Economics of Pesticides, Sustainable Food Production, and Organic Food Markets: Volume 4

This paper revisits claims about implications of production function specification for pesticide productivity measurement and presents two extensions of the popular damage control specification, along with an empirical application. One extension eliminates bias caused by relying solely on economic data and shows how to include variables that represent the pest population when they are necessary to avoid bias. The second extension allows for the possibility of phytotoxicity. These extensions generalize the damage control specification by eliminating bias and allowing for a range over which the first and third stages of production may occur. The main contributions of the analysis are to clarify existing misconceptions about pesticide productivity modeling and to provide extensions to the damage control specification that permit greater realism for empirical analysis.

We present direct econometric tests of the induced innovation hypothesis. We test whether the price of herbicides relative to labor, machinery, and land, as well as research stocks, affects the direction of technological change and long-run substitution of herbicides for labor, machinery, and land, in U.S. agriculture. In the long run, a decrease in the price of herbicides relative to labor induces a strong labor-saving and herbicide-using bias in technological change. Public research induces labor-saving, machinery-saving, land-saving, and herbicide-using biases. Exogenous changes in scientific knowledge and/or spillovers from other sectors are labor and machinery saving and herbicide using.

This paper outlines economic threshold models developed by various authors as an aid to decision-making about pest management and their applicability to pests of livestock. The definitional confusions relating to economic threshold models are raised as are limitations for applying threshold models. Complexities in the nature of yield loss function due to uncertainty in pest densities, the presence of multiple pests, and the occurrence of pesticide resistance are discussed. An extension is provided that incorporates both multiple-pest species and pest resistance to control measures. Complications relating to the cost functions for pest control are considered. The combination of these factors limits the applicability of profit-maximising thresholds for livestock management, especially compared to other strategies such as prophylaxis.

This paper uses survey data collected from tomato growers in California to determine the factors that influence pest control advisor participation and pesticide use recommendations. We find that advisor recommendations are dependent on the probability of infestation conditional on the calendar and on advisors' perceptions of growers' knowledge, while growers depend more on information obtained from observing their crop. We also determine that the pesticide use recommendations of advisors are, on average, higher than those of growers. Results demonstrate the incentives of grower and advisor pesticide use decisions that must be taken into consideration when regulatory policy is designed.

In Europe the distribution of organic farming has increased along with growing political support during the 1990s - including a common EU definition of organic farming and financial support for organic farmers. Three qualitative analyses covering all EU member and three non-member states are summarised to analyse co-variation between policies and organic sector size. When comparing impacts of policy instruments, the results were unclear but mainly pointed towards positive effects from introducing uniform certification schemes. With regard to national policy processes no correlation appeared between conditions for policy oriented learning and the size of organic farming sector. Some explanatory power is, however, derived from distinguishing between three types of institutional interrelationships between organic farming and mainstream farming. Cooperation or creative conflict persists in countries with large organic farming sectors, while pure competition is found in countries with small ones.

In California, organic acreage increased by 60% and sales of organic commodities increased by 110% between 1992 and 1997. The rate of growth in the organic industry does not reveal the dynamic nature of California's organic agriculture. In this chapter, we explore the characteristics of farmers entering and exiting the organic market in California. In so doing, our analysis provides insight into the impact of policy and growth on the future composition of the organic industry.

Organic farming is recognised in the European Union as one possible model to improve the sustainability of agriculture. During the 1990s the sector grew rapidly (to 3% of agricultural area in 2000), caused in part by policy support measures in member states and the EU. The paper summarises the development of the organic sector, discusses reasons for policy support, and reviews the main policy measures at EU and country level in three areas: legislation defining organic production, direct payments and other measures. It concludes that in future the integration of policy measures within countries and at EU level should be improved, in particular through the development of national and European action plans for organic farming.

Enthusiasts of the organically grown food industry often espouse a preference for produce grown in the local region, and suggest that consumers should buy locally produced organic products. One reason consumers buy organic products is to improve the environment. There is a perception that transporting foods long distances is wasteful, in part because transport costs are not appropriately priced to include all externalities. Does this make sense?The focus of this paper is to examine conceptually how trade can contribute to a more environmentally-sound way of supplying agricultural products to consumers, even when transport costs are adequately taken into account. An example from the international wheat trade illustrates this point.

Spatial regulations can restrict chemical use more efficiently by linking local benefits to local costs. California has instituted such a spatially based regulation of an agricultural fumigant to meet air quality standards. We examine the implications of alternative allocation mechanisms: allocation of use based on a first come, first served basis; on quotas linked to historical use; and on the highest-value use. Although there are distributional impacts by crop, the overall change in aggregate value from using a highest-value use mechanism rather than a first come, first served approach is estimated to be less than $9 million of a total potential regulatory cost of $65 million.

In this chapter the contingent valuation method is used to estimate the yearly value to an average farmer in Sri Lanka of avoiding direct exposure to pesticides and the resulting illnesses. The costs are shown to be high. The pesticide cost scenarios calculated from the contingent valuation bids for the entire country show that the costs run into millions of Sri Lankan rupees each year. The last section of the paper identifies the factors that influence the willingness to pay (WTP) to avoid direct exposure to pesticides and the resulting illnesses. The health policy implications stemming from the regression analysis are also discussed.

The paper combines health risk generation and economic models to compare the efficiency of the two main types of policies to reduce worker injury from toxic substances: occupational safety regulations designed to limit exposure to toxic substances and taxes and bans that are intended to reduce contamination, or total use of the product. The model is developed with reference to pesticide poisoning of farm workers. General conditions for the relative efficiency of policies are derived. Empirical results indicate that protective clothing requirements achieve given reductions in poisonings with about half the cost of a pesticide tax. Implications of the model for regulating other types of worker injury from hazardous inputs are presented.