Managing Pesticide Resistance: Input‐Oriented Versus Result‐Oriented Tax Systems

ABSTRACT Pesticide resistance is a phenomenon that is becoming increasingly worrying. Heavy reliance on pesticides in the agricultural sector is at the core of this problem. In this paper, we analyse how farmers' pest control strategies can reduce pesticide resistance. We show that Integrated Pest Management is effective in limiting the growth of pesticide resistance. However, because one farmer's choices affect those of their neighbours, externalities remain and public policies are needed. We analyse two tax systems where one is polluting input‐oriented and the other is result‐oriented. We derive conditions under which both tax systems lead to socially optimal strategies. We show that a result‐oriented scheme needs less information on farmers' time preferences.