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Market-Based Instruments for the Optimal Control of Invasive Insect Species: B. Tabaci in Arizona

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  • Richards, Timothy J.
  • Ellsworth, Peter
  • Tronstad, Russell
  • Naranjo, Steve

Abstract

Invasive insect species represent perhaps one of the most significant potential sources of economic risk to U.S. agricultural production. Private control of invasive insect species is likely to be insufficient due to negative externality and weaker-link public good problems. In this study, we compare a system of Pigouvian taxes with tradable permits for invasive species control. While the emissions control literature shows that taxes are preferred to permits under cost uncertainty, invasive-species control involves correlated cost and benefit uncertainty. Hence, we expect a quantity-based system to be preferred. Monte Carlo simulations of optimal steady-state outcomes confirm our expectations.

Suggested Citation

  • Richards, Timothy J. & Ellsworth, Peter & Tronstad, Russell & Naranjo, Steve, 2010. "Market-Based Instruments for the Optimal Control of Invasive Insect Species: B. Tabaci in Arizona," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-19, December.
    • Handle: RePEc:ags:jlaare:97852
    DOI: 10.22004/ag.econ.97852
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    1. Hoel, Michael & Karp, Larry, 2002. "Taxes versus quotas for a stock pollutant," Resource and Energy Economics, Elsevier, vol. 24(4), pages 367-384, November.
    2. Pimentel, David & Zuniga, Rodolfo & Morrison, Doug, 2005. "Update on the environmental and economic costs associated with alien-invasive species in the United States," Ecological Economics, Elsevier, vol. 52(3), pages 273-288, February.
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    3. Eli Fenichel & Timothy Richards & David Shanafelt, 2014. "The Control of Invasive Species on Private Property with Neighbor-to-Neighbor Spillovers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(2), pages 231-255, October.
    4. Somdeep Chatterjee, 2022. "How Hard Did That Sting? Estimating the Economic Costs of Locust Attacks on Agricultural Production†," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(1), pages 434-459, March.
    5. Chalak, Morteza, 2014. "Optimal Control for a Dispersing Biological Agent," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-19.
    6. Kovacs, Kent F. & Haight, Robert G. & Mercader, Rodrigo J. & McCullough, Deborah G., 2014. "A bioeconomic analysis of an emerald ash borer invasion of an urban forest with multiple jurisdictions," Resource and Energy Economics, Elsevier, vol. 36(1), pages 270-289.
    7. Grogan, Kelly A. & Goodhue, Rachael E., 2012. "Spatial Externalities of Pest Control Decisions in the California Citrus Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(01), pages 1-24, April.

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