Landscape Clubs: Co‐existence of Genetically Modified and Organic Crops

Abstract

The possibility of increased production of genetically modified (GM) crops in agriculture accentuates the need to examine the feasibility of GM and non-GM technologies co-existing on a common physical landscape. Using the theory of clubs, this paper examines the possibility of co-existence for GM and organic wheat technologies through the formation of an organic club with an endogenously determined buffer zone. Given the available data on prices, and yields, it is shown that a club can be created in which GM and organic agricultural production technologies can economically co-exist in the same physical landscape. Specifically, co-existence results in an increase in economic welfare over a situation where only GM technology is used but is not Pareto superior because producers in the buffer zone will incur injury. We show that organic producers in the club can compensate producers in the buffer zone and still be better off. Hence, the compensation principle holds.La possibilité de production accrue de cultures génétiquement modifiées (GM) accentue la nécessité d'examiner la faisabilité de coexistence des technologies GM et non GM dans un même paysage agricole.À l'aide de la théorie des clubs, le présent article a examiné la possibilité de coexistence des technologies de culture de blé GM et de blé biologique en créant un club biologique comprenant une zone tampon déterminée de façon endogène. Compte tenu des données disponibles concernant les prix et les rendements, il est montré qu'il est possible de créer un club au sein duquel les technologies de production de cultures biologiques et GM peuventéconomiquement coexister dans un même paysage naturel. Spécifiquement, la coexistence engendre une augmentation du bien-êtreéconomique par rapportà une situation où seule la technologie GM est utilisée, mais elle n'est pas Pareto supérieure parce que les producteurs dans la zone tampon subiront des dommages. Nous montrons que les producteurs de cultures biologiques membres du club peuvent indemniser les producteurs de la zone tampon tout en demeurant en bonne position. Le principe de compensation tient donc.

Regulating coexistence of GM and non-GM crops without jeopardizing economic incentives

“…In Canada, by contrast, owing to stringent organic standards (i.e. zero tolerance for GM content), organic farmers claim that the presence of GM canola varieties, and the occurrence of cross-fertilizations, makes it impossible for them to have their organically produced canola certified as organic [19].…”

“…GM-free price premiums differ from organic price premiums; products can only be labeled 'certified organic' if all procedures occurring along the supply chain (from crop production to processing) have been verified to comply with established organic standards [19]. One of the standards is the GM-free status, for which similar thresholds are applied (e.g.…”

“…market share) on the market for non-GM crops. As long as consumers are willing to pay significant GM-free price premiums, highly productive areas, in which the incentive for growing GM crops is higher than the incentive for supplying GM-free crops, will cluster as GM regions, whereas low productive areas will rapidly form GMO-free zones [19,35] in an attempt to capture the GM-free gains.…”

“…One of the standards is the GM-free status, for which similar thresholds are applied (e.g. 0.9% threshold in the EU [13], 5% in the US (United States Department of Agriculture, 'The National Organic Program: Program Standards', http://www.ams.usda.gov/nop/NOP/standards.html) and 0% in Canada [19]). Hence, organic crops are GM-free but GM-free crops are not necessarily organic.…”

“…In scientific and regulatory communities, the debate about coexistence has been centered mainly on the following aspects: preventive coexistence measures needed to keep the adventitious presence of GM material in non-GM products below established tolerance thresholds [5,[7][8][9][10][15][16][17][18]; the feasibility and costs of implementing such measures [16,[19][20][21][22][23]; segregation costs and potential economic losses resulting from adventitiously co-mingled products [24][25][26]; who should bear the costs of coexistence measures [2,14]; and who should redress the incurred economic losses due to adventitious mixing [13]. Although these aspects are of fundamental importance when discussing coexistence strategies, they do not take into account the economic incentives for coexistence.…”