Journal or Book Title
Journal of Agricultural and Resource Economics
Subsidies and fines are compared to voluntary and mandatory refuge insurance (insurance for pest damage on Bt corn refuge) as mechanisms for securing grower compliance with EPA refuge mandates. A conceptual model partially ranks mechanisms. Tradeoffs between mechanisms using grower welfare, payments to growers, and monitoring frequency are quantified empirically. Grower welfare is lowest with mandatory insurance because growers pay all costs, and is highest with direct refuge subsidies because public funds or companies subsidize all costs. Assuming typical premium loads and ignoring distribution considerations, we develop monitoring budgets for fines and subsidies, above which voluntary or mandatory insurance is better.
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Western Agricultural Economics Association
Mitchell, Paul D.; Hurley, Terrance M.; Babcock, Bruce A.; and Hellmich, Richard L., "Insuring the Stewardship of Bt Corn: A Carrot versus A Stick" (2002). Entomology Publications. 83.