Do Farmers Internalise Environmental Spillovers of Pesticides in Production?

Pesticides are used in agriculture to protect crops from pests and diseases, with indiscriminate pesticide use having several adverse effects on the environment and human health. An important question is whether the environmental spillovers of pesticides also affect the farmers’ production environment. We use a model of optimal pesticide use that explicitly incorporates the symmetric and asymmetric effect of pesticides’ environmental spillovers on crop production. The application focuses on panel data from Dutch cash crop producers. We show that pesticides have a positive direct impact on output and a negative indirect impact through their effects on the production environment.     

The economic role of Russia's subsistence agriculture in the transition process

In this article, we analyze the role of subsistence‐oriented agriculture in Russia in the 1990s. We start out by discussing the diverging economic effects of the growth of subsistence agriculture in Russia since the transition process started. The quantitative analysis of this sector's role is carried out by means of an applied computable general equilibrium (CGE) model applying a 1994 social accounting matrix (SAM) as base year data. The novelty of the article is to disaggregate primary agricultural production not by products but by farm types, which enables us to distinguish their institutional and economic characteristics. The model also explicitly differentiates between marketed and subsistence consumption or formal and informal marketing activities of agricultural producers. We simulate two ex post and two ex ante experiments. The results of the first backward‐looking experiment highlight that Russia's subsistence agriculture was an important buffer against further agricultural output declines during transition and, hence, against food insecurity. A simulation, which looks into the effects of a devaluation of the Russian ruble, shows that the financial crisis should have increased the relative competitiveness particularly of large‐scale crop farms versus small‐scale farms. Two forward‐looking experiments indicate that efficiency enhancing institutional change would benefit both large‐scale and small‐scale farms. However, within small‐scale agriculture, a shift from subsistence to commercial agriculture would take place.     

Pesticides,Preference Heterogeneity and Environmental Taxes

In this paper we present results from two choice experiments (CE), designed to take account of the different negative externalities associated with pesticide use in agricultural production. For cereal production, the most probable impact of pesticide use is a reduction in environmental quality. For fruit and vegetable production, the negative externality is on consumer health. Using latent class models we find evidence of the presence of preference heterogeneity in addition to reasonably high willingness to pay (WTP) estimates for a reduction in the use of pesticides for both environmental quality and consumer health. To place our WTP estimates in a policy context we convert them into an equivalent pesticide tax by type of externality. Our tax estimates suggest that pesticide taxes based on the primary externality resulting from a particular mode of agricultural production are a credible policy option that warrants further consideration.     

The economic impacts of technology and climate change: New evidence from U.S. corn yields

Over the past century, U.S. farmers have been offered a steady stream of new agricultural technologies, and more recently, experienced climate change. Because these two events have been occurring simultaneously, identifying their separate effects is difficult, and misimputation is easy. This article explicitly examines the economics of technical change and the interaction between weather and technology as revealed in a half century of panel data on U.S. Midwest rainfed state‐average corn yields. Observed yields reflect two components: yield potential and damage to the potential caused by weather and pests. Yield potential is modeled as a stochastic production frontier where nitrogen fertilization, public corn research, and introduction and adoption of biotech corn seeds impact yield potential and excess heat impacts nitrogen productivity. The yield‐damage/damage‐control function permits biotech corn plants to abate adverse effects of weather and pest events. Results include the following: nitrogen use, public corn research, and biotech seed‐corn adoption increase yield potential; soil moisture stress reduces yield potential, and excess heat severely reduces nitrogen productivity. Biotech corn plants abate yield damage caused by soil moisture stress but not excess heat.     

