The Economics of Agricultural Chemical Use in Prairie Agriculture: Productivity and Environmental Impacts

The use of agricultural chemicals, particularly in crop production, has increased greatly in the prairie region of Western Canada. Pesticide use, chiefly the use of herbicides, increased 7.6 percent per year from 1948 to 1991, slowing down only after 1985 with depressed conditions in the grain economy. In this report, a general social assessment of the use of pesticides in prairie agriculture is attempted. The main focus is on the role of herbicides which are among the most important pesticides used in prairie agriculture. Implicit quantity indexes for both pesticide use and fertilizer use over time were constructed by dividing annual expenditures on these items by the corresponding price index. The relatively rapid growth in agricultural chemical use in prairie agriculture over the past four decades is clearly evident, especially in the period from 1971 to 1985. However, since 1985, pesticide use has been relatively stagnant. Partial productivity measures with respect to both pesticides and fertilizer were calculated. The average productivity of pesticides has generally declined over time, particularly since the early 1970s, as pesticide use accelerated and diminishing returns in pesticide use occurred. Aggregate production functions for prairie agriculture and the prairie crop sector were also estimated in which the role of the pesticide input was emphasized. The estimated crop output elasticities with respect to pesticide use range from 0.43 to 0.89 under different production function specifications over the time period from 1971 to 1991. The estimates, in general, imply a relatively high degree of responsiveness of output to pesticide use. However, it is difficult to accurately separate the effects of pesticides from the effects of other inputs, especially when pesticides are part of a wider and more intensive technological package. The major social benefits associated with pesticide use relate to gains in agricultural production and productivity, and they are evaluated in the study. Estimates in the literature indicate that considerable yield reductions would result from herbicide removal. Even if such yield losses are over-estimated, they appear to be significant. Among the social costs of pesticides are the private costs incurred by farm producers but also the possible external or spillover costs inflicted on humans and the environment. Our qualitative assessment of these external costs tends to suggest that the agricultural sector in Western Canada has a level of pesticide use that is low in comparison with intensive agriculture in other parts of the world, and a mix of herbicides with which minor, rather than major, health and environmental concerns are associated. - Nevertheless, the debate on the cost and benefits of pesticide use is far from settled. Recent developments in the literature cast doubts on the validity of traditional bioassays used to assess synthetic pesticide hazards. A possible area of concern which emerged in recent literature is the suggested increased risk of lymphomas for farmers and farm workers who may be exposed to 2,4-D for longer periods of time. Such issues should be monitored. At the least, guidelines for protective clothing should be considered for farm workers who are engaged in extensive spraying.