Working Paper

Trade, GMOs, and Environmental Risk: Are Policies Likely to Improve Welfare?

Aug 19, 2008 | Håkan Eggert, Mads Greaker

This was created in partnership with Environment for Development .


Food with inputs from genetically modified organisms (GMOs) has met considerable skepticism among European Union (EU) consumers. The EU import ban on GM food has triggered a great deal of controversy and has been replaced by a mandatory labeling scheme. This study hadtwo foci. First, we examined how different policies for the production and use of GMOs might influence the market outcome in consumer food markets. Second, we evaluated the welfare effectsof the policy measures. We found that mandatory labeling often increases domestic welfare and, moreover, that in most cases it increases global welfare. On the other hand, a trade ban is morelikely to decrease global welfare.