Policy Documents

Estimating the Global Economic Effects of GMOs

Kym Anderson, Chantal Pohl Nielsen, Sherman Robinson, and Karen Thierfelder –
February 2, 2010

The new agricultural biotechnologies using transgenic or genetically modified organisms (GMOs) are attracting an exceptionally large degree of opposition. Both environmental and food safety concerns have been raised by opponents to the development of genetically modified (GM) crops. The vast majority of opponents want at least to have labels on products that may contain GMOs, while the most extreme of them (particularly in Western Europe) want to see GM crops totally excluded from production and consumption in their country. This extreme view contrasts with the more relaxed attitude towards the use of GMOs in pharmaceuticals, and swamps discussions of the positive attributes of the new technology.

To illustrate the usefulness of quantitative models for informing the GMO debate, the present paper draws on recent studies by the authors that use empirical models of the global economy to examine what the effects of widespread adoption of genetically modified crop varieties in some (non-European) countries might be in light of different policy and consumer preference responses. In one study, the GTAP global model is used to examine the effects of an assumed degree of GMO-induced productivity growth in selected countries for maize and soybean. Those results are compared with what they would be if (a) Western Europe chose to ban consumption and hence imports of those products from countries adopting GM technology or (b) some Western European consumers and intermediate users responded by boycotting imported GM-potential crops. Another study uses a GAMS-based global computable general equilibrium (CGE) model in which countries can produce both GM and GM-free varieties of maize and soybeans. As in the GTAP analysis, there is an assumed degree of GMO-induced productivity growth for the GM variety. The model is used to explore the impact on production, trade, and the relative price of the GM and non-GM varieties of a preference shift towards GM- free food in Western Europe and High-income Asia. The final section discusses areas where future empirical work of this sort might focus.