6. Net Present Value
The Net Present Value (NPV) generated by the 20 case studies is estimated at $16.5 billion. Thereof, a $2.7 billion contribution to the US economy, a $500 million contribution to the Israeli economy and a $13.3 billion contribution to other countries.
These 20 selected case studies account for only a fraction of BARD funded projects. Nonetheless, the direct returns on these selected case studies have well-exceeded the total compounded value of BARD’s investment since 1979, which totals $1.06 billion in 2018 dollar-terms. In terms of Benefit- Cost Ratio (BCR), comparing the global benefit generated only by these 20 projects to the total of BARD’s research investment yields a BCR of 16.5. This BCR is 60% higher than the median BCR value documented in a recent study that reviews more than 600 agricultural research projects worldwide spanning 50 years of activity
The economic benefit from the full portfolio of BARD’s 1,330 awards is undoubtedly greater than that quantified for the 20 case studies. Based on the responses of the broader set of 140 researchers that responded to the survey, we extrapolate to the full BARD portfolio of projects, and estimate that these resulted in the adoption of approximately 200 new agricultural practices, around 40 commercial engagements, and approximately 100 series of patents and breeding rights licenses. Based on this, we assume that additional projects, beyond those included in the case studies, have generated significant economic benefit.
6.1 Applications in the Pipeline
In analyzing the case studies, we find that on average, 15 years are required between the initial investment in a BARD agricultural research study and its first practical application. Accordingly, we assume that only a fraction of the potential applications and benefits stemming from research projects conducted during the last 15 years has been manifest at this point. Our current results, therefore, are by definition an underestimation of the benefit generated by BARD-funded research.
6.2 Economic Contribution of Capacity Building
The OECD recently conducted a comprehensive economic analysis of higher education in its member countries, analyzing the private and public costs and benefits per person attaining tertiary education. The study calculated the average public and private investment for a single person attaining higher education in the US and Israel at $100,000 and estimated the benefit at $717,000, yielding an estimated BCR of 7, i.e. a sevenfold return on investment. See also an analysis of skills, education, and the rise in earnings among US high school graduates, undergraduates and postgraduates in the period of 1964 - 2012.
Over the past decade, the Australian government has commissioned several studies dealing with evaluations of capacity building in the agriculture sector. These studies indicated for capacity building a BCR between 13 and 28 (Mullen et al, Gordon and Chadwick).
We used the OECD values to estimate, as a reference, the benefit of BARD’s investment in fellowships and salaries. We applied the BCR of 7. Based on these parameters, we estimated the Net Present Value attributed to BARD’s $550 million investment in human resource capacity building at $3 billion, contributed in equal parts to the US and Israeli economies.
1. Pardey P.G., Chan-Kang C., Dehmer S., Beddow J.M., Hurley T.M., Rao X., and Alston J.M. Investments in and the Economic Returns to Agricultural and Food R&D Worldwide. In: Neal Van Alfen, editor-in-chief. Encyclopedia of Agriculture and Food Systems, Vol. 4, San Diego: Elsevier; 2014. pp. 78-97