Impacts of Bt cotton on profitability, productivity and farm inputs in Pakistan: use of panel models

This study estimates the benefits from adopting Bt cotton seeds in Punjab, Pakistan over two cropping seasons - 2008 and 2009. The study uses the panel modeling approach to determine the average effects of Bt cotton technology on short-run profits, yields and farm inputs. This approach controls for biases resulting from self-selection and endogenous farm inputs. The study shows that, on average, Bt adopting farmers receive 9 per cent higher yields per hectare (ha), reduce per-ha pesticide use by 21.7 per cent, and increase per-ha use of irrigation water by 6 per cent. Our estimates of the increase in cotton yield are far below estimates from previous studies conducted in Pakistan and India, which do not use panel methods. Allowing more Bt cotton varieties and ensuring the availability of quality Bt cotton seeds in the market is likely to lead to further increase in the private benefits from Bt cotton.