by Jack Kloppenburg and Silvia Rodriguez | 20 Jul 1992

Jack Kloppenburg and Silvia Rodriguez

Last September, Costa Rica's National Institute for Biodiversity (INBio) signed a million dollar with the largest drug company in the world, Merck, giving the multinational exclusive rights to develop new products from one of the world's richest rainforests. The deal took many outsiders by surprise. To some, it looked like an eminently intelligent way to assert and exert national sovereignty over biological resources. To others, it seemed like a massive sell-out that would never benefit the rural communities of Costa Rica. To air the issues, GRAIN turned to Jack Kloppenburg, an American rural sociologist working at the University of Wisconsin, well-known for his research into what could be called "the commodification of the seed". We asked him to analyse for 'Seedling ' what was at stake with "the commodification of the rainforest". The following article is a piece he prepared for us with the assistance of Silvia Rodriguez, from the School of Environmental Sciences at the National University of Costa Rica.


Earlier this year, the International Union for the Conservation of Nature presented the prestigious Peter Scott Award for Conservation Merit to Costa Rica's National Institute for Biodiversity (INBio). A central tactic in INBIO's award-winning conservation strategy is raising money through the contractual supply of biological organisms to private companies searching for new sources of drugs, industrial materials, and agricultural inputs. The first initiative of this type is an arrangement with the North American pharmaceutical transnational Merck, Sharpe and Dohme. The Merck deal raises US$ 1 million for INBIO's activities and so has received praise from many quarters as an innovative method for generating funding for conservation efforts. But this unprecedented sale of genetic resources has also drawn criticisms from environmental organisations and other NGOs within Costa Rica which oppose granting the right to the disposition of Costa Rican biological patrimony to a private organisation -- for INBio is not a public institution.

Understanding the issues embedded in the INBio-Merck arrangement is important for anyone concerned with the equitable preservation, management, and use of genetic resources. Make no mistake, this is an exceedingly important precedent. Already, INBio is negotiating with three additional companies and the INBio model is being touted as one that other countries should follow. We can expect to see many more such arrangements appearing around the world, and it is important that we grapple now with the particular kinds of problems and opportunities that such transactions present.

Selling the National Patrimony

INBio was founded by a commission set up by Executive Decree of the Oscar Arias government in October 1989 as a private, non-governmental, non-profit organisation. Its purpose is two-fold: 1) to inventory the biological resources extant in Costa Rica and, 2) to protect that biodiversity by making it available for productive purposes and -- by establishing its utility -- thereby generate the financial resources to protect the natural resources. A US$ 4.9 million "debt for nature swap" funded by a variety of prominent North American foundations as well as US and Swedish government development agencies provided the material means to begin operations. The advice and assistance of some of the United States ' most prominent conservation biologists also appears to have substantially influenced the intellectual and programmatic orientations of the Institute.

As INBio's Director Rodrigo Gámez phrases it, the Institute's objective is for Costa Rica"to deliberately apply its native biological wealth to intellectual and economic work for society." To this end, INBio entered into a two-year contract with Merck, Sharpe, and Dohme, currently the largest drug company in the world. For a payment of US$ 1 million, INBio undertakes to provide Merck with plant, insect, and microbial samples and confers on Merck the exclusive right to evaluate and commercially develop those samples for pharmaceutical and agricultural applications. Merck also agrees to pay royalties to INBio of 5% on any products ultimately derived from the biological materials to which it gains access. In order to enhance and protect its unique position as the broker for Costa Rica genetic resources, the Institute has recently applied to have "INBio" registered both as a commercial name and as a trademark.

But, almost from its inception, INBio has been faced with challenges from other sectors of both state and civil society in Costa Rica. In September of 1990, a bill to establish a Law for the Conservation of Wildlife was introduced into the national Legislative Assembly by a Special Commission on the Environment. Articles 3 and 4 of this bill identify genetic resources as a national patrimony, explicitly place them in the public domain, and reserve to the State the exclusive right to commercialise them. Should it pass, this bill would establish national sovereignty over biodiversity and substantially reduce INBio's now almost exclusive control over the manner in which Costa Rica's genetic wealth is being marketed and the way in which the benefits of that sale are distributed.

