Not Just A Matter Of Matter: ‘The Way Forward’ For The UNCBD, NP And Half-Earth 07/09/2018 by Intellectual Property Watch 4 Comments Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) The views expressed in this article are solely those of the authors and are not associated with Intellectual Property Watch. IP-Watch expressly disclaims and refuses any responsibility or liability for the content, style or form of any posts made to this forum, which remain solely the responsibility of their authors. By Joseph Henry Vogel, professor of economics at the University of Puerto Rico-Río Piedras [Note: a Spanish translation of this article is available here.] Is information something or is it about something?  That is essentially the question before the Fourteenth Conference of the Parties (COP) to the 1993 United Nations Convention on Biological Diversity (CBD), which meets from 19-27 November 2018. And it is a “$64 billion question” . The answer could determine the modality for “access to genetic resources” and “the fair and equitable sharing of benefits” (ABS), which is the third objective of the CBD. If the information conveyed in life is something, then the obligation of benefits could be orders of magnitude greater than if that same information is only about something. Re-phrasing the question: Are Users of genetic resources accessing information? Or are they accessing matter, the properties about which are diffused over organisms and jurisdictions? Information-as-the-answer leads to an economic rationale for tens of billions of dollars in payments per year. Properties-as-the-answer justifies the “peanuts” currently being paid . “Peanuts for biodiversity”—Peter Drahos, To date, the modality for ABS has been Material Transfer Agreements (MTAs). Yet few such agreements have ever been concluded and even fewer are foreseen as Users resort to “digital sequence information” and “jurisdiction shopping in a non-Party” . If genetic resources are the properties of matter, then the non-compliance is merely lawful avoidance. But if genetic resources are information, then the non-compliance is evasion on a vast and almost unimaginable scale. How should Users, Providers and agents grapple with information being something or being about something? The answer can help show “the way forward”, which is the earnest plea of UNCBD Secretariat . With twenty-five years of controversy over ABS and MTAs, almost everyone enters this discussion in media res. The style of argumentation in economics can sort through the flashbacks, some of which pre-date the CBD. Economists generally begin with issues of efficiency and then turn to questions of equity before suggesting policies for a better future. Efficiency Despite a bio-economy estimated at one trillion dollars per year, ABS has generated no significant incentive to conserve habitats . Brazil is a good example. In 2015, its Congress institutionalized royalties as low as 0.1% (one tenth of one percent) . A caveat is in order: the value of genetic resources should not be confused with royalty income. The stunningly low percentage is not evidence of little value for Users. It is only evidence of competition among Providers. Nine South American countries are sovereign over Amazonian rainforest. The specter of competition reduces the price of access to the cost of collecting samples and the transaction costs of MTAs. When the pitiful revenues of ABS are added to the pitiful revenues for environmental services (carbon sequestration, watershed management, sustainable extraction), conservation cannot compete with cattle, crops and timber. Market failure conspires with government failure to render habitat loss and mass extinction. The value of genetic resources should not be confused with royalty income. The phrase merits repetition because Parties and stakeholders often believe that contracts over genetic resources will reveal value. No less of a scholar than EO Wilson writes “Bioprospecting can serve both mainstream economics and conservation when done on a firm contractual basis” . The economics of information and twenty-five years of experience show that contracts serve neither mainstream economics nor conservation. Significant royalty income cannot emerge through contracts, whether they be firm, infirm or “smart”, which is the qualifier du jour . Users should even agree as they often disparage the financial potential as “speculative” and “exaggerated” . The paradox of high value yet low royalty income can be explained by the economics covered in an introductory course . Fortunately, a prosaic analogy can make it even simpler. If people may freely copy information, say, a book, a movie or software, then almost everyone will wait for someone else to publish that book, that movie or that software. To use the metaphor preferred by economists, people will free ride. The institution of intellectual property rights (IPR) solves the free-rider problem by affording innovators a mechanism to suspend competition and recoup the fixed costs of the innovation. The same logic holds for “natural information” and conservation. Because natural information is dispersed across taxa and jurisdictions, all Providers of the same genetic resource should be claimants. Fortunately, a legal instrument already exists for an IPR-like oligopoly in the “Global Multilateral Benefit-sharing Mechanism” (GMBSM), which is the title of Article 10 of the Nagoya Protocol (NP) . Efficiency dictates that the modality for the GMBSM be, to borrow Einstein’s aphorism, “as simple as possible but no simpler”: natural information would flow unencumbered, disclosure of utilization would occur at the moment of application for an IPR, a percentage royalty would be charged according to the characteristics of utilization and disbursement of income would be proportional to the habitat of the species in each Provider country. The handle for the modality is “bounded openness”, which was coined by the political scientist Chris May for artificial information, i.e., things like books, movies or software . The robustness of “bounded openness” enhances its inherent equity. In other words, the protection that Users jealously celebrate for artificial information is also good for the natural information of Providers. Despite the logic of interpreting genetic resources as natural information and applying the appropriate economics, the COP interprets genetic resources as matter and applies an inappropriate economics. The misinterpretation has resulted in the predictable result of scant MTAs with abysmally low royalties. How does the category mistake sustain itself in COP after COP? The answer is disheartening for political economists who cherish academic freedom: criticism is not brooked. Stare decisis (stand by the decision) is implicitly invoked in the beguiling request “to move on” . Alas, movement forward is thwarted by contradictions. The “transboundary situations” of Article 10 of the NP is a relevant example. Because matter cannot be in two places at once, one hears that “transboundary situations” must mean something other than what any reasonable person would think . Among the contenders are museum samples of unknown provenance, microorganisms in Antartica and migratory oceanic species. Should the economist insist on addressing the relevant nature of genetic resources, the talk will be deflected to standardized MTAs. At any of the recent COPs, one will hear that model contracts are downloadable from the website of the Secretariat. That they are there, just free for the taking!  A thought experiment is warranted. Imagine the Rolls Royce of contracts is uploaded with a Creative Commons Licence (cc). Imagine further that the model goes viral. At that moment, Providers will be competing only on the royalty percentage as everything else will have been standardized. When the market finally clears, the bowl of peanuts will be just a bowl. Equity Blockbuster biotechnologies which paid nothing for genetic resources are inequitable, indisputably so. Nothing more needs to be said except that such was the case with polymerase chain reaction (PCR) which jumpstarted the whole biotechnology revolution . Worthy for debate are cases where something is paid. At what percentage does a royalty in an MTA qualify as equitable? At an ABS event held in 1999, a lawyer who had collaborated on a pioneering MTA became indignant when queried about the percentage royalty. She solemnly intoned the confidentiality of the contract . Over the years, such questions have been asked and not answered often enough that COP10 enshrined “mutually agreed terms”—code for confidentiality—into the NP some 24 times. “Transparency” appears thrice. The Brazilian royalty of 0.1%, cited above, is only known because the pesky constitution of that country requires disclosure of terms for the sale of public assets. For corporate Users and compliant NGOs, non-monetary benefits are trumpeted, while public relations substitute for disclosure of monetary benefits. Users and their intermediaries bemoan: Will Providers just forget about the percentage royalty? They very well