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Purpose – This chapter investigates the role that mandatory genetically modified (GM) labeling versus voluntary labeling has played in the split between those countries with small GM markets and those with large GM markets.

Methodology/approach – Data on product introductions and other market evidence are used to examine market outcomes and identify the likely drivers of GM market bifurcation.

Findings – Labeling has negligible effects on consumer choice or on GM differentiation costs and therefore does not explain the split in GM market outcomes. Other factors have driven market outcomes: namely, consumer confidence in government and the safety of the food supply, competition among manufacturers and retailers, market momentum, and most importantly, the affordability of a non-GM strategy. Ultimately, a non-GM market strategy is feasible only if consumers are willing to cover the additional costs associated with non-GM production and marketing. The two elements composing the cost/price wedge between GM and non-GM products – the cost-reducing benefits of the GM technology and the costs of differentiating non-GM products – therefore play an important role in market outcomes. In the mid-1990s, when producers, manufacturers, and retailers were determining their strategies, neither element was very large. As a result, both GM and non-GM marketing strategies were economically feasible.

Practical implication – Regardless of the labeling regime, changes in the cost/price wedge between GM and non-GM products could change the mix of GM and non-GM products on the market.

Originality/value of paper – This analysis extends the literature by focusing on the impact of labeling regime on both consumer behavior and the cost/price wedge between GM and non-GM products.

Purpose – The chapter provides a comprehensive review of trade-related regulations of genetically modified (GM) food, identifies their main effects, and analyzes the main motivations behind their support.

Methodology/approach – The analysis is substantiated by (a) results from the literature on GM food regulations and (b) comparative statics results from a simplified three-country partial equilibrium welfare and political economic model.

Findings – The analysis shows that in a non-GM producing country, trade-related regulations will benefit producers, but not necessarily consumers. Producers' support is found to be instrumental to push for a ban, for information requirements on shipments, or for mandatory labeling of GM food products. Outside pressure groups will play the role of swing voters in cases where consumers and producers do not agree.

Research limitations/implications – The analytical model is based on simplifying assumptions on the groups and market effects of each regulation. Future research is needed to empirically validate some of the main results.

Originality/value of the chapter – The goal of the chapter is to inform economic and policy researchers on the effects of GM food trade-related regulations. The chapter provides an updated comprehensive overview of the key trade regulations of GM food. It uses a unique model to derive the main welfare effects of GM food regulations. By comparing the effects of GM food regulations in different types of countries for different pressure groups, the findings provide new insights in this area.

The application of modern biotechnology to crop and food production is one of the most significant technological advances to impact modern agriculture. Barely a dozen years since their introduction, genetically modified (GM) crops are currently grown on more than 300 million acres worldwide. GM (or transgenic) crops are produced using plant biotechnology to select desirable characteristics in plants and transfer genes from one organism to another. As a result, crops can survive under harsher conditions, costs are lowered, and yields are improved. Scientists are introducing genes into plants that will give the plants resistance to herbicides, insects, disease, drought, and salt in the soil. Crop research in bioengineering is also aimed at improving the nutritional quality of food, such as providing healthier vegetable oils. Pharmaceutical and industrial crops (or “pharma” crops) are also on the horizon, with the potential to dramatically reduce drug production costs. Compared to traditional plant breeding, biotechnology can produce new varieties of plants more quickly and efficiently, and it can introduce desirable traits into plants that could not be established through conventional plant breeding techniques.

Purpose – Despite the existence of hundreds of studies and several review articles on consumer preferences for genetically modified (GM) food, it remains difficult to ascertain the current state of knowledge on the topic. The purpose of this chapter is to distill some of the key findings from the body of research on consumer preferences for GM food.

Approach – In reviewing key pieces of literature, including two meta-analyses, the chapter identifies four key unresolved questions and includes discussions on how the questions might be resolved.

Findings – The chapter identifies four questions in need of additional thought and research. The questions relate to (1) why the market for GM-free food is so small in the United States despite the large estimated willingness-to-pay premiums for GM-free food, (2) why consumers remain so uninformed about biotechnology despite their seemingly high levels of aversion, (3) why economists have generally ignored the information-content of GM food policies, and (4) why it is so difficult to determine why U.S. and European consumers have seemingly reacted so differently to GM foods.

Value – This chapter should be useful to those interested in learning about the current state of knowledge on consumer preferences for GM food, and to those seeking to identify areas in need of additional research.

Purpose – The chapter examines the international welfare effects of biotech crop adoption, based on a transversal literature review and a case study of the introduction of genetically modified (GM) food crops in Bangladesh, India, Indonesia, and the Philippines.

