The minimum cost for reducing the farmers' use of pesticides is calculated. The measures include are; (i) a decrease in use of inputs, (ii) an improvement of the insurance system, and (iii) application of an ecotechnology where 5–10 meters along the borders of the fields are left untreated with pesticides. The cost of reducing the use of pesticides is measured by means of pesticide demand functions and the cost for improving an insurance system is measured as the risk premium. The empirical results indicate that the minimum cost for reducing the use of pesticides by 50% in Sweden corresponds to about 6 per cent of farmers' incomes from crop production. A simple comparison of policy instruments shows that the cost of a quota system is about 40 per cent higher than the costs of the charge and permit market systems. The farmers' decreases in incomes under a charge system are twice as high as under the other two policy instruments. The results are, however, sensitive to the levels of the pesticide price elasticities.
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Gren, I. Cost efficient pesticide reductions: A study of Sweden. Environ Resource Econ 4, 279–293 (1994). https://doi.org/10.1007/BF00692329
- Cost efficiency
- pesticide reductions
- policy instruments