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Figure 26. A contour of U.S. pesticide policy

Source: Author, 2008.

Furthermore the new regulations made it easier to register public-health pesticides (i.e., those used to protect the public from diseases carried by insects or animals) and pesticides used on minor crops including many fruit and vegetable crops. The new Act defines minor use as the use of a pesticide on an animal or on a commercial crop/site if the crop is grown on less than 300,000 U.S. acres. The new law intends to improve consumers’ access to information on pesticide exposure by authorizing the EPA to provide a list of substitute foods for higher risk products and distribute it to the supermarkets. Additionally, it considers the risks from pesticide residues to infants and children. According to the law, research should be undertaken to identify the consumption patterns of infant and children, their susceptibility to pesticide chemicals (even in utero exposure), and the cumulative effects of pesticide residues.
Other provisions of the act include the development and implementation (EPA) of a screening program for estrogenic and other endocrine effects. The aim of this program is to identify substances that have similar effect in humans to ones produced by naturally occurring estrogen or other endocrine effects. Finally, the law establishes penalties for any person who introduces or trades food that contains pesticide residues above the tolerance thresholds.

California is the most important state in the value of agricultural production in the US. This state’s Department of Pesticide Regulation (DPR) is responsible for registering pesticide products and providing sale permissions in that state (DPR, 2008). Registration fees are as following: a) $750 for registering a new product, b) $750 for renewing product registration, and c) $100 for label amendment. Free of charge are the emergency exemption from registration, the special local registration and the research authorization. Registration fees exist also in other U.S.A. states like Florida, Oregon, Missouri, Kentucky, New Jersey, Washington and Virginia.

The California DPR provides public access to registered pesticides that currently amount to 13,162 products. To apply for product registration an applicant must submit an application for registration form (including the $750 registration fee), six copies of the printed label (or printer’s proof), data concerning the pesticide product, and a copy of the U.S. Environmental Protection Agency (EPA)-approved label and letter. The data concerning the pesticide product include: acute toxicology data, chemistry data, efficacy data, phytotoxisity data (if used on a plant), fish and wildlife data (if applicable), volatile emissions potential data, chronic toxicology data (if the product contains a new active ingredient to California), environmental fate data for the first agricultural use of the active ingredient in California, and medical management data (if the product contains a new active ingredient to California). All registration applications are reviewed by DPR, DPR scientists and public agencies (notified by DPR) that can be affected by pesticide use. The Pesticide Registration and Evaluation Committee (PREC) provides the forum for possible concerns on pesticides registrations raised from public agencies or even common citizens. After a product is registered, it is subject to an annual renewal fee, a quarterly mill and risk assessment, reevaluation and data call-ins.

  1. Uncertainty under a policy introduction/investment

More info available
Period 1 Period 2

State of the world State of the world

Good Do not introduce a tax

Pesticide Application Good or bad?

Tax Introduction? Bad Introduce a tax

Uncertainty for the state of the world
igure 27
. Two period diagram for pesticide and tax application.

Source: Author, 2008.

The imposition of a tax or levy scheme is not a costless procedure and its entire regulatory cost creates uncertainty concerning the optimal timing it is imposed. In period 1 there is uncertainty about the stage of the world. The externalities of pesticide use have not still fully documented neither the external costs have been quantified precisely. Therefore, a policy maker is not sure whether he or she has to introduce a pesticide tax now or to wait for further information and introduce it later.
Imposing a pesticide tax in period 1 (Figure 27) can proved to be more costly as there are no precise indicators of the external costs of pesticides. Therefore, this lack of knowledge can lead a policy maker to delay his intervention and to wait to identify the exact external costs of pesticides and reflect them in the prices of the different commodities by imposing a suitable tax. For instance, in the case of water pollution acting at an early stage can be burdensome while delaying can enable a policy maker to obtain accurate scientific information that reflect at a good extent the external costs of pesticides. Therefore, delaying reduces somehow the economic risk of imposing a tax scheme. On the other hand waiting can proved to be devastating in cases like biodiversity loss.

