TEAMPEST The Project Start: May 1 st 2008 Duration: 36 Months Webpage: teampest.agro.auth.gr Prof .

1. Belgrade, Serbia, May 24, 2010 TEAMPEST The Project Start: May 1st 2008 Duration: 36 Months Webpage: teampest.agro.auth.gr Prof. KonstadinosMattas Project Coordinator

2. Outline • Features and origins of the project • Objectives of TEAMPEST • Methodology • State of the art • Results • Challenges

3. TEAMPEST Partners

4. Background The EC Thematic Strategy on the Sustainable Use of Pesticides (COM(2006) 372 final ) • New measures that cannot be integrated into existing instruments • (new Framework Directive) • Measures that can best be integrated in existing instruments • (to be integrated in existing instruments) • 3. Measures/actions that are currently not proposed to be part of the Thematic • Strategy, but could be examined again at a later stage • (could be considered later in the light of the review mechanism foreseen in the Framework Directive) • “Setting-up of a system of taxes/levies to influence qualitatively pesticide use. At this point in time, it will be virtually impossible to devise an efficient and manageable system of taxes/levies that would reflect adverse effects of individual pesticides. Member States could explore introducing ‘banded’ systems (flat rate systems are currently applied in some Member States), adapted to their specific situations and the protection objectives they wish to pursue.”

5. Our contribution to Plant Research – FP7 FIRST CALL: KBBE-2007-1 External costs of pesticides(Call 1) KBBE-2007-1-4-18: Internalisation of external costs of pesticides is an option considered by some Member States as a valid policy action to reduce their use and limit their negative impacts on humans and on the environment. Research is needed to assess the feasibility and benefits of such an approach. The project should; (i) identify true external costs of pesticides, taking into account the direct impact on the operators and indirect impact on bystanders, residents, consumers and the environment; (ii) develop options/criteria for an effective and realistic system of taxes/levies on pesticides; (iii) study the potential support of incentives to implement the substitution principle to pesticides (preferred use of plant protection products with lower risks to human health and the environment) and; (iv) study the possible implementation and feasibility of such a system. Funding scheme: Small collaborative project Expected impact: The project will contribute to the further development of market-based instruments to support the development and implementation of the Sustainable Use of Pesticides thematic strategy. In the preparation of the strategy, following detailed research and taking into due account the specificities of both pesticides’ supply and demand, the Commission finally considered that knowledge and instruments were not yet ripe to allow taxation to be part of the TS - this research should contribute to fill this knowledge gap.

6. Project Scientific Objectives • Develop a consolidated methodological framework comprised of detailed qualitative and quantitative analytical tools, in order to identify external costs of pesticide use and to study the development of policy instruments • Test and validate the proposed regulatory system by studying its application in different EU countries.

7. The State-of-the-art • The development of a holistic approach, based on interrelated and complementary models that encompass different research areas (agricultural economics, health economics, environmental science, agricultural policy)

8. Specific objectives Specifically, the project will meet, in a measurable scientific way, the following specific objectives: • To assess the impacts of pesticide use on yield, efficiency and productivity • To cast the impact of pesticide use on farm operators and on any bystanders and residents • To estimate the environmental effects (pollution and contamination) induced by pesticide use • To measure the impact of pesticide use on consumers • To estimate the socially optimal level of pesticide use at the farm level • To design a realistic and effective tax and levy scheme that reduces the use of pesticides to a socially optimal level from the point of view of a policy maker • To assess producers’ willingness to adopt low pesticide use production methods • To implement the policy schemes for reducing the indirect cost of pesticide use • Each one refers to a specific Work Package with explicit milestones and deliverables • 10 WPs, 39 Deliverables

9. Objective 8 (WP8) Objective 4 (WP4) Objective 1 (WP1) Objective 2 (WP2) Objective 3 (WP3) Objective 5 (WP5) WP9 WP10 Objective 7 (WP7) PHASE II OBJECTIVES WP LEADER WORK PLAN PHASES PHASE III PHASE I Objective 6 (WP6) UOC UWA Producers AUTH SLU UNWE WU UCY Environment Consumers INRA Objectives and Work Plan Phases External Costs Criteria for a levy system Incentives for substitution Feasibility

10. WPs applications

11. Details on the project’s work • Work Package 1: Pesticide Productivity, Efficiency, and Shadow pricing for Stochastic Agricultural Production Technologies • Work Package 2: Analysis of the Effects of Pesticide use on Operators’ Health Status and on Farm productivity • Development of a Dual Farm Model for Productivity Measurement 11

12. WP1: Approaches to Problem • Following Chambers (2008), an exact-index approach using Divisia-type indexes and assuming efficiency has been developed and applied to test data. • An approach that assumes an event-specific technology, but allows for inefficiency, has been developed. • --will be applied using DEA methods • --will be applied using Bayesian econometric methods • Next Steps: • Calculation of stochastic productivity indexes using DEA methods and Greek data • Calculation of stochastic productivity indexes using Bayesian econometrics and Greek data • Calculation of shadow prices for pesticides using DEA event-specific (stochastic) technology and Chambers-Fare (2008) “Calculus for DEA Models” –Greek data • Calculation of shadow prices for pesticides using event-specific stochastic technology fit using Bayesian methods—Greek data

