Environmental Economics of Pollination

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The pollination of crops by domesticated bees and wild pollinators is easily and often imagined as an accidental but essential process in agriculture. The notion that pollinators are overlooked despite their essential role in food production is widespread among the general public, as well as in policy debates concerning all issues related to pollinators, ranging from regulation of pesticides to conservation of habitat for wild bees, to support of beekeeping as an industry or as a hobby. Meade was the first to formalize this notion by making pollination a canonical example of beneficial externality in economics and arguing that subsidies should be established to ensure that honeybees are provided in optimal numbers to pollinate crops. In the first two decades of the 21st century, the same argument, but this time focusing on wild pollinators, has been proposed and supported by a large and growing literature in conservation ecology. However, a thorough review of contributions on the economics of pollination reveals several misconceptions behind the appealing fable of pollination externalities. The most striking rebuttal of Meade’s argument comes from the study of pollination markets, where beekeepers and crop growers engage in voluntary transactions called pollination contracts. A small economics literature formalizes the issue of incentives solved by these transactions and provides a detailed empirical analysis of many complex aspects, such as the establishment of standards for the monitoring of bee densities or the impact of seasonality of blooms and bee population dynamics on pollination prices. Outside pollination markets, economists have made rather sparse and partial contributions to several other important issues related to pollination in agriculture, such as valuation of pollination services, conservation of wild pollinators, and regulation of pesticides that impact pollinators. On these topics, studies have largely been published in non-economics journals and economists stand to make valuable contributions by applying and popularizing the concepts of incentive design, information costs, and other key insights of environmental economics in the study of pollination.