The efforts of INBio and its allies to eliminate or modify Articles 3 and 4 have themselves been instrumental in creating public awareness of the pertinent issues and in galvanising opposition to the INBio-Merck arrangement. Spokespersons for such organisations as the National Museum, the Federation of Associations for the Conservation of Nature, and Environment and Biodiversity have criticised the government for abdicating its responsibility by allowing INBio to arrogate to itself the management of a public good, by allowing a non-profit organisation to apply for a commercial trademark, and by strengthening one private organisation at the expense of other governmental and non-governmental organisations and institutions. Public pressures have stiffened political backbones, and Articles 3 and 4 of the Wildlife Law have so far remained intact. The bill may be voted on during the current session of the Assembly and proponents are optimistic that it will pass.

A Review of the Issues

What then can we learn from the current Costa Rica experience? Perhaps the clearest lesson is that we have reached a watershed in the continuing tendency toward the commodification of genetic resources. For the first time, scientists, a government, and a transnational corporation are all voluntarily adhering to the principle that access to genetic materials merits compensation. Further, that compensation is not merely rhetorical, but material. The INBio-Merck arrangement is the first instance of systematic, contractual conjoining of both willingness to sell genetic materials and willingness to pay for them. The agreement therefore represents an important precedent for the future operations of companies, governments, and scientific institutions in the exchange of biological resources. The central issue is no longer whether or not compensation is appropriate, but the conditions under which compensation will be paid and -- most importantly -- which social groups or institutions will have the right to determine those conditions.

This transition to a new central problematic in the "seed wars" is evident in the concerns advanced by critics of the Merck pact that Costa Rica has lost its "sovereignty" over its biological resources. The target of the allegations of genetic piracy is not Merck, but INBio! Merck, after all, is paying for access to Costa Rican biodiversity. Rather, it is INBio's application for a commercial trademark for its genetic prospecting that is being likened to the letters of marque that gave a semblance of legitimacy to the privateering activities of such corsairs as Henry Morgan and Blackbeard. In the words of Mario Carrazo, Attorney for AMBIO, "It's a letter of marque, as was given to ships in the old days so that they could do whatever they wanted, like the one the pirate Morgan had." The problem is not the sale of access to biodiversity per se, but the fact that a private organisation -- INBio -- has usurped what many regard as a public prerogative. If the genetic resources of Costa Rica are the patrimony of the Costa Rican people, then what right does INBio have to dispose of those resources?

It is true that INBio has the best of intentions. There is no question that the income from genetic prospecting agreements would be directed to conservation activities, personnel training, and the development of Costa Rican scientific capacity, rather than to personal or institutional profit. But even if INBio's intent is to foster sustainable development, the problem is that contractual income would be channelled to the support of INBio's concept of sustainable development. And INBio's concept of sustainable development may not be the same as that held by any number of other groups and organisations in Costa Rican society. As long as the use of a public resource is in question, decision-making ought to be made through public institutions accountable to broad social interests.

The private character of the Merck-INBio agreement has already created difficulties for Costa Rican public interest NGOs inasmuch as some of the key details of the contract originally could not be disclosed. In particular, the arrangements for determining any future royalties were being kept secret. Daniel Janzen, a prominent conservation biologist and an INBio advisor says, "You 've got to know what's in your greenhouse if you put it up for sale." Granted. But then don 't the Costa Rican people have a right to know not only what is being sold on its behalf but also at what price it has been sold? Only recently, as a direct result of public pressures, has INBio revealed the royalty rate: a meagre 5%.

INBio's application to register its name commercially and as a trademark has also angered government agencies and NGOs which regard the move as, at best, inappropriate for a non-profit association and, at worst, an unconstitutional attempt to strengthen INBio's virtually exclusive grasp of genetic resources collection in Costa Rica. The argument is made that only INBio has the technical and administrative capacity to implement and manage the sale of genetic materials. But INBio is only three years old. Its much vaunted capacity is the product of a massive programme of financial and technical assistance from U.S. and European foundations, aid agencies, and universities. If one organisation is the recipient of such largesse, then of course the alternatives appear weak by comparison. But what are the implications of allowing Northern interests to use patterns of aid allocation to dictate environmental policy the way they have dictated development policy in the past?

