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Valuing New Random GM Traits: The Case of Drought Tolerant Wheat

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  • Shakya, Sumadhur
  • Wilson, William W.
  • Dahl, Bruce L.

Abstract

There has been an increase in support for developing genetic modification (GM) technology in wheat. The purpose of this paper was to develop an analytical model to analyze the value of GM traits at different phases of development. To do so we developed a stochastic binomial model of real options. The results indicate that the value of drought tolerant wheat using GM technology is in-the-money at each phase of development. The greatest value would accrue to the Prairie Gateway and northern Great Plains regions in the United States.

Suggested Citation

  • Shakya, Sumadhur & Wilson, William W. & Dahl, Bruce L., 2012. "Valuing New Random GM Traits: The Case of Drought Tolerant Wheat," Agribusiness & Applied Economics Report 128033, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaae:128033
    DOI: 10.22004/ag.econ.128033
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    References listed on IDEAS

    as
    1. Wilson, William W. & Janzen, Edward L. & Dahl, Bruce L. & Wachenheim, Cheryl J., 2003. "Issues In Development And Adoption Of Genetically Modified (Gm) Wheats," Agribusiness & Applied Economics Report 23497, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Guanming Shi & Jean-paul Chavas & Kyle Stiegert, 2010. "An Analysis of the Pricing of Traits in the U.S. Corn Seed Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1324-1338.
    3. Magnier, Alexandre & Kalaitzandonakes, Nicholas G. & Miller, Douglas J., 2010. "Product Life Cycles and Innovation in the US Seed Corn Industry," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 13(3), pages 1-20, September.
    4. William W. Wilson & Bruce L. Dahl, 2005. "Costs and Risks of Testing and Segregating Genetically Modified Wheat," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 212-228.
    5. David Zilberman, 2006. "The Economics of Biotechnology Regulation," Natural Resource Management and Policy, in: Richard E. Just & Julian M. Alston & David Zilberman (ed.), Regulating Agricultural Biotechnology: Economics and Policy, chapter 0, pages 243-261, Springer.
    6. William Wilson & Bruce Dahl, 2010. "Competition and Dynamics in Market Structure in Corn and Soybean Seed," Antitrust Chronicle, Competition Policy International, vol. 4.
    7. Magnier, Alexandre & Kalaitzandonakes, Nicholas G. & Miller, Douglas J., 2010. "Product Life Cycles and Innovation in the US Seed Corn Industry," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61779, Agricultural and Applied Economics Association.
    8. William W. Wilson & Bruce L. Dahl, 2005. "Costs and Risks of Testing and Segregating Genetically Modified Wheat," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 212-228.
    9. Huso, Scott R. & Wilson, William W., 2005. "Impacts Of Genetically Modified (Gm) Traits On Conventional Technologies - Summary," Agribusiness & Applied Economics Report 23560, North Dakota State University, Department of Agribusiness and Applied Economics.
    10. Huso, Scott R. & Wilson, William W., 2005. "Impacts Of Genetically Modified (Gm) Traits On Conventional Technologies," Agribusiness & Applied Economics Report 23491, North Dakota State University, Department of Agribusiness and Applied Economics.
    11. Richard E. Just & Julian M. Alston & David Zilberman (ed.), 2006. "Regulating Agricultural Biotechnology: Economics and Policy," Natural Resource Management and Policy, Springer, number 978-0-387-36953-2, March.
    12. Kent J. Bradford & Julian M. Alston & Nicholas Kalaitzandonakes, 2006. "Regulation of Biotechnology for Specialty Crops," Natural Resource Management and Policy, in: Richard E. Just & Julian M. Alston & David Zilberman (ed.), Regulating Agricultural Biotechnology: Economics and Policy, chapter 0, pages 683-697, Springer.
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