Costs and Risks of Testing and Segregating Genetically Modified Wheat

Posted: 8 May 2006

See all articles by William W. Wilson

William W. Wilson

North Dakota State University

Bruce L. Dahl

North Dakota State University - Department of Agribusiness and Applied Economics

Abstract

Development of genetically modified (GM) crops is challenging the functions of the grain marketing system. A stochastic optimization model was developed in this study to determine optimal testing strategies. The model chooses the optimal testing strategy that maximizes utility (minimizes disutility) of additional system costs due to testing and rejection, and allows the estimation of the risk premium required for sellers to undertake the dual marketing of GM and non-GM segregations over a non-GM system. Costs are estimated for a vertically integrated grain export chain including testing, rejection, and a risk premium. The model includes elements of costs and risks of adventitious commingling at all stages of the marketing chain, variety declaration, grower truth-telling, and accuracy of testing technologies. Sensitivities were evaluated for the effects of GM adoption, risk parameters, variety declaration, and tolerance levels.

Suggested Citation

Wilson, William W. and Dahl, Bruce L., Costs and Risks of Testing and Segregating Genetically Modified Wheat. Review of Agricultural Economics, Vol. 27, No. 2, pp. 212-228, June 2005, Available at SSRN: https://ssrn.com/abstract=876706 or http://dx.doi.org/10.1111/j.1467-9353.2005.00222.x

William W. Wilson (Contact Author)

North Dakota State University ( email )

Morrill 221F
Fargo, ND 58105
United States
701-231-7472 (Phone)
701-231-7400 (Fax)

Bruce L. Dahl

North Dakota State University - Department of Agribusiness and Applied Economics ( email )

PO Box 5636
Fargo, ND 58105
United States
(701) 231-8001 (Phone)
(701) 231-7400 (Fax)

HOME PAGE: http://www.ext.nodak.edu/~aedept/staff/dahl_b.htm

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