Dynamic Pesticide Regulation under Resistance and Fiscal Constraints

Pantelis Kalaitzidakis () and Vangelis Tzouvelekas ()
Additional contact information
Pantelis Kalaitzidakis: Department of Economics, University of Crete, Greece
Vangelis Tzouvelekas: Department of Economics, University of Crete, Greece

No 2604, Working Papers from University of Crete, Department of Economics

Abstract: Pesticide use generates dynamic externalities through resistance, health, and environmental channels, complicating the design of optimal regulation. We develop a dynamic framework in which pesticide use, resistance, and damages are jointly determined under a balanced-budget constraint. Resistance affects policy through two margins: it raises marginal external damages by amplifying effective exposure, but also reduces pesticide use, shrinking the fiscal base for intervention. This interaction creates a state-dependent gap between the Pigouvian benchmark and the constrained-efficient policy, which we term fiscal attenuation. We characterize the optimal tax-subsidy system and show that resistance both strengthens the case for taxation and shifts implementation toward non-chemical control. Simulations quantify the nonlinear interaction between resistance dynamics and fiscal capacity, highlighting the joint role of evolving damages and fiscal constraints in optimal environmental poli

Keywords: pesticide regulation; resistance dynamics; environmental externalities; fiscal constraints; second-best policy; dynamic optimization (search for similar items in EconPapers)
JEL-codes: C61 D62 Q12 Q18 Q28 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2026-03-26
References: Add references at CitEc
Citations:

Published

Downloads: (external link)
https://economics.soc.uoc.gr/wpa/docs/2604.pdf First version (application/pdf)
No

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crt:wpaper:2604

Access Statistics for this paper

More papers in Working Papers from University of Crete, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Kostis Pigounakis ().