Betting on cotton: Potential payoffs and economic risks of adopting transgenic cotton in West Africa

Cotton is the largest source of export receipts in several West African nations where yields are declining and pesticide use is rising. Although there may be payoffs to introducing genetically modified Bt (Bacillus thurigiensis) cotton, limited information is available to predict its potential economic impact and there is uncertainty about its performance. Recognizing these constraints, we use an economic surplus model augmented with stochastic simulation to estimate ex ante the impact and distribution of benefits from Bt cotton. We consider the effects of adoption on both yields and abating crop damage, and offer scenarios depicting the policy options faced by West African stakeholders. The findings indicate that although the total net benefits of adopting Bt cotton may be relatively small for the countries studied, these countries would be worse off without the technology. Our approach, which incorporates variability and uncertainty, may be useful in decisions about investments in crop biotechnology.