Ravello: Experiencing and contemplating bioeconomy

I returned this week from Ravello, Italy where I participated in the 19th International Consortium for Applied Bioeconomy Research (ICABR)conference. Ravello is one of the “100 places you must see before you die”. Located atop Amalfi Bay and near Naples, it is a village full of colorful gardens, magnificent palacios, great restaurants, and a modern conference center where our meeting was held.

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The conference focused on the bio-economy, the environment, and development. There were many interesting presentations during our meetings, but I want to concentrate on the remarkable keynote speakers we had: Sir Partha Dasgupta, Dr. Chris Patermann, Professor Guiseppe Novelli and professor Matin Qaim.

Sir Partha Dasgupta is one of the important economists of the post World War II era. He is the leading thinker on environment and development, and started a journal with this title. He is alarmed by current rates of environmental degradation—in particular, we extract 30% more biomass (living matter) than is regenerated by nature. This rate of extraction is not sustainable. He suggests that the excessive depletion is resulting from externalities—the unintended consequences felt by others as a result of the actions taken by individuals and organizations. These externalities may result from over consumption in the developed world and high rate of population growth in developing countries. Sir Partha suggests a mix of remedies including collective action and moral persuasion that will lead to eliminating the excess depletion of biomass.

Technological improvement must also contribute to the immense effort required to eliminate depletion of biomass, especially when we realize that we must also pursue strategies that enable developing countries to grow. We need industries that will increase the rate of biomass regeneration and reduce the rate of its extraction, and bioeconomy can make major contributions to this end. The term bioeconomy has many definitions. My working understanding is that bioeconomy includes the segments of the economy that rely on biological processes to produce industrial products.

According to another keynote speaker, Dr. Chris Patermann, who for many years, was in charge of the environmental research program of the European Commission, and is considered the “Father of Bioeconomy in Europe”, the knowledge based bioeconomy will replace chemical processes with more environmentally friendly biological technologies—and will provide improved solutions to medical problems, climate change, depletion of raw materials, and environmental resources. According to Dr. Patermann, the bioeconomy is producing 9% of the EU’s GNP, but it is in its infancy and the EU needs to invest significantly in research and development and incentives for investments that would further build this sector. The EU bioeconomy policy is influenced by political considerations. The definition of bioeconomy in Europe does not include agriculture, which is surprising. Many of the future products of the bioeconomy will be farmed, including fuels and industrial oils. Genetic modification and gene editing have been major enabling tools for the bioeconomy. Unfortunately, banning their use in the EU will reduce the effectiveness of the bioeconomy there. As usual European politics have prevented countries from taking full advantage of a new capability created by human knowledge.

Professor Giuseppe Novelli, President of University of Rome Tor Vergata also gave a compelling keynote presentation in which he explained the significance and potential of new biological knowledge. According to Professor Novelli, a noted biologist, the new tools used for molecular biology discovery of DNA provide a basis for transition from ad-hoc to systematic methods of development of solutions to problems of living systems. According to Professor Novelli, genetic mapping and new genetic tools (GMOs, gene editing, and gene silencing) increase the precision of solutions for medical and agricultural problems. The greater precision of the molecular tools allows us to achieve our goals with fewer undesirable side effects. Furthermore, as our knowledge improves, we are witnessing something akin to Moore’s Law, where the cost of biotechnology research processes declines significantly over time. Professor Novelli doesn’t see the rationale for the much heavier regulatory burden placed on agricultural biotechnology compared to medical biotechnology. He suggests that sound, but lighter, regulation of agricultural biotechnology can significantly enhance human welfare.

Professor Matin Qaim’s presentation provided an overview of the performance of biotechnology thus far. The results of a recent study suggest that GMO varieties increase yields, reduce pesticide use, and increase farmer profitability in corn, soybeans, and cotton. The benefits were greater in developing versus developed countries; in India, much of the benefits of adoption of GM cotton have accrued for the poor, subsistence farmers. There is evidence that adoption of GMO seeds reduced diseases and saved lives of farm workers. Finally, the use of GMO varieties didn’t reduce crop biodiversity over time as measured by number of distinct varieties.

