A discussion of the market and policy failures associated with the adoption of herbicide-tolerant crops

Weed control in the U.S. Midwest has become increasingly herbicide-centric due to the adoption of herbicide-tolerant (HT) crops in the 1990s. That integrated weed management (IWM) practices, including ecological and mechanical controls, are scarcely used is concerning. IWM would be a more sustainable form of farming for two reasons. First, it would reduce the negative health and environmental externalities associated with herbicide use. Second, it would reduce the selection pressure on weed populations and the development of weed resistance to some herbicides, thereby reducing the uncertainty of the long-term effectiveness of herbicidal weed control. In this context, we develop an economic framework to clarify the interplay among the different market failures that either contribute to the herbicidal ‘lock-in’ or make it problematic. We then analyse the evidence for and perceptions of these market failures based on twenty-four semi-structured interviews with farmers and experts conducted in 2017, as well as on discussions in the academic literature. To this end, we put into perspective the possible self-reinforcing effects in the adoption path of HT crops, such as increasing farm size, changes in farm equipment, increasing incentives for simplified crop rotations, and the loss of practical knowledge of IWM practices.     

Regulation of a Spatial Externality: Refuges versus Tax for Managing Pest Resistance

We examine regulations for managing pest resistance to pesticide varieties in a temporally and spatially explicit framework. We compare the performance of the EPA’s mandatory refuges and a tax (or subsidy) on the pesticide variety under several biological assumptions on pest mobility and the heterogeneity of farmers’ pest vulnerability. We find that only the tax (or subsidy) restores efficiency if pest mobility is perfect within the area. If pest mobility is imperfect and when farmers face identical pest vulnerability, only the refuge might restore efficiency. With simulations we illustrate that complex outcomes may arise for intermediate levels of pest mobility and farmers’ heterogeneity. Our results shed light on the choice of regulatory instruments for common-pool resource regulations where spatial localization matters.     

On the proportionality of EU spatial ex ante coexistence regulations: A comment

In their recent article in this journal, Demont et al. (2009) discuss the effects of alternative spatial ex ante coexistence regulations (SEACERs) in the context of the EU regulatory framework. We retain from Demont et al. (2009) that small pollen barriers should be considered as a possible regulatory option in all identifiable situations in which they are as effective as large isolation distances. This idea is in accordance with the proportionality principle of the 2003 EC Recommendation. But further analysis of how consumer choice and consumer welfare are affected should be conducted before supporting the idea that SEACERs should be flexible, that is that GMO farmers should always have the option of paying their non-GMO neighbours to implement the SEACERs in their own fields. We reject the authors’ argument that pollen barriers are necessarily more easily negotiable among neighbours (more “flexible”) than are isolation distances. We contest the relation of proportionality to the size of market signals for IP products. We contest the idea of shifting coexistence regulation from ex ante to ex post. We believe that any economic analysis of coexistence measures should include their welfare effects on consumers as well as on producers.     

Who Pays the Costs of Non-GMO Segregation and Identity Preservation?

Our aim is to explore who pays the costs and who reaps the benefits of maintaining a dual-market system of genetically modified organisms (GMOs) and non-GMOs. We analyze the welfare effects of the introduction of consumer "hatred" given GMO technology and the introduction of GMO technology given hatred. Making alternative assumptions of competitive and then monopolistic supply, we recognize that identity preservation (IP) of non-GMOs creates costs for IP and non-IP producers. We model these costs as depending on the sizes of the two supply channels.     

The Dynamics of Pest Resistance Management: The Case of Refuge Fields for Bt Crops

We examine the optimal time‐variant refuge policy to manage pest resistance to Bacillus thuringiensis (Bt) crops in a finite, discrete‐time horizon model. We identify analytically the intertemporal effects of refuge fields on the pest population and its susceptibility. The shape of the optimal refuge policy and whether or not pest susceptibility should be exhausted completely at the end of the time horizon depend crucially on the values of a cost premium of Bt seeds and the fitness cost of resistance (over mortality of resistant pests) and are addressed via numerical simulations. We demonstrate the importance of modeling the dynamics of the biological system accurately, of defining a diploid (and not haploid) biological model, and of using a discrete‐time (rather than continuous‐time) framework.     

Taxes and Subsidies in Vertically Related Markets

In the framework of a two–country, two–good partial equilibrium model where one of the commodities (the bulk commodity) is an intermediate input in the production of the second good (the processed good), we assume that the government wishes to transfer income to both bulk commodity and processed good producers. Our analysis is concerned with efficient redistribution. The instruments are subsidies or taxes, and there is an opportunity cost of public funds. We use the targeting principle to characterize the set of optimal subsidies or taxes applied on both the bulk commodity and the final good in this vertically related market structure. The theoretical analysis is illustrated using the example of cereals (the bulk commodity) and pork and poultry (the processed good) in the European Union.