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Economic analysis of pesticide regulation in the U.S. apple industry

Jutta Roosen ()

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Several particularities of apple production systems require careful consideration of the methods used to estimate impacts of pesticide regulation. Growing conditions are geographically diverse, quality considerations are of particular importance, and dynamic aspects need to be acknowledged in production systems of perennial crops;A partial-equilibrium model of the apple industry is estimated where orchards are modeled as multiproduct firms producing apples for fresh and processed consumption. Groups of growers are distinguished by region and by pesticide use patterns. The changes of quantities and prices in the markets for fresh and processed apples that follow a technology shift are derived. Economic impacts of a hypothetical ban on seven fungicides and seven herbicides are estimated employing expert opinion data;Because of a lack of historical or experimental data, expert opinion is often used in ex-ante welfare analyses that assess the impacts of uncertain changes in the economic, legal, or physical environment. At the example of organophosphate use regulation in apple production, a Bayesian method is proposed for obtaining probability distributions over policy impacts using a collection of dispersed expert opinions arising as probability estimates over a finite number of intervals. The distributions of welfare outcomes following a hypothetical ban on one and on all organophosphates are estimated under different assumptions about consumer preferences for pesticide regulation and the distributions are ordered in their welfare properties using a nonparametric test for stochastic ordering of probability distributions;Lastly, the long-term impacts of pesticide regulation on the orchard replanting decision are studied. The topic is addressed under the particular consideration of antibiotics that are used in apple production to control fire blight, a bacterial disease of fruit trees that leads to yield losses and eventually to tree death. Because of fear about widespread resistance development, antibiotics use in agriculture is of increasing concern to scientists and public health officials. A model of orchard replanting as a function of an orchard's survival probability is developed and an equilibrium analysis is facilitated by embedding the individual grower's decision to replant in an industry equilibrium. Welfare impacts of survival probability changes after a ban on antibiotics are estimated.

Date: 1999-01-01
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