Agriculture, pesticides and the ecosystem

Economists have a good understanding of intra-economic interdependence and a mature methodology of modelling it. Ecologists focus on the complex and sensitive interactions of species in ecosystems. This paper’s objective is to suggest a new micro-foundation of ecosystem analysis based on economic methodology, to integrate the analyses of the ecosystem and the economy and focus on the interface of ecosystem-economy relations. Agriculture forms a major part of this interface. The basic assumption is that in the short run the individual organisms of all species behave as if they optimise their costly offensive and defensive activities given other organisms’ activities (Nash-behaviour).We consider an ecosystem with three species in a unidirectional food chain: buzzards feed on mice, mice feed on grain, and grain feeds on solar energy. A fourth species, humans, also feeds on grain. Humans intervene in the ecosystem in various ways. They can grow grain by using seed, farm labour, pesticides and possibly nature conservation measures to maintain buzzard habitat. Short-run ecosystem equilibrium is characterised, and it is shown, in particular, how this equilibrium depends on farming activities. We then link this ecosystem model to a simple model of an agricultural economy. Both systems are solved for equilibrium simultaneously. From an economic perspective the ecosystem induces positive and negative externalities in agricultural production and in consumer ‘green’ preferences.The inefficiencies of the competitive economy are identified and some possibilities to restore efficiency through corrective taxes or subsidies are briefly discussed. We also outline how short-run equilibria are connected through ecosystem stock-flow relationships. Due to the complexity of the inter-temporal analysis, the resulting ecosystem dynamics cannot be characterised in general analytical terms. It is a topic for future research to study the dynamics in numerical analysis to understand under which conditions the joint ecological and economic system is driven toward a (sustainable) steady state.     

Can economic incentives encourage actual reductions in pesticide use and environmental spillovers?

Chemical pesticides constitute an important input in crop production. But their indiscriminate use can impact negatively agricultural productivity, human health, and the environment. Recently, attention is focused on the use of economic incentives to reduce pesticide use and its related indirect effects. The aim of this work is to assess the effectiveness of different economic instruments such as taxes and levies in encouraging farmers to decrease pesticide use and their environmental spillovers. A policy simulation model is employed using data from Dutch cash crop producers including two pesticide categories that differ in terms of toxicity and pesticides’ environmental spillovers. Four different instruments were selected for evaluation: pesticide taxes, price penalties on pesticides’ environmental spillovers, subsidies, and quotas. The results of the study indicate that even high taxes and penalties would result in a small decrease in pesticide use and environmental spillovers. Taxes that differentiate according to toxicity do not lead to substitution of high‐ with low‐toxicity pesticides. Subsidies on low‐toxicity products are not able to affect the use of high‐toxicity products. Pesticide quotas are more effective in reducing pesticide use and environmental spillovers.     

Rural credit and agricultural supply in Brazil

The objective of this study is to determine the financing impact of total expenditure on the use of agriculture inputs (fertilizers, labor, and pesticides), and the output of cotton, rice, beans, corn, soybean, and wheat in Brazil. We study the period 1976–2005. The analysis is based on duality applied to the production theory. The output supplies and conditioned input demands are estimated from a translog multi‐output, multi‐input restricted profit function, where the total production credit is used as proxy of the total expenditure. Farmer expectations with respect to crop prices are incorporated to the estimation based on the quasi‐rational expectation model. The output and input responses to the total expenditure are positive and statistically significant except for cotton, wheat, fertilizer, and pesticides. The short‐run output supply response to own prices is inelastic, except for wheat, which presents elastic response to its price. Acreage has a positive impact on the output supply and it is influenced by land productivity. The main conclusion is that farmers face budget restrictions to purchase inputs, and a government credit program might increase the agricultural supply.     

EU Food Safety Standards,Pesticide Use and Farm‐level Productivity: The Case of High‐value Crops in Kenya

This article provides an empirical analysis of the impact of European Union (EU) private food safety standards on pesticide use and farm‐level productivity among small‐scale vegetable producers in Kenya. We apply an extended three‐stage damage control production framework, accounting for multiple endogeneity problems, to farm‐level data collected from a random cross‐sectional sample of 539 small‐scale producers. Estimation results show that farmers producing vegetables for the domestic market use significantly lower quantities of pesticides than do export farmers. However, contrary to findings elsewhere, the econometric evidence here shows that both domestic and export‐oriented vegetable farmers in Kenya use pesticides at levels below the economic optimum. The results also show that the adoption of standards by export farmers does not have any significant impact on total pesticide use. However, adopter categories are distinguishable in terms of types of pesticide used, i.e. adopters use safer pesticides based on World Health Organization (WHO) classification. The third‐stage structural revenue model results demonstrate that adoption of standards has a positive and significant impact on revenue raised in vegetable production. Nevertheless, farmers producing for the export market are indistinguishable from those producing for the domestic farmers in terms of the total revenue earned from producing vegetables during the rainy season, on a ‘per acre’ basis. Although standards can potentially prevent resource‐poor smallholders from maintaining their position in the lucrative export markets, they can also result in positive changes in the production systems of those small‐scale farmers who adopt it, as shown by these results.     

