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Bt cotton and production risk: Panel data evidence

Crost, B. and Shankar, B. (2008) Bt cotton and production risk: Panel data evidence. International Journal of Biotechnology, 10 (2/3). pp. 122-131. ISSN 0963-6048

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To link to this article DOI: 10.1504/IJBT.2008.018349

Abstract/Summary

The farm-level success of Bt-cotton in developing countries is well documented. However, the literature has only recently begun to recognise the importance of accounting for the effects of the technology on production risk, in addition to the mean effect estimated by previous studies. The risk effects of the technology are likely very important to smallholder farmers in the developing world due to their risk-aversion. We advance the emergent literature on Bt-cotton and production risk by using panel data methods to control for possible endogeneity of Bt-adoption. We estimate two models, the first a fixed-effects version of the Just and Pope model with additive individual and time effects, and the second a variation of the model in which inputs and variety choice are allowed to affect the variance of the time effect and its correlation with the idiosyncratic error. The models are applied to panel data on smallholder cotton production in India and South Africa. Our results suggest a risk-reducing effect of Bt-cotton in India, but an inconclusive picture in South Africa.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Life Sciences > School of Agriculture, Policy and Development
ID Code:8439
Uncontrolled Keywords:GM crops, developing countries, production risk , Bt-cotton , endogeneity bias, India , South Africa , agricultural biotechnology, bacillus thuringiensis, GM cotton, genetically modified cotton, risk assessment, risk reduction

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