Academic journal article Journal of Economic Issues

Economic Challenges of Transgenic Crops: The Case to Bt Cotton

Academic journal article Journal of Economic Issues

Economic Challenges of Transgenic Crops: The Case to Bt Cotton

Article excerpt

Over the past century, technological advances, in concert with increased extraction of nonrenewable resources, have forestalled the realization of the Malthusian prediction. Yet there remains a need to feed and clothe a growing world population on a largely fixed land base - and to do so in a manner that sustains natural resources for future use. Some foresee this need being met, in part, by transgenic crops [Miller et al. 1995].

Transgenic crops have been genetically modified by the insertion of genetic material from another species. These modifications create crops with certain beneficial characteristics. Already available to farmers are transgenic corn, potatoes, and cotton that produce an insecticide in the plant tissue. Also available are transgenic corn, canola, cotton, chicory, and soybeans that are resistant to specific herbicides; transgenic squash and papaya that are resistant to specific diseases; transgenic canola that produces oil with high lauric acid content; transgenic soybeans that produce oil with high oleic acid content; and transgenic tomatoes with thicker skins or delayed ripening characteristics. In 1997, more than 16 million acres of transgenic crops were grown in the United States [Marra et al. 1997].

No less than eight additional transgenic crop technologies are currently under review by federal regulatory authorities [Union of Concerned Scientists 1997]. Pre-review field testing is being conducted on transgenic apple, barley, beet, broccoli, carrot, chicory, cranberry, creeping bentgrass, chestnut, cucumber, eggplant, gladiolus, grape, lettuce, melon, pea, peanut, petunia, pepper, rapeseed, raspberry, rice, strawberry, sugar cane, sunflower, sweetgum, sweet potato, tobacco, and wheat [Traynor 1997; Schechtman 1997]. A recent study predicted that, by the year 2005, a "substantial" proportion of all crop seeds would be genetically engineered [Renkoski 1997].

Some genetically engineered crops hold promise for significant environmental benefits. For example, insect- and disease-resistant crops greatly reduce the need for synthetic pesticides. Crops genetically engineered to be resistant to broad-spectrum herbicides allow for effective weed control with less total herbicide use. Transgenic crops that yield high oil content may substitute for oils derived from nonrenewable resources or from plants in environmentally fragile ecosystems. Crops genetically engineered to fix nitrogen in the soil would reduce the demand for nitrogen fertilizers.

Critics have argued that the potential environmental benefits of transgenic crops are overshadowed by the risks associated with introducing genetically altered species into existing ecosystems [Ho and Tappeser 1997]. Concerns have been raised about the transfer of potentially allergenic proteins from one food plant to another [Nordlee et al. 1996]. European consumer groups have argued that consumer food product labels should indicate whether or not the product contains genetically engineered ingredients. This would require keeping transgenic crops separate from traditional crops throughout the marketing chain [Reuters 1997]. Still others challenge biotechnology on ethical grounds [Bereano 1995a, 1995b]. This article argues that in addition to these challenges there are fundamental economic challenges that must be addressed before the potential benefits of transgenic crops can be realized over the long run.

These economic challenges are addressed by focusing on the case of Bt cotton - the first transgenic plant to be widely adopted in U.S. crop production. In particular, this article emphasizes (1) non-exclusivity in access to the gene pool of Bt-susceptible pests; (2) enforcement problems in contractual relationships between patent holders of the transgenic Bt technology and farmers; and (3) regulatory activities in an environment characterized by rapid technological change and highly imperfect information.

While some of the issues addressed are unique to the particular characteristics of Bt cotton, many are generalizable to transgenic food crops. …

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