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Insuring the Stewardship of Bt Corn: A Carrot versus A Stick
Journal of Agricultural and Resource Economics
  • Paul D. Mitchell, Texas A & M IUniversity
  • Terrance M. Hurley, University of Minnesota - Twin Cities
  • Bruce A. Babcock, Iowa State University
  • Richard L. Hellmich, Iowa State University
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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.


This article is from Journal of Agricultural and Resource Economics; 27 (2002); 390-405.

Works produced by employees of the U.S. Government as part of their official duties are not copyrighted within the U.S. The content of this document is not copyrighted.
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Western Agricultural Economics Association
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Paul D. Mitchell, Terrance M. Hurley, Bruce A. Babcock and Richard L. Hellmich. "Insuring the Stewardship of Bt Corn: A Carrot versus A Stick" Journal of Agricultural and Resource Economics Vol. 27 Iss. 2 (2002) p. 390 - 405
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