This analysis was conceived by its author as a trilogy of commentaries in the wake of Decision 16/2 from the 16th Conference of the Parties (COP) to the UN Convention on Biological Diversity (CBD).  Although each commentary can be read separately, synergy results when read together, and the composite reinforces abstractions that may be difficult to appreciate without some repetition, he says. ‘Bounded openness over natural information’ emerges as a robust modality for access to genetic resources and traditional knowledge, and the fair and equitable sharing of financial benefits (known by the acronym ABS). The ‘additional modality’ proposed here for Decision 16/2 should be vetted in the run-up to COP17, which is scheduled for 2026 in Armenia, he argues.

1. Boondoggle: ‘Operationalizing’ the multilateral benefit-sharing mechanism of Decision 15/9 (Decision 16/2 of UNCBD)

The tumultuous COP16 to the CBD concluded on 1 November 2024. Decision 15/9 was “operationaliz[ed]” in Decision 16/2 for the multilateral benefit-sharing mechanism of “Digital Sequence Information on Genetic Resources” (DSI).  I begin my analysis where Decision 16/2 ends, viz. the Enclosures.  Consider how Decision 16/2 answers this primary question:

Who will be the beneficiaries of the multilateral benefit-sharing mechanism?

“Enclosure B: Indicative list of criteria for funding allocation

Biodiversity richness, and other biodiversity-related criteria for which data is readily available at the national level.” – Decision 16/2

Through the lens of physics, information is the reduction of uncertainty or variance, while the lack of variance in genetic distance is a proxy for “richness, and other biodiversity-related criteria.” An unwelcome scenario emerges whereby the Provider Party for a genetic resource of a successful biotechnology may not be a beneficiary.

Hypothetical? Under “biodiversity richness,” a Party with archeo-bacteria in hypothermal vents may have a higher variance per square kilometer than a mega-diverse Party: one thinks of sub-Arctic Iceland and tropical Bolivia. The alternative modality of “bounded openness over natural information” assures that the Provider Parties are indeed the beneficiaries.

Under bounded openness, royalty income would be dispersed according to the geographic percentage of the habitat of terrestrial species that contain the natural information used, whenever researched and developed into a commercially successful intellectual property. For species that are ubiquitous, the beneficiaries would be institutions dedicated to taxonomy. And for marine species threatened with ocean acidification from CO2, Parties that reduce CO2 emissions beyond agreed reductions would be rewarded.

Rather than representing bounded openness as an alternative in “Studies commissioned further to Decision 15/9”, elements of the modality are instead cherry-picked and side-lined (see peer review by One World Analytics).

Artfulness in references to the official placeholder DSI

“The geographical origin of the genetic resources from which digital sequence information in the database was derived (noting that this data is currently often incomplete or unrepresentative).” – Decision 16/2

The reference to geographic origin contradicts the implication of ‘genetic resources’ in digital sequence information on genetic resources (DSI), which is the official term for its placeholder. ‘On genetic resources’ are crucial words in the official term, yet left elliptical in the quote from Decision 16/2. ‘On genetic resources’ excludes DSI from the scope of genetic resources in the official placeholder. However, the phrase ‘genetic resources from which’ implies inclusion (see PubPeer reviews  of opinions in Nature Communications and Science). Confusion ensues and compounds.

Because any natural DSI in the database is ‘derived’ from a biological sample, some user upstream must have de-materialized the sample. No significant value is added through de-materialization. A dematerialized genetic resource is not a derivative in the meaning of having developed something distinct. ‘Derived’ in the above quote can only be reasonably interpreted as ‘to come from’ (Oxford Learners Dictionary). The bilateral model of the CBD would thus apply. For the end user, legal certainty does not obtain despite any payment to the Multilateral Mechanism of Decision 15/9.

Similar concerns  were expressed by The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) at the opening and conclusion of COP16. In contrast to Decision 16/2, bounded openness would achieve certainty and legal clarity because genetic resources are interpreted as natural information along the entire production chain, regardless of the medium of communication, be it biological matter, print or silicon.

