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Minimum Distance Requirements and Liability: Implications for Co-Existence

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  • Soregaroli, Claudio
  • Wesseler, Justus

Abstract

The co-existence of conventional and transgenic products in the food chain introduces new elements in the evaluation of the profitability of transgenic crops and, consequently, on the farmer’s adoption decision. In particular, one emerging problem farmers are facing in Europe is related to the legal liability of transgenic crop cultivation. In Europe, a mixture of ex-ante regulations and ex-post liability rules governing transgenic crops emerges. One of the predominant ex-ante regulations discussed at the EU-level is a minimum distance requirement to neighbouring fields in order to avoid cross-pollination. The ex-post liability rules differ. They depend on the legal frameworks of individual members of the EU. The current interpretation of, for example, Italian and German law does not exclude ex-post liability for farmers planting transgenic crops in the case of cross-pollination. In this paper, we analyze the value of planting transgenic crops when farmers face ex-ante regulatory and ex-post liability costs under irreversibility and uncertainty. The regulatory instrument analyzed is the minimum distance to neighbouring fields. First results indicate that under irreversibility and uncertainty the value of cultivating transgenic crops presents a trade-off between ex-ante regulatory and ex-post liability costs with respect to farm size. From this, it is not possible to conclude a priori the net effect on the size of the adopting farms, if, ceteris paribus, a minimum distance regulation is adopted within the EU and farmers can be held liable ex-post.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33230.

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Date of creation: 2005
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Handle: RePEc:pra:mprapa:33230

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Related research

Keywords: Coexistence; ex-ante regulation; ex-post liability; real option; uncertainty;

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References

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  1. Demont, Matty & Tollens, Eric, 2001. "Uncertainties Of Estimating The Welfare Effects Of Agricultural Biotechnology In The European Union," Working Papers, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics 31828, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
  2. Kolstad, Charles D & Ulen, Thomas S & Johnson, Gary V, 1990. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements?," American Economic Review, American Economic Association, American Economic Association, vol. 80(4), pages 888-901, September.
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Cited by:
  1. Skevas, Theodoros & Fevereiro, P. & Wesseler, Justus, 2008. "Coping with ex ante Regulations and ex post Liability Rules for Planting Bt-maize – The Portuguese Experience," 2008 International Congress, August 26-29, 2008, Ghent, Belgium, European Association of Agricultural Economists 44189, European Association of Agricultural Economists.
  2. Consmuller, Nicola & Beckmann, Volker & Schleyer, Christian, 2008. "Public Policy and Farm-level Strategies for Coexistence in Germany – A Case Study of Bt-maize in Brandenburg," 2008 International Congress, August 26-29, 2008, Ghent, Belgium, European Association of Agricultural Economists 44187, European Association of Agricultural Economists.
  3. Beckmann, Volker & Soregaroli, Claudio & Wesseler, Justus, 2009. "Ex-ante regulation and ex-post liability under uncertainty and irreversibility: governing the coexistence of GM crops," Economics Discussion Papers 2009-53, Kiel Institute for the World Economy.
  4. Rolf A. Groeneveld & Erik Ansink & Clemens C.M. Van de Wiel & Justus Wesseler, 2011. "Benefits and Costs of Biologically Contained Genetically Modified Tomatoes and Eggplants in Italy and Spain," Sustainability, MDPI, Open Access Journal, vol. 3(8), pages 1265-1281, August.
  5. Beckmann, Volker & Soregaroli, Claudio & Wesseler, Justus, 2006. "Governing the Co-existence of GM Crops: Ex-Ante Regulation and Ex-Post Liability under Uncertainty and Irreversibility," Institutional Change in Agriculture and Natural Resources Discussion Papers, Humboldt University Berlin, Department of Agricultural Economics 18845, Humboldt University Berlin, Department of Agricultural Economics.
  6. Jennifer Schweiger & Ali Ferjani & Achim Spiller, 2010. "Agentenbasierte Abschätzung der Wirtschaft-lichkeit von transgenen Kulturen anhand von Beispielbetrieben in einer Schweizer Ackerbau-region," Yearbook of Socioeconomics in Agriculture, Swiss Society for Agricultural Economics and Rural Sociology, Swiss Society for Agricultural Economics and Rural Sociology, vol. 3(1), pages 3-37.
  7. Wesseler, Justus, 2009. "The Santaniello theorem of irreversible benefits," MPRA Paper 25602, University Library of Munich, Germany.
  8. Skevas, Theodoros & Wesseler, Justus & Fevereiro, Pedro, 2009. "Coping with ex-ante regulations for planting Bt maize: the Portuguese experience," MPRA Paper 25609, University Library of Munich, Germany.

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