Stochastic Benefit Streams, Learning, and Technology Diffusion : Why Drought Tolerance is Not the New Bt

Abstract

The speed of Bt cotton diffusion among smallholders in poor countries such as India, China, and South Africa has been unprecedented. Hopes are high for drought-tolerant (DT) varieties that similarly reduce yield risk and have attracted substantial investments from public, private, and philanthropic sectors. We highlight important learning differences between Bt and DT that will shape diffusion patterns. While the potential welfare benefits of DT are compelling, we caution against glossing over practical complications that farmers will face in assessing the relative merits of DT varieties. We emphasize how and why vulnerable farmers facing marginal growing conditions -- ostensibly, the target beneficiaries -- may be slowest to adopt DT crops. More frequent extreme drought events associated with climate change may further complicate this learning and diffusion process. Generalized water-use efficiency gains and early maturation could help improve learning in arid and semi-arid regions by conferring benefits across a broader range of rainfall outcomes.