Under bounded openness, ‘geographical origin’ refers to the habitat of the species from which the natural information could have come, not to the location of the dematerialized sample. Distribution of royalty income would require determination of the diffusion of the natural information among species and the geographic distribution of those species across national jurisdictions. The trigger to make such determinations is commercially successful intellectual property.

A Marxist tenet and the labor theory of value

“Capacity needs for the conservation and sustainable use of biodiversity, taking into account the circumstances of developing countries, in particular the least developed countries and small island developing States and those with economies in transition, and of indigenous peoples and local communities.” – Decision 16/2

‘Capacity needs’ in the context of resource allocation is reminiscent of the Marxist tenet “to each according to his needs.” That the User obligation is 0.1% revenues or 1% profits, presumably whichever is less, undercuts User Party sincerity of ‘capacity needs.’ These percentages, for being so infinitesimal, also imply that only R&D justifies compensation, which ironically coheres with the Marxist Theory of Value (Jack Kloppenburg Jr., First the Seed: The Political Economy of Plant Biotechnology, University of Wisconsin Press, 1987).

Stark is the asymmetrical treatment of artificial and natural information. Untouched in Decision 16/2 is the rent-rich income protected by intellectual property over the value added to genetic resources. Recall that economic rent is the difference between the price paid during intellectual property protection and that paid after expiry. On a blockbuster biotechnology with annual sales of $1 billion, the 0.1% of Decision 16/2 calculates to one million for Providers. On an off-patent biotechnology with same volume of sales, the obligation will be the same. The unfairness and inefficiency of equal incidence of the benefit-sharing obligation is elaborated in Commentary 3 below, but the question addressed here is one of intent. What motivates such uneconomic thinking?

The answer from economics is the principal-agent problem. Aspirations run high that a ‘demonstration case,’ a ‘flagship project’ or whatever the euphemism is for the boondoggle, will be fueled by trust-based philanthropy. Due diligence is indeed out of vogue in the gilded age of the 21^st century.

Economics of the alternative

Bounded openness foresees high single-digit and even two-digit royalties, which implies tens of billions of dollars for a Global Multilateral Benefit-sharing Mechanism, which is considered in Article 10 of the Nagoya Protocol. The exact percent royalty for any product would be determined by the Ramsey Rule of public finance, which minimizes ‘excess burden’ across goods, viz., the welfare loss from consumer reduction in the quantity demanded of a good.

Rather than oppose significant benefits and differentiated royalty percentages, Big Pharma should welcome them. The public-relations value of fair and equitable ABS will outweigh the royalty incidence, i.e. the portion not passed on to the consumer and borne by industry.

As the U.S. Inflation Reduction Act of 2022 makes clear, pharmaceutical prices are determined in the political arena and not in the market. Better public relations by Big Pharma may convince a hostile public that the use value of a drug can be multiple times greater than the price paid.

Bounded openness would also benefit Indigenous and local communities (IPLCs), who would receive royalty income proportional to the geographic boundaries of the community within the habitat of the Provider Party. The monies would compensate custodianship and obviate the objection that Decision 16/2 violates national sovereignty.

An analogy exists with payments for the protection of watersheds to IPLCs rather than for the provision of water. [2] Payment for custodianship of natural information aligns incentives as isolated populations of a species re-populate degraded lands beyond the boundaries of the community. I reiterate: the compensation would be for custodianship and not for the use of genetic resources, over which the State is sovereign.

Bounded openness holds many positive implications for IPLCs concerning the traditional knowledge (TK) associated with genetic resources, i.e., the artificial information associated with natural information. The analysis appears in submissions to the Secretariat in English and Spanish, and in a chapter of an IUCN law series in English, French and Spanish, as well as in a co-authored opinion from Plants People Planet.

Compensation for TK lost to IPLCs and discovered through ‘random bioprospecting’ appears in the last commentary of this trilogy: I began this with Enclosure B and raised the question “Who will be the beneficiary?”  I continue with Enclosure A and answer “Who will pay the benefit?” with what they will pay.