The rising tide of public concern has already had a salutary impact on INBio's operations. Again as a result of public pressure, the institute has agreed to pay a portion of the income derived from its genetic prospecting contracts to government agencies such as the National Park Service and the Ministry of Natural Resources, Energy and Mines. And it plans to contract work to other universities and institutions in Costa Rica. A broader and more equitable distribution of the proceeds of such contracts is certainly appropriate. Still more useful would be enhanced public oversight and a measure of real public participation in INBio planning and decision-making. And, of course, the strongest response would be the reassertion of national sovereignty over genetic resources through the constitutional amendment now being proposed in the Legislative Assembly.

INBio as a Model: Goodbye Farmers ' Rights

At one level, the assertion of national sovereignty over biodiversity may seem to be a simple and elegant solution to the problem of private appropriation of public resources. But it is not without its problems, and two of these merit special concern. First, to the extent that genetic resources are formally considered as a form of national property, the prospects for achieving effective regional or global agreements on a framework for the international exchange of genetic resources tend to be undermined. A perhaps inevitable by-product of the commercialisation of genetic materials is that countries may emphasise maximisation of national income from biodiversity occurring within their borders rather than look to the advantages of regional cooperation through free exchange. Moreover, assertion of national sovereignty probably has an erosive effect on the possibility of devising concrete forms for recognising "Farmers ' Rights" under the auspices of FAO. The potential willingness of the advanced industrial nations to pay into a hypothetical international gene fund --already a chancy proposition given the Bush administration's lack of interest in signing the Biodiversity Convention -- is further reduced if their companies are already paying for genetic resources in direct bilateral contracts.

A second problem with the assertion of national sovereignty over biodiversity is that it may not recognise the differential distribution of legitimate rights in genetic resources among social groups within a country. In many nations, particular farmers, communities, or ethnic/tribal groups are associated closely with the production, reproduction, and protection of specific complexes of genetic materials. There is danger that this close association will not be respected and that national sovereignty might simply become a mechanism by which political or scientific elites channel the benefits of compensation for the extraction of genetic resources to the satisfaction of their own interests, rather than to the rights of farmers and indigenous peoples.

Nonetheless, it is clear that national sovereignty is greatly appealing to Third World governments. Hernán Bravo, Minister of Natural Resources, Energy and Mines, says of his country's genetic resources: "Definitively, they belong to Costa Rica. Although we have to protect them as a universal good, that which is in Costa Rica belongs to Costa Ricans." That sentiment is certainly widely held among politicians of the South, and declarations of national sovereignty are likely to be the principal juridical foundation for managing the increasing interest among Northern governments and companies in paying for access to biodiversity.

In sum, the INBio/Merck contract represents an important advance in a variety of ways. It sets a precedent for compensation for the appropriation of genetic resources by companies, it permits Costa Rica to generate financial income from its biodiversity and to direct that additional income to conservation and development, and it provides a framework for training Costa Rican scientific personnel. On the other hand, the public controversy surrounding the agreement demonstrates that, as the value of genetic materials -- crop germplasm, wild medicinal plants, even human tissue -- is recognised, there will be struggles over the equity of the social arrangements in place to regulate access to and ownership of those materials. The INBio model is inadequate because it confers rights to the disposition of a public resource on a private entity, because it has insufficient channels for public participation, because it relies on confidentiality, and because it fails to incorporate mechanisms to recognise the potentially differential rights of various social groups. Moreover, there is now little debate on the manner in which assertion of national sovereignty will affect relations with other states and research organisations. It should be the task of NGOs to illuminate further the range of choices that must be developed for managing equitable national and international preservation, use and exchange of biological diversity; that is, mechanisms for rewarding the conservationists rather than the corsairs.

Author: Jack Kloppenburg and Silvia Rodriguez