Pesticide Economics. David Zilberman EEP 101/Econ 125: Spring 2003. General Overview. There are three major classes of pesticides: Insecticides Fungicides Herbicides
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EEP 101/Econ 125: Spring 2003
. Current pesticide policy separates pesticide economics from health considerations.
New policy is triggered solely by health considerations: when a chemical is found to be carcinogenic or damaging to the environment, it is banned, or “canceled”.
Supply without pesticides
Supply with pesticides
Ban will increase prices reduce export may benefit producers but will hurt consumers. Bad for livestock, good for filed crops
The assessment of the cost of banning should take into account subsidies-when food is subsidized, the marginal cost of food lost is smaller than the price-since the price is inflated by the subsidy.Sometimes ban is improving welfare as it will reduce oversupply
MEC=Marginal Externality Cost
MRC=Marginal Resistance Cost
Social optimum=point A
Monopoly =Price C Quantity B
Competitive outcome=point E
MB of production
Risk of chemical residues can be reduced by
*Reducing application levels through taxes, direct control,etc.
*Blocking movement of residue to and in bodies of water (can be induced by incentives).
*Reducing human exposure by filters,protective clothing.
*Treatment in case of poisoning and injury.
initial exposure exposure dose/response
might represent the degree of confidence we have in our risk estimate.