Here’s a recording of a recent webinar discussing the CBD COP16 decision on DSI:

2. Who will pay what in UNCBD Decision 16/2 to ‘operationalize’ Decision 15/9: Unfair, inefficient, and cringe-worthy

Voluminous criticisms can become an unintentional smokescreen. A fundamental flaw in the “Studies commissioned further to Decision 15/9” was eclipsed in the 37 peer reviews.  The studies ran to 143 pages with 487 footnotes, and are the basis for Decision 16/2 to operationalize Decision 15/9 of COP16. The UN Secretariat to the CBD and the UNEP World Conservation Monitoring Centre appear as the institutional authors who ‘collaborated’ with the consulting firm KPMG-UK, which received “generous support” from Norway, the UK, and the European Commission. The terms of the collaboration were not disclosed.

Peer reviews of the draft studies – substantive, piercing and pro bono – hailed from 23 Parties, one non-Party and 13 Observers. More than one reviewer lamented the over-reliance of the studies on the white paper, “Finding Compromise”, which was launched by the WiLDSI Project on 7 October 2020. The studies cite the white paper 19 times, beginning with the 13th footnote and ending with 452^nd. No passage or footnote indicates the withering criticisms detailed in the unpublicized  addendum to “Finding Compromise,” which was as long as the mother document. Nor did COP16 clear the smoke shrouding the foundations of the studies, much less the foundations to those foundations.

The quest of the Secretariat “to move forward” trumped the fundamental flaw buried in the 37 peer reviews, viz. over-reliance on “Finding Compromise.” At the eleventh hour, the COP16 president gaveled into adoption Decision 16/2 to “operationalize” Decision 15/9.

Whereas Enclosure B grapples with identifying the Provider Parties who will benefit, Enclosure A grapples with the users who will pay.

“Indicative list of sectors that may directly or indirectly benefit from the use of digital sequence information on genetic resources.” – Decision 16/2

The complement of directly is indirectly. The phrase ‘directly or indirectly’ would include any sector which “benefits from the use of digital sequence information on genetic resources.”  That such verbosity was not struck in the negotiations at COP16 suggests equivalence for direct and indirect uses. The list consists of six sectors:

“(a) Pharmaceuticals;

(b)  Nutraceuticals (food and health supplements);

(c)  Cosmetics;

(d)  Biotechnology;

(e)  Laboratory equipment associated with the sequencing and use of digital sequence information on genetic resources, including reagents and supplies;

(f) Information, scientific and technical services related to digital sequence information on genetic resources including artificial intelligence.” – Decision 16/2

The biotechnology sector is a class that includes the other five sectors as elements. “Biotechnology” should have been modified with ‘other’ to read ‘Other biotechnologies’ (e.g., agricultural, industrial, environmental and so on) and appeared last in the list. Under the International Standard Industrial Classification of all Economic Activities (ISIC), mentioned in Item 2 of Enclosure A, ‘biotechnology’ does not have a separate code. Given the necessity of correctly identifying economic activities for Decision 16/2, this sloppiness should give pause to any User Party or good-faith philanthropist contemplating ‘trust-based’ support, generous or otherwise. One week prior to COP16, Nature warned of just such hazards in “Don’t Rush Rules for Sharing Digital Sequence Information.” Their plea went unheeded.

Simplicity, touted as a criterion in the Decision 15/9, is achievable through the alternative modality “bounded openness over natural information,” explained in my 2024 trilogy of commentaries for Mongabay and in research papers in 2022 and 2024 from The South Centre. A trajectory of antecedent literature was published in 2015.

The scope of benefit sharing under bounded openness would include any commercially successful good or service that enjoys rents from intellectual property. Unlike the equivalence for direct or indirect uses in Decision 16/2, the royalty percentage under bounded openness would be higher for direct uses. The reason is simple: indirect use implies more substitutes and hence, more elastic demand. The royalty percentage would vary inversely to the elasticity of demand for goods and services in the specific sector, sub-sectors and products. This inverse relationship is known as the Ramsey Rule in public finance and assures fairness and efficiency.

