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Pesticide externalities, comparative advantage, and commodity trade : cotton in Andhra Pradesh, India

  • Kishor, Nalin M.
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    Because the cotton bollworm is migratory, a farmer who controls the pest in his own field creates a positive externality for other farmers. But because pesticide use leads to the development of pesticide-resistant strains, he also creates a negative externality. These externalities affect a wide range of food crops as well as cotton. Because of their extensive migratory patterns, pesticide resistant bollworms are attacking food crops situated hundreds of kilometers from the cotton tracts in coastal Andhra Pradesh, India. The author of this report develops a theoretical model that incorporates these externalities and examines the conditions needed for economically optimal use of pesticides, as well as of other agricultural inputs in cotton cultivation. Using field data, the author tries to quantify the losses in cotton and other crops due to the development of resistant pests. Under one scenario, the costs of externalities could raise the economic cost of cotton cultivation 50 to 60 percent. After empirically evaluating the taxation of inputs and the implementation of integrated pest management (IPM) practices to address the pest problem, he concludes that IPM offers the most feasible and environmentally benign way to achieve Pareto optimality, especially in the long term.

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 928.

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    Date of creation: 31 Jul 1992
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    Handle: RePEc:wbk:wbrwps:928
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    1. Regev, Uri & Shalit, Haim & Gutierrez, A. P., 1983. "On the optimal allocation of pesticides with increasing resistance: The case of alfalfa weevil," Journal of Environmental Economics and Management, Elsevier, vol. 10(1), pages 86-100, March.
    2. J. Pannell, David, 1991. "Pests and pesticides, risk and risk aversion," Agricultural Economics, Blackwell, vol. 5(4), pages 361-383, August.
    3. Ernst Lutz, 1992. "Agricultural trade liberalization, price changes, and environmental effects," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(1), pages 79-89, January.
    4. Tobey, James A, 1990. "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos, Wiley Blackwell, vol. 43(2), pages 191-209.
    5. Mishan, E J, 1971. "The Postwar Literature on Externalities: An Interpretative Essay," Journal of Economic Literature, American Economic Association, vol. 9(1), pages 1-28, March.
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