Even if new information at period 2 show that the state of the world is “bad”, a tax can be imposed after comparing and weighting the costs of introducing and not introducing a tax and the external costs of pesticides to the society as a whole. This comparison should take place as they may exist alternative and less costly ways of reducing or internalizing the external costs of pesticides.

  1. Policy Implications, Gaps and Overlaps

Reviewing the EU and non-EU pesticide policies and analyzing policy effects on competitiveness and the uncertainty concerning their time of application we identified some policy recommendations, gaps and overlaps:

- Stricter environmental regulations can trigger farmers to innovate and to improve their production efficiency.
- There are relatively few national pesticide policies that are based on economic measures/incentives in many European countries.
- Financial incentives and flexible policies can improve resource allocation. Subsidies on the adoption of environmental friendly farm practices and/or levies on pesticide use are some well known financial incentives.

      • Income support policies that focus on specific crops impact farmers’ risk attitude and lead to increased pesticide use that has negative impact on farmland biodiversity. Policies that intend to enhance biodiversity should try to modify farmers’ short run returns by alternative schemes like compensation funds. Therefore, income support policies should be re-examined by better cooperation among policy makers, environmental scientists and agricultural economists (Di Falco and Perrings, 2005; Omer et al., 2007; Heisey et al., 1997).

- An EU pesticide levy should be differentiated according to environmental hazards of different pesticides and take into account the countries' specific agronomic circumstances. Nevertheless, a pesticide tax alone cannot be an effective measure. A combination of policy instruments (taxes, subsidies, training, and research) can tackle pesticide externalities.

V. Concluding Comments

This review maps the literature on economic sustainability, biodiversity loss and, socially optimal pesticide use. The detailed database provided in this study integrates three different streams of literature: a) economic growth and the environment; b) pesticide use and biodiversity; and c) pesticide regulations.

Economic growth has a dual impact on the environment. While it is responsible for environmental degradation (e.g. through agricultural intensification), it can also serve as a mean of improving environmental quality by transfer of clean technologies, establishment of environmental institutions and enforcement of global environmental agreements. Economic growth has brought a market-oriented production as consumers are more aware of agricultural externalities and demand environmental friendly products. This consumer-oriented production is responsible for significant rural transformations, like agricultural intensification and influx of environmental friendly technologies, which have both positive and negative impacts on the natural habitat. Increased use of pesticides have a negative impact on biodiversity and as a result on agricultural productivity. Therefore, more precise applications and/or use of alternative pest control methods can protect biodiversity and farm income. Concerning pesticide policies, the present review provides evidence which shows that a socially optimal pesticide use can be achieved through the establishment of an EU wide pesticide regulatory framework based on a variety of measures, including economic incentives. This attempt requires the involvement of all the respective stakeholders that should cooperate for the establishment of flexible pesticide policies taking into account the economic and environmental impacts of pesticides. Special attention should be paid to the protection of landscape heterogeneity and farmland biodiversity that play a decisive role in augmenting crop productivity and decreasing environmental risk and yield variability.

Addressing the above-mentioned themes, a number of shortcomings have been appeared. To begin with, there is a gap in understanding and monitoring the economic and environmental impacts of pesticides. A more detailed investigation of this impact can help policymakers in designing effective pesticide policies. As it stressed throughout the literature review, biodiversity conservation should be an integral part of any pesticide policy. But this study has shown that biodiversity valuation is an ambiguous and challenging issue in a growing research field. Therefore, more research should be directed towards biodiversity valuation and formulation and practical implementation of biodiversity conservation policies.

Difficulties in monitoring the exact economic and environmental impacts of pesticides in conjunction with a lack of studies on biodiversity valuation have led to a shortage of socially optimal pesticide policies that are based on economic incentives which reflect to a great extent pesticide externalities.


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