Implications of biotech traits with segregation costs and market segments: the case of Roundup Ready(R) Wheat

Abstract

Roundup Ready-Wheat (RRW) is one of the first genetically modified (GM) traits for the wheat sector. We develop a spatial partial equilibrium model of the higher-protein hard wheat market and assess the changes in the distribution of welfare associated with release and adoption of RRW. It incorporates segments for GM aversion in each market and segregation costs for each segment. In the most likely scenario, producer and consumer welfare increases by $301 and $252 million, respectively. Producers of hard red spring wheat in the US and Canada gain. There are welfare losses to hard red winter wheat growers in the US and to EU consumers who have to import at a higher cost. Oxford University Press and Foundation for the European Review of Agricultural Economics 2008; all rights reserved. For permissions, please email [e-mail], Oxford University Press.