might but egghead economists will not. As Nobel Memorial Laureate Ronald Coase commented, economics is the most precise social science because it has a convenient measuring rod: money . The rod is also a metric for equity. Any single-digit percentage for, say, a pharmaceutical would qualify as grossly inequitable—peanuts—-given the inelasticity of demand for drug therapies and the breathtaking profitability of the industry . It gets worse. Regardless of the percentage, why should one country receive all the royalty income when the habitats of the species overlap jurisdictions? Compensation of only one country makes all MTAs inherently inequitable, a priori. This deduction is not new. “The impossibility of a successful case for bioprospecting without a cartel” was a case study presented to the Second Summit of the Americas (December 1996, Bolivia) . As is elaborated in the policy recommendations below, only recently have the Parties contemplated the economics of information, which puts economists in a dilemma. Should they be magnanimous and ignore twenty-five years of studied ignorance?  Any Yes risks business-as-usual. Any No, alienation of those who are clearly changing their minds. Time favors the prevalence of logic and evidence. At some moment in time, a critical mass of Users, Providers and agents emerges who never participated in the mistake. They have no reason to adhere to it. This is one of the many enduring insights of Thomas S. Kuhns’ The Structure of Scientific Revolutions. Another is that when the correction finally happens, it will seem sudden to those who tirelessly made their case, assuming they are still alive. The Way Forward Bounded openness over natural information offers a rare opportunity in policymaking: a Win-Win outcome for principals and even for some agents. For Providers, the Win is self-explanatory. For Users, it is nuanced and depends on the value of the opportunities now missed and the ultimate incidence of the royalties. To return to the salvo which opens this essay, a Win for Users means that their share of the $64 billion burden is inferior to the value of the missed opportunities, which is a realistic assumption in a trillion-dollar bio-economy. Allied to the Users both North and South are intellectual-property lawyers who will benefit through more applications for various IPRs. In sum, Users, Providers and even some agents can find much common ground. The juggernaut of “synthetic biology” has made adoption of bounded openness urgent. The working definition of “synthetic biology” rambles on with 38 words, none of which is “information” even though the essence of “synthetic biology” is information . The only logical inference is that the word “material” in the definition of “synthetic biology” means “matter + information”. Yet any such interpretation opposes the position of the Parties which insist on treating “genetic resources” as matter and not information. In an Expert Online Discussion Group on Synthetic Biology, held in the autumn of 2017, frustration arose that the themes identified for discussion could not be fruitfully discussed without a clarification of terms . Some participants held out hope that the “Digital Sequence Information (DSI) Report”, then under elaboration, would shed light. The chronology of that endeavor is a flashback worth re-visiting. A draft DSI Report was released on 10 January 2018 and was met with 41 peer reviews, many carefully constructed . A 25-member Expert Committee on DSI convened from 13 to 16 February 2018 at the UNCBD Secretariat to issue a report. Consensus was reached on only one point: “restricting the use of publicly accessible data would not be desirable” . Ironically, a rigorous legal analysis of the CBD and NP, published just two months later, unmistakably interprets the capacity to restrict the aforementioned data . Pity that the Expert Committee did not appreciate that bounded openness would obviate the capacity to restrict as well as many other concerns. For example, “a challenge to monetary benefit-sharing is the fact that there may be no cut-off point and that benefit-sharing obligations may continue in perpetuity” . Under bounded openness, no obligation arises when intellectual property rights are not sought; when rights are sought and granted, the benefits cut off with the expiry of the intellectual property. That such a concern even arose indicates unfamiliarity with the published literature, which emphasizes quid pro quo . The way forward is a close study of the various ways not traversed, many of which