Risk and the Value of Bt Corn

A conceptual model is developed to evaluate the effect of Bt corn on risk. Results highlight the importance of distinguishing between a farmer’s marginal and aggregate risk effects and demonstrate that the effect of Bt corn on risk depends crucially on the price paid for the technology. Empirical results show that, depending on the price, Bt corn can be marginally risk increasing or decreasing and can either increase or decrease corn acreage. Also, depending on the price, Bt corn can provide a risk benefit to farmers, even when Bt corn is risk increasing. Terrance M. Hurley is an associate professor in the Department of Applied Economics at the University of Minnesota. Paul D. Mitchell is an assistant professor in the Department of Agricultural Economics at Texas A&M University. Marlin E. Rice is a professor in the Department of Entomology at Iowa State University. Support for this project was provided by the Iowa, Minnesota, and Texas Agricultural Experiment Stations and Monsanto. All conclusions and any remaining errors are the authors.