Ecological Economics 36 2001 263 – 279
ANALYSIS
Pesticide taxation and multi-objective policy-making: farm modelling to evaluate profitenvironment trade-offs
Katherine Falconer
a,
, Ian Hodge
b
a
Centre for Rural Economy, Department of Agricultural Economics and Food Marketing, Uni6ersity of Newcastle upon Tyne, Newcastle upon Tyne, NE
1 7
RU, UK
b
Department of Land Economy, Uni6ersity of Cambridge, Cambridge CB
3 9
EP, UK Received 24 August 1999; received in revised form 7 July 2000; accepted 7 July 2000
Abstract
Many countries in Western Europe have introduced voluntary programmes to encourage farmers to adopt environmentally more benign practices such as integrated pest management, but more policy action appears to be
needed to meet the environmental quality levels now demanded. Input taxes could assist in meeting policy objectives. The issue considered here is the identification of the most appropriate specification of a tax instrument to reduce the
environmental problems of agricultural pesticide usage. This paper takes a farm systems approach to evaluation. A case-study illustration is given for a specialist arable farm in the UK, combining an economic model of land use and
production with a set of environmental indicators for pesticides. Linking these two components allows the identification of the potential trade-offs between achieving reductions in the environmental burden to a number of
ecological dimensions and farm income. Different pesticide tax specifications vary in both the magnitude and the direction of their impacts. The results of the model indicate that either compromises will have to be made in
environmental policy, or additional instruments will be required to counter-act the negative side-effects of some instruments. © 2001 Elsevier Science B.V. All rights reserved.
Keywords
:
Pesticides; Policy evaluation; Environmental indicators; Economic instruments www.elsevier.comlocateecolecon
1. Introduction
The Common Agricultural Policy was estab- lished with the aim of increasing production effi-
ciency and self-sufficiency in food production in the EU. A broad range of environmental prob-
lems have been attributed to the achievement of its policy goals over recent decades, relating, for
Corresponding author. Present address: Scottish Natural Heritage, 2 Anderson Place, Edinburgh, Scotland EH6 5NP,
UK. Tel.: + 44-131-4462427; fax: + 44-0-131-4462405. E-mail address
:
katherine.falconersnh.gov.uk K. Fal- coner.
0921-800901 - see front matter © 2001 Elsevier Science B.V. All rights reserved. PII: S 0 9 2 1 - 8 0 0 9 0 0 0 0 2 3 6 - 6
example, to environmental contamination by agro-chemicals, habitat destruction, biodiversity
reduction and
undesirable landscape
change Skinner et al., 1997. In particular, there are
widespread and growing concerns related to the levels of use of chemical pesticides Reus et al.,
1994; World Wide Fund for Nature, 1995, Free- mark and Bontin, 1995; McLaughlin and Mineau,
1996. Agricultural pesticides are integral compo- nents of modern crop production systems. Unfor-
tunately, however, it seems almost impossible to prevent chemicals that are deliberately introduced
into the environment for crop protection from entering and diffusing through the environment.
An obvious solution would be to reduce the quan- tities applied and to use chemicals of lower eco-
toxicity, but a balance needs to be struck between greater environmental protection and the contin-
ued contribution of agriculture to production.
The fifth European Environmental Action Plan established a reduction in chemical use as a major
objective, although no actual goals or limits have been defined and currently member-states are
largely free to address their own priorities. The complexity of crop protection and the generally
superior information available to the farmer com- pared to the regulator, on the relative costs of
alternative abatement strategies implies that envi- ronmental controls should aim to retain as much
farm-level flexibility as possible. Policies involving the use of the market mechanism are potentially
able to do this. However, although the environ- mental economics literature suggests that eco-
nomic incentives may have efficiency advantages compared to command-and-control approaches,
their applications have, as yet, covered only a limited range of issues. Only a few Northern
European countries have experimented with ad
6 alorem pesticide taxes or volume levies so far,
although there is growing interest in the refine- ment and extension of incentive instruments. For
example, in recent years, the UK government has been assessing the options for input pesticide tax-
ation Department of the Environment, 1997.
Environmental economics can only really make a practical contribution to agri-environmental re-
source management if linked with more explicit acknowledgement of the real-world characteristics
of environmental problems. The heterogeneity of pesticide inputs and the complexity of agro-eco-
logical systems adds an important dimension to environmental policy-making; in this respect, pes-
ticide contamination differs significantly from other agricultural pollution issues such as nitrate
contamination.
This paper examines how an analytical mod- elling approach linking economic and ecological
components could assist in achieving acceptable and workable environmental policies. A case-
study assessment of the applicability of economic- incentive-based policy options to reduce pesticide
contamination is presented. Section 2 discusses the need for multi-dimensionality in policy evalu-
ation and outlines the production ecology ap- proach. Section 3 introduces the case study and
Section 4 presents some policy evaluation results. Section 5 discusses the findings, and Section 6
concludes the paper.
2. Environmental complexity and policy multi-dimensionality
