Production risk, farmer welfare, and Bt Corn in the Philippines

Abstract

© The Author(s) 2017. We determine the production risk effects and welfare implications of single-trait Bt corn adoption in the Philippines. We use a stochastic production function estimation approach that allows for examining the skewness effects of Bt within a damage abatement specification. Our results indicate that Bt corn has a statistically significant yield increasing, risk-increasing (i.e., variance-increasing) and downside risk-reducing (i.e., skewness-increasing) effects. Based on risk premium, certainty equivalent, and loss probability welfare measures, Bt corn farmers in the Philippines are better-off (in absolute terms) relative to non-Bt farmers given Bt corn's dominant yield increasing effect and downside risk-reducing effect.

Source or Periodical Title

Agricultural and Resource Economics Review

ISSN

10682805

Page

507-528

Document Type

Article

Subject

Bt corn, Damage abatement, Downside risk, GM crop, Production risk, Skewness, Stochastic production function

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