Can We Really Use Prices to Control Pesticide Use? Results from a Nonparametric Model

In this paper, we assess to what extent pesticide price can be used to bring about more sustainable agricultural practices in field crop farms. We use an innovative three-step nonparametric frontier approach to simulate price increases that would persuade “rational” farmers to adopt practices that use the smallest possible amount of pesticides while still enabling them to continue to produce the same output, given the current production technology. The procedure is based on a data envelopment analysis (DEA) estimation of the production technology. The result suggests that very large price changes are necessary to bring about fairly small change of the quantity of pesticide used, thus challenging the efficacy of price as a policy tool in the short run. Consequently, managing pesticide is likely to require a multi-channel procedure, as prices appear not to be a fully effective instrument. Since the short-run demand structure for pesticides seems to be inelastic, a clear communication of the long-run objective is desirable if not essential for any policy to be implemented.