Transcript Pesticides and Toxics

Chapter 20
Controlling Pesticides and
Toxic Chemicals
© 2007 Thomson Learning/South-Western
Thomas and Callan, Environmental Economics
Pesticide Controls
Overview of Pesticide Regulation
Rulings on Pesticide Use
 Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) of
1947 and subsequent amendments regulate pesticide use


Controls storage, transportation, and disposal of pesticides,
including labeling regulations
Controls use, disposal, refill, and reuse of pesticide containers
 Chief regulatory instrument is registration of new pesticides and
reregistration of those already on the market
 Recent revisions made through the Pesticide Registration
Improvement Act of 2003

Main objectives include promoting quicker decisions for reducedrisk pesticides and creating a new registration fee system
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Overview of Pesticide Regulation
Rulings on Pesticide Residues
 Food Quality Protection Act (FQPA) of 1996
amended FIFRA as well as the Federal Food, Drug,
and Cosmetic Act (FFDCA), which sets tolerances for
pesticide residues left on food
 FQPA provides consistency by establishing a single
health-based standard for all pesticides in all foods
and gives special attention to pesticide risks faced by
infants and children
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Registration of New Pesticides
 Pesticide registration refers to formally listing a
pesticide with the EPA based on risk-benefit analysis
before it can be sold or distributed

Risk-benefit analysis is an assessment of risks of a
hazard along with the benefits to society of not regulating
that hazard
 At registration, EPA sets the pesticide tolerance,

A pesticide tolerance is the legal limit on the amount of
pesticide residue allowed on raw or processed foods
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Reregistration of Existing Pesticides
 Pesticide reregistration is a formal reevaluation of
a previously licensed pesticide on the market
 At the final phase of reregistration, EPA issues a
Reregistration Eligibility Decision (RED)

An RED is a document that gives the results of the
EPA’s risk assessment of the pesticide
 EPA must reassess each pesticide every 15 years
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New Policy Direction
 Objective of the Pesticide Environmental
Stewardship Program (PESP) it to achieve pollution
prevention

A voluntary program whose main objective is to reduce
pesticide use—not just regulate it
 PESP promotes Integrated Pest Management (IPM)

Methods that foster more selective use of pesticides and
greater reliance on natural deterrents
 Sets up partnerships with pesticide users to
implement preventive strategies
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Analyzing FIFRA
Risk-Benefit Analysis
 According to FIFRA, costs and benefits of
pesticide use are to be considered in determining
risk, suggesting risk-benefit analysis

Risks of using a pesticide should be weighed
against benefits, such as greater crop yields
 In practice, risks are the dominant factor in EPA's
registration decisions
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Assessing Risks
 For new pesticides, risks are evaluated using data on
health and environmental effects submitted by
manufacturers as part of the registration application


If risks are negligible, EPA usually assumes that private
benefits exist because manufacturer is willing to absorb high
registration costs
If risks are greater than negligible, onus is on manufacturer
to formulate a risk reduction strategy or show that benefits
exceed risks
 For existing pesticides, a formal benefit analysis is
done by determining and monetizing biological gains,
such as increased crop yields
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Risk Assessment Problems
 Scientists question EPA's risk assessment
methods

Some argue risks are underestimated


Due to EPA’s lack of attention to inert ingredients and
cumulative effects from using a combination of pesticides
Some argue risks are overestimated

Due to findings from animal bioassays that overstate the
potential harm to humans
 Federal government's environmental priorities
do not align consistently with expert risk ranking
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Benefit Assessment Problems
 Primary incremental benefits are reduced plant
damage and increased crop yields

In theory would be modeled as a supply (S) increase, with
incremental benefits estimated as change in consumer and
producer surpluses
 Problems in practice


