Author: Patricia Kristjanson

Publisher: ILRI (aka ILCA and ILRAD)

Published: 1999-01-01

Total Pages: 60

ISBN-13: 9789291460533

The estimated present value (US$42 million) of the proposed ILRI/ICRISAT/NARS collaborative research project on genetic improvement of millet and sorghum crop residues indicates fairly attractive returns, even with the cautious assumption made about likely adoption rates and the scope of the benefits (i.e. only meat and milk production in cattle in India). The estimated IRR to this research investment (28%) can be compared to market rates on alternative investments. Most longer-run, low-risk, private-sector investments yield rates of return three times as high as alternative investments. However, this raises the question of what is an appropriate rate of return to expect from 'public'good' type of investment such as the investment in international development oriented research. The same methodological approach was recently used (Kristjanson et al 1999) to estimate potential returns to a similary challenging crop-livestock research area, a vaccine against potential returns to a similarly challenging crop-livestock research area, a vaccine against trypanosomosis (a serious livestock disease that poses the greatest development constraint to mixed livestock-crop systems across Africa). Potential returns to this research were estimated at US$ 118 million, with an IRR of 25%, and a benefit:cost ratio of 15:1. In a comparison of predicted rates of return across 5 crop-livestock related research areas at ILRI, potential research benefits were estimated to outweigh the costs of the research by between 9 and 37 times. Returns of similar magnitudes have also been estimated for other crop improvement research. In an economic analysis of returns to 15 research themes at the Centro International de la Papa (CIP) the NPVs ranged from US$ 1 million to US$ 195 million (average US$ 67 million), with IRRs ranging from 13% to 51% (Walker and Collion 1997). ICRISAT ranked returns to 110 different research areas as part of their research priority-setting process several years ago. The average NPV, net benefit:cost ratio and IRR for the top 20 of those were US$ 61 million (with a range from US$ 8 million to US$ 265 million), 52:1 and 39%, respectively (Kelley et al 1995). Thus it appears that the magnitude of returns predicted in this study are very much in line with returns to similar research investments.