those whose stated goal never varies from pure profit-seeking (Hamilton et al., 1990).
The importance of marketing an innovation properly can therefore not be underestimated, no matter how positive the consequences for the consumer may be. It is not enough to provide a more efficient, healthier, more sustainable or better quality good or service; consumers are not always fully aware of these qualities. Even if told, they may mistrust the teller.
The question of adoption or refusal of an innovation cannot be answered simply and it is not our purpose to explain the complex reasons for the refusal of adoption of seemingly sure things. We merely cite these examples as a warning to engineers: it takes more than venture capital and a great idea to be a successful entrepreneur. Common sense is not sufficient to explain or predict consumer actions and attitudes. We cannot stress the importance of a market study enough. A firm’s viability in the market can depend solely on its ability to market its products efficiently. To take an example from another rapidly developing sector, IBM is a striking instance of the importance of marketing for survival; IBM’s personal computer, in many ways inferior, in terms of performance, to substitutes on the market, survived, perhaps solely, thanks to brilliant commercialization and marketing strategy (Dodgson, 2000).
Marketing is not to be confused with advertising. Marketing includes all processes that aim at meeting consumer needs. Sometimes, a market study may find that there simply is no market for a developed good or service, leading to a discontinuation of the research. Standard marketing dogma points out the following steps: identifying consumer needs, developing a product which can fulfill those needs, then advertising the product (in this modelised world, advertising is reduced to informing the public of the product’s existence); naturally, once consumers are aware of the existence of a way to make them more comfortable, they will buy the good or service until their needs are met, at which point the market is saturated and businesses will need to identify a new consumer need, etc. (Gauthy-Senechal and Vandercammen, 2010, or almost any marketing manual).
However, although Western consumers with spending power may currently be feeling the effects of food and energy inflation to a certain extent, they are still basically in a comfortable position. Biotechnology offers solutions to problems that we may be aware of, but that are not (yet!) pressing in our day to day lives. We may be conscious of global warming, but there is still a market for South African grapes and sports vehicles. Therefore, while the potential demand for environmentally friendly products should be huge, as we mentioned previously, these products still need careful marketing.
There is a serious asymmetry of information problem here, because to the consumer, while two pears might taste alike and two plastic bags may carry the same load, the environmental impact of one can be much lighter than that of the other. Businesses can thus not rely on the standard marketing dogma, which aims to identify what customers want and then to provide it. Indeed, it is safe to assume that people want to survive on this planet without serious sacrifices in terms of living standards. This may be achievable through biotechnology, but how to integrate this long term effect into the consumer’s choice between two similar tasting pears? In fact, while it may be obvious that people prefer a product which is environmentally friendly, sustainable and healthy, these three product characteristics cannot actually be experienced through consumption of the product. Fazio et al (1989) highlighted three conditions which need to be fulfilled in order for this type of characteristic to influence consumer choice:
- access to external cues which link the product to the quality (product labeling and advertising);
- positive perception of the quality and activation of this perception when considering the product (this is extremely difficult in the case of biotechnologies because some studies show that GMO’s may be perceived as “inherently harmful” by consumers (Scholderer et al., 1999));
- the belief that there is in fact a link between the product and the quality in question.
These conditions, in short, refer to internalization, in the eyes of consumers, of the benefits of sustainability, environmentally friendliness and health into the good itself as found on the supermarket shelf. It is delicate, but if a good or service is to be marketed solely on the basis of its sustainability or health benefits, these criteria must be met.
In conclusion, while gene technologies may offer a way out of the mess the human race is undoubtedly in, if they are to become commonplace, it is absolutely essential that engineers work closely with all factions of society and with professionals from various fields to undertake a complete analysis of the ramifications of their innovation. The ramifications which must be taken into account include those elucidated through economic, environmental or sociological analysis. This must be done not only to avoid harmful applications of the developed good, but also to avoid the real or perceived issues that are a source of concern to consumers. All these elements must be taken into consideration by the innovator, if only in the interests of seeing his or her good succeed in a market which is increasingly complex.
Despite the slow rate of change in both technology and consumer habits, it is now widely accepted that energy is one of the biggest issues faced by humanity today. Over the last fifty years, the world’s population has more than doubled, and its energy consumption has followed suit. Moreover, the economic growth of the BRICs[2] means higher standards of living for billions more people. This increase in living standards goes hand in hand with an increase in the demand, and hence the production, of energy.
