Socio-economic Impacts of Bt Cotton Adoption in India: Evidence from Panel Data

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Abstract or Summary

Several empirical studies have evaluated the farm-level and aggregate impacts of transgenic crops in developed and developing countries, however there is extensive opposition in the wider public. In particular, concerns have been raised about the performance of transgenic crops in developing counties in terms of their environmental, health, and social effects. This study addresses some of these research gaps by analyzing the effects of insect-resistant transgenic cotton in India, building on several years of data. The results indicate that Bt technology is very successful in India. Adopting farmers have realized significant benefits through pesticide reductions, higher effective yields, and higher profits. Even though the diffusion of Bt was a learning process for farmers in the beginning, aggregate adoption has increased steadily and reached more than 80% of India’s total cotton area by 2008. A random-effects probit adoption model shows that Bt technology is scale-neutral. Therefore, the common notion that transgenic crops are only suitable for rich and large-scale farmers is not confirmed under Indian conditions. However, farmers with more formal education and those with better knowledge and information about the technology are more likely to be among the early adopters, underlining that structural constraints need to be overcome. The estimation results confirm yield- and profit-enhancing impacts of Bt cotton. These findings confirm and extend previous studies on Bt cotton impacts in India and other developing countries, building on a unique dataset.

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