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Did the Economic Conditions for Bt-maize in the EU Improve from 1995 to 2004? A MISTICs Perspective

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  • Scatasta, Sara
  • Wesseler, Justus
  • Demont, Matty

Abstract

The debate about the "quasi" moratorium on the release of GMOs in the European Union is on going. One of the major arguments that were put forward to delay the release of new traits was the one for more information. In this contribution we compare the situation for Bt-maize from the 1995 and 2004 perspective. The 2004 perspective differentiate between two scenarios: one without the CAP reform and one including the CAP reform. For the comparison we use an ex-ante assessment model based on real option theory that explicitly considers the irreversible costs and benefits of the technology. As empirical information about possible irreversible costs is scarce we identify the maximum incremental social tolerable irreversible costs, MISTICs, for Bt-maize, a threshold value beyond which the immediate release of the crop should be delayed. The reversible benefits from Bt-maize among the EU- 15 where the damage from the ECB is economically important namely France, Greece, Italy, Spain, and Portugal are modeled using a small open economy partial equilibrium model. We compare the MISTICs for those five countries by farm household and by household. We observe very low values at household level, which have only slightly changed in favor of an immediate EU-wide release of Bt-maize. The CAP-reform in the case for Bt-maize does decrease the economic incentives for immediate adoption. Further details are discussed in the main text.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25245.

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Date of creation: 2006
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Handle: RePEc:ags:iaae06:25245

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Keywords: Bt-maize; irreversibility; real options; uncertainty; Crop Production/Industries; Research and Development/Tech Change/Emerging Technologies;

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