Since the industrial revolution, the production and storage of energy, as well as their byproducts, have been problematic, causing huge costs which prices rarely reflect. The damages wrought upon natural resources and human lives have consistently been left out of market mechanisms. This type of situation in which the price for consumers and the cost for producers fail to reflect the actual social cost is known as a negative externality. The textbook example is that of a steel producer who dumps sludge up the river from fishermen, affecting the fish population upon which the fishermen’s livelihood depends. Externalities arise when markets fail to internalize the actual costs or benefits of a good, hence their name.
The main sources of energy throughout history have all presented negative externalities. Coal could be extracted cheaply but the release of greenhouse gases and the damage to the underpaid miners’ lungs constitute important negative externalities. Sperm whale oil is another good example; again, whaling was an incredibly dangerous profession and the near-extinction of whales is a potential threat to biodiversity. The most striking example for our generation is, clearly, fossil fuels and global warming. Oil is still relatively cheap despite its actual costs being through the roof, in terms of the environmental debt we will leave our children and, albeit debatably, the wars being fought to insure that oil is available in plentiful quantities.
Governments are scrambling to find a solution to the energy crisis, but traditional policy tools fail in the face of the problem. The problem of climate change is global, leading to negotiation costs that are through-the-roof and to property rights debates that can never be satisfactorily resolved. Vaguely defined property rights make adequate regulation impossible, be it through price or quantity fixing,. Some theorists draw a parallel between the current environmental crisis and the Great Depression and express concern that a “green dictatorship” will arise (see Radcliff, 2002), much as communist dictatorships arose in the face of a keenly felt economic crisis. Barring that drastic outcome and assuming that consumers and businesses are not likely to spontaneously change their ways, no matter how serious the risks we face, it seems the most viable solution to the energy crisis is not less of the same but more of something different. As possibly the only way to reduce greenhouse gas emissions and land-use, the development of alternative sources of energy is a crucial issue for humanity. Government action may be able to influence our habits, but at too slow a rate, as governments are concerned first and foremost with the instant gratification of the electorate (Mankiw, 2008).
Besides the democratic state’s inherent inability to take drastic action, generally speaking governmental power is dwindling throughout the developed world as the range of what is perceived to be the public arena is reduced through the privatization of services. This privatization trend has many worried, but several authors show that it can lead to important gains in efficiency (see Estache et al., 2001). We will discuss the case of Argentina where the privatization of water utilities has been shown to increase social gain by decreasing child mortality.
Neo-classical economics holds that negative externalities can be internalized in the market under certain conditions, and it is only when these conditions are not met that the State must step in and use tax and subsidy instruments to reach a social optimum. This standard dogma holds that there is a socially optimal level of pollution, different from zero, because the social cost in terms of jobs and other social benefits which arise from industry is at some point higher than the social gain from reducing pollution. However, in the presence of a competitive market for alternative energy sources, might not these issues resolve themselves? Private entrepreneurs are working on developing ways to produce clean energy in order to be competitive in what is possibly a very profitable emerging market. The competitive market may, in this case, manage to remove the reliance on altruism and long-term planning which the human race finds so difficult to survive on.
In 1970, while giving a talk at the General Motors Technical Center, John Bockris coined the term “hydrogen economy”. He was referring to a future of moving away from fossil fuel dependency towards an economy in which the main energy source would be hydrogen. Forty years later, we still rely heavily on fossil fuels. Hydrogen does indeed present many advantages when compared with other energy sources but it is an energy carrier, not a primary energy source, so the energy in question must be generated through wind, solar, or fossil power and then stored in the hydrogen molecules. These technologies are thus a better, but not an ideal, alternative to petroleum-based energy. However, biotechnology may, in the not too distant future, provide a way to produce clean hydrogen from elements that are otherwise undervalued, in our case, wastewater. If we are to accept the fact that our fossil fuel economy is no longer sustainable, the potential demand for non fossil energy sources is enormous. The development and implementation of Hydrocoli is thus potentially a very profitable investment.
