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United States Department of Agriculture

Agricultural Research Service

Research Project: ECOLOGICALLY-BASED PEST MANAGEMENT STRATEGIES FOR WESTERN COTTON

Location: Pest Management and Biocontrol Research

Title: Market-based Instruments for optimal control of Invasive Insect Species: B. tabaci in Arizona.

Authors
item Richards, Timothy -
item Ellsworth, Peter -
item Tronstad, Russ -
item Naranjo, Steven

Submitted to: Journal of Agricultural and Resource Economics
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: September 30, 2010
Publication Date: December 8, 2010
Citation: Richards, T.J., Ellsworth, P., Tronstad, R., Naranjo, S.E. 2010. Market-based instruments for optimal control of invasive insect species: B. tabaci in Arizona. Journal of Agricultural and Resource Economics. 35:349-367.

Interpretive Summary: The whitefly, Bemisia tabaci, is a worldwide pest of agricultural. It invaded the U.S. in the mid 1980’s and caused significant impacts on agriculture to multiple states. Invasive insect species in general represent a significant economic risk to both the financial viability of agricultural producers and to the sustainability of U.S. agriculture. In this study we investigate two market-based institutional mechanisms for invasive species control: a system of taxes on insect population numbers, and a marketable permit system that allows each grower only a certain amount of infestation. A spatially-explicit model was developed and parameterized to examine these scenarios using data from an experimental system Under realistic parameter assumptions we find that a system of permits is preferred to a system of taxes. Moreover, we show that a steeper marginal social damage function favors the use of taxes, while a steeper control-cost function favors permits, which is likely to be more politically-acceptable than a tax-based systems.

Technical Abstract: Invasive insect species represent a significant economic risk to both the financial viability of agricultural producers and to the sustainability of U.S. agriculture more generally. With the rapid growth of international trade in agricultural commodities of all types, agricultural systems in the U.S. are under constant threat that new species will be introduced, spread and thrive in an environment lacking natural predators. The objective of this study is to investigate whether taxes or permits is preferred for the control of spatial-temporal externalities that arise in the management of invasive insect species. We apply our model to a specific insect – Bemisia tabaci, in Arizona. Welfare outcomes are compared under scenarios of only privately-optimal insect control, private control with taxes, and private control with permits relative to a socially-optimal benchmark. Under realistic parameter assumptions we find that a system of permits is preferred to a system of taxes. Moreover, we show that a steeper marginal social damage function favors the use of taxes, while a steeper control-cost function favors permits, which is likely to be more politically-acceptable than a tax-based systems

Last Modified: 4/17/2014
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