OPTIMAL TESTING STRATEGIES FOR GENETICALLY MODIFIED WHEAT

Author

William Wilson, Eric J. Jabs and Bruce L. Dahl

No 23605, Agribusiness & Applied Economics Report from North Dakota State University, Department of Agribusiness and Applied Economics

Abstract: A stochastic optimization model was developed to determine optimal testing strategies, costs, and risks of a dual marketing system. The model chooses the testing strategy (application, intensity, and tolerance) that maximizes utility (minimizes disutility) of additional system costs due to testing and quality loss and allows simulation of the risk premium required to induce grain handlers to undertake a dual marketing system versus a Non-GM system. Cost elements including those related to testing, quality loss, and a risk premium were estimated for a model representing a grain export chain. Uncertainties were incorporated and include test accuracy, risk of adventitious commingling throughout, and variety declaration. Sensitivities were performed for effects of variety risks, penalty differentials, re-elevation discounts, import tolerances, variety declaration, risk aversion, GM adoption, and domestic end-user.

Keywords: Segregation; Testing; Tolerance; Genetically Modified; Wheat; Risk Premium; Crop Production/Industries; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Date: 2003
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