Reducing Pesticide Use Risks: An Economic Analysis

Abstract

The reduction of environmental and health risks is on top of the agricultural policy agenda worldwide. The design of effective and efficient policies though is complex. Pesticides are very heterogenous with regards to their properties and usages, pesticide application behaviour of farmers is driven by different deterministic and stochastic determinants, such as environmental conditions, weather and risk preferences and perceptions of farmers – and other agricultural policies like risk management instruments and cross compliance regulations influence farmers application decisions. The goal of this thesis is to inform policymakers on the design and implementation of efficient and effective pesticide policies in order to reduce environmental and health risks from pesticide use. Using economic analysis and quantitative methods, and focusing on the European context, the thesis addresses each of the three major challenges, stated above. As the topics are not independent from each other, the thesis does not only explore each topic separately, but considers important interlinkages. The research reveals three key points for the design of efficient and effective pesticide policies. First, pesticide policies have to account for the fact that pesticides are strongly heterogeneous, with regard to: inherent properties of each pesticide, types of pesticides with different underlying determinants of application, groups of farmers with diverging application behavior and application patterns, leading to different temporal and spatial hotspots of application. The results show that not accounting for this heterogeneity leads in each case to less effective and efficient pesticide policies – and in the worst case to policies having detrimental effects. Second, farmers’ risk preferences and perceptions are an important driver of application behavior of farmers - and farmers’ application behavior, especially economic risks, matter for farmers’ pesticide use decisions. Further, the thesis shows that risk effects of pesticides are different in size and direction, depending on pesticide types and pesticide properties (e.g. low vs. high toxicity). Third, the results of the thesis show that other agricultural policies, apart from pesticide policies, have strong effects on pesticide use: Crop insurances induce changes in pesticide use intensity and land use decisions. Cross compliance regulations incentivize changes in land use and other policy targets like reductions of soil erosion and agricultural energy output conflict with pesticide use reduction targets. In conclusion, efficient and effective pesticide policies should i) address the heterogeneity of pesticides by specifying exact and measurable policy targets and introducing differentiated policies ii) account for differences in application behavior and risk effects and not regard pesticide use decisions as purely deterministic and iii) follow a holistic approach in the agricultural policy framework, i.e. consider potential detrimental effects on pesticide reduction targets whenever new agricultural policies are implemented.