You may have seen the news lately about how important NIH funding is to the US economy. In an update to a 2011 study, the “United for Medical Research” organization reported this week that the FY 2011 US National Institutes of Health (NIH) funding of $30.7 “produced $62.132 billion in new economic activity” (Ehrlich, 2012). This means that for every dollar invested in the NIH, an additional $2.02 in new economic activity is produced. There is little doubt that the increase in economic activity of this magnitude is significant. NIH research, of course, is not simply for biomedical research. Some of the NIH funding does support agriculturally related research, including almost $1 billion in food safety research.
What I found interesting about the report, however, is how small the multiplier effect is for NIH research when compared with that of agricultural research. According to a recent publication by Julian Alston, each dollar of state-specific agricultural research investments generated an average national benefit of $32 and USDA intramural research returned an average of $18 per dollar invested (Alston, 2010). There are, of course, a lot of other studies that indicate higher returns on investments in agricultural research but virtually all agree that, at a minimum, $20 in economic activity is generated for each $1 invested in US agricultural research. According to estimates from the US Office of Science and Technology Policy (OSTP), USDA is expected to invest slightly less than $2.1 billion for extramural and intramural research in FY 2012. At a return of $20 for every dollar invested, this will generate economic activity of $42 billion. The FY 2012 level at USDA, though, is $35 million LESS than what was spent in FY 2011 and this led to lost economic activity of $700 million. Thus, every time we reduce overall funding for USDA extramural and intramural research, there are significant impacts on the US economy, far more than the impact of a comparable reduction in biomedical research.
If we were to provide USDA $3.1 billion for agricultural research (about 10% of the total NIH budget) in one year, we would generate $62 billion in economic activity, i.e., the same amount of return as the NIH. Is a $1 billion increase in USDA research achievable in the short term? No, but maybe we can convince policy makers to increase USDA research by about $100 million in FY 2013 (~ 5 percent increase). This alone would generate an additional $2 billion in economic activity for the US economy.
For the long-term, though, we have to change how policy makers view the value of increasing investments in agricultural research at USDA. We have to be better at explaining the real impact of extramural and intramural research investments at USDA. We have to help them understand the cost-effectiveness of making strategic investments in agricultural research. This will be a long, up and down process of taking two steps forward and one back, but I believe that we can see net research at USDA increase to $3.1 billion over the next 5-10 years. Let’s get to work!
Alston, J.M. (2010). The Benefits from Agricultural Research and Development, Innovation, and Productivity Growth (Paris: OECD Publishing).
Ehrlich, E. (2012). NIH's Role in Sustaining the U.S. Economy: A 2011 Update (Washington, D.C.: United for Medical Research).