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Ex Ante Impact Assessment under Imperfect Information: Biotechnology in New Member States of the EU
Author(s) -
Demont Matty,
Cerovska Marie,
Daems Wim,
Dillen Koen,
Fogarasi József,
Mathijs Erik,
Muška František,
Soukup Josef,
Tollens Eric
Publication year - 2008
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2008.00157.x
Subject(s) - ex ante , agricultural biotechnology , agriculture , impact assessment , european union , genetically modified organism , value (mathematics) , economics , microbiology and biotechnology , agricultural economics , agricultural science , business , international trade , biology , political science , ecology , macroeconomics , gene , biochemistry , public administration , machine learning , computer science
Some argue that the lack of modern agricultural development in the former socialist countries of Central and Eastern Europe has made cutting‐edge biotechnology attractive. However, enthusiasm for planting genetically modified (GM) crops varies greatly in the enlarged European Union (EU) and especially among the New Member States (NMS); the Czech GM maize area is progressively growing whereas Hungary imposed a de facto ban on GM crops. Remarkably, the Hungarian ban was not supported by any cost–benefit assessment. In the literature, ex ante impact assessments of monopolistically priced technologies are often based on cross‐sectional comparisons of average cropping budgets. Such assessments ignore heterogeneity of farmers and underestimate the true impact of these technologies because of homogeneity bias. Therefore, we propose an improved method by explicitly modelling farmer heterogeneity under imperfect information, and assess the potential value and benefit sharing of GM crops in the two NMS using a stochastic partial equilibrium model. The total potential value of GM crops is estimated at €82 million for both countries, of which €60 million (73%) accrues to farmers and €22 million (27%) to the gene developers and the seed industry. This is in line with the literature on global benefit sharing of first‐generation GM technologies.