are a few clicks away on the Internet. The Expert Committee may have had an inkling of the solution, as indicated by the last line of the report: “Some experts suggested that the concept of ‘bounded openness over natural information’ may merit consideration; however, the concept was not discussed by the AHTEG [Ad hoc Technical Expert Group]” . The Expert Report on DSI was a crucial input for the twenty-second Subsidiary Body on Scientific, Technical and Technological Advice (SBSTTA22) which met 2-7 July 2018. The SBSTTA 22 bracketed all of its recommendations on DSI, which “may not be the most appropriate … and it is used as a placeholder until an alternative term is agreed” . Astonishing as is the bracketing of every recommendation, more astonishing is recommending anything on a placeholder deemed suboptimal. The cart is miles out of sight of the horse. Tellingly, “bounded openness over natural information” was never uttered at SBSTTA22, despite having been the closing thought of the Expert Report on DSI. So, the way forward remains a rocky road. Historians of economic thought will not be surprised. They will recall that David Ricardo (1772-1823) argued forcefully against the Corn Laws, beginning in 1815. The British Parliament only fully repealed them in 1846 . The way forward for ABS is to refine the modality of bounded openness as a legal project for the GMBSM. As Milton Friedman shrewdly perceived early in his career, policy proposals must be on the shelf and await the opportune moment . The Peruvian Society for Environmental Law has drafted Version 1.0 of a GMBSM titled “bounded openness over natural information” . The project contemplates the details and invites feedback. One daresay that it is to global conservation in the 21st century, what repeal of the Corn Laws was to industrialization of England in the 19th. And Half-Earth A parenthetical comment on antecedents of the CBD may help identify the desired destination of humanity as COP14 moves forward on ABS or, more realistically, remains deadlocked for years or decades to come. Palpable worry of a mass extinction crisis began in the 1980s. The very subject matter of biology was at stake. EO Wilson responded by prioritizing his research agenda in favor of conservation. Biophilia, published in 1984, was the first foray, followed by the co-edited volume Biodiversity in 1988 and The Diversity of Life in 1992. The scholarship of Wilson and other like-minded scientists penetrated the political sphere, as evidenced by the ratification of the CBD in 1993. Unfortunately, the tremendous momentum for conservation in the 1990s resulted in little progress. Mass extinction continued unabated: Habitats were lost, Invasive species proliferated, climate-changing Pollution rose, human Populations grew and Over-harvesting continued (the letters in capitalization generate the mnemonic HIPPO). By 2002, Wilson would complain of “battle fatigue”  and by 2012, return to his previous research agenda with the publication of The Social Conquest of Earth. Nevertheless, Wilson did not give up. Conservation was in need of a re-boot and Wilson responded. In 2016 and at the age of 87, Wilson published Half-Earth. The proposal is audacious: the size of relatively undisturbed habitats should account for fifty percent of the planet. Wilson’s unsaid tenet is that species are to count . Karl Marx famously said that the whole point in studying the system is to change it . Yet Marx did not explain how exactly that would happen. Something similar can be said about Wilson’s attempt to free half the planet of humans. How to get countries to stop relentless changes in land use, which is the H that leads HIPPO? How to expand those corridors until protected areas become half the size of Earth? On these economic questions, Wilson has little to say. The silence may be astute. The first chapter of Adam Smith’s Wealth of Nations is “Of the Division of Labour”. Over the last twenty-five years, economists have also been elaborating a policy framework pre-adapted to half-Earth. It goes by the rubric “payments for environmental services” . Among the payments would be significant royalties for access to genetic resources. The greater the royalty income for ABS, the greater the ease for “living within limits”, which was the instructive title of Garrett Hardin’s capstone oeuvre. At some future point in human enlightenment, half-Earth becomes non-negotiable. Payments will no longer be necessary. Species will finally count. The GMBSM is one of the means, undoubtedly the most powerful, to