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Integrated Pest Management Profitable
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Newsletter: | Volume: III # 11 November, 1996 |
Source Reports: | Fernandez-Cornejo, Jorge "The Microeconomic Impact of IPM Adoption: Theory and Application" Agricultural and Resource Economics Review Volume 25 Number 2 October 1996 pages 149-160 |
Subject: | 3. Cost and Economic Impacts Analyses 4. Economic Incentives and Other Innovative Approaches |
Environmental Media/Problem: | d. Chemicals d. Chemicals - Pesticides |
| Newsletter Article Text: |
| U.S. farmers spent $7.2 billion on pesticides in 1994. Integrated Pest Management (IPM) was developed to address some of the health and environmental concerns posed by pesticides as well as the problem of pest resistance. IPM attempts to optimize pest control economically and ecologically. Through a two-staged model Fernandez-Cornejo accounts for self selectivity and simultaneity, and derives pesticide demand and yield equations which are consistent with a profit function. Estimation errors produced by self selectivity arise from the fact that there may be systematic differences between adopters and nonadopters. Simultaneity arises from unmeasured variables correlated with both IPM adoption and pesticide demand, such as the size of the pest population, pest resistance, farm location, and grower perceptions. IPM techniques for insects and for diseases are evaluated separately. The results indicate that fresh market tomato growers who adopt IPM for insects apply 24% fewer insecticides than non-adopters. The annual yield at 28,900 pounds per acre for adopters is 1.2% higher than for non adopters. Profits are 15.9% lower. Growers who adopt IPM for diseases apply 18% fewer insecticides. The annual yield is 0.4% higher, and profits 9% lower. The Fernandez-Cornjos model indicates that the impact of IPM for insects on yields is positive but insignificant, and of IPM for diseases on yields is negative, and also not significant. The effect of IPM adoption on profits is positive but small: the elasticities of variable farm profits with respect to the probability of adoption of IPM is 0.01 for insects and 0.27 for diseases. An increase in the probability of insect IPM increases variable farm profits by 0.1% while a 10% increase in the probability of disease IPM adoption raises variable profits by 2.7%. |