Adoption of GM Food Crop Varieties in the European Union

Bio-safety issues and food-safety concerns have delayed the adoption of GM crop varieties in the food chain of the European Union (EU). Previous general equilibrium studies of welfare effects have focused on analyzing possible changes in consumer preferences. The point of departure for the current study is that consumer preferences are invariant. Instead, policy-relevant limitations for the adoption of GM crop varieties in the EU are considered to include (i) lack of (approval of) appropriate GM varieties for the EU area, (ii) lack of marketing of GM products due to first mover issues among commodity retailers, (iii) lack of trustworthy certification schemes addressing heterogeneous information needs among consumers, (iv) (excessive) national coexistence regulation and country-specific insurance problems, and (v) lack of a concerted effort by national and EU institutions including technical support and farmer-to-farmer interactions. Simulations with a global GE model point to the existence of important trade-related spillover effects on regions with little own production of GM food crops. Hence, the results suggest that EU have benefitted, strongly, from existing GM adoption on the consumption side (spillover effects from imports of GM products), and that they are likely to enjoy strong additional benefits from increased future GM adoption on the production side. However, the results also suggest that EU may have an equal interest in promoting GM adoption at home and abroad.