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Bt cotton, damage control and optimal levels of pesticide use in Pakistan

Published online by Cambridge University Press:  19 November 2013

Shahzad Kouser  and
Matin Qaim
Shahzad Kouser
Affiliation:
Institute of Agricultural and Resource Economics, Faculty of Social Sciences, University of Agriculture, Faisalabad, Pakistan. Tel: +92-41-9200161-2802. Fax: +92-41-9200764. E-mail: [email protected]
Matin Qaim
Affiliation:
Department of Agricultural Economics and Rural Development, Georg-August University of Goettingen, Germany. E-mail: [email protected]
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Abstract

We use farm survey data and a damage control framework to analyze impacts of Bt cotton on yields and pesticide use in Pakistan. We also derive optimal levels of pesticide use with and without Bt, taking into account health and environmental externalities. This has not been done previously in the literature. Conventional cotton growers suffer from significant insect crop damage; they underuse pesticides from a profit-maximizing perspective. Yet, the picture is reversed when externalities are also considered. The social optimum of pesticide use is much lower than the private optimum, and both optima are lower with Bt than without this technology. Bt controls pest damage more effectively. Hence, yields on Bt farms are about 20 per cent higher in spite of lower pesticide use. Large pest damage is a typical phenomenon in developing countries. In such situations, Bt can contribute to productivity growth, while reducing pesticide applications and associated negative externalities.

Type
Research Article
Information
Environment and Development Economics , Volume 19 , Issue 6 , December 2014 , pp. 704 - 723
Copyright
Copyright © Cambridge University Press 2013 

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