VALUING RISK TRADEOFFS AND VOLUNTARY INSECTICIDE REDUCTION

Luanne Lohr, Timothy Park and Leon Higley

No 16671, Faculty Series from University of Georgia, Department of Agricultural and Applied Economics

Abstract: Farmer's willingness to voluntarily reduce insecticide use is not considered when regulatory approaches to environmental protection are proposed. Regulations that require behavior that would voluntarily be undertaken are excessive and economically inefficient. Using survey data from a contingent valuation scenario, we demonstrate the willingness of crop producers in four Midwestern states in the U.S. to trade yield losses for environmental risk reduction by eliminating an insecticide application. The mean acceptable yield loss for a sample of 1,138 producers in Illinois, Iowa, Nebraska and Ohio is $8.25 per acre. Acceptable yield loss increases with the rated importance of environmental goods (fish, birds, mammals, native plants and endangered species), with formal education and with farming experience. Willingness to pay increase with total expenditure on herbicides and insecticides up to $89 per acre, then decreases as total expenditure continues to rise. We approximate that crop farmers in the four states are willing to give up over $420 million in yield losses, or about 4 percent of total sales of corn and soybeans, to guarantee protection of eleven environmental goods from moderate insecticide risk. Uncertainty about risks, dominance of regulatory approaches and economic pressures undercut voluntary reductions in insecticide use.

Keywords: Crop Production/Industries; Environmental Economics and Policy; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 14
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ugeofs:16671

DOI: 10.22004/ag.econ.16671

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