INSURING THE STEWARDSHIP OF BT CORN: 'A CARROT' VERSUS 'A STICK'

Paul Mitchell (), Terrance Hurley, Bruce Babcock and Richard L. Hellmich

Journal of Agricultural and Resource Economics, 2002, vol. 27, issue 2, 16

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.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (8)

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https://ageconsearch.umn.edu/record/31127/files/27020390.pdf (application/pdf)

Related works:
Working Paper: Insuring the Stewardship of Bt Corn: A Carrot Versus a Stick (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:31127

DOI: 10.22004/ag.econ.31127

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