Besides the undeniably sound future of the alternative energy source market, Hydrocoli presents other investment advantages. Access to clean water is an essential standard for survival, making the demand for clean water inelastic when incomes face a downward trend (Galiani et al., 2003). While some uses of water are among the first luxuries to go in the case of shortage (recreational services such as golf courses and swimming pools), there remains an incompressible level of water demand for drinking and hygiene purposes. Moreover, the possibility of future scarcity of this most basic resource is increasingly obvious and the consequences of such scarcity would be drastic for every sector of the economy. This impending scarcity leads some to refer to water as “blue gold” (Barlow and Clarke, 2002) meaning of course that those who retain the property rights to clean water would effectively be the oil magnates of the future.
Because of the link between water and health, the market for clean water generates positive externalities for all concerned. Many water washed diseases as well as diseases carried in polluted water can be eradicated through access to clean water, reducing health costs and making for a healthier and larger labor market. Moreover, inefficient treatment of waste can lead to the pollution of other resources when it is released into the environment. Stagnant pools of waste are also breeding grounds for various disease carrying insects, and the treatment of the waste can thus reduce the risk of such diseases, particularly malaria.
Traditionally, another characteristic of the water utility market is the huge fixed costs involved. The infrastructure needed for water treatment, evacuation and distribution is considerable and costly, under current technological conditions. It is estimated that, in 1994, fixed costs represented over 80% of water service costs in the UK (Armstrong et al, 1994).
These characteristics of the water market mean that traditionally, water utilities have been considered part of the State’s responsibility, and have been financed and regulated by the authorities. This system is generally perceived as being more efficient in terms of social costs and gains. However, the increasing deregulation over the last thirty years has led certain countries to privatize as many sectors as possible. There remains a lot of mistrust in the face of this deregulation, as privatization is, to many people, synonymous of higher prices, lower quality services and more inequality. As a utility which demands the presence of large infrastructures, and in the presence of such important positive health externalities, water treatment may seem like the perfect example of a service which should be regulated by the state. Studies show however (Estache et al, 2001) that privatization, under certain circumstances, can lead to significant gains in revenue and well being.
Galiani et al studied the impact of privatization on water network connection rates and child mortality rates in Argentina in the 1990’s. This study showed a negative relationship between child mortality rates and the privatization of water utilities. Galiani controlled for unbiasedness, robustness and statistical significance of his conclusion, and found that this negative relation holds, with decreases of child mortality rates varying between 4% and 10% for an increase in privatization, depending on the econometrics involved.
These results may surprise some, because as mentioned above, privatization is expected to lead to less equity, not more. It is clear that these results cannot be generalized without caution as the basis of a case for privatizing water treatment and provision. However, they do highlight the important fact that the assumption of social gain obtained from the intervention of the State in markets relies on the assumption of a relatively functional, transparent, efficient and well-meaning State. Barring this, privatization can logically be the most beneficial, cost-effective and egalitarian solution.
Clearly, in the case of a monopoly or oligarchy, the consequences of deregulation can be absolutely disastrous. The word disastrous is not chosen lightly, as, in the case of Argentina, among many others, there is a direct impact of water provision on child mortality rates. These potential ramifications of insufficient competition on the water market partially explain the reluctance to privatize it. Monopoly and oligarchy situations are more likely when the fixed costs of the activity are high and when the infrastructure needed is considerable, because high fixed costs make exiting and entering the market more difficult, leading to static prices. However, to the extent that hydrocoli needs no specific infrastructure, and as the costs are exclusively linked to research and development, this technology makes privatization an easier alternative and guarantees competitive prices, assuming of course that the relevant intellectual property is rendered open-source. These characteristics of hydrocoli mean that when reliance on the State fails, water treatment can be privatized efficiently, cheaply, and quickly.
The characteristics that make hydrocoli easy to privatize also make it possible to create self-sufficient agricultural systems in rural areas. Farmers could set up a hydrocoli facility, thus having access to clean water and organic fertilizer with little or no transportation costs. Quasi abandoned areas could thus return to their former state of agricultural and economic activity.