Precise information is likely not available for demand, prepesticide supply, and post-pesticide supply for every
market in which the pesticide were used
Difficult to estimate secondary benefits such as improved
worker productivity linked to greater food supplies
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Toxic Chemical
Controls
Overview of Toxics Regulation
 Toxic Substances Control Act (TSCA) of 1976 is aimed
at identifying and controlling chemicals that present a
health or environmental risk before they are introduced
into commerce
 Gives EPA authority to collect data on chemical risks
from producers, to call for testing on existing chemicals,
and to review new chemicals before they are made
available for use
 Requires compilation of the TSCA Inventory
 A database of all chemicals commercially produced
or processed in the U.S.
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Controlling Chemical Use
New Chemicals
 For new chemicals, TSCA requires producers
to notify government at least 90 days before
they plan to produce or import the substance

A new chemical is one not listed in the TSCA
inventory
 Notification is done via a premanufacture
notice (PMN)
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Controlling Chemical Use
Existing Chemicals
 For existing chemicals, manufacturers must
notify the EPA if any chemical is found to
present a substantial risk to health or the
environment

An existing chemical is one listed in the TSCA
inventory
 EPA response can vary and may include
labeling requirements or outright ban
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New Policy Direction
 Green Chemistry Program promotes the
development and use of innovative technologies
to prevent pollution by minimizing or eliminating
production of hazardous substances
 Extended Product Responsibility (EPR), also
known as product stewardship, calls for
commitment by all participants in the product
cycle to reduce environmental effects
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Analyzing TSCA
Risk-Benefit Analysis
 TSCA's objectives are to regulate chemicals
posing an unreasonable risk
 Use of risk-benefit analysis in the chemical approval
process is implied in a Congressional report
discussing how “unreasonable risk” is determined
 Therefore, TSCA empowers the EPA to ban or
restrict use of toxic chemicals that do not pass
the risk-benefit test
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Risk Assessment Problems
 Testing is done only upon formal request by EPA,
so some risks are not discovered until after a
chemical has been introduced into commerce
 Reportedly, risk assessments have been done on
relatively small proportion of registered chemicals
 Government's environmental priorities do not
always align with expert risk rankings
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Benefit Assessment Problems
 Estimating social benefits is particularly difficult
for chemical use because the benefits accrue in
various ways and across multiple markets
 Expected benefits are difficult to measure
because of so many substances to assess


Over 76,000 chemicals are registered
Over 1,000 premanufacture notices (PMNs) are
filed each year
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Bias Against New Chemicals
 Bias exists because government is more efficient at
testing new substances than it is for existing chemicals
 Analysis of existing chemicals is complex and timeintensive relative to rules for reviewing new substances
 Result is that chemical producers have an incentive to
continue selling existing, and possibly more
dangerous, substances, to avoid costs of introducing
new substances that will be subject to government’s
more efficient testing
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Economic Analysis and
Market-Based Solution
Inefficient Outcomes
 Nothing in FIFRA or TSCA assures efficiency
 In both the pesticide and chemical markets, source of
inefficiency is a negative consumption externality
associated with use

Modeled as a negative marginal external benefit (MEB),
that causes marginal social benefit (MSB) to lie below
marginal private benefit (MPB)
 Without government intervention, the negative MEB
is ignored, so competitive equilibrium output, QC,
where MPB = MPC, is higher than efficient output
level, QE, where MSB = MSC

Result is overallocation of resources to production
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Market-Based Solution
Product Charge
 To internalize the consumption externality, a
product charge could be implemented as a unit
tax (t) on the chemical.
 To achieve efficiency, t must equal MEB at QE

Modeled as a shift up of MPC, by the amount of the tax,
raising effective product price to (PE + t)
 Product charges are used by some state
governments to discourage chemical use, and by
other countries, such as Belgium, Denmark,
Norway, and Sweden
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Modeling the Product Charge
Price
($)
Product charge
PE + t
St = MPCt = MSCt
S = MPC = MSC
D = MPB
MSB = MPB + MEB
0
QE
QC
Q of Chemicals
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