Pesticide taxation could be an effective means to reduce pesticide overuse in developing countries
The estimation of the elasticity of pesticide demand in Costa Rica is examined, based on farm-level panel data. Two different models of dual profit functions were used in the estimation process: (1) a single equation panel model; and (2) a system of seemingly unrelated regressions. The data for the estimation were collected in a recall survey covering 3 consecutive years on 325 coffee farms. The single equation panel model yielded results that are consistent with economic theory while the results obtained with the system of demand equations were less conclusive. Results of this empirical research indicate that pesticide taxation could be an effective means to reduce pesticide overuse in developing countries. From authors' summary.
Quarterly Journal of International Agriculture (Germany), v. 44(2) p. 141-153