PLANT PESTICIDE ECONOMICS WITH SPECIAL REFERENCE TO COTTON INSECTICIDES

The energy crisis and the current world food situation have both drawn attention to the importance of off-farm inputs in high-technology agricultural systems. Plant pesticides are one of the most important of these off-farm inputs. The correct use of chemical pesticides requires a high level of managerial competence since the issues involved are extremely complex. The development of an integrated approach to the management of plant pests offers an alternative to the increasingly expensive chemical control techniques. Cotton production illustrates both the complexities of the management involved in plant pest control and the feasibility of developing integrated control strategies. Plant pesticides, especially insecticides, also create externalities. The policy issues surrounding the use of cotton insecticides demonstrates the need for careful analysis before political action is taken. A feasible package of policy measures for the control of the use of insecticides in Australian cotton-growing areas is suggested.     

Does crop insurance influence agrochemical uses under current Chinese situations? A case study in the Manasi watershed,Xinjiang

Government subsidy to crop insurance has been advocated as a policy alternative to support growth of agricultural production and farmers' income in China since the country joined the WTO. However, cautions have been raised as the crop insurance program may impact the environment negatively. This study tries to explore farmers' behaviors with regard to agrochemical use with household data applied to a simultaneous equation system consisting of disaggregated input models. It is found that decisions on fertilizer, pesticides, and agro‐film applications do have different impacts on crop insurance participation, and are influenced by the latter in different ways. It is also implied that encouraging farmers' participation in crop insurance under current low‐premium and low‐indemnity terms does not have a significantly negative impact on the environment.     

Farmers’ risk preferences and pesticide use decisions: evidence from field experiments in China

China faces health and environmental problems associated with the use of agricultural chemicals, including pesticides. While previous studies have found that risk aversion affects pesticide use in China, they have focused primarily on commercial cotton farmers. In this study, we consider the case of smaller, semisubsistence and subsistence farmers in a poor and landlocked province of China (Yunnan). We use a field experiment to measure risk aversion and collect detailed data on farm production and input use to specifically ask whether risk aversion affects pesticide use, and whether this effect differs for subsistence farmers producing exclusively for home consumption versus semisubsistence farmers who produce both for home and the market. We find that risk aversion significantly increases pesticide use, particularly for subsistence farmers and for market plots by semisubsistence farmers. Further, this effect of risk aversion significantly decreases with farm size for subsistence farmers, but not for semisubsistence farmers, implying that pesticide use may be used to ensure sufficient food supply for home consumption. Finally, we find barriers to the use of pesticides for subsistence farmers, both in terms of financial constraints and economies of scale. This finding implies that risk‐mitigation strategies, such as crop insurance, may not target food security concerns of subsistence farmers. Given these different motivations for pesticide use, policymakers may wish to consider effective tools to support rural food security for farmers in the poorer regions of China in order to decrease pesticide use.     

Specification and Estimation of Production Functions Involving Damage Control Inputs: A Two-Stage, Semiparametric Approach

Productivity assessment of damage control inputs (such as pesticides) is complicated because their effect depends on the exposure to damage agents (such as pests). We discuss some open specification and estimation issues. The contribution is threefold. First, we elaborate the separability conditions for the damage control function and production function. Second, we employ a two-stage semiparametric technique to combine attractive features of both nonparametric and parametric approaches. Third, we model the interaction between pest exposure and damage control inputs by using slope dummies. An application to productivity analysis of small scale Bt cotton production in China illustrates the approach.     

