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Tax or Green Nudge? An Experimental Analysis of Pesticide Policies in Germany

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  • Buchholz, Matthias
  • Mußhoff, Oliver
  • Peth, Denise

Abstract

Pesticides are an important input in modern agriculture. However, intensive use of pesticides is also related to adverse effects on the environment and human health. While implementation of pesticide taxes with the intent to reduce pesticide applications has been widely discussed, green nudges are considered as innovative policy tools to foster environmental friendly behaviour. To date, little is known about the effects of these policy tools at the farm level. With this in mind, we use a business management game to investigate how a pesticide tax and a green nudge affect crop, tillage and pesticide decisions for a ‘virtual’ farm. Results from a sample of German agricultural students reveal that both policies are able to reduce the amount of pesticides applied. However, implementation of the pesticide tax also involves a substantial profit loss. Unlike in the green nudge treatment, participants under pesticide tax adjust their cropping and tillage strategies which could involve unintended ecological effects.

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  • Buchholz, Matthias & Mußhoff, Oliver & Peth, Denise, 2019. "Tax or Green Nudge? An Experimental Analysis of Pesticide Policies in Germany," 59th Annual Conference, Braunschweig, Germany, September 25-27, 2019 292279, German Association of Agricultural Economists (GEWISOLA).
    • Handle: RePEc:ags:gewi19:292279
    DOI: 10.22004/ag.econ.292279
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    2. Michels, Marius & Luo, Hao & Weller von Ahlefeld, Paul Johann & Mußhoff, Oliver, 2023. "Compliance with pre-harvest interval rules in apple production—A comparative analysis of green nudges among fruit growers and agricultural students in Germany," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 102(C).
    3. Ana Clara Borrego & Rute Abreu & Francisco Alegria Carreira & Filipe Caetano & Ana Lúcia Vasconcelos, 2023. "Environmental Taxation on the Agri-Food Sector and the Farm to Fork Strategy: The Portuguese Case," Sustainability, MDPI, vol. 15(16), pages 1-18, August.
    4. Finger, Robert & Möhring, Niklas, 2022. "The adoption of pesticide-free wheat production and farmers' perceptions of its environmental and health effects," Ecological Economics, Elsevier, vol. 198(C).

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