EX ANTE NON-MARKET VALUATION FOR NOVEL PRODUCT: LITERATURE REVIEW

This paper provides a critical review of the literature on non-market valuation methods to estimate the welfare impact of novel products; it is the first study to assess both observed data- and perception-based methods as non-market valuation methods. Observed databased methods include budgets, regression, mathematical programming, and simulation. Perceptions-based methods include the contingent valuation method, choice-based conjoint analysis and experimental methods. Findings imply that the preferred observed data-based method to estimate the ex ante economic impact of a new technology on the welfare of the farm household is a combination of simulation and mathematical programming. The preferred perceptionbased method for estimating the ex ante impact of a novel product on the welfare of an economic agent is represented by experimental methods. Findings also imply that observed-data based methods and more specifically mathematical programming are more popular for estimating the ex ante farm-level economic impact of a new technology. On the other hand, perception-based methods are more popular for estimating the economic impact of a novel product for consumers.Staff working papers, Dept. of Agricultural Economics, Internet publications, Purdue University

Ex Ante Economic Impact of Genetically Modified (GM) Cowpea in Benin

The net impact of pest-resistant GM crops on the welfare of both producers and consumers in developing countries is currently unknown and subject to speculation. This study uses choice-based conjoint protocol to estimate the net impact of pest-resistant Genetically Modified (GM) cowpea on net social welfare in Benin given price and income risks. Results imply that Bt cowpea will increase expected net social welfare by about $US 50 million per year in Benin given no inefficiencies in the seed sector. If inefficiencies in the seed sector are such that cowpea growers can access Bt cowpea seeds only 50$US 11 million per year.Crop Production/Industries,

Ex ante economic impact of Bt cowpea in Nigeria, Niger and Benin

Generating economic growth for the millions who live in poverty in developing countries is one of the key world problems of our time. In many cases, economic growth is driven by technological improvements. One of the technologies which could generate economic growth in Africa is biotechnology. However, little is known about the potential producer and consumer benefits/losses from genetically modified (GM) crops in Africa. This study uses the Choice-Based-Conjoint (CBC) protocol to estimate the ex ante economic impact of Bt cowpea (GM crop) on producers and consumers in Benin, Niger and northern Nigeria. The results from the study suggest that cowpea growers and consumers in Benin and Northern Nigeria prefer Bt to conventional cowpea because they believe that with Bt cowpea, they will be able to avoid the health hazards related to chemical insecticide misuse. More specifically, the results imply that social welfare in all of Benin, Niger and northern Nigeria would increase by at least US $542 million per year with the introduction of Bt cowpea, given the yield, income and price risks faced by economic agents in the region and given no inefficiencies in the seed sectors. Assuming inefficiencies in seed markets, social welfare in the region will increase by at least US$338 million per year. The results also suggest that, contrary to what the current literature implies, the option price does not seem to accurately reflect the ex ante Willingness-To-Pay (WTP) for a product in the face of risk and given the absence of actuarially fair insurance. The minimum price appears to be more appropriate measure and it is based on the assumption that the economic agent is more concerned about bad outcomes occurring with a substantial probability. Various methodologies were compared for estimating the ex ante economic impact of Bt cowpea. The results suggest that cheap talk combined with the CBC protocol provides more accurate estimates compared to the CBC protocol alone; they also suggest that cheap talk seems to deal with a trust rather than hypothetical bias in settings where real market transactions are characterized by imperfect information on product quality. A comparison between mathematical programming and the CBC protocol as valuation methods suggest that the latter is preferable in settings where the key variables affecting utility cannot be easily identified

EX ANTE NON-MARKET VALUATION FOR NOVEL PRODUCT: LITERATURE REVIEW

This paper provides a critical review of the literature on non-market valuation methods to estimate the welfare impact of novel products; it is the first study to assess both observed data- and perception-based methods as non-market valuation methods. Observed databased methods include budgets, regression, mathematical programming, and simulation. Perceptions-based methods include the contingent valuation method, choice-based conjoint analysis and experimental methods. Findings imply that the preferred observed data-based method to estimate the ex ante economic impact of a new technology on the welfare of the farm household is a combination of simulation and mathematical programming. The preferred perception-based method for estimating the ex ante impact of a novel product on the welfare of an economic agent is represented by experimental methods. Findings also imply that observed-data based methods and more specifically mathematical programming are more popular for estimating the ex ante farm-level economic impact of a new technology. On the other hand, perception-based methods are more popular for estimating the economic impact of a novel product for consumers

Ex Ante Economic Impact of Genetically Modified (GM) Cowpea in Benin

The net impact of pest-resistant GM crops on the welfare of both producers and consumers in developing countries is currently unknown and subject to speculation. This study uses choice-based conjoint protocol to estimate the net impact of pest-resistant Genetically Modified (GM) cowpea on net social welfare in Benin given price and income risks. Results imply that Bt cowpea will increase expected net social welfare by about $US 50 million per year in Benin given no inefficiencies in the seed sector. If inefficiencies in the seed sector are such that cowpea growers can access Bt cowpea seeds only 50$US 11 million per year