| Because many pests and beneficial organisms are mobile, the pest control choices of individual growers may impose externalities, positive or negative, on their neighbors. This dissertation identifies situations where such externalities may exist between both homogeneous and heterogeneous growers. In many cases, multiple externalities occur simultaneously and sometimes in opposite directions. Addressing these externalities could lead to a more efficient use of agricultural resources, including pesticides, which are a significant and growing share of production costs.;This dissertation begins with an empirical analysis of the California citrus industry. Many citrus growers utilize beneficial insects, known as natural enemies, because they either eat or parasitize citrus pests. However, some pesticides are toxic to these natural enemies. A mail survey sent to California citrus growers inquired about their pest control decisions, farm and grower characteristics, and organic certification status. The analysis of the 422 responses presents evidence that the use of pesticides on surrounding citrus and/or non-citrus fields reduces the prevalence of natural enemies on respondents' fields.;The spatial-dynamic theoretical models, including an analytical model and two numerical models with the same basic framework, presented in this dissertation analyze two neighboring growers. One pest and one natural enemy of the pest move between the two fields. The models consider two types of pest control decisions. First, the growers choose the pesticide application rate or equivalently, the number of applications of a given rate made during a growing season. The models predict that growers will tend to apply too little pest control in many, but not all, situations. In other words, in some situations, the private decisions are not inefficient. In some cases, increased grower heterogeneity with respect to output price and pesticide price and efficacy, however, will actually lessen this tendency to make inefficient decisions, compared to growers who are homogeneous in terms of pesticide attributes and economic parameters.;In the second type of pest control decision considered by this dissertation, the conventional grower chooses between a broad-spectrum pesticide that kills the natural enemy and a targeted pesticide that does not. The neighboring organic grower chooses between an organic pesticide, augmentation of natural enemies, or a combination of the two methods. Due to lower efficacy of the organic pesticide, the organic grower relies more heavily on control by the natural enemy than does the conventional grower. Varying the relative price and efficacy of the targeted pesticide determines how these attributes affect the divergence between the socially optimal and Nash equilibrium pest control decisions. Given the relative efficacy, differences in relative prices lead to more frequent inefficient decisions and larger welfare losses than differences in relative efficacy given the relative price. Thus, an analysis that considers only one conventional pesticide option cannot capture the tradeoffs between chemically controlling the pest and conserving natural enemies. |
