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Should we internalise inter-temporal production spillovers in the case of pest resistance?

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  • Elsa Martin

Abstract

The efficiency of pesticides decreases with their global application by farmers. Within a strategic dynamic framework, this results in inter-temporal production spillovers. We analyse a dynamic fiscal scheme that can be implemented to correct these inefficiencies. We show that it is able to restore socially optimal paths but that the final time of pesticide use differs. With this scheme, farmers have a tendency to switch to a backstop pest-control technology earlier than is socially optimal. We also show that an additional exit fiscal scheme is necessary to obtain a switching time equal to the socially optimal one. We test our theoretical results on a stylised illustration, showing that the best policy strategy consists of implementing a lump-sum transfer in order to delete the revenue effect induced by the dynamic fiscal scheme.

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  • Elsa Martin, 2015. "Should we internalise inter-temporal production spillovers in the case of pest resistance?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(4), pages 539-578.
    • Handle: RePEc:oup:erevae:v:42:y:2015:i:4:p:539-578.
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    File URL: http://hdl.handle.net/10.1093/erae/jbu034
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    Cited by:

    1. Qiang Li & Ruotong Si & Sen Guo & Muhammad Ahmed Waqas & Baogui Zhang, 2023. "Externalities of Pesticides and Their Internalization in the Wheat–Maize Cropping System—A Case Study in China’s Northern Plains," Sustainability, MDPI, vol. 15(16), pages 1-15, August.
    2. Chelsea A. Pardini & Ana Espínola‐Arredondo, 2023. "Fungicide resistance and misinformation: A game theoretic approach," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(2), pages 171-201, June.
    3. Finger, Robert & Möhring, Niklas & Dalhaus, Tobias & Böcker, Thomas, 2017. "Revisiting Pesticide Taxation Schemes," Ecological Economics, Elsevier, vol. 134(C), pages 263-266.
    4. Zheng, Yanan & Goodhue, Rachael E., 2021. "Cross-crop Spatial Externalities of Pesticide Use: Management of Lygus Bugs in the San Joaquin Valley of California," 2021 Annual Meeting, August 1-3, Austin, Texas 313888, Agricultural and Applied Economics Association.
    5. Hennessy, David A., 2018. "Managing Derived Demand For Antibiotics In Animal Agriculture," 2018 Annual Meeting, August 5-7, Washington, D.C. 274359, Agricultural and Applied Economics Association.
    6. Pardini, Chelsea A. & Espinola-Arredondo, Ana, 2020. "Facing Fungicide Resistance in Grape Production: A Game Theoretic Approach," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304309, Agricultural and Applied Economics Association.

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