the noble end of half-Earth. [Note: This is the second in a trilogy of essays on “bounded openness” as the solution to “access to genetic resources” and the “fair and equitable sharing of benefits”. Presentation of the arguments will be made at the Fourteenth Conference of the Parties to the Convention on Biological Diversity, in a Side Event sponsored by the Peruvian Society of Environmental Law and the International Centre for Trade and Sustainable Development. The first two essays are available here (first) and here (third.] References:  Ananthaswamy, A. 2017 (29 March). Inside knowledge: Is information the only thing that exists? New scientist. Available at https://www.newscientist.com/article/mg23431191-500-knowledge-is-information-the-only-thing-that-exists/?campaign_id=RSS%7CNSNS-  A metaphor derived from the 1950s quiz show “The $64,000 Question”. Available at https://www.imdb.com/title/tt0047701/  Drahos, P. 2014. Intellectual property, indigenous people and their knowledge. Cambridge University Press, Cambridge, at page138.  Peruvian Society for Environmental Law / Sociedad Peruana de Derecho Ambiental. 2017 (1 May). Lawful avoidance of ABS: Jurisdiction shopping and selection of non-genetic-material media for transmission. SCBD/OIC/DC/RH/84326. Available at https://www.cbd.int/doc/emerging-issues/SPDA-submission2017-05-en.pdf  UNCBD. 2018. Submissions on Article 10 of the Nagoya Protocol pursuant to decision NP-2/10. Available at https://www.cbd.int/abs/submissions-np-2-10/default.shtml  ten Brink P. 2009. Chapter 5: rewarding benefits through payments and markets. The economics of ecosystems and biodiversity for national and international policy makers. Available at www.cbd.int/doc/case-studies/inc/cs-inc-teeb.Chapter%205-en.pdf  Brazil: Law No. 13.123 of May 20, 2015. Article 20. Available at http://www.wipo.int/edocs/lexdocs/laws/pt/br/br161pt.pdf. See also M. Brown, 2017 (7 December), New Brazilian law on genetic heritage gives one year to companies to report on their past activities having used Brazilian heritage. Available at https://www.lexology.com/library/detail.aspx?g=3f8fb766-b4f0-437d-80ee-ae2ee742f360.  Wilson, EO. 2002. The future of life. Random House, New York at page 127.  Earth Bank of Codes. 2018. Available at https://earthbankofcodes.worldsecuresystems.com  For analysis of the misuse of “speculative”, see JH Vogel, 2017, Peer Review “The Emergence and Growth of Digital Sequence Information in Research and Development: Implications for the Conservation and Sustainable Use of Biodiversity, and Fair and Equitable Benefit-Sharing – A Fact-Finding and Scoping Study Undertaken for the Secretariat of the Convention on Biological Diversity”, at page 2. Available at https://www.cbd.int/abs/DSI-peer/Vogel,%20UPR.pdf . For an unsubstantiated assertion of “exaggerated”, see KD Divakaran Prathapan, R. Pethiyagoda, K. Bawa, PH. Raven, PD. Rajan and 172 co-signatories from 35 countries, 2018, When the cure kills– CBD limits biodiversity research. Science 360 (6396), at pages 1405-1406.  Samuelson PA and Nordhaus WD. ECONOMICS, 2010. McGraw-Hill Irwin, New York, at page 224.  The rights argued for genetic resources are like IPRs but are not IPRs. Deplazes-Zemp, A. 2018. ‘Genetic resources’, an analysis of a multifaceted concept”. Biological Conservation 222: 86–94.  May, C. 2010. The global political economy of intellectual property rights, 2 edn, Routledge, London.  Josefsson, M. 2017 (4 July). Reply to Genetic resources as natural information, missing from the AHTEG operational definition of synthetic biology [#8374]. Available at http://bch.cbd.int/synbio/open-ended/discussion/?threadid=8367#8393  D’Alessandro, M. 2013. UNCBD Secretariat Online discussions on Article 10 of The Nagoya Protocol on Access and Benefit-sharing at comment [#4953]. ABS Clearing-House: Pilot Phase. Available at https://absch.cbd.int/forums/art10_groups . Peruvian society of environmental law / Sociedad peruana de derecho ambiental. 2016 (9 December). Transcript: New approaches to access and benefit sharing: The case for bounded openness and natural information. Conference of the Parties XIII to the UN Convention on Biological Diversity, at page 41. Available at http://www.actualidadambiental.pe/wp-content/uploads/2017/12/TranscriptSideEventCOP13BoundedOpenness.pdf  Fore, Jr, J, R Ilse, R Wiechers and R Cook-Deegan. 2006. The effects of business practices, licensing, and intellectual property on development and dissemination of the polymerase chain reaction: Case study. Journal of biomedical discovery and collaboration 1, at page 7.  