The Use of Marketable Permits for Pesticide Control

EPA Grant Number: R829612
Title: The Use of Marketable Permits for Pesticide Control
Investigators: Zilberman, David
Current Investigators: Zilberman, David , Sunding, David
Institution: University of California - Berkeley
EPA Project Officer: Hahn, Intaek
Project Period: May 1, 2002 through April 30, 2005
Project Amount: $175,217
RFA: Market Mechanisms and Incentives for Environmental Management (2001) RFA Text |  Recipients Lists
Research Category: Economics and Decision Sciences


Pesticide regulation concentrates almost exclusively on implementing direct controls to reduce the environmental and public health risks associated with pesticide use. The continued use of traditional direct controls to achieve these standards is not the most efficient solution in all cases. Economists have demonstrated the efficiency gains that are available when flexible market based incentive policies are implemented. This study will provide the conditions under which market based policies are efficient, describe the institutional design of these policies, and determine how they can be realistically implemented along side exiting direct control regulation. The determination of what is 'efficient' will be a comparison between changes in economic welfare and changes in environmental quality.


To achieve these objectives, we will first develop a theoretical model which describes the interaction of pesticide use and pesticide regulation. This model will incorporate the differences of pesticide use by region, crop and farmer characteristics. The identification of this heterogeneity is necessary for marketable permits to not just be a theoretical possibility, but also a realistic policy alternative. A computable equilibrium simulation model will then be constructed using the information on parameter relationships obtained from the theoretical model. Economic simulations will focus primarily on Methyl Bromide but also look at particular Organophosphate pesticides. Simulations will be used to examine market incentive regulations to limit specific pesticides for markets with uniform and differentiated permits of various dimensionalities all integrated along side existing direct controls.

Expected Results:

Information on and a better understanding of market based policies will allow for more efficient and effective protection of environmental and public health. The results of this research benefit all of society through lower environmental compliance costs, smaller effects of producer competitiveness, improved environmental and health risk management, and the potential to encourage improvements in pesticide use technology that results in more effective and efficient pesticide use.

Publications and Presentations:

Publications have been submitted on this project: View all 15 publications for this project

Journal Articles:

Journal Articles have been submitted on this project: View all 3 journal articles for this project

Supplemental Keywords:

pollution prevention, public policy, decision making, social science, agriculture, economic incentives, pollution trades., RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Economics, Ecology and Ecosystems, Market mechanisms, Social Science, effects of policy instruments, financial mechanisms, market incentives, market-based mechanisms, policy instruments, impact of federal policy instruments, policy incentives, policy making, decision making, incentives, socioeconomics, pesticide control, environmental impact fees, pollution fees, pollution allowance trading, public policy, allowance allocation, permit trading, allowance market performance, environmental economics

Progress and Final Reports:

  • 2002 Progress Report
  • 2003
  • Final Report