title: Increasing social welfare by taxing pesticide externalities in the Indian cotton sector.
abstract: BACKGROUND
  Pesticide use in the Indian cotton industry has decreased with the introduction of Bt cotton, but rates are still high in comparison with other countries. The adoption of alternative strategies, such as integrated pest management, has been slow, even though benefits are potentially high, more so if the full costs of the external effects of the technologies are taken into account. In order to estimate true societal benefits of different strategies, we compare their external costs and economic performance under external cost taxation, using a state-of-the-art partial equilibrium model of the Indian agricultural sector.
  
  
  RESULTS
  Pesticide externalities lower social welfare in the Indian cotton sector by $US 400-2200 million, depending on the technologies employed. A full internalisation reduces producer revenues by $US 100 ha-1if only Bt cotton is used, and by $US 30 ha-1if IPM is another option. Consumers do not start to lose surplus until 20-70% are internalised, and losses are smaller if all technologies are available.
  
  
  CONCLUSIONS
  External pesticide costs can be internalised partially without substantially affecting consumer surplus while still increasing social welfare, but producers need to have access to and the knowledge to employ all available cotton production technologies to minimise losses. © 2016 Society of Chemical Industry.
authors.affiliation: Research Unit, Sustainability and Global Change, Department of Geosciences, Klima Campus, Hamburg University, Grindelberg, Hamburg, Germany. livia.rasche@uni-hamburg.de.
authors.forename: Livia
authors.initials: L
authors.lastname: Rasche
authors.affiliation: Research Unit, Sustainability and Global Change, Department of Geosciences, Klima Campus, Hamburg University, Grindelberg, Hamburg, Germany.
authors.forename: Alexander
authors.initials: A
authors.lastname: Dietl
authors.affiliation: Research Unit, Sustainability and Global Change, Department of Geosciences, Klima Campus, Hamburg University, Grindelberg, Hamburg, Germany.
authors.forename: Nikolinka
authors.initials: N
authors.lastname: Shakhramanyan
authors.affiliation: Research Unit, Sustainability and Global Change, Department of Geosciences, Klima Campus, Hamburg University, Grindelberg, Hamburg, Germany.
authors.forename: Divya
authors.initials: D
authors.lastname: Pandey
authors.affiliation: Research Unit, Sustainability and Global Change, Department of Geosciences, Klima Campus, Hamburg University, Grindelberg, Hamburg, Germany.
authors.forename: Uwe A
authors.initials: UA
authors.lastname: Schneider
mesh_terms: D003365:Costs and Cost Analysis; D018556:Crops, Agricultural / Q000191:economics*; D003368:Gossypium / Q000235:genetics; D006801:Humans; D007194:India; D010575:Pesticides / Q000191:economics*; D030821:Plants, Genetically