a1 Technische Universität München, Center of Life and Food Sciences Weihenstephan, Weihenstephaner Steig 22, 85354, Freising, Germany. Tel: +49 8161 715632. Fax: +49 8161 713030. E-mail: [email protected]
a2 Department of Agricultural and Resource Economics, University of California, Berkeley, USA. E-mail: [email protected]
Vitamin A enriched rice (Golden Rice) is a cost-efficient solution that can substantially reduce health costs. Despite Golden Rice being available since early 2000, this rice has not been introduced in any country. Governments must perceive additional costs that overcompensate the benefits of the technology to explain the delay in approval. We develop a real option model including irreversibility and uncertainty about perceived costs and arrival of new information to explain a delay in approval. The model has been applied to the case of India. Results show the annual perceived costs have to be at least US$199 million per year approximately for the last decade to explain the delay in approval of the technology. This is an indicator of the economic power of the opposition towards Golden Rice resulting in about 1.4 million life years lost over the past decade in India.
(Received March 04 2013)
(Revised October 18 2013)
(Accepted October 23 2013)
(Online publication January 22 2014)