Pesticides, Preference Heterogeneity and Environmental Taxes

In this paper we present results from two Choice experiments (CE) designed to take account of the different negative externalities associated with pesticide use in agricultural production. For cereals production the most likely impact of pesticide use is a reduction in environmental quality. For fruit and vegetable production, the negative externality is on consumer health. Using latent class models we find evidence of the presence of preference heterogeneity regarding pesticide reduction in the population. With respect to consumer health, respondents’ WTP for a 100 percent reduction in the use of pesticides in the UK is a 105 percent increase in the weekly fr uit and vegetable food bill. For the environmental quality the WTP for a 100 percent reduction in the pesticide use in the UK is a 184 percent increase in the price of a loaf. To place our WTP estimates in a policycontext we convert them into an equivalent pesticide tax by type of externality. Our tax estimates suggest that pesticide taxes based on the primary externality resulting from a particular mode of agricultural production are a credible policy option that warrant further consideration.