The debate over the future of GMOs and biofuels are only part of the many emerging applications of biotechnology. We learned, for example, that improved geographic information systems and monitoring technologies would allow for better utilization of biological controls that address plant diseases and invasive species. There a growing number of applications that use algae to produce food and fuel simultaneously, as well as, attempts to use various organic methods to produce natural gas. Finally, while the conference emphasized the potential of the new bioeconomy, we enjoy, during our stay in Italy, pleasure of the old bioeconomy: great wines, cured meats (prosciutto), fine cheeses…and wonderful bio-resources (vistas) of Ravello and Capri.

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Uri Regev: an unsung hero of resource economics

Uri Regev, a teacher and friend of mine, passed away on April 22 in Israel at the age of 80. Uri grew up in Kibbutz Yagur in Israel, studied economics at Hebrew University and came to Berkeley, where he got his Ph.D. in agricultural economics in 1968. He spent most of his career at Ben Gurion University of the Desert in Israel, and was a frequent visitor to Berkeley, where he produced some of his best work in the 1970s.

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Uri’s research was multi-disciplinary when being a multi-disciplinarian was not cool. His work integrated biology and economics- studying “bio-economics” — especially the economics of pest control — and his work laid the foundation to a large body of research.

Uri was among the first to study the economics of resistance to pesticides. His co-authored paper with Darrell Hueth[1] suggested that pests have a certain amount of vulnerability to pesticides, and it wears off the more pesticides are applied, and that resistance to the treatment is increasing. Therefore, when deciding to apply pesticides, people should take into account the future cost of the resistance built up, and reduce the use of pesticides accordingly. This analysis resulted in formulas that actually established rules on how resistance considerations affect how much and when to apply chemicals and what the social cost is of over-application in terms of excess future pest damage. Regev and collaborators went on to apply this model[2], and today the formulation they introduced has been expanded and is widely used today.

Another paper[3] was the first to introduce considerations of predator-prey relationships among species to the economics of pest control. It considers situations when a plant is attacked by two pests when one of them is a predator of the other. The predator reduces the damage of the prey, and if you ignore this and eliminate the predator, the damage may become much bigger if the prey is the bigger pest. Therefore, the control of the predator needs to consider cost of the resulting damage by the prey.

Uri had an enduring, productive and inspiring collaboration with a leading entomologist, Andy Gutierrez. Andy applied their models to develop real world strategies of pest control that recognized such complex relationships and have saved many millions of dollars over the years.

Another innovation of Regev and Gutierrez has been modeling the outcomes of multitrophic food chains (e.g. algae — krill — fish –humans)[4]. As human harvesting capacities grow, market-driven harvesting activities may steer the system away from sustainable outcomes towards destruction. The analysis identifies different scenarios where ignoring the rules governing interaction among species will result in undesired outcomes. Improved human harvesting capacity requires policy interventions that will restrain resource exploitation and sustain the ecosystem.

Uri’s work did not get much attention in the 1970s when his work initially appeared, even at his own university at the time in Tel Aviv. But his research has gained much recognition over time — Uri was very satisfied when, about 20 years ago, his work was featured prominently at a conference on the economics of resistance with applications to both pest control and medicine, sponsored by Resources for the Future.

I owe Regev a debt of gratitude. He was chair of the economics department at Tel Aviv University, where I did my undergraduate studies. Every year, he invited the top performers in the second year of the program for a conversation. I will always remember my interview with him: he asked me about my plans and earnings (I was working fulltime while going to school, which was not unusual in those days). I told him that I was earning well as a programmer and I would like to consider pursuing my education beyond a bachelor’s degree. He encouraged me to consider pursuing a Ph.D. in economics and recommended that I take a course in econometrics. He told me that the course was tough, but valuable, and that taking it would help me decide if I should pursue a career in economics.

One month later, I was invited to a ceremony where I received an envelope from the department with a large certificate. Unlike others who received similar envelopes, however, my envelope did not contain a check, which made me appreciate Uri’s sense for social justice and eye for talent. Uri later recommended me to Eithan Hochman as a possible research assistant, which eventually led me to Berkeley.