13. Rate of technical change Scale effect Change in technical efficiency Quality effect TFP growth health education WP2 - Basic Idea • The use of pesticides has two effects: (a) a direct effect as an input to control pests and (b) an indirect human health effect operating through the chronic effects that pesticides exposure has on farmer’s health (Antle and Pingali, 1994). • Pesticides use has a negative effect on farmer’s health and farmer’s health has a positive effect on productivity. The productivity loss from reduced pest control could be offset by the productivity gain from improved farmer’s health, and vice versa.

14. Theoretical Model Specification

15. Environment • Objectives • To link changes in agricultural production to damage to the environment • To calculate the costs of changing management practices to reduce damage to the environment • Methodology: Development of a policy analysis tool which integrates natural science models with economic models

16. Two types of models • Natural science models • Footprint (FP6) • Pesticide Toxicity Indicator (PTI), developed for use as an environmental indicator to support the policy objective of a non-toxic environment in Sweden • Economic models: • farm optimization • input-output

17. Consumer • Objective: Evaluation of consumers’ WTP for the reduction of pesticide use in the production of fresh and processed foods and analysis of the most efficient way to disseminate information of pesticide reduction to consumers • Methodology: Experiments based on random-price sales (BDM mechanism) using apples and apple juice 17

18. Micro-impact of tax and levy scheme • To evaluate the impacts of the tax and levy scheme on farm-level decision making to gauge the micro-foundations of the alternative macro-level solutions. • To implement an empirical investigation of pesticide tax and levy schemes to assess the impacts on agriculture and the environment. • To build a generic simulation model for assessing the farm level effects of taxes and levies, that can be applied to other countries (Bulgaria and Portugal).

19. Taxes • Simulations with the estimated model • Tax on pesticides (Zp) • Tax on environmental loads (EL) • Tax on pesticides and differentiate according to their contribution to environmental loads • Tax on accumulated toxicity (zm) • Tax on pesticides and differentiate according to their contribution to the toxicity level. • Scale up the tax effects from farm level to regional level using farm weights (=number of farms represented) reported in the FADN data

20. Specification issues • WP5 specification: • Modifications: • Xnp,zp, = Non-pesticide input, pesticide input • R = pesticides resistance • BD = Biodiversity • EL= Environmental loads • Potential Output Function Where labour in Xnp is specified as: N.B. Zp(t-1) is accumulated toxicity which affects the efficiency of labor

21. Components of the specification • Damage Abatement Function • N.B. Damage abatement process is a function of pesticides use (Zp), resistance (R) and biodiversity (BD). • Impact pesticides on biodiversity is reflected by environmental loads • Available Data • FADN data of cash crop farms • Land, labour, production of crops etc. • Detailed data on the use of 1500 different pesticides • Data on Environmental Loads: Impacts on • water organisms • soil organisms • ground water • pollinators

22. Macro tax-levy scheme • Objective: Develop a dynamic social-planning problem that will allow the construction of an effective tax and levy system to decrease pesticide use at a socially optimal level, by taking into account the negative effects of pesticide use on farmers, consumers and the environment. On the technical part, the maximization problem is defined in a continuous time setup • A tax on the use of pesticides or an information subsidy should change production methods and direct farmers to the adoption of alternative non-chemical pest control inputs

23. Quantitative FADN economic data analysis and modelling Qualitative Focus Group analysis Social acceptability and likely uptake of alternative methods of achieving reduced pesticide usage. Incentives for substitution • Objective: Assess the feasibility and potential benefits of producers adopting low input systems by evaluating a range of factors affecting producers’ willingness to adopt low pesticide input arable, horticultural and permanent crop systems. • Methodology : Interdisciplinary approach appropriate

24. http://www.eng.auth.gr/mattas/teampest/twb/econo_pest_1.htm

25. Conclusions & Challenges • So far • A data and literature background (harmonized literature) • Consumer experiments completed • A Dynamic Macroeconomic model of Effective Pesticide Use • Challenges • To complete and test the models • To connect them and import to micro and macro models • Present it as an operational tool for local authorities • 120th EAAE Seminar 2-4 September 2010, Chania, Greece • External Cost of Farming Activities: Economic Evaluation, Risk Considerations, Environmental Repercussions and Regulatory Framework • Webpage: eaae120.maich.gr 25

26. TEAMPEST website: http://teampest.agro.auth.gr FOODIMA website: http://www.eng.auth.gr/mattas/foodima.htm AGRICULTURAL ECONOMICS REVIEW: http://www.eng.auth.gr/mattas/eng.htm