Sunday, October 10, 2010

Genetically Engineered Corn Has Positive Externalities

See Study: High-tech corn cuts pest damage far afield. Here is an excerpt:
"Corn that's been genetically engineered to resist attacking borers (insects) produces a "halo effect" that provides huge benefits to other corn planted nearby, a new study finds. Since the borers that attack the genetically modified crops die, there are fewer of them to go after the non-modified version.

Given that the corn borer has cost U.S. farmers $1 billion a year, the economic benefits are dramatic, according to the report in Friday's edition of the journal Science."

This is what economists call a "positive externality." Here is the definition I use in class:

Positive Externalities-Benefits received by third parties due to other’s actions.

For example, if you get vaccinated against a contagious disease, other people benefit because you will not infect them. A scientist who discovers that eating vegetables helps prevent cancer aids others.

In this case, farmers who did not use the modified corn are benefiting from those who did since their are fewer pests. In fact, the other farmers received 62% of the net benefit, which was $6.9 billion.

This excerpt might be my favorite:
"David Onstad of the University of Illinois said a strength of the study is that the large team of researchers involved included not just entomologists but people from other disciplines such as economics."

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