Costs and Risks of Testing and Segregating GM Wheat

....................................................................................................................................... iv Highlights ....................................................................................................................................... v Introduction .................................................................................................................................... 1 Background .................................................................................................................................... 2 Experiences of GM Grains/Oilseeds .................................................................................. 2 GM Wheats ........................................................................................................................ 3 Previous Studies on Market Mechanisms, Testing, and Tolerances .................................. 6 Elements of a Dual Marketing System and Sources of Risks .......................................... 10 Testing and Tolerance ...................................................................................................... 12 Trade Practices ................................................................................................................. 14 Empirical Model .......................................................................................................................... 15 Risk Premiums and Utility ............................................................................................... 15 Model Specification ......................................................................................................... 15 Simulation Procedures ..................................................................................................... 17 Distributions and Parameters Used in the Model ............................................................ 18 Results .......................................................................................................................................... 19 Base Case ......................................................................................................................... 19 Variety Declaration and Testing ...................................................................................... 23 Effect of Risk Parameter (0) ............................................................................................ 25 Effect of Price Differentials (Discounts) ......................................................................... 27 GM Adoption Rate ........................................................................................................... 29 Grower Truth-telling ........................................................................................................ 31 Effect of Testing Tolerance ............................................................................................. 34 Effects on Domestic Versus Import System .................................................................... 36 Summary and Implications .......................................................................................................... 38 Problem ............................................................................................................................ 38 Analytical Model ............................................................................................................. 39 Major Conclusions ........................................................................................................... 39 Implications ..................................................................................................................... 40 References .................................................................................................................................... 42