Assessing market failures driving pesticide resistance

Abstract

Greater use of a pesticide usually has two dynamic and countervailing effects on pest populations: (i) To the extent that susceptibility remains in the population, it reduces that population’s growth (population suppression) or crop damage, and (ii) it selects for resistant genotypes, which can increase future crop damage (resistance selection). Because these effects occur simultaneously, it is challenging to disentangle them in field settings. Economists studying pesticide resistance have theorized that two potential market failures inherent to the problem can work in opposing directions; it is an empirical matter whether farms are over- or underusing a pesticide in any given context, compared to what would be optimal for their collective profits. On page 943 of this issue, Ye et al. (1) describe the use of transgenic Bacillus thuringus (Bt) corn to provide an important example of how to empirically assess the balance of these market failures in an applied, policy-relevant setting.