Returns to Integrated Pest Management Research and Outreach for Soybean Aphid

Soybean aphid is a major invasive pest that has caused major yield loss and increased insecticide use in the United States since its discovery in 2000. Using the economic surplus approach, we estimate the economic benefits of U.S. research and outreach for integrated pest management (IPM) of soybean aphid. We calculate ex ante net benefits from adoption of an IPM action threshold (AT). The AT triggers insecticide application only if the value of predicted yield damage from pest scouting is expected to exceed the cost of pest control. Our research finds that gradual adoption of AT-based IPM over the 15 years since soybean aphid IPM research began in 2003 generates a projected economic net benefit of $1.3 billion, for an internal rate of return of 140%. Lower and upper bound sensitivity analysis brackets the estimated net benefit to U.S. consumers and soybean growers in the range of $0.6 to 2.6 billion in 2005 dollars. If a 10% rate of return is attributed to IPM applied research and outreach on soybean aphid, that would leave nearly $800 million to compensate prior basic IPM research. Using benefit functions from two prior studies of consumer willingness to pay to avoid pesticide risk, we find that the nonmarket environmental and human health benefits of reduced insecticide use due to adopting AT-based IPM are less than five percent of the baseline market value estimate of economic net benefit.