Grantee Research Project Results
Final Report: The Microeconomy of Chemical Use on Residential Landscapes
EPA Grant Number: R823342Title: The Microeconomy of Chemical Use on Residential Landscapes
Investigators: Zilberman, David , Templeton, Scott R.
Institution: University of California - Berkeley
EPA Project Officer: Chung, Serena
Project Period: May 1, 1995 through May 1, 1998
Project Amount: $302,366
RFA: Socio-Economics (1995) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
Use of pesticides and synthetic fertilizers on residential landscapes is increasingly scrutinized by policy makers. Effective policies should be grounded in an understanding of not only biological and chemical, but also economic reasons for this use and, more generally, for pest control and soil fertility management. Previous and limited research on this subject had not been summarized and there had been almost no relevant economic analyses.
The goal of our research was to characterize and analyze the microeconomy of the use of synthetic fertilizers and pesticides on residential landscapes. The project had these final objectives:
- To characterize the private and external benefits and costs of synthetic chemical use outdoors.
- To characterize the derived demand for synthetic chemicals and household time in yard production by developing appropriate economic models.
- To develop an econometric model of discrete-continuous choice by analyzing the differences between two-part and sample selection statistical models.
- To estimate what percent of households apply synthetic chemicals outdoors and analyze household and yard characteristics that significantly affect this discrete choice.
- To estimate how much money households spend on synthetic chemicals that they apply outdoors, analyze household and yard characteristics that significantly affect this expenditure and time spent on yard work other than chemical application, and identify the main types of retail sellers of these chemicals.
- To estimate what percent of households hire professionals to apply synthetic chemicals outdoors, analyze determinants of this discrete choice relative to do-it-yourself application or non-use, and identify the main types of sellers of professional applications.
- To analyze by use of simple correlations the factors that significantly influence discrete choices about conventional pest management or natural pest control and the use of synthetic fertilizers or organic fertilizers.
- To analyze how synthetic chemical use, land area, and regulations differ between environmental horticulture, which includes yard care and agriculture.
- To explore and use existing data bases to the fullest extent possible and augment them with additional data on yard characteristics.
- To explore policy implications of our analysis of this microeconomy.
Methods and Data. To achieve these objectives, a number of data sources and analytical methods were used. Previous research of biologists, environmental scientists, public health specialists, horticultural extension agents, marketing specialists, and economists was used to identify the benefits and costs of synthetic chemical use on residential landscapes. The National Home and Garden Pesticide Use Survey provided information about the national incidence of do-it-yourself and professional outdoor pesticide use in 1990, the types of pests treated, and the degree to which households read labels and took precautions.
One source of data that we used to analyze determinants of the discrete choice of synthetic chemical use by households was a random telephone survey of adult heads of household in San Francisco that was conducted in early June 1994, by the Public Research Institute at San Francisco State University and the consulting firm Public Affairs Management. We augmented these data with information about mean travel time to work for households with the same zip code from the United States Census 1990, STF3B, P50, and P51. The data were analyzed with a multinomial logit model, which is one representation of discrete, probabilistic choices as functions of various exogenous variables and, in this case, was based on differences in indirect utility functions associated with keeping a yard or not and, if so, using synthetic chemicals or not.
The primary source of data that we used to analyze national incidence of do-it-yourself use of synthetic yard chemicals and expenditures for them was the National Gardening Association's stratified, random survey of adult heads of household in the United States. In addition to having standard questions about expenditures on controlling insects outdoors and various household characteristics, the survey for 1995 was augmented with our questions about yard characteristics, time spent on annual application of synthetic chemicals and weekly yard work during the growing season, and expenditures on do-it-yourself synthetic chemicals other than insecticides. We also augmented these survey data with climatic information in the Cooperative Summary of the Day database from the National Climatic Data Center.
The discrete choice of this do-it-yourself use was analyzed by estimating a normit, or probit, probability model of multiple exogenous variables with maximum likelihood. The continuous choice of spending money for this use was analyzed by estimating a multivariate linear, or multiple regression, model with maximum likelihood. The combined household-climatic data set also was used to analyze a household's discrete choice to hire professional applicators of synthetic chemicals by estimating a multinomial logit model with maximum likelihood.
The Industry Task Force II on 2,4-D Research Data and the Office of Pesticide Programs, U.S. Environmental Protection Agency (EPA) provided estimates of the annual use of various types of pesticides and annual application rates on residential yards, other landscapes used for environmental horticulture, and agricultural landscapes. Our survey of the board of directors of the Professional Lawn Care Association of America provided information for 1987-1991 about growth in customers who pay for professional application of synthetic chemicals, associated revenues, and factors that account for changes during the period. Interviews and documents of local agricultural commissioners, pesticide and water quality regulators, and yard care professionals were our main sources of information about regulation of pesticide use on horticultural landscapes.
