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Risk and the Value of Bt Corn

Author

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  • Terrance M. Hurley
  • Paul D. Mitchell
  • Marlin E. Rice

Abstract

A conceptual model is developed to evaluate the effect of Bt corn on risk. Results highlight the importance of distinguishing between marginal and aggregate risk effects and demonstrate that the effect of Bt corn on risk depends crucially on the price paid for the technology. Empirical results show that, depending on the price, Bt corn can be marginally risk increasing or decreasing and can either increase or decrease corn acreage. Also, depending on the price, Bt corn can provide a risk benefit to farmers, even when Bt corn is risk increasing. Copyright 2004, Oxford University Press.

Suggested Citation

  • Terrance M. Hurley & Paul D. Mitchell & Marlin E. Rice, 2004. "Risk and the Value of Bt Corn," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 345-358.
    • Handle: RePEc:oup:ajagec:v:86:y:2004:i:2:p:345-358
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    File URL: http://hdl.handle.net/10.1111/j.0092-5853.2004.00583.x
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    Citations

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    Cited by:

    1. Mitchell, Paul D. & Zhu, En (John), 2003. "Moral Hazard And Bt Corn Refuge," 2003 Annual meeting, July 27-30, Montreal, Canada 22113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Mitchell, Paul D. & Knight, Thomas O., 2008. "Economic Analysis of Supplemental Deductible Coverage as Recommended in the USDA's 2007 Farm Bill Proposal," Agricultural and Resource Economics Review, Cambridge University Press, vol. 37(1), pages 117-131, April.
    3. Mitchell, Paul D. & Knight, Thomas O., 2007. "Economic Analysis of Supplemental Deductible Coverage as Recommended in the USDA’s 2007 Farm Bill Proposal," Staff Papers 92125, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    4. Matty Demont & Marie Cerovska & Wim Daems & Koen Dillen & József Fogarasi & Erik Mathijs & František Muška & Josef Soukup & Eric Tollens, 2008. "Ex Ante Impact Assessment under Imperfect Information: Biotechnology in New Member States of the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(3), pages 463-486, September.
    5. Julian M. Alston & William J. Martin & Philip G. Pardey, 2014. "Influences of Agricultural Technology on the Size and Importance of Food Price Variability," NBER Chapters, in: The Economics of Food Price Volatility, pages 13-54, National Bureau of Economic Research, Inc.
    6. Frisvold, George B. & Reeves, Jeanne M., 2008. "The costs and benefits of refuge requirements: The case of Bt cotton," Ecological Economics, Elsevier, vol. 65(1), pages 87-97, March.
    7. Paul D. Mitchell & Terrance M. Hurley, 2006. "Adverse Selection, Moral Hazard, and Grower Compliance with Bt Corn Refuge," Natural Resource Management and Policy, in: Richard E. Just & Julian M. Alston & David Zilberman (ed.), Regulating Agricultural Biotechnology: Economics and Policy, chapter 0, pages 599-623, Springer.
    8. Paulson, Nicholas D. & Babcock, Bruce A., 2010. "Readdressing the Fertilizer Problem," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-17, December.
    9. Pardey, Philip G. & James, Jennifer S. & Alston, Julian M. & Wood, Stanley & Koo, Bonwoo & Binenbaum, Eran & Hurley, Terrance M. & Glewwe, Paul & Mayer, Jorge & Jones, Richard & De Groote, Hugo & Kana, 2007. "Science, Technology and Skills," Reports 136256, University of Minnesota, International Science and Technology Practice and Policy.
    10. Francisco Rosas & Mariana Sans, 2023. "Quantifying the value to the farmer from adopting climate risk-reducing technologies," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(6), pages 1-18, August.
    11. Yang, Juan & Mitchell, Paul D. & Gray, Michael & Steffey, Kevin, 2007. "Unbalanced Nested Component Error Model and the Value of Soil Insecticide and Bt Corn for Controlling Western Corn Rootworm," Staff Paper Series 510, University of Wisconsin, Agricultural and Applied Economics.
    12. František KOCOUREK & Jitka STARÁ, 2012. "Efficacy of Bt maize against European corn borer in Central Europe," Plant Protection Science, Czech Academy of Agricultural Sciences, vol. 48(SpecialIs), pages 25-35.
    13. Hennessy, David A. & Saak, Alexander E., 2003. "State-Contingent Demand for Herbicide-Tolerance Seed Trait," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(1), pages 1-14, April.
    14. Xingliang Ma & Guanming Shi, 2015. "A dynamic adoption model with Bayesian learning: an application to U.S. soybean farmers," Agricultural Economics, International Association of Agricultural Economists, vol. 46(1), pages 25-38, January.
    15. 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.
    16. Grove, Bennie & Oosthuizen, Lukas Klopper, 2010. "Stochastic efficiency analysis of deficit irrigation with standard risk aversion," Agricultural Water Management, Elsevier, vol. 97(6), pages 792-800, June.
    17. Banerjee, Swagata (Ban) & Martin, Steven W., 2006. "Certainty Equivalent Farm Returns from Bt and Non-Bt Cotton," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35383, Southern Agricultural Economics Association.
    18. Motamed, Mesbah J., 2021. "Price-Yield Covariance Effects on Producers’ Risk Profile and Risk Response," 2021 Annual Meeting, August 1-3, Austin, Texas 314082, Agricultural and Applied Economics Association.
    19. Ma, Xingliang & Shi, Guanming, 2011. "A Dynamic Adoption Model with Bayesian Learning: Application to the U.S. Soybean Market," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 104577, Agricultural and Applied Economics Association.
    20. Dillen, Koen & Demont, Matty & Tollens, Eric, 2008. "Modelling heterogeneity to estimate the ex ante value of biotechnology innovations," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43945, European Association of Agricultural Economists.
    21. Jiang, Jingze & Marsh, Thomas L. & Tozer, Peter R., 2015. "Policy induced price volatility transmission: Linking the U.S. crude oil, corn and plastics markets," Energy Economics, Elsevier, vol. 52(PA), pages 217-227.
    22. Elizabeth Nolan & Paulo Santos, 2019. "Genetic modification and yield risk: A stochastic dominance analysis of corn in the USA," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-10, October.
    23. Nolan, Elizabeth & Santos, Paulo, 2012. "Insurance premiums and GM traits," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125942, International Association of Agricultural Economists.
    24. Yang, Juan & Mitchell, Paul D., 2004. "Unbalanced Nested Component Error Model For Estimating Pest Damage Functions," 2004 Annual meeting, August 1-4, Denver, CO 20002, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    25. Seo, Sangtaek & Mitchell, Paul D. & Leatham, David J., 2004. "Effects Of Federal Risk Management Programs On Land Allocation And Input Use," 2004 Annual meeting, August 1-4, Denver, CO 20160, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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