The Net Gain to Cotton Farmers of a Natural Refuge Plan for Bollgard II® Cotton

Abstract

This paper presents an evaluation of the initial potential economic benefit at both the farm-level and to Monsanto Company of a change in refuge policy for Bollgard II® cotton. The proposed policy change is to eliminate the cotton refuge requirement for Bollgard II cotton in favor of a natural refuge. We first present an evaluative model that is appropriate for any cotton state. We then present an empirical application of the model for North Carolina. We estimate the annual per-acre, farm-level benefit to North Carolina cotton farmers, based on 2005 data as the counterfactual, to be $22.82 and the total farm-level benefit to be $13,037,614 when non-pecuniary benefits are not considered. When non-pecuniary benefits are taken into account, the per-acre benefit is estimated to increase to $26.90 and the total benefit to $15,379,129. The increase in revenue accruing to Monsanto Company is estimated to be $2,427,620.