Estimation of non-agricultural pesticide use and analyses of regulatory impacts require information about the areas of landscapes used for environmental horticulture. To estimate the area of 10 different types of horticultural landscapes in California, we acquired primary data from the following sources: the household survey of the National Gardening Association for 1995 that we augmented with questions about yard size; the State Controller's Office; surveys of California State University campuses; our update of a previous survey of electric utilities; the 1992 California Community and Urban Forestry Survey; and our mail surveys of the California Department of Transportation, University of California campuses, public school districts, private schools, cemeteries, arboreta, and zoos. We utilized secondary information about the area of golf courses, public parks, and commercial farms that produce flowers and other ornamental plants.
Summary/Accomplishments (Outputs/Outcomes):
At least one nonstructural pesticide has been applied per year on the residential landscapes of about 50 percent of all households in the United States during the past 20 years. The expected benefits of using pesticides and synthetic fertilizers outdoors include more comfort and safety from nuisance pests, better-looking lawns, higher quantities or improved quality of edible produce or flowers, and enhanced property values. When synthetic chemicals prevent or delay plant mortality, people avoid or postpone monetary and time costs of replacing plants and, for shade trees, enjoy lower cooling expenses as well. The private costs of this use include not only the household's money but also its time for purchase, preparation, application, storage, and disposal of the chemicals. A person's dislike of exposure of household members or the surrounding environment to synthetic chemicals also is a private cost. A household model of yard production and consumption can represent these benefits and costs because people use these chemicals and their own time to produce services and goods that they consume but cannot or do not separately market.
Outdoor residential pesticide use can create adverse environmental and human-health impacts. Actual or potential external costs include water pollution, accidental poisonings of humans and pets, loss of beneficial "pests" and earthworms, and avian mortality and reproductive impairment. The possibility of cancer or other adverse health effects on bystanders and applicators of nonaccidental, chronic exposure to yard pesticides is a public concern and the subject of an ongoing, unresolved scientific debate. Synthetic chemical use that prevents plant mortality enables the treated plants to continue to abate noise, moderate temperature, and provide other environmental functions, which can be external benefits.
About 44 million, or 45 percent of all, households in the United States applied synthetic fertilizers, pesticides, or both around their yards in 1995. Households give top priority to controlling arthropod nuisance pests. People care most about their own safety, some nuisance pests impair outdoor recreation, and damage done by weeds or other arthropods to yard plants is usually aesthetic and not immediately financial. Among households in the United States that do all yard care themselves, the odds of synthetic chemical use decrease with time available for household activities and increase with purchasing power, the availability of competing leisure activities, and the degree to which people enjoy gardening rather than lawn care. The number of children in a household has no effect on the odds of this use. In San Francisco, 22 percent of all households use synthetic chemicals and the likelihood of this use, given yard care, increases as measures of time scarcity, purchasing power, and "pro-environment" attitudes increase.
Households spent $1 to $1.3 billion in 1995 on outdoor pesticides that they applied. Estimates of household expenditures for all synthetic chemicals applied outdoors range from $1.5 to $4.2 billion. Among do-it-yourself users of synthetic pesticides or fertilizers, these chemicals as a group are income necessities and expenditures for them also increase with the number of competing leisure activities and the lawn's share of total yard area. The number of children in a household has no effect on chemical expenditures, but a positive effect on time spent in yard work other than chemical application. A household spends more time in yard work other than chemical application if the growing season is longer, the yard is larger, or there are not two spouses who work full-time. Household income has not only a negative direct effect, as an indicator of time costs, but also a positive indirect effect, through ability to purchase chemical expenditures, on yard work. Mass merchandisers account for most of the retail sales of outdoor pesticides?80 percent of the total in 1995?but provide less product expertise than traditional suppliers, namely, nurseries, lawn and garden centers, and hardware stores.
Although the overall percentage of households that had pesticidal treatments has been relatively constant during the past 20 years, the portion that has paid for professional treatments has been growing. In 1995, 11.5 percent of all households in the United States hired professionals to apply pesticides or fertilizers or both to their yards and spent about $3.1 billion for these chemical treatments. Professional pest control becomes more attractive as costs of household time, equipment, or exposure increase or as benefits of professional time, expertise, equipment, or a restricted pesticide increase. Lawn care operators have the largest market share among professional applicators, which also include landscape maintenance companies, arborists and tree service companies, professional gardeners, landscape contractors, and structural pest controllers. Professional applicators of outdoor residential pesticides are more regulated than householders who apply them, but are not monitored as much as applicators of agricultural pesticides.
In general, households are less likely to use pesticides, read labels, take precautions, and practice integrated pest management than commercial agricultural producers. Households and lawn care operators apply herbicides at higher rates and insecticides and fungicides at lower rates than most of these farmers. These behavioral differences occur because households and, to some extent, lawn care operators face less regulation, treat considerably smaller "farms" with different "cropping patterns," and have more nonfinancial reasons for management of pests or soil fertility than commercial agricultural producers.
