Economic Evaluation of Agrochemical Externalities

Rachitha Silva

Assessing the true costs and benefits of pesticide use is much more complicated than for technologies such as fertilizer application or new crop varieties. Most of impacts may take many years to emerge and even longer to be quantified. This future cost to sustainability of production systems through current pesticide use is not included in standard cost-benefit analyses.

Reliance on pesticides as the main control strategy is not only unsustainable, but also extracts penalties in terms of human and environmental health. Externalities result in economic costs which are not reflected in the price of pesticides and there is therefore no direct market incentive for users to change their pest control practice to reduce these costs. Only since the early 1990s some researchers tried to estimate some of these external costs.

Most of the present literature focuses primarily on human rather than environmental consequences of agrochemical usage, and the literature therefore concentrate on valuation of health effects on consumers and farmers. Travisi et al (2004) emphasize that this research are still suffers from a scarce communication with the environmental sciences and the environmental dimension of pesticide risk is still partly neglected in the literature.

Health risks associated with pesticide residues in fresh foods have been valued using contingent valuation method. There are several studies on valuation of reduction or ban of a pesticide using cost- benefit analysis. The organic farming products valuation has been more market-oriented and focuses on consumers WTP for residue free products. Only few studies have been done on hedonic pricing valuation, travel cost method and defensive expenditure method [Travisi et al (2004)]. The Environmental dimensions of pesticide risk are still partly neglected in the literature. This paper discusses about economic evaluation techniques that can be used to evaluate both positive and negative externalities related with agrochemical usage.