Location: 368A Heady Hall
Description: Barry Goodwin
William Neal Reynolds Distinguished Professor in the Department of Agricultural and Resource Economics
“Has Technology Increased Yield Risk? Evidence From the Crop Insurance Biotech Endorsement”
Contact Person: Wendong Zhang
Abstract: The conventional wisdom that technological advances in seed breeding and genetic modification of corn traits has lowered yield risk has recently been challenged by research that argues that the converse is true. The implications of this research have been applied to models of climate change and have led to the conclusion that these technological advances have actually increased agronomic risk, such that climate change is asserted to raise important concerns regarding the stability and viability of corn yields in the future. The argument is based upon assertions that corn yields have become more sensitive to weather stresses. We use crop insurance data from the US federal crop insurance program to evaluate these claims. In particular, we use side-by-side data collected under the Biotech Endorsement (BE) between 2008 and 2011. We find that risk, as measured by the rate of indemnities paid per units insured, was significantly lower for crops insured under the BE. We also find that the difference in risk tends to be greater when growing conditions are less favorable.