This article analyzes effects of insect-resistant Bt cotton on pesticide use and agricultural productivity in Argentina. Based on farm survey data, it is shown that the technology reduces application rates of toxic chemicals by 50 per cent, while significantly increasing yields. Using a damage control framework, the effectiveness of Bt versus chemical pesticides is estimated, and technological impacts are predicted for different farm types. Gross benefits could be highest for smallholder farmers, who are not currently using the technology. The durability of the advantages is analyzed by using biological models to simulate resistance development in pest populations. Rapid resistance buildup and associated pest outbreaks appear to be unlikely if minimum non-Bt refuge areas are maintained. Thus, promoting a more widespread diffusion of Bt cotton could amplify the efficiency, equity, and environmental gains. Conclusive statements about the technology's sustainability, however, require longer-term monitoring of possible secondary effects and farmers' behavior in maintaining refuges.