Estimation of Spillover Effects from Large Scale Adoption of Transgenic (Bt) Corn in the Philippines
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This paper proposes the application of an econometric methodology developed in the environmental and urban economics literatures for studying spatial congestion and agglomeration to the context of agricultural pest control and technology adoption. The methodology allows the identification of spillover effects, either from bioeconomic feedbacks or social interactions, in discrete choice econometric models. We apply this framework to study area-level adoption and potential feedbacks from individuals’ decisions to adopt pesticidal transgenic corn, using a panel dataset from the Philippines. In a conceptual model, we show that a bioeconomic feedback through pest suppression will manifest as congestion effect. Identification in the econometric model is achieved by combining fixed effect conditional logit estimation with instrumental variable (IV) methods. Applying this econometric approach, we find evidence for a congestion spillover associated with the adoption of transgenic corn in the Philippines.