Genetically engineered varieties in the U.S. maize and soybean seed markets: Production impacts, environmental implications, and welfare effects

This dissertation consists of three essays that explore how the widespread adoption of genetically engineered (GE) corn and soybean varieties has impacted three different facets of the agricultural landscape. The first two essays investigate the impact of GE variety adoption on two related farming practices: conservation tillage and pesticide use, and the third essay focuses on the monetary benefits for the farmers that adopt GE varieties.In the first essay we develop a test within a discrete choice framework, based on the theory of supermodularity, for whether glyphosate tolerant soybeans and conservation tillage are complementary practices. We find that glyphosate tolerant soybeans and conservation tillage are complementary practices, and this finding is robust to a variety of alternative specifications. In the baseline specification, the marginal benefit of the complementarity effect is about $1.69 per acre. In addition, the results indicate conservation tillage is more likely to be adopted on large farms, highly erodible land, in drought-like conditions, and when fuel prices are high. The estimates are also used to simulate a counterfactual in which glyphosate tolerant soybeans were not available as a choice. The simulation indicates that the availability of glyphosate tolerant soybeans led to an increase in the adoption of conservation tillage and no-tillage by about 10% and 20%, respectively.In the second essay we examine the relationship between the adoption of GE corn and soybeans and pesticide use. We estimate the impact of GE varieties on pesticide use with data on the seed and pesticide use decisions of 86,736 plots in soybeans and 134,264 plots in maize over the 1998-2011 period. We control for potentially important omitted variables by including grower-specific fixed effects, time fixed effects, and CRD-specific time trends. We find that glyphosate tolerant soybean and corn adopters used about 28% (0.30 kg/ha) more and 1.2% (0.03 kg/ha) less than non-adopters, respectively. Insect resistant corn adopters used about 11.2% (0.013) less insecticide than non-adopters. When weighted by an index called the environmental impact quotient these results are modified to 0%, -9.8% and -10.4%, respectively. Perhaps most interestingly, we find that the relationship between GE and non-GE adopters changed significantly over time. In particular, glyphosate tolerant corn and soybean adopters gradually used more herbicide relative to non-adopters over time. We show that this trend is in part attributable to the emergence of glyphosate weed resistance.The final essay develops a discrete choice model of seed demand and applies it to a dataset of corn and soybean seed purchases from 1996-2011. We then use the model estimates to retrieve farmers’ willingness-to-pay (WTP) for GE varieties. Importantly, we permit the WTP estimates to structurally vary over the three sub-periods – 1996-2000, 2001-2006, and 2007-2011. These sub-periods correspond to the expiration of Monsanto’s glyphosate patent in 2000 and the sharp increase in corn and soybean output prices that began in 2007. We find that corn and soybean growers were almost always willing to pay a premium for GE varieties, with the extent of that willingness increasing significantly over time. A comparison of the WTP estimates to the actual premiums charged by seed firms suggests that farmers gained the most from GE varieties in the final sub-period, also the sub-period during which seed prices rose the most.