Enclosure A is oblivious to economics. A brief consideration of the first sector in the list, viz. pharmaceuticals, is enough to dispatch Decision 16/2 as unencumbered by economic thinking.

Pharmaceuticals can be partitioned between off-patent drugs and those under patent. The former face elastic demand and the latter, inelastic. By the Ramsey Rule, subjecting them to the same benefit obligation is not only inefficient for global production and consumption but also economically regressive, i.e. adversely impacting consumers of low income and producers in low-income countries. Pharmaceuticals unpartitioned in the list greatly penalizes India which leads the world in manufacturing generic drugs. The implications of bounded openness contrast drastically. Indian manufacturers of generic drugs would not be obligated to pay any royalty for monopoly rents as they are not enjoying any protection. Exported patented pharmaceuticals from the non-Party to the 196 Parties would face a tariff equivalent to the rent-rich royalty.

Variance in elasticity occurs among sectors and also within any given sector. For example, demand for substitutable patented nutraceuticals is highly elastic while the elasticity of non-substitutable patented life-saving pharmaceuticals is near zero. The Ramsey Rule suggests a gradation in the royalty percentages among and within sectors. Distribution of the royalty income could hugely mobilize resources and incentivize alleviation of the drivers of extinction.

The previous paragraphs make clear that ABS is an economics issue, yet ABS has never been officially discussed as such in any COP. In 2022, the Secretariat finally contracted an ‘independent economist’ to consider ABS but they ultimately “could no longer deliver the work.” That the undisclosed individual(s) was replaced by in-house staff is telling: I daresay that any truly independent economist would find Decision 15/9 and Decision 16/2 cringe-worthy.

Non-application of economics reverberates against the interests of Indigenous and local communities. In this last commentary, below, I take up how lost traditional knowledge can be recovered and rewarded through bounded openness.

3. Reclaiming lost traditional knowledge: Bounded openness as the modality for “operationalizing” Decision 15/9 of UNCBD (Decision 16/2)

Traditional knowledge (TK) is artificial information. This statement may strike Indigenous and local communities (IPLCs) as coldly reductionist, yet reductionism has underpinned large swaths of science ever since the Enlightenment and brought forth a cornucopia of material goods. In reductionist terms, the TK associated with genetic resources (GR) is essentially the artificial information associated with natural information. An economics of (artificial) information exists for which several economists have won Nobel Memorial Prizes.

My research trajectory over 30+ years has applied its counterintuitive lessons to natural information. I argue that “economic rents” – compensation beyond the perfectly competitive price – can be realized for natural information and distributed through a Global Multilateral Benefit-sharing Mechanism (GMBSM) for GR, which is Article 10 of the Nagoya Protocol to the CBD. The Decision 16/2 to ‘operationalize’ Decision 15/9 at COP16 does not brook rents, which is as crucial for TK as it is for GR.

In theory, a GMBSM for GR and TK, would be an intellectual property-like right that would complement those already institutionalized. But whereas patents, copyrights and trademarks are limited-in-time monopolies, an equitable and efficient GMBSM would have to be an oligopoly, which is unapologetically a biodiversity cartel. The GMBSM would fix prices and distribute rents (see Chapter 3 in A Moving Target, IUCN 2007, EN, FR, ES).

Users will be vigorously opposed. Claims for TK will be denigrated as a claw-back from the public domain, which is an argument not without merit. The same cannot be argued for unpublished TK. To not run afoul of protecting the public domain, IPLCs will have to determine what TK is unpublished. Alas, botanists have been hard at work ever since antiquity. For many IPLCs, there may be no unpublished TK. Just as grim are prospects for restitution for unpublished TK. Before the GMBSM can transform unpublished TK into trade secrets, a participating IPLC will have to exhibit juridical personhood and the institutional capacity to manage a local ethnobotanical database that filters out public-domain TK. Many do not have legal standing. Most are capital starved.