Landscapes associated with environmental horticulture in California in 1995 covered about 1.37 million acres with these subareas: 679,000 acres of residential yards; 158,000 acres of maintained vegetation at parks; 158,000 acres of vegetation around electric power lines; 131,000 acres of golf courses; 109,000 acres of school yards; 72,000 acres of roadside vegetation, which included about 25,000 acres of power-line vegetation; 18,000 acres of cemetery grounds; 2,000 acres of botanical gardens and zoo grounds; and 67,000 acres of production nurseries, greenhouses, and other commercial farms that produced ornamental plants. In contrast to the last subarea, harvested agricultural crops in the state covered 7.7 million acres in 1992.
Conclusions. Our economic perspective, together with scientific information on pest and soil fertility management, can be useful for creating better policies to reduce adverse environmental or public-health impacts. Public campaigns to reduce use of synthetic chemicals and promote integrated pest or plant management (IPM) need to address the economic motivations for that use?namely, convenience and efficacy?and should use scientific evidence of childhood exposure risks to encourage households with children to take extra precaution. Politically feasible taxation of do-it-yourself synthetic chemicals as a group is not likely to substantially reduce use, but could raise revenues for regulatory enforcement, development of less-toxic alternatives, and educational campaigns. Taxes or subsidies are more effective at decreasing or increasing purchases, respectively, the more they target specific undesired or desired products because demand is more price elastic as the number of untaxed or unsubsidized substitutes increase. However, selective bans on specific active ingredients, uses, locales, and formulations?EPA's main approach for regulating pesticides?are likely to be less costly than taxes or subsidies in achieving the same environmental goals because administrative costs are probably lower for use of these selective controls than price policies. Public abatement districts for nuisance pests and mobile pests that damage valuable yard plants are politically feasible and could reduce cumulative impacts of pesticide misuse by households. Policies that make professional IPM for lawns less expensive are likely to induce some households to begin using this service and, thereby, might reduce adverse impacts of conventional do-it-yourself lawn treatments.
Better data are needed for future economic research to be more useful to policy makers for assessing costs and benefits of synthetic chemical policies. In theory, estimation of household costs of regulation requires data on quantities of the regulated item(s) and any close substitutes purchased in actual or constructed markets at various prices to estimate derived demand for the item(s). Data on actual quantities purchased are more accurate, but also more time-consuming and expensive to collect than data from hypothetical or experimental markets. A final method is to estimate the time and money costs of restoring outdoor residential landscapes to their pre-regulation states by replacing affected plants and produce with purchased ones as similar in quality and type to the originals as possible or by using substitutes for the regulated chemical(s). This method is cheaper and quicker than others but the conditions under which restoration costs accurately represent welfare losses to households need to be analyzed.
Better biophysical and economic data also are needed to estimate risks of synthetic chemicals and benefits of risk-reducing regulation. California's mandatory pesticide-use reporting does better than any other program in the world in collecting data about the actual timing, location, and quantities of pesticides applied by licensed applicators for hire. Estimation of the benefits of risk reduction and the costs of replacing regulated chemicals with substitutes could be improved if similar data were collected by other states individually or regionally. However, the California program does not comprehensively monitor applications of pesticides by households, schools, and other institutions that use noncommercial, in-house personnel. States should require in-house applicators other than households to have a license, report their do-it-yourself applications, and break down the report of area treated for landscape and right-of-way maintenance into more precise types of horticultural landscapes, such as cemetery grounds and roadside vegetation.
One possible method of estimating actual quantities and rates of do-it-yourself applications by households around their yards and, if states do not expand licensing and mandatory reporting, other noncommercial, in-house applicators would be to acquire scanned, barcode data on purchases of specific pesticide products from retailers and, if necessary, wholesalers in a county and estimate the percentage of specific purchased materials applied, the type of landscape treated, the percentage of the landscape treated, and the area of different types of horticultural landscapes by state or county. In addition to its usefulness in monitoring synthetic chemical use, the spatial information also would help policy makers to assess the environmental impacts of land-use changes, green waste disposal, and the use of leaf blowers, lawn mowers, nonnative plants, and water for environmental horticulture.
Journal Articles on this Report : 3 Displayed | Download in RIS Format
Other project views: | All 12 publications | 3 publications in selected types | All 3 journal articles |
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Type | Citation | ||
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Templeton SR, Yoo SJ, Zilberman D. An economic analysis of yard care and synthetic chemical use: the case of San Francisco. Environmental and Resource Economics 1999;14(3):385-397. |
R823342 (Final) |
Exit Exit |
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Zilberman D, Yoo SJ, Templeton SR. An economic perspective on outdoor residential pesticide use. Environmental Science & Technology 1998;32(17):416A-423A. |
R823342 (Final) |
not available |
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Templeton S, Brown C, Goldman G, Yoo SJ, Pradhan V. An economic analysis of environmental horticulture with a focus on California. HortScience 2000;35(6):987-992. |
R823342 (Final) |
not available |
Supplemental Keywords:
land use, pesticides, fertilizers, pest control, modeling, environmental horticulture, California, CA., RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Toxics, Ecology, pesticides, decision-making, Economics & Decision Making, Social Science, time-preference rates, ecosystem valuation, economic incentives, environmental values, microeconomy, environmental policy, pesticide regulation, residential landscaping, water quality, econometric analysis, household chemical useProgress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.