Economic Impacts and Impact Dynamics of Bt (Bacillus thuringiensis) Cotton in India

Abstract

Despite widespread adoption of genetically modified crops in many countries, heated controversies about their advantages and disadvantages continue. Especially for developing countries, there are concerns that genetically modified crops fail to benefit smallholder farmers and contribute to social and economic hardship. Many economic studies contradict this view, but most of them look at short-term impacts only, so that uncertainty about longer-term effects prevails. We address this shortcoming by analyzing economic impacts and impact dynamics of Bt cotton in India. Building on unique panel data collected between 2002 and 2008, and controlling for nonrandom selection bias in technology adoption, we show that Bt has caused a 24% increase in cotton yield per acre through reduced pest damage and a 50% gain in cotton profit among smallholders. These benefits are stable; there are even indications that they have increased over time. We further show that Bt cotton adoption has raised consumption expenditures, a common measure of household living standard, by 18% during the 2006–2008 period. We conclude that Bt cotton has created large and sustainable benefits, which contribute to positive economic and social development in India.

"Despite widespread adoption of genetically modified (GM) crops in many countries (1), controversies about their advantages and disadvantages continue. In the public debate, negative attitudes often seem to dominate. Civil society groups tend to emphasize potential risks of GM crops and question reports about positive agronomic and economic effects (2–5). Especially with a view to developing countries, there are widespread concerns that GM crops fail to benefit smallholder farmers and contribute to social and economic hardship (4, 5). Much of this debate focuses on Bt cotton (5–9), as this is currently the most widely used GM crop technology among smallholders. Using comprehensive data from India, we show that these concerns about negative social and economic impacts are not backed by representative empirical evidence. Bt cotton contains genes from Bacillus thuringiensis...."

Continue reading: http://www.pnas.org/content/early/2012/06/25/1203647109.long

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