Although the establishment of a GMBSM for TK is conceivable, the associated costs seem greater than the expected benefits. For these reasons, my co-authors and I have focused on a GMBSM for GR. Cutting-edge technologies have made me reconsider that assessment.

The remote sensing method for Light Detection and Ranging (LIDAR) is revolutionizing conservation biology. LIDAR can capture fine-scale features in structurally complex ecosystems and allow identification of biodiversity hot spots. What is often thought to be a natural landscape is anything but, as Darwin concluded about the English heathlands in On the Origins of Species. Much of the seemingly pristine Amazon has been managed by indigenous peoples through fire for millennia. This management would have selected useful characteristics in species that may be absent in the same species from adjoining hotspots.

LIDAR ushers in a new specialization for field scientists: paleo-ethno-bioprospecting. So-called ‘random bioprospecting’ may be sweeping up TK lost to IPLCs through centuries of displacement and genocide. Can this unpublished artificial information be reclaimed through Article 8(j) of the CBD?

In the Decision 16/2 to operationalize Decision 15/9, the COP “decides to further explore the modalities of the multilateral mechanism…[and] possible additional modalities…” Bounded openness over natural information is one such possibility that would achieve the ‘facilitated access’ to GR and TK, so vaunted by Users.

Yet bounded openness is unexplored in the COP. Why? The answer reduces to rent. Decision 16/2 does not contemplate rent and suggests benefits of 0.1% on revenues of biological products, for which IPLCs will claim half.

Although half is a big percentage, half of an infinitesimal percentage is twice as infinitesimal.  In contrast, bounded openness contemplates rent-rich royalties in the high single and even double digits on commercially successful goods and services that enjoy limited-in-time monopoly intellectual property.  Whenever the information bioprospected turns out to be artificial and not natural, the share of royalty income would be 100%! Who among the IPLCs should get this benefit for traditional knowledge once lost and now found?

The 1992 landmark Mabo Decision of the High Court of Australia provides guidance.  Native title resides with IPLCs who have continuous connection to the lands and waters, and who also observe traditional customs and laws. Under Article 8(j) of the CBD, they could be the rightful “holders” of lost traditional knowledge in their environs.

Through reductionistic science and disruptive leadership at a future COP, some restitution is possible.

Conclusion

The Decision 16/2 of the CBD COP is unencumbered by economic thinking. The COP recognizes its own shortcomings by requesting submissions of views for “possible additional modalities” on a “multilateral mechanism for the fair and equitable sharing of benefits from the use of digital sequence information on genetic resources.” The call does not require novelty for any modality proposed; newness in the discussion is enough.

That ‘bounded openness over natural information’ is fair, equitable and efficient – yet classifiable as ‘additional’ to the discussion – speaks to dysfunction in the Secretariat and system failure of the sixteen COPs. Bounded openness is grounded in an established literature that has accompanied the entire trajectory of the CBD, since The Earth Summit, which convened in Rio de Janeiro, Brazil in June 1992.

A scaffolding of mistakes belies Decision 15/9 and Decision 16/2. Three are foundational: the artful misnomer of DSI, the glaring absence of intellectual property, and the concomitant absence of economic rents in the benefits to be shared. The economics of information implies rent-rich royalties from intellectual property and extends to other issues of high priority to Parties and stakeholders. Outstanding among them is reclamation of traditional knowledge lost to communities yet recoverable through LIDAR.

To move forward, leadership in bounded openness over natural information is indispensable.

Joseph Henry Vogel is professor of economics at the University of Puerto Rico-Río Piedras. He has published widely on the Convention on Biological Diversity and served as advisor to the Ecuadorian delegation at COP2 and COP9.

Related audio from Mongabay’s podcast: Another conservation funding mechanism that emerged from COP16 in Cali is the Tropical Forest Forever Facility (TFFF) and three guests discuss its potential and pitfalls, listen here:

See related coverage:

Can the Cali Fund provide a rights-based remedy for biopiracy? (commentary)

COP16 biodiversity meeting recap: Progress made, but finance lags