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Uri was a real gentleman. He was a very kind and supportive colleague and teacher, with infectious intellectual curiosity and a zest for life and adventure. He appreciated the good things in life, was very musical, and actually continued to play the flute till the very end. He loved his wife Nurit deeply and his three daughters and grandchildren. One of his daughters, Tali Regev, has a Ph.D. in economics from MIT; another daughter, Shiri Regev, is a law professor specializing in civil rights; and a third, Gili, is an MD researching control of diseases (interestingly, her research relies on models based on her father’s work on predator-prey relationships).

Uri’s memory will live in the heart of his family, students and friends, and in the work of the people who follow his research.

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[1] Hueth, D., and Uri Regev. “Optimal agricultural pest management with increasing pest resistance.” American Journal of Agricultural Economics 56, no. 3 (1974): 543-552

[2] see for example Regev, Uri, Haim Shalit, and A. P. Gutierrez. “On the optimal allocation of pesticides with increasing resistance: the case of alfalfa weevil.” Journal of Environmental Economics and Management 10, no. 1 (1983): 86-100

[3] Feder, Gershon, and U. Regev. “Biological interactions and environmental effects in the economics of pest control.” Journal of Environmental Economics and Management 2, no. 2 (1975): 75-91

[4] Regev, U., Andrew P. Gutierrez, Sebastian J. Schreiber, and David Zilberman. “Biological and economic foundations of renewable resource exploitation.” Ecological Economics 26, no. 3 (1998): 227-242

The Fenigstein Effect

Every year during graduation season, I encounter many students who are nervous about the job market. Surprisingly, many worry not only about their technical qualifications, but that they don’t look the part.

Some of these students probably listen to the media and studies that have found that good-looking men are considered more competent and good-looking women are considered less competent in a work environment, which may lead to sexist discrimination.The study also discovered some strategic behavior in hiring: when you hire someone who will collaborate with you, you will favor the better-looking person, but when you hire someone who competes with you (e.g. another salesperson), you will hire the less-attractive person.

These concerns and studies remind me of Jack Fenigstein, with whom I worked in a computer company in Israel. I was responsible for the payroll application for the company and he was one of our four salespeople.

Three of them looked like textbook salespeople — blue suits, crisp white shirts, a handkerchief in the pocket, etc. But Fenigstein was a round ball, never wore a suit and tie, and always had a shirt with buttons on the verge of explosion.

Yet he was our best salesperson. The manager of the company was always upset at his appearance because he wasn’t presentable, yet couldn’t fire him because of his sales success.

Once I asked him, “Jack, why don’t you dress like a mensch?” And he replied, “I tried, but I actually look worse in a suit than I do like this. When you try to wear a suit and it doesn’t fit, no matter what you do, you look like a failure. But if you dress informally, it is a signal that you don’t care about appearances.”

Besides, he said that this appearance is good for business. He told me that he operates by calling people to make an appointment, and that he has a great body for the telephone. He said, “once they invite me, the secretary gives me a disgusting look but the boss has no choice but to hear me out for five minutes. Then, I give them my best pitch — I figure out their needs and provide them with a reasonable solution.

Suddenly their underestimation works in my favor. They think, ‘this guy really cares about the important stuff, not a stupid model for Brooks Brothers.’”

Later on, I learned about another study that found that good-looking men might be considered smarter, but get fewer job offers because they come across as intimidating. That’s another explanation for what I call “The Fenigstein Effect.”

Fenigstein once said that the unique skills of salespeople may not correlate with good skills in economics. We took some classes together and he needed at least a mark of 60 to get his degree. I drove him back to work after he learned that he flunked and he couldn’t get his degree in economics.

He told me, “I thought about it, and my revenge will be that one day all of these professors will work in the Jack Fenigstein building…” I never found out if the building exists or not, but I know he employed many economists as consultants. Jack might not have been a great academic or a sharp-looking person, but when I saw him working with a client, figuring out their needs, and helping to design a computerized solution that fit the customer’s needs, I understood why he was successful.

When I read a study relating performance to appearance, I am always reminded of the Fenigstein Effect, and how insightful people can turn a perceived liability into an asset. It is essential to accept yourself and find ways to take advantage of “what you got” rather than to lament it.