Bt Cotton Refuge Policy

Since cotton producers do not own legal rights to kill insect populations that are susceptible to insecticides, individual producers may have no incentive to account for future, insecticide-resistance productivity losses arising from their pest-management decisions. As a result, the collective actions of producers may increase the rate of resistance development relative to the rate that maximizes social welfare. Concerns regarding insect-pest development of resistance to Bt cotton prompted the Environmental Protection Agency to establish legal limits on the proportion of total acres individual producers may plant, representing the first attempt to regulate the development of insecticide resistance and the first instance of the use of refuge as a policy instrument. Ever since Carlson and Castle first pointed out the resource characteristics of insecticide susceptibility, pest management in the presence of increasing resistance has been viewed as an exhaustible resource allocation problem, and many studies have examined efficient insecticide use in this setting. Resistance management studies found in the economics literature, however, have examined single-insect single-insecticide problems almost exclusively. The majority of genetic and entomological studies have followed suit. Since cotton producers routinely use multiple insecticides and insecticide mixtures to manage multiple insect pests, and since simulation and empirical evidence suggests that toxin mixtures can affect the rate of resistance development to component toxins, the standard model may not be well suited for the examination of refuge policies under cotton production settings. Static refuge policies that maximize the present value of profit flows attainable by producers over five- and 10-year planning horizons are examined using a deterministic, operational model that accounts for short- and long-run features of production and resistance development. The model accounts for the development of resistance in two cotton insect pests to Bt cotton and a popular conventional insecticide, and relationships between refuge policy, insecticide resistance, producer profit and producer behavior in Louisiana. The model is used to examine relationships between resistance simulation model parameters and refuge policies and comparative advantages between treated and untreated refuge policies.