Applying the System Asset Pricing Model
Decision Accounting

Applying the System Asset Pricing Model to Ecological Irreversibility: Measuring the System Welfare Cost of Gene Drive Deployment

core
Core Claim

Gene drive deployment destroys $12.40 of system welfare per dollar of industry revenue

The System Asset Pricing Model (SAPM) measures the welfare cost of open-release homing drives before deployment. The weighted-average operational system beta is 12.4 (90% CI: [9.4, 17.0]): each dollar of industry revenue (1.2B/yr R&D) is accompanied by ~12.40 of system welfare destruction at the margin.

theory
Why CAPM Fails

No market price can observe the welfare cost of a permanently altered genome

SAPM retains CAPM's constrained-optimization structure but changes the object being priced. System beta cannot be recovered from observed prices under W-Independence (Proposition 2). That missing observability condition is why the welfare cost of gene drive deployment was never measured.

impossibility
Impossibility Theorem

Ecological Ratchet Floor: no governance can reduce system beta below ~4.2

For open-release homing drives, no governance mechanism satisfying axioms A1–A3 can reduce system beta below ≈4.2 through private, sovereign, or multilateral action. Portfolio theory has no corresponding impossibility theorem. The SAPM does.

trap
The Trap

Gene drives create a Missing System Trap: individually rational, collectively destructive

Every bilateral transaction is individually rational—the consortium funds development, the sovereign grants approval, the community consents—but the aggregate outcome is welfare-destroying, and no unilateral deviation can improve system welfare.

channels
Channel Breakdown

Six channels of welfare destruction sum to $228B/yr

The system welfare cost is decomposed into six causally distinct channels, each calibrated from laboratory data, field trials, historical analogs, and population genetics models. The channels are not orthogonal; additivity understates true cost due to positive feedback loops.

payoff
Private Payoff

The entire debate is about $3.7 billion per year of marginal disease reduction

The cooperative baseline (Wolbachia + conventional control) achieves 14.7B/yr—80% of the maximum 18.4B/yr. The extraction gap is only 3.7B/yr. The system beta measures what that margin costs: 12.40 of welfare destruction per dollar of marginal gain.

decomposition
Payoff Decomposition

Malaria vector control drives 80% of payoff but activates 100% of welfare channels

The 18.4B/yr private payoff is dominated by malaria vector control (14.8B/yr, 80.4%). Agricultural pest control (1.9B), conservation (0.9B), and biodefense (0.8B) contribute 19.6% of payoff but activate all welfare channels. The architecturally irreducible gain is only ~0.3B/yr.

bifurcation
Contained vs Open

Self-limiting architectures dissolve the impossibility theorem

The Contained/Open-Release Bifurcation supplies the regulatory design principle: self-limiting architectures (Wolbachia, daisy-chain drives) achieve 77–92% of the private payoff at βW ≈ 2.1, dissolving the Ecological Ratchet Floor by violating Axiom A2 (self-propagation).

robustness
Robustness

Monte Carlo simulation confirms beta persists across distributional assumptions

A 100,000-draw Monte Carlo simulation with explicit distributional assumptions yields 90% CI [9.4, 17.0]. The classification as an Impossibility Theorem is robust even at a 50% reduction in all channel estimates (Minimum Publishable Result).

implications
What Changes

The measurement before catastrophe, not after

This paper estimates the welfare cost of gene drive deployment before it becomes irreversible. The system beta of 12.4 is the expected welfare cost upon deployment. The policy implication is to codify the Contained/Open-Release Bifurcation in international biosafety law before the first open-release deployment triggers irreversible transboundary genomic alteration.

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