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

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.


Issue Date:
2002-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/31127
Published in:
Journal of Agricultural and Resource Economics, Volume 27, Number 2
Page range:
390-405
Total Pages:
16




 Record created 2017-04-01, last modified 2017-08-24

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