IDEAS home Printed from https://ideas.repec.org/a/bla/agecon/v54y2023i1p110-126.html
   My bibliography  Save this article

Risk effects of GM corn: Evidence from crop insurance outcomes and high‐dimensional methods

Author

Listed:
  • Serkan Aglasan
  • Barry K. Goodwin
  • Roderick M. Rejesus

Abstract

This study evaluates whether genetically modified (GM) corn hybrids with rootworm resistant traits (GM‐RW) have lower yield risk. A crop insurance actuarial performance measure, the loss cost ratio (LCR), is used to represent yield risk. High‐dimensional methods are utilized in this study to maintain parsimony in the empirical specification, and facilitate estimation. Specifically, we employ the Cluster‐Lasso (cluster‐least absolute shrinkage and selection operator) procedure. This method produces uniformly valid inference on the main variable of interest (i.e., the GM‐RW variable) in a high‐dimensional panel data setting even in the presence of heteroskedastic, non‐Gaussian, and clustered error structures. After controlling for a large set of potential weather confounders using Cluster‐Lasso, we find consistent evidence that GM corn hybrids with rootworm resistant traits have lower yield risk.

Suggested Citation

  • Serkan Aglasan & Barry K. Goodwin & Roderick M. Rejesus, 2023. "Risk effects of GM corn: Evidence from crop insurance outcomes and high‐dimensional methods," Agricultural Economics, International Association of Agricultural Economists, vol. 54(1), pages 110-126, January.
    • Handle: RePEc:bla:agecon:v:54:y:2023:i:1:p:110-126
    DOI: 10.1111/agec.12757
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/agec.12757
    Download Restriction: no
    File URL: https://libkey.io/10.1111/agec.12757?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Edward D. Perry & Jisang Yu & Jesse Tack, 2020. "Using insurance data to quantify the multidimensional impacts of warming temperatures on yield risk," Nature Communications, Nature, vol. 11(1), pages 1-9, December.
    2. Marshall Burke & Kyle Emerick, 2016. "Adaptation to Climate Change: Evidence from US Agriculture," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 106-140, August.
    3. A. Belloni & D. Chen & V. Chernozhukov & C. Hansen, 2012. "Sparse Models and Methods for Optimal Instruments With an Application to Eminent Domain," Econometrica, Econometric Society, vol. 80(6), pages 2369-2429, November.
    4. Alexandre Belloni & Victor Chernozhukov & Christian Hansen, 2014. "Inference on Treatment Effects after Selection among High-Dimensional Controlsâ€," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 608-650.
    5. Olivier Deschênes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
    6. GianCarlo Moschini, 2008. "Biotechnology and the development of food markets: retrospect and prospects," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(3), pages 331-355, September.
    7. Barry K. Goodwin & Nicholas E. Piggott, 2020. "Has Technology Increased Agricultural Yield Risk? Evidence from the Crop Insurance Biotech Endorsement," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1578-1597, October.
    8. Tian Yu & Bruce A. Babcock, 2010. "Are U.S. Corn and Soybeans Becoming More Drought Tolerant?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1310-1323.
    9. Elizabeth Nolan & Paulo Santos, 2012. "The Contribution of Genetic Modification to Changes in Corn Yield in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1171-1188.
    10. Wolfram Schlenker & Michael J. Roberts, 2006. "Nonlinear Effects of Weather on Corn Yields ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 391-398.
    11. Sanglestsawai, Santi & Rodriguez, Divina Gracia P. & Rejesus, Roderick M. & Yorobe, Jose M., 2017. "Production Risk, Farmer Welfare, and Bt Corn in the Philippines," Agricultural and Resource Economics Review, Cambridge University Press, vol. 46(3), pages 507-528, December.
    12. Millner, Antony & McDermott, Thomas K. J., 2016. "Model confirmation in climate economics," LSE Research Online Documents on Economics 67122, London School of Economics and Political Science, LSE Library.
    13. Chavas, Jean-Paul & Shi, Guanming, 2015. "An Economic Analysis of Risk, Management, and Agricultural Technology," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(1), pages 1-17.
    14. Leeb, Hannes & Pötscher, Benedikt M., 2008. "Can One Estimate The Unconditional Distribution Of Post-Model-Selection Estimators?," Econometric Theory, Cambridge University Press, vol. 24(2), pages 338-376, April.
    15. Michael J. Roberts & Wolfram Schlenker & Jonathan Eyer, 2013. "Agronomic Weather Measures in Econometric Models of Crop Yield with Implications for Climate Change," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 236-243.
    16. Burke, M. & Craxton, M. & Kolstad, C.D. & Onda, C. & Allcott, H. & Baker, E. & Barrage, L. & Carson, R. & Gillingham, K. & Graff-Zivin, J. & Greenstone, M. & Hallegatte, S. & Hanemann, W.M. & Heal, G., 2016. "Opportunities for advances in climate change economics," ISU General Staff Papers 3565, Iowa State University, Department of Economics.
    17. Zou, Hui, 2006. "The Adaptive Lasso and Its Oracle Properties," Journal of the American Statistical Association, American Statistical Association, vol. 101, pages 1418-1429, December.
    18. Daniel Urban & Michael Roberts & Wolfram Schlenker & David Lobell, 2012. "Projected temperature changes indicate significant increase in interannual variability of U.S. maize yields," Climatic Change, Springer, vol. 112(2), pages 525-533, May.
    19. Solomon Hsiang, 2016. "Climate Econometrics," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 43-75, October.
