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An Ex Ante Analysis of the Benefits from the Adoption of Corn Rootworm Resistant, Transgenic Corn Technology

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  • Alston, Julian M.
  • Hyde, Jeffrey
  • Marra, Michele C.
  • Mitchell, Paul D.

Abstract

This study examined the potential economic impacts in the United States of the commercial adoption of a corn rootworm (CRW) resistant transgenic corn. Using a counterfactual approach, we estimated that if the technology had been made available in the year 2000 at a price that would equate per acre costs to those for insecticide-based corn rootworm control, and adopted on all of the acres treated for corn rootworm in that year, the total benefits would have been $460 million. This benefit includes $171 million to the technology developer and seed companies, $231 million to farmers from yield gains, and a further $58 million to farmers from reduced risk, time savings, and other nonpecuniary benefits associated with reduced use of insecticides. This is a one-year benefit with 100 percent adoption. Our nation-wide survey of corn producers suggests that initial adoption might be as low as 30 percent, which means that the first-year benefits might be only one-third of the value implied by 100 percent adoption. Different pricing assumptions would mostly change the distribution of the benefits between farmers and others, so long as the pricing did not influence the adoption rate as well. Benefits over time would reflect changing adoption patterns and evolving insect resistance. Further analysis could include the effects of any refuge requirements implemented to slow the development of resistance, when such requirements are known.

Suggested Citation

  • Alston, Julian M. & Hyde, Jeffrey & Marra, Michele C. & Mitchell, Paul D., 2003. "An Ex Ante Analysis of the Benefits from the Adoption of Corn Rootworm Resistant, Transgenic Corn Technology," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57828, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare03:57828
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    File URL: http://purl.umn.edu/57828
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    References listed on IDEAS

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    1. Ramanan Laxminarayan & R. Simpson, 2002. "Refuge Strategies for Managing Pest Resistance in Transgenic Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(4), pages 521-536, August.
    2. Giancarlo Moschini & Harvey Lapan & Andrei Sobolevsky, 2000. "Roundup ready® soybeans and welfare effects in the soybean complex," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 33-55.
    3. Mitchell, Paul D., 2002. "Yield Benefit Of Corn Event Mon 863," Faculty Paper Series 23978, Texas A&M University, Department of Agricultural Economics.
    4. Livingston, Michael J. & Carlson, Gerald A. & Fackler, Paul L., 2000. "Bt Cotton Refuge Policy," 2000 Annual meeting, July 30-August 2, Tampa, FL 21850, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Erik Lichtenberg & Robert C. Spear & David Zilberman, 1993. "The Economics of Reentry Regulation of Pesticides," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 946-958.
    6. Hurley, Terrance M. & Babcock, Bruce A. & Hellmich, Richard L., 2001. "Bt Corn And Insect Resistance: An Economic Assessment Of Refuges," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July.
    7. Mitchell, Paul D. & Gray, Michael E. & Steffey, Kevin L., 2002. "Composed Error Model For Insect Damage Fucntions: Yield Impact Of Rotation Resistant Western Corn Rootworm In Illinois," 2002 Annual meeting, July 28-31, Long Beach, CA 19602, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. Kotu, Bekele & Admassie, Assefa, 2015. "Potential impact of improved varieties on poverty reduction: a case study of selected cereal crops in two districts of Ethiopia," 2015 Conference, August 9-14, 2015, Milan, Italy 212013, International Association of Agricultural Economists.
    2. 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.
    3. Joshua D. Detre & Hiroki Uematsu & Ashok K. Mishra, 2011. "The influence of GM crop adoption on the profitability of farms operated by young and beginning farmers," Agricultural Finance Review, Emerald Group Publishing, vol. 71(1), pages 41-61, May.
    4. Useche, Pilar & Barham, Bradford & Foltz, Jeremy, 2006. "A Trait Specific Model of GM Crop Adoption by Minnesota and Wisconsin Corn Farmers," Working Papers 201525, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    5. Buttel, Frederick H. & Merrill, Jeanne & Chen, Lucy & Goldberger, Jessica & Hurley, Terrance M., 2005. "Bt Corn Farmer Compliance with Insect Resistance Management Requirements: Results from the 2002 Minnesota and Wisconsin Farm Polls," Staff Papers 13659, University of Minnesota, Department of Applied Economics.
    6. Frisvold, George, 2010. "Resistance Management and Sustainable Use of Agricultural Biotechnology," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 188091, International Consortium on Applied Bioeconomy Research (ICABR).
    7. Marra, Michele C. & Piggott, Nicholas E., 2006. "Measuring Part-Whole Bias: Some Evidence from Crop Biotechnology," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25372, International Association of Agricultural Economists.
    8. Oliver Musshoff & Norbert Hirschauer, 2011. "A behavioral economic analysis of bounded rationality in farm financing decisions: First empirical evidence," Agricultural Finance Review, Emerald Group Publishing, vol. 71(1), pages 62-83, May.
    9. Fiona Thorne & Kevin Hanrahan & E. Mullins, 2005. "The Economic Evaluation of a GM Free Country: an Irish Case Study," Working Papers 0508, Rural Economy and Development Programme,Teagasc.
    10. 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.
    11. Aultman, Stephen & Hurley, Terrance M. & Mitchell, Paul D. & Frisvold, George B., 2009. "Valuing the Roundup Ready® Soybean Weed Management Program," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49342, Agricultural and Applied Economics Association.
    12. Gardner, Justin G. & Nelson, Carl H., 2007. "Genetically Modified Crops and Labor Savings in US Crop Production," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34919, Southern Agricultural Economics Association.

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