Insuring the stewardship of Bt corn: 'A carrot' versus 'a stick'

Paul D. Mitchell, Terrance M. Hurley, Bruce A. Babcock, Richard L. Hellmich

Research output: Contribution to journalArticlepeer-review

14 Scopus citations

Abstract

Subsidies and fines are compared to voluntary and mandatory refuge insurance (insurance for pest damage on Bt corn refuge) as mechanisms for securing grower compliance with EPA refuge mandates. A conceptual model partially ranks mechanisms. Tradeoffs between mechanisms using grower welfare, payments to growers, and monitoring frequency are quantified empirically. Grower welfare is lowest with mandatory insurance because growers pay all costs, and is highest with direct refuge subsidies because public funds or companies subsidize all costs. Assuming typical premium loads and ignoring distribution considerations, we develop monitoring budgets for fines and subsidies, above which voluntary or mandatory insurance is better.

Original languageEnglish (US)
Pages (from-to)390-405
Number of pages16
JournalJournal of Agricultural and Resource Economics
Volume27
Issue number2
StatePublished - Dec 1 2002

Keywords

  • Biotechnology
  • European corn borer
  • Refuge insurance
  • Resistance management

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