    20. Francis Annan & Wolfram Schlenker, 2015. "Federal Crop Insurance and the Disincentive to Adapt to Extreme Heat," American Economic Review, American Economic Association, vol. 105(5), pages 262-266, May.
    21. Fernandez-Cornejo, Jorge & Livingston, Michael J. & Mitchell, Lorraine & Wechsler, Seth, 2014. "Genetically Engineered Crops in the United States," Economic Research Report 164263, United States Department of Agriculture, Economic Research Service.
    22. Burke, M & Craxton, M & Kolstad, CD & Onda, C & Allcott, H & Baker, E & Barrage, L & Carson, R & Gillingham, K & Graf-Zivin, J & Greenstone, M & Hallegatte, S & Hanemann, WM & Heal, G & Hsiang, S & Jo, 2016. "Opportunities for advances in climate change economics," University of California at Santa Barbara, Recent Works in Economics qt4tc5d9pb, Department of Economics, UC Santa Barbara.
    23. Solomon M. Hsiang, 2016. "Climate Econometrics," NBER Working Papers 22181, National Bureau of Economic Research, Inc.
    24. Jesse Tack & Keith Coble & Barry Barnett, 2018. "Warming temperatures will likely induce higher premium rates and government outlays for the U.S. crop insurance program," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 635-647, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aglasan, Serkan & Goodwin, Barry K. & Rejesus, Roderick, 2020. "Genetically Modified Rootworm-Resistant Corn, Risk, and Weather: Evidence from High Dimensional Methods," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 305181, Agricultural and Applied Economics Association.
    2. Pierre Mérel & Matthew Gammans, 2021. "Climate Econometrics: Can the Panel Approach Account for Long‐Run Adaptation?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1207-1238, August.
    3. Mu, Jianhong E. & McCarl, Bruce A. & Sleeter, Benjamin & Abatzoglou, John T. & Zhang, Hongliang, 2018. "Adaptation with climate uncertainty: An examination of agricultural land use in the United States," Land Use Policy, Elsevier, vol. 77(C), pages 392-401.
    4. Hrozencik, Robert A. & Rouhi Rad, Mani & Uz, Dilek, 2023. "Electricity Demand by the Irrigated Sector in Response to Climatic Shocks," 2023 Annual Meeting, July 23-25, Washington D.C. 335469, Agricultural and Applied Economics Association.
    5. Newell, Richard G. & Prest, Brian C. & Sexton, Steven E., 2021. "The GDP-Temperature relationship: Implications for climate change damages," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    6. Cristina Cattaneo & Emanuele Massetti, 2019. "Does Harmful Climate Increase Or Decrease Migration? Evidence From Rural Households In Nigeria," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(04), pages 1-36, November.
    7. Emediegwu, Lotanna E. & Wossink, Ada & Hall, Alastair, 2022. "The impacts of climate change on agriculture in sub-Saharan Africa: A spatial panel data approach," World Development, Elsevier, vol. 158(C).
    8. Taraz, Vis, 2018. "Can farmers adapt to higher temperatures? Evidence from India," World Development, Elsevier, vol. 112(C), pages 205-219.
    9. Santeramo, Fabio Gaetano & Bozzola, Martina & Lamonaca, Emilia, 2020. "Impacts of Climate Change on Global Agri-Food Trade," 2019: Recent Advances in Applied General Equilibrium Modeling: Relevance and Application to Agricultural Trade Analysis, December 8-10, 2019, Washington, DC 339375, International Agricultural Trade Research Consortium.
    10. Cui, Xiaomeng, 2020. "Climate change and adaptation in agriculture: Evidence from US cropping patterns," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    11. Charles D. Kolstad & Frances C. Moore, 2019. "Estimating the Economic Impacts of Climate Change Using Weather Observations," NBER Working Papers 25537, National Bureau of Economic Research, Inc.
    12. Aragón, Fernando M. & Restuccia, Diego & Rud, Juan Pablo, 2022. "Are small farms really more productive than large farms?," Food Policy, Elsevier, vol. 106(C).
    13. Kalkuhl, Matthias & Wenz, Leonie, 2020. "The impact of climate conditions on economic production. Evidence from a global panel of regions," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    14. Kahn, Matthew E. & Mohaddes, Kamiar & Ng, Ryan N.C. & Pesaran, M. Hashem & Raissi, Mehdi & Yang, Jui-Chung, 2021. "Long-term macroeconomic effects of climate change: A cross-country analysis," Energy Economics, Elsevier, vol. 104(C).
    15. Cuong Viet Nguyen & Manh‐Hung Nguyen & Toan Truong Nguyen, 2023. "The impact of cold waves and heat waves on mortality: Evidence from a lower middle‐income country," Health Economics, John Wiley & Sons, Ltd., vol. 32(6), pages 1220-1243, June.
    16. Chang Cai & Sandy Dall’Erba, 2021. "On the evaluation of heterogeneous climate change impacts on US agriculture: does group membership matter?," Climatic Change, Springer, vol. 167(1), pages 1-23, July.
    17. Emediegwu, Lotanna E. & Ubabukoh, Chisom L., 2023. "Re-examining the impact of annual weather fluctuations on global livestock production," Ecological Economics, Elsevier, vol. 204(PA).
    18. Richard S.J. Tol, 2020. "The Economic Impact of Weather and Climate," Video Library 2094, Department of Economics, University of Sussex Business School.
    19. Costa, Lucas & Sant'Anna, André Albuquerque & Young, Carlos Eduardo Frickmann, 2023. "Barren lives: drought shocks and agricultural vulnerability in the Brazilian Semi-Arid," Environment and Development Economics, Cambridge University Press, vol. 28(6), pages 603-623, December.
    20. van Weezel, Stijn, 2020. "Local warming and violent armed conflict in Africa," World Development, Elsevier, vol. 126(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:agecon:v:54:y:2023:i:1:p:110-126. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.