Insuring Against Losses from Transgenic Contamination: The Case of Pharmaceutical Maize

Concerns about the risk of food supply contamination and the resulting financial losses have limited the development and commercialization of certain pharmaceutical plants. This article develops an insurance pricing model that helps translate these concerns into a cost-benefit analysis. The model first estimates the physical dispersal of maize pollen subject to a number of weather parameters. This distribution is then validated with the limited amount of currently available field trial data. The physical distribution is then used to calculate the premium for a fair-valued insurance policy that would fund the destruction of possibly contaminated fields. The flexible framework can be readily adapted to other crops, management practices, and regions

Is Area-Wide Pest Management Useful? The Case of Citrus Greening.

Citrus greening currently poses a severe threat to citrus production worldwide. No treatment or management strategy is yet available to cure the disease. Scientists recommend controlling the vector of the disease, and area-wide pest management has been proposed as a superior alternative to individual pest management. We analyzed a unique dataset of farm-level citrus yields that allowed us to test this hypothesis. We found that yields of blocks located in an area with higher participation in coordinated sprays were 28%, 73% and 98% percent higher in 2012/13, 2013/14, and 2014/15, respectively, compared to the yields of blocks under the same management but located in an area with lower participation; providing evidence on the efficiency of a well-performing pest management area to deal with HLB. However, participation in CHMAs has not been commensurate with this evidence. We present survey data that provide insights about producers’ preferences and attitudes toward the area-wide pest management program. Despite the economic benefit we found area-wide pest management can provide, the strategic uncertainty involved in relying on neighbors seems to impose too high of a cost for most growers, who end up not coordinating sprays