Agricultural pesticides impact adversely on the environment and human health. These impacts are sensitive to climate change, because pest pressure and optimal pesticide application rates vary with weather and climatic conditions. This dissertation provides an integrated economic analysis on climate change and US pesticide applications. A panel data regression model, for thirty two states, is used to quantify the effect of weather variability and climate change on pesticide application. The results indicate that weather and climate differences significantly influence the application rates of most pesticides. Subsequently, the regression results are linked to a downscaled climate change scenario, the Canadian and Hadley climate change models. Results show that the application of most pesticides increases under both scenarios. The projection results vary by crop, region and pesticide. Increases in pesticide application doses may amplify the negative impacts on the environment. One important issue is the effect on aquatic species. Aquatic risk indicator, REXTOX and climate change projection on pesticide applications from the panel data regression model, are combined to examine the impact of climate change on aquatic risk from agricultural pesticides in the US. On average, climate change is likely to increase the toxicity risk to aquatic species by 47 percent, because of increased applications of agricultural pesticides. Daphnia and fish are the most affected aquatic species categories. Across eight broad crop groups, pesticides used on pome and stone fruits and on fruiting vegetables contribute the most to aquatic risk. Within the thirty two US states examined, more than 90 percent of the climate change-induced pesticide pollution impact on the aquatic environment is caused by only thirteen states near the coast. Because projections on aquatic risk are based on uncertain regression coefficients with an error distribution and projection period covering 100 years, a Monte Carlo simulation and prediction intervals system is used to estimate the uncertainty of the risk estimates. Simultaneously, projections on pesticide application are linked with the Pesticide Environmental Accounting (PEA) tool, to compute the impact of climate change on the external cost of pesticide applications. The current average external cost of pesticide use in US agriculture is calculated at US$42 per hectare. Under projected climate change this cost could increase to $72 per hectare by 2100.
Subsequently, pesticide external cost estimations and climate change projections on pesticide application, together with alternative pest control data, climate state specific data on agricultural crop yields, irrigation water requirements and production costs are integrated within the Agricultural Sector and Mitigation of Greenhouse Gas (ASMGHG) model, to examine alternative assumptions about regulations of external costs from pesticide applications in US agriculture under different climatic conditions. The impact of the internalization of the pesticide externality and climate change, are assessed both independently and jointly. Results indicate that without external cost regulation, climate change benefits from increased agricultural production in the US, may be more than offset by increased environmental costs. The internalization of the pesticide externalities increases farmers’ production costs but also increases farmers’ income, because of price adjustments and associated welfare shifts from consumers to producers. The results also show that full internalizations of external pesticide costs substantially reduce preferred pesticide application rates for corn and soybeans, as climate changes.
Additionally, a partial equilibrium model of the US agricultural sector is modified to examine the effects of alternative regulations of the pesticide and greenhouse gas emission externality. Simulation results indicate that without pesticide externality regulations and low greenhouse gas emission mitigation strategy, climate change benefits from increased agricultural production in the US are more than offset by increased environmental costs. Although the combined regulation of pesticide and greenhouse gas emission externalities increases farmers’ production costs, their net income effects are positive because of price adjustments and associated welfare shifts from consumers to producers. The results also show heterogeneous impacts on preferred pest management intensities across major crops In absence of greenhouse gas emission policy, pesticide externality regulation substantially increases the total water use for irrigation.
Empirical results from this dissertation show the importance of accounting for pesticide externalities. Overall increased negative externalities from pesticide applications could provide an argument for more mitigation, i.e. for stronger greenhouse gas emission control policies. Related to this argument, the externality estimates can help to improve the scope of climate change impacts in integrated assessment and earth system models. Furthermore, the examined pesticide policy could be interpreted as a pesticide tax, where the tax level corresponds with the environmental and human health damage. Such a policy is different from most existing regulations, which only prohibit pesticides but impose no charge on admitted ones. The results further could also affect agricultural research programs because the anticipated social returns to research on alternative pest control strategies depend also on the expected external cost change.