Farmer risk assessment for voluntary insecticide reduction

Abstract

We develop a theoretical basis for voluntary reduction in insecticide use, and quantify the subjective value farmers place on reducing environmental risk. The indirect utility model is used to quantify the acceptable financial cost of eliminating one insecticide application in return for avoidance of moderate risk to the environment. The mean valuation in Illinois, Iowa, Nebraska and Ohio, USA, is $8.25 per acre. Acceptable yield loss increases with importance of environmental goods, with formal education and with farming experience. Valuation increases with total expenditure on insecticides up to $89 per acre. Decomposition of the Tobit model used in estimation indicates that voluntary programs should target intensification rather than extensification of participation to maximize effectiveness.