Production Risk, Farmer Welfare, and Bt Corn in the Philippines

Santi Sanglestsawai, Divina Gracia P. Rodriguez, Roderick Rejesus and Jose M. Yorobe

Agricultural and Resource Economics Review, 2017, vol. 46, issue 3, 507-528

Abstract: 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.

Date: 2017
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Working Paper: Production Risk, Farmer Welfare, and Bt Corn in the Philippines (2012)
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