Food versus fuel: examining tradeoffs in the allocation of biomass energy sources to domestic and productive uses in Ethiopia

Rural households in Ethiopia have limited options to meet their domestic energy needs because they lack access to modern fuels and technologies. Domestic use of certain fuel sources, such as cow dung, can hinder agricultural outcomes and productivity. This article explores the tradeoffs between domestic and productive uses of biomass energy sources in the Nile Basin of Ethiopia using a nonseparable farm household model where labor allocation to energy collection and farming are analyzed simultaneously. We estimate a system of five structural equations using three‐stage least squares and find that the use of dung as a domestic fuel source has negative implications for the value of harvested crops, while use of on‐farm fuelwood is associated with increased value of agricultural output. On‐farm production of fuelwood appears to increase the value of crop output and provide labor savings, by making fuelwood collection more convenient for households. Policy interventions to support the expansion of agroforestry and increase access to new energy‐efficient technologies are needed to ensure that agricultural productivity can be both increased and sustained.     

Sustainable agricultural intensification in forest frontier areas

The Lore Lindu region in Indonesia—as in many forest frontier areas in Southeast Asia—has experienced rapid deforestation due to agricultural expansion in the uplands, at the forest margins. This has resulted in aggravated problems of erosion and water availability, threatening agricultural productivity growth. At the same time, technical progress is promoting agricultural intensification in the lowlands. In this article, we examine how improved technologies for paddy rice cultivation in the lowlands have affected agricultural expansion and deforestation in the uplands. The question of a “forest‐saving” or “forest‐clearing” effect related to technical innovation is important from a sustainable development perspective and remains a controversial issue in the literature. We address this question for the Lore Lindu region with an empirical model in which expansion in the lowlands and the uplands is estimated simultaneously. We use data from an extensive village survey conducted in the region, combined with GIS data. To guide the empirical analysis, we develop a theoretical framework based on a Chayanov‐type agricultural household model. The model analyzes farmers' land allocation decisions, taking into account the lowland–upland dichotomy in the agricultural sector. The empirical findings, corroborated by the analytically derived results, show how technical progress for lowland production affects land use at the forest margins and how these effects depend on the factor‐intensity of the technology. The findings imply specific rural development policies for sustainable agricultural intensification in forest frontier areas.     

Road connectivity,population, and crop production in Sub‐Saharan Africa

This study adopts a cross‐sectional spatial approach to examine the relationship between transport infrastructure, population location, and agricultural production in Sub‐Saharan Africa using new data obtained from geographic information systems (GIS). We find that both population and agricultural production are spatially concentrated near large cities, with 41.4% of population and 23.6% of agricultural production (in value terms) within 2.5 hours travel time to large cities. Taking into account agroecological and other factors, we find a statistically significant association between travel time and agricultural production. Using coefficients estimated for Mozambique, we simulate the effects of hypothetical increases in road investments on travel times and agricultural production, suggesting that improvements in road infrastructure could facilitate a substantial increase in agricultural production.     

Determinants and impact of sustainable land management (SLM) investments: A systems evaluation in the Blue Nile Basin,Ethiopia

Ongoing debate over water management along the Blue Nile and land degradation in Ethiopia emphasizes the need for efficiency gains in agricultural production through sustainable land management (SLM). However, previous SLM studies overlook the tradeoffs involved in maintaining SLM investments over time. We address this limitation by combining a household survey that evaluates the economic impacts of SLM investments and maintenance, with a hydrological model that explores location‐specific infrastructure effects. We then use a multi‐market model to evaluate the impacts of alternative SLM investments on agricultural production, prices, and incomes over time. Analysis suggests SLM investments must be maintained for at least seven years to show significant increases in value of production, and that terraces on moderate and steep slopes are most effective in increasing agricultural yields. However, the benefits of terracing do not outweigh the cost of foregone off‐farm labor opportunities, nor compensate for lower agricultural prices from increased supply. Thus, SLM investments must be paired with other input and infrastructure investments, as well as subsidies for initial labor costs, in order to incentivize adoption and long‐term SLM maintenance.     

