Pesticide externalities from the US agricultural sector -- The impact of internalization, reduced pesticide application rates, and climate change

Pesticides used in agricultural production affect environmental quality and human health. These external costs can amplify due to climate change because pest pressure and optimal pesticide application rates vary with weather and climate conditions. This study uses mathematical programming to examine alternative assumptions about regulations of external costs from pesticide applications in US agriculture. We use two climate projections given by the Canadian and Hadley climate models. The impacts of the internalization of the pesticide externality and climate change are assessed both independently and jointly. We find 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 increase farmers’ production costs but increase farmers’ income because of price adjustments and associated welfare shifts from consumers to producers. Our results also show that full internalizations of external pesticide costs substantially reduces preferred pesticide applications rates for corn and soybeans as climate change.