Sir, In the current environment in which food consumers have expressed their concerns about bacterial contamination, about hormone, pesticide and antibiotic residues, and about genetically modified organisms, in their food, it is important that the analysis about these concerns is as comprehensive as possible. It is also important that the results of such analysis are discussed widely in order to reduce the public’s feelings of distrust.
Thus far, much of the public debate has been concentrated on science and the need for independent scientific analysis. However, as Wayne Jones et al. argued (Observer No. 216, March 1999), the public policy issues raised by food safety are not just about science. Somewhere in the analysis, the economic benefits and costs provided by that scientific evidence need to be identified and interpreted. The technique suggested by Jones et al. is social cost-benefit analysis.
I would like to go even further to suggest that the economic framework ought to be capable of incorporating other elements too. First, it must handle aversion of food consumers to uncertainty about the health status of the foods they buy. Second, the definition and interpretation of probabilities must incorporate the weight of evidence. Third, the analysis should be recognised that unforeseen contingencies are an inherent feature of new foods, not only for the consumer, but also for the natural environment. Fourth, the effects on consumers and the natural environment may be irreversible in some circumstances, including economically. Fifth, the analysis should incorporate dynamics so that the time profiles of costs and benefits can be properly taken into account. And sixth, the social benefits and costs need to be evaluated in an open economy setting in order to judge whether or not trade barriers are justified.
Jones et al. ask whether food safety is a matter of protection or trade protectionism. The answer depends upon two things: the results of the analysis conducted using independent scientific data, acknow-ledging any ambiguities, and economic analysis, incorporating the elements outlined above. While protectionism is not to be encouraged, it should be recognised that freer trade is not an end in itself but is a means to the end of increasing society’s welfare.
Department of Economics,
The University of Melbourne,
Parkville, Vic 3052, Australia.
©OECD Observer No 219, December 1999