The forthcoming Access and Benefit-Sharing (ABS) provisions of the Convention on Biodiversity carry significant potential implications for the future of biotechnological and pharmaceutical research and development investment, and thus for the evolution of preventative and therapeutic medicine, that is, for the future alleviation of human suffering. If implemented in a system of contractual arrangements, ABS would secure for the owners of flora, fauna, and traditional knowledge clearer and more certain ownership of intellectual and physical property without the severe valuation and other biases inherent in a patent-based system. A patent-based ABS system on the other hand would be equivalent analytically to a long-run tax on biotechnological and pharmaceutical research and development investment. Accordingly, it would have the effect of reducing such investment and thus the worldwide biotechnological and pharmaceutical capital stock over time.

This paper estimates biotechnological and pharmaceutical research and development flows, and thus the equivalent capital stocks, for the period 1985 through 2025 under an assumed patent-based ABS regime beginning in 2005. The estimates are made for twenty-seven nations. For reasons discussed in the paper, the assumed long run ABS tax on research and development investment is 50 percent for the biotechnology subsector and 20 percent for the pharmaceutical subsector. Appendix A presents as a sensitivity exercise estimates under assumed implicit tax rates of 35 percent and 14 percent, respectively. Table A presents the aggregate findings for the twenty-seven nations in five-year intervals for the period 2005-2025, while Table B presents the specific projections for the European Union.