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University Melbourne (2017)

Valuing genetically modified traits in crops using real options

Wynn, Katherine

Titre : Valuing genetically modified traits in crops using real options

Auteur : Wynn, Katherine

Université de soutenance : University Melbourne

Grade : Doctor of Philosophy (PhD) 2017

Planning the development and commercialisation of new crop varieties is difficult and requires appropriate models to guide investment decisions. The purpose of this thesis was to develop a stochastic binomial real option model that values the commercialisation of traits in selected regions and demonstrate the use of this model through application to example technologies. Traits in canola and wheat that have been genetically modified (GM) to be drought tolerant were used as the example technology in this thesis. This thesis sought to fulfil this purpose by investigating how real options could be used to value agricultural technologies in Australian and global markets. This thesis also sought to estimate the potential value of the example technologies to farmers, the potential technology fee that could be charged for the technologies, and the potential revenue that could be earned if the technologies were successfully commercialised. The way in which real options could support investment planning during the development of the example technologies was also explored. This research showed that the valuation model is well placed to identify target markets for commercialisation, to price new GM traits endogenously, to estimate the option values for trait development projects and to quickly and cheaply test model sensitivities and various market entry strategies. The results also showed that the : • GM canola trait is likely to be profitable in Australia but that to be profitable in Australia, it needs to provide a trait efficiency across rainfall conditions, not just drought tolerance ; • GM canola trait is likely to be profitable in global markets after the discovery stage but is likely to need public funding support in the first trait development stage ; • GM wheat trait is likely to be profitable in most Australian states but it is unlikely to be profitable for or adopted by farmers in South Australia because they have experienced lower yield and profit volatility, and are thus less likely to value a reduction in volatility, compared to farmers in other Australian states ; and • GM wheat trait is likely to be profitable in global markets. The research conducted in this thesis makes important contributions to the body of existing work on the economics of trait development. This research is the first time real options has been used to value new crop varieties in Australia, and the first time it has been used to value new canola varieties or to value the global commercialisation of a GM crop in the world. This thesis also demonstrates the importance of options thinking and modelling to trait development strategy. This research has important implications for firms and firm strategy, for policy makers and R&D organisations, and for economics and science.

Mots clés : real options ; valuation ; investment ; drought tolerance ; commercialisation ; canola ; wheat


Page publiée le 3 février 2018