Economics and the Future of Biotech

Recently, I exchanged several emails with a newer writer– David Boultbee — on the subject of plants genetically engineered to remove toxins from land and water, and the exchange got me to thinking. A number of years ago, when I was a full-time environmental regulatory consultant, a number of cities were experimenting with various ways in which growing plants could be used to filter and purify sewage and waste water, including removing heavy metals and various types of organic and bacterial contamination.

That was twenty years ago, and there’s been surprisingly little progress in his area, particularly given the need. That brings up the question as to why such progress is so slow… and the answer, I believe, is quite simple. It’s not a question of biology or even development costs, but the structure of our economic system.

Growing plants in large concentrations effectively constitutes agriculture. These days, agriculture is largely unprofitable on anything but a large scale, and the greatest amount of profit doesn’t usually lie in producing and selling the raw material, but in the distribution and end-point sales. That’s why orange growers, almond growers, and others form grower cooperatives that attempt to control the product all the way from production to final [or next-to-final] sales.

Now… even if a genius biologist does produce an oilseed plant that’s got a huge amount of oil that could be refined, where does the profit lie? With the refiner and distributor, who need to build an enormous infrastructure in order to make profits competitive with other industries in order to obtain the capital necessary to build that infrastructure. And in what industries do the highest profits lie? In those that produce small goods with low production costs with a high demand and an existing market.

Agricultural products seldom fit that market. Take wheat. It’s practically ubiquitous, world-wide, and while different varieties have been developed for different uses and climates, within those climates any competent farmer can grow it. The entire U.S. farm subsidy program was developed because too much of too many agricultural products were being grown, with the result that the prices were so low that too many farmers went bankrupt, to the point that, as noted above, only large farms — or specialty farms — remain profitable.

So… what happens if the biologists develop miracle plants? Before long, the entire world has them, and they cost less, and the profit margin is low — and they’ve either replaced products that had a higher profit margin, or they replace pollution control technology that does. And whole industries lose substantial profits. You can see why certain industries just might not be exactly supportive of really effective large-scale and widespread biotech. Biotech is just fine in making new high-margin pharmaceuticals, but fungible energy supplies or pollution control remedies, those are a different matter.

This isn’t a new story in human history. Way back when, sometime before, say, 200 B.C., there was a plant that grew in the Middle East, well-documented in more than a few writings, paintings, and even sculptures. Taken in some oral form, it was apparently a reliable contraceptive. It became extinct before the Christian era. Why? Because it filled a social need, a desperate one for women in poor societies who felt they could not afford more children, but no one could see a profit in growing or preserving it. Now, whether this plant was as effective as the various writings claim isn’t really the point. The point is that people thought it was, and yet there was no profit in cultivating it, and thus, it was hunted out and used until there were no more left.

So… I have grave doubts that we’ll see many biological solutions to our energy and environmental problems until someone can figure out a way to make mega-profits out of any new biological developments.