Economic analysis of chemical pesticide use has shown that the interactions between plants, pests, damage control technology and state of the ecosystem are important variables to be considered. Hence, a bio-economic model was developed for the assessment of Bt variety and pesticide-based control strategies of the cotton bollworm in China. The model simulates plant growth, the dynamics of pest populations and of natural enemies. The model predictions are used as major inputs for a stochastic partial budgeting procedure of alternative control strategies. Results show that: (1) productivity effects of Bt varieties and pesticide use depend on the action of natural control agents, and (2) the profitability of damage control measures increases with the severity of ecosystem disturbance. The findings highlight the importance of the choice of a counterfactual scenario in the assessment of the impact of agricultural biotechnology. Also, some doubts are raised whether the high benefits of Bt cotton varieties based on cross section comparisons are realistic.