Methodology/approach – The analysis is based on (a) a review of lessons from the applied economic literature and (b) simulations using an improved multimarket, multicountry, computable general equilibrium (CGE) model, calibrated with productivity hypotheses formulated with local scientists in the four Asian countries.

Findings – Results from the analysis show that, in the absence of trade-related regulations, GM crop adoption generates economic gains for adopting countries and importing non-adopters, that domestic regulations at adopters and especially non-adopters can reduce these gains, and that import regulations in other countries can also affect gains for exporting adopters. The case study illustrates these conclusions, but it also shows that net importers will mostly benefit from adoption in their terms of trade, and that segregation of non-GM crops for export markets can be beneficial if it is not too costly.

Research limitations/implications – The use of a CGE model allows for accounting for cross-sectoral effects, and for regulations affecting bilateral trade flows, but it also has a number of limitations. The model used here, like the ones used in the other papers in the literature, is static, based on an aggregated representation of the global economy (GTAP database), and assumes perfect competition. This means that the absolute results of each scenario may not perfectly represent the actual welfare effects engendered by the adoption of biotech crops. Still, what matters here is the comparison of the relative welfare effects across countries and scenarios. The simulations are also done ex-ante, so, even if the model here was calibrated with country-based data, the results do depend on hypothetical assumptions about the performance of the selected technologies.

Originality/value of the paper – The chapter aims to illustrate the welfare effects generated by GM crops for adopters, non-adopters, in a segmented and regulated international market. Unlike other papers, the review section provides key transversal lessons from the literature, accounting for results from both partial equilibrium and CGE model studies. The empirical application focuses on four populous Asian countries that have been largely left out of the literature. The model used in the simulation presents a number of improvement from the CGE literature on GM crops, including partial adoption, factor-biased productivity shock in each adopting country, GM labeling regulations modeled as trade filters, and the inclusion of costly non-GM segregation as observed in the international market.

The widespread introduction of genetically modified (GM) crops may change the effect of agriculture on the environment. The magnitude and direction of expected effects are still being hotly debated, and the interests served in this discussion arena are often far from those of science and social welfare maximization. This chapter proposes that GM crops have net positive environmental effects, while regulatory responses focus mainly on environmental concerns, giving an unbalanced picture of the regulatory context. This unbalance supports the hypothesis that environmental concerns about GM crops have been politically instrumentalized and that more attention should be paid to regulatory responses considering the environmental benefits of this technology. It is also argued that a number of environmental effects have not yet been quantified and more research is needed in this direction.

Two major regulatory regimes for planting of genetically modified (GM) crops have emerged: one where the property rights for growing GM crops are mainly with the GM farmer and another where the property rights are mainly with the non-GM farmer. In this contribution, the regulatory model chosen by Canada and the United States is compared with that of the EU and its variants, analyzed from an efficiency point of view. While the general view in the literature on ex-ante regulation versus ex-post liability rules under uncertainty holds that the most efficient regulatory regime depends on the specific case under investigation, we have investigated the analytical conditions for one or the other regulatory system to be more efficient, concluding that the property rights systems are almost equivalent, so long as transaction costs are not prohibitively high and using the court system is costless. As using the court system is not cost free, however, we hold that property rights regimes where the GM farmer is not liable are preferable from a social welfare point of view.

While genetically modified (GM) crops have provided tremendous agricultural productivity gains, many consumers oppose GM products and maintain they are unsafe. We use the case of GM sugar beets and their adoption by the US producers to examine the implications of GM technology on food security. A partial equilibrium framework is used to examine the implications of GM technology on food security. This analysis provides a unique opportunity to examine the impact of GM adoption in one product (sugar beets) relative to non-GM adoption in a substitute product (sugarcane). This analysis examines the potential gains to food security through the adoption of biotechnology versus consumer fear of GM technology. Research and development (R&D) has potential implications not only through its impact on supply, but also on demand as well. This study shows that demand impacts can negate the supply-induced food security gains of R&D. Regulations such as mandatory labeling requirements can impact this outcome.

This study contributes to the understanding of the health effects of pesticides exposure and of how pesticides have been and should be regulated.

This study presents literature reviews for the period 2000–2013 on (i) the health effects of pesticides and on (ii) preference valuation of health risks related to pesticides, as well as a discussion of the role of benefit-cost analysis applied to pesticide regulatory measures.

This study indicates that the health literature has focused on individuals with direct exposure to pesticides, i.e. farmers, while the literature on preference valuation has focused on those with indirect exposure, i.e. consumers. The discussion highlights the need to clarify the rationale for regulating pesticides, the role of risk perceptions in benefit-cost analysis, and the importance of inter-disciplinary research in this area.

This study relates findings of different disciplines (health, economics, public policy) regarding pesticides, and identifies gaps for future research.