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Explanation:

It is clear from the passage that the instead of the private, public institutions are better placed in terms of research. The following extract, “Knowledge and techniques for resource management are not ‘marketable’ in the same way as those inputs. Their application to land, water and forests has a long gestation and their efficacy depends on resolving difficult problems such as designing institutions for proper and equitable management of common pool resources. Public or quasi-public research institutions informed by broader, long-term concerns can only do such work. The public sector must therefore continue to play a major role in the national research system.”
Option 1 although correct and important is not as significant as what option 2 says.
Option 3 is not correct, the passage nowhere implies that private companies are incapable of building products based on traditional or folk knowledge.
Option 4 has not been explicitly stated in this context.
Hence, the correct answer is option 2.

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