Rural exodus and brain drain are often linked to the isolation of an area from networks which we take for granted, including the internet, electric grids, gas mains and water facilities. An area which is without these and without the means to build them tends to become more and more cut-off from the hyper-centers and consequently from any and all economic activity. The possibility of creating an autonomous agricultural system could reduce rural exodus, often linked to insufficient water provision for agriculture, and hence the problems that go with massive emigration on the one hand, and immigration on the other. Problems linked to emigration include a collapse of the local economy, brought on by an insufficient labor supply. This is particularly true when you take into account the fact that the demographic faction that is most likely to leave is young people, who are also the strongest workers. Immigration can cause over-taxation of a city’s resources which the authorities do not have the means to deal with. This can be linked to the formation of ghettos and an inefficient waste treatment system which in turn are linked to the spread of disease. Brain drain can also lead to a flooding of the labor markets in certain areas, which can threaten workers’ rights through the increase in the number of people competing for a single job. From a Keynesian point of view, a decrease in wages and hence spending power can lead to an economic slump. In contrast, the decrease in rural exodus is linked to the development of areas that are currently marginalized or even forgotten, thus curbing a phenomenon which is a serious economic drain.
In conclusion, we do not for a moment doubt that in the face of increasing deregulation and water scarcity, the characteristics of hydrocoli or similar water treatment biotechnologies will make it the most efficient choice in terms of costs, public health, sustainability and safety. We hope that in this perhaps small way we may contribute to a safer and more egalitarian future.
Our proposed goal was to show how issues stemming from synthetic biology were taking showing up in various fields. We hope to have reached this goal. The field of synthetic biology remains a closed one, and the details are still mysterious for a large portion of the public. However, thanks to international events where synthetic biology takes center stage, such as IGEM, it is becoming more familiar to people outside the field. As we have seen, there are numerous issues, more every day, that must be resolved. This process is difficult but society as a whole must reach for the light at the end of the tunnel.
The birth of a new scientific discipline and its road towards becoming commonplace must be dealt with responsibly in order for humanity to benefit without causing damage to the environment. This must include education, and, more importantly, consultation, of the general public because it is consumers who ultimately make a technology successful or not. Researchers, as well as the guardians of bio-safety and bio-security, must also take responsibility to ensure that uncontrolled and dangerous dissemination of these technologies is not possible. Just as certain plants have both healing and dangerous properties, synthetic biology can benefit humanity, or damage humanity if misused. Our position is neither alarmist nor utopian; in fact, a happy medium between technophobia and technophilia must be struck, especially when dealing with such highly complex matters as those concerned by synthetic biology.
We firmly believe that this technology has the power to do good, all the while bringing significant financial returns to investors. This can happen if, and only if, those responsible for its commercialization and implementation proceed with caution. On the one hand, from a human point of view, caution must be used in the face of ethical concerns, safety and the economic analysis of humanitarian aid. While they must be addressed, these concerns will not even have the opportunity to see the light of day if the product is not successfully commercialized. From a commercial point of view, care must be taken to avoid the pitfalls of negative consumer attitudes and culture shock, leading to the rejection and hence the failure of the innovation.
[13] see for example the Entomological Society of America Position paper on transgenic insect-resistant crops: potential benefits and hazards
[14] The term “ information asymmetry” refers to a situation wherein one party of the transaction has more information than the other party.
[15] Willingness to accept is a commonly used econometric tool, used for measuring attitudes; the attitude holders are asked how much they would pay, or in this case how much one would have to pay them, for a non quantitative item.
[18] Culture is used here in the specific wildavskian sense. Wildavsky highlights four main cultures, which can be assimilated to political beliefs.
[19] For details concerning the ubiquitous enthusiasm for bridging the digital divide, see AVGEROU C., CIBORRA C. and LAND F. (ed.), The social study of information and communication technology, OUP, Oxford, 2004.
[20] The introduction of snowmobiles in Lapland, for example, had a terrible effect on the local economy and on social ties. It effectively destroyed the careful balance of the local economy, which had relied on reindeer for both meat and transportation until the snowmobile was marketed.
[21] Buzz advertising is the attempt to influence potential consumers by having their peers voice good opinion of the good or service.
[24] The Dvorak keyboard was designed, unlike its alternatives qwerty and azerty, for maximum efficiency. The force of habit led it to fail however, and it is not used.
[25] The insider-outsider phenomenon refers to a situation in which people perceive some as being in the know and others as being outside.
