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"Ex Ante" Impact Assessment under Imperfect Information: Biotechnology in New Member States of the EU

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Author Info

  • Matty Demont
  • Marie Cerovska
  • Wim Daems
  • Koen Dillen
  • József Fogarasi
  • Erik Mathijs
  • Frantisek Muska
  • Josef Soukup
  • Eric Tollens

Abstract

Some argue that the lack of modern agricultural development in the former socialist countries of Central and Eastern Europe has made cutting-edge biotechnology attractive. However, enthusiasm for planting genetically modified (GM) crops varies greatly in the enlarged European Union (EU) and especially among the New Member States (NMS); the Czech GM maize area is progressively growing whereas Hungary imposed a "de facto" ban on GM crops. Remarkably, the Hungarian ban was not supported by any cost-benefit assessment. In the literature, ex ante impact assessments of monopolistically priced technologies are often based on cross-sectional comparisons of average cropping budgets. Such assessments ignore heterogeneity of farmers and underestimate the true impact of these technologies because of homogeneity bias. Therefore, we propose an improved method by explicitly modelling farmer heterogeneity under imperfect information, and assess the potential value and benefit sharing of GM crops in the two NMS using a stochastic partial equilibrium model. The total potential value of GM crops is estimated at €82 million for both countries, of which €60 million (73%) accrues to farmers and €22 million (27%) to the gene developers and the seed industry. This is in line with the literature on global benefit sharing of first-generation GM technologies. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 The Agricultural Economics Society.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Agricultural Economics.

Volume (Year): 59 (2008)
Issue (Month): 3 (09)
Pages: 463-486

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Handle: RePEc:bla:jageco:v:59:y:2008:i:3:p:463-486

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X

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Cited by:
  1. Conor Keelan & Fiona Thorne & Paul Flanagan & Carol Newman & Ewen Mullins, 2008. "Adoption of GM Technology at Farm Level," Working Papers 0810, Rural Economy and Development Programme,Teagasc.
  2. Areal, Francisco J. & Riesgo, Laura & Gómez-Barbero, Manuel & Rodríguez-Cerezo, Emilio, 2012. "Consequences of a coexistence policy on the adoption of GMHT crops in the European Union," Food Policy, Elsevier, vol. 37(4), pages 401-411.
  3. Demont, Matty & Daems, W. & Dillen, Koen & Mathijs, Erik & Sausse, C. & Tollens, Eric, 2008. "Are EU spatial ex ante coexistence regulations proportional?," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44191, European Association of Agricultural Economists.
  4. Dillen, Koen & Demont, Matty & Tollens, Eric, 2008. "Modelling heterogeneity to estimate the ex ante value of biotechnology innovations," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43945, European Association of Agricultural Economists.
  5. Tillie, Pascal & Dillen, Koen & Rodríguez-Cerezo, Emilio, 2014. "Modelling ex-ante the economic and environmental impacts of Genetically Modified Herbicide Tolerant maize cultivation in Europe," Agricultural Systems, Elsevier, vol. 127(C), pages 150-160.
  6. Breustedt, Gunnar & Latacz-Lohmann, Uwe & Müller-Scheeßel, Jörg, 2013. "Impact of alternative information requirements on the coexistence of genetically modified (GM) and non-GM oilseed rape in the EU," Ecological Economics, Elsevier, vol. 93(C), pages 104-115.

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