Measuring pesticide overuse and its determinants: Evidence from Vietnamese rice and fruit farms

Pesticides have long been important for the development of agricultural production. However, improper use of pesticides may result in inefficiency with respect to farm profitability, in addition to external effects of pesticide use on environmental and human health. This paper employs a production function that explicitly accounts for the role of damage abatement inputs (i.e. pesticides) in the production process, to examine the optimal use of pesticides. It then investigates determinants of pesticide overuse versus underuse and the intensity of overuse. The empirical application uses data on Vietnamese rice and fruit farms drawn from the 2016 Vietnamese Household Living Standards Survey. Results show about 95% of farmers overused pesticides for both rice and fruit farming systems. The Mekong Delta, also known as the ‘Rice Bowl’ of Vietnam, has higher levels of overuse on rice farms than two other regions. Overuse intensity is lower for female and poorer rice farmers while intensity is higher for those with more income and more family members. For fruit farms, younger farmers or those with more family members were more likely to overuse versus underuse pesticides.     

The impact of marketing systems on soil sustainability of agriculture in developing countries: a method and an application

This article is concerned with soil‐sustainability problems of agriculture in developing countries, in particular with soil erosion. The aim of our study is to develop a comprehensive model that explains the adoption of sustainable agricultural practices with respect to soil conservation. Our approach includes the following special features: (a) the model is comprehensive in that it includes a large number of institutional, personal–social, economic, and physical explanatory variables; (b) particular attention is paid to the influence of marketing systems on the adoption of sustainable agricultural practices, which to our knowledge has been neglected in past research; (c) the concept of adopting sustainable agricultural practices (ASAP) is differentiated into a limited number of basic components of soil conservation; and (d) the model is estimated by Principal Component Regression, which enhances efficient estimation of the impact of many explanatory variables on ASAP. Our model is applied to Cabuyal hillside farming in Colombia. The application demonstrates the usefulness of the proposed model. ASAP is differentiated into three basic components: soil‐disturbance control, soil‐protection practices, and run‐off control. It appears that soil‐disturbance control is particularly influenced by farmers' characteristics, such as education and managerial variables. The second component, soil‐protection practices, appears to be strongly influenced not only by farmers' managerial variables but also by their relationship with their environment, in particular marketing institutions. The third soil‐conservation component, run‐off control, is influenced by the physical characteristics of the plot and by the available farm labor. Our empirical results demonstrate the usefulness of the proposed model in designing agricultural policies, because it can determine which variables are more likely to influence the adoption of a specific type of soil conservation.     

Technological and policy options for sustainable agricultural intensification in eastern Uganda

This article presents a bio‐economic household model, which has been developed to assess the potential impacts of agricultural intensification efforts on economic and ecological indicators in eastern Uganda. A study region in the Lake Victoria Crescent was selected with comparative advantages for intensive agricultural production: high agricultural potential, high market access, and high population density. However, current production is characterized by low input–output systems revealing a discrepancy between development opportunities and actual development outcomes. Based on a farmer participatory research approach, production methods were introduced in the study region aimed at fostering sustainable agricultural development. Data from two community surveys, two comprehensive household and plot level surveys, and farm‐trial data were used to develop and calibrate bio‐economic models for four representative household types. Model scenarios reveal that farm households in eastern Uganda would not pursue sustainable intensification under current socio‐economic conditions. The market environment has to be improved substantially, i.e., transaction and transportation costs have to be reduced, innovative credit schemes for smallholders have to be introduced, and alternative forms of labor acquisition have to be promoted, to provide sufficient economic incentives for the adoption of environmentally sound production methods. In addition, agricultural service provision needs to be reformed and more agricultural research is needed for new and better‐targeted technologies.     

Do Differences in the Scale of Irrigation Projects Generate Different Impacts on Poverty and Production?

This article investigates differences in household production and consumption among small‐ and large‐scale irrigators to assess whether the scale of an irrigation project increases household welfare in Mali. Much of the evidence of the impact of irrigation does not use counterfactual analysis to estimate such impact or distinguish between the scale of the irrigation projects to be evaluated. In the dataset collected by the author, both a large‐scale irrigation project and small‐scale projects are used to construct counterfactual groups. Propensity score matching is used to estimate the average treatment effect on the treated for small and large irrigators relative to non‐irrigators on agricultural production, agricultural income and consumption per capita. Small‐scale irrigation has a larger effect on agricultural production and agricultural income than large‐scale irrigation, but large‐scale irrigation has a larger effect on consumption per capita. This suggests that market integration and non‐farm externalities are important in realising gains in agricultural surplus from irrigation.