World Resource Institute. 1999 (27 May). Latin American workshop on access to genetic resources, Cancún, Mexico. See also M Guérin-McManus, LM Famolare, IA Bowles, Stanley A.J Malone, RA Mittermeier, and AB Rosenfeld, 1999, Bioprospecting in practice: A case study of the Suriname ICBG project and benefits sharing under the Convention on Biological Diversity. Available at https://www.cbd.int/doc/case-studies/abs/cs-abs-sr.pdf  Posner, RA. 1993. Nobel Laureate Ronald Coase and methodology. Journal of economic perspectives 7(4): 195-210, at page 208.  See Note 16, at page 10.  Vogel, JH. 1997. White paper: The successful use of economic instruments to foster the sustainable use of biodiversity: Six cases from Latin America and the Caribbean. Discussion paper for the Summit of the Americas on sustainable development, Santa Cruz de la Sierra, Bolivia, 6-8 December 1996. Biopolicy journal, volume 2, Paper 51997. Available at http://www.bioline.org.br/request?py97005  Oduardo-Sierra, O, BA Hocking, JH Vogel. 2012 (11 May). Monitoring and tracking the economics of information in the Convention on Biological Diversity: Studied ignorance (2002-2011). Journal of politics and law. Available at http://dx.doi.org/10.5539/jpl.v5n2p29  Conference of the Parties to the Convention on Biological Diversity. 2016 (16 December). Decision XIII/17. Synthetic biology. Available at http://bch.cbd.int/synbio  Winter, G. 2017. Re: Opening of discussion [#8690]. Current activities of the online forum on synthetic biology. Available at http://bch.cbd.int/synbio/open-ended/discussion/?threadid=8598#8690  UNCBD. 2018. AHTEG on Digital sequence information on genetic resources. Available at https://www.cbd.int/abs/dsi-gr/ahteg.shtml  UNCBD. 2018 (20 February). Report of the Ad hoc technical expert group on digital sequence information on genetic resources, at page 10. Available at https://www.cbd.int/doc/c/4f53/a660/20273cadac313787b058a7b6/dsi-ahteg-2018-01-04-en.pdf  Sollberger, K. 2018 (7 April). Digital sequence information and the Nagoya Protocol. Legal expert brief on behalf of the Swiss Federal Office for the Environment (FOEN), Australia. Available at https://www.bafu.admin.ch/dam/bafu/en/dokumente/biotechnologie/rechtsgutachten/digitale-sequenzinformationen-nagoya-protokoll-rechtliches-gutachten.pdf.download.pdf/20180407_kurzgutachten-digitale-sequenzinformationen_final.pdf  See Note 26, at page 9.  Vogel, JH. 2015. Foreword: On the silver jubilee of ‘Intellectual property and information markets: Preliminaries to a new conservation policy’ in M Ruiz Muller, Genetic resources as natural information: Policy implications for the Convention on Biological Diversity, Routledge, London, at pages xxii-xxv. Available at https://s3-us-west-2.amazonaws.com/tandfbis/rt-files/docs/9781138801943_foreword.pdf  See Note 26, at page 10.  UNCBD. 2018 (7 July). Recommendation adopted by the Subsidiary body on scientific, technical and technological advice 22/1. Digital sequence information on genetic resources. Available at https://www.cbd.int/doc/recommendations/sbstta-22/sbstta-22-rec-01-en.pdf  The library of economics and liberty. 2018. David Ricardo 1772-1823. https://www.econlib.org/library/Enc/bios/Ricardo.html  Klein, N. 2007. The shock doctrine. Henry Holt and Company, New York.  Peruvian society for environmental law / Sociedad peruana de derecho ambiental. 2018. Available at: https://spda.org.pe  Wilson, EO. 2002. See Note 8, at page 152.  The tenet “that individuals’ preferences are to count” undergirds post-World War II economics. Samuelson, PA. 1947. Foundations of economic analysis, Harvard University Press, Cambridge, MA, at page 223. Any synthesis of conservation biology and economics will mean subordination of tenets, in this case, Samuelson’s to Wilson’s.  Marx’s advice appears on his tombstone. Jeffries, S. 2018 (5 May). Two centuries on, Karl Marx feels more revolutionary than ever. Available at https://www.theguardian.com/commentisfree/2018/may/05/karl-marx-200th-birthday-communist-manifesto-revolutionary  Wunder, S. 2005 (May). Payments for environmental services: Some nuts and bolts. CIFOR: Center for International Forestry Research, INFOBRIEF. Available at https://vtechworks.lib.vt.edu/bitstream/handle/10919/66932/2437_009_Infobrief.pdf?sequence=1&isAllowed=y Image Credits: Melchoir Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related "Not Just A Matter Of Matter: ‘The Way Forward’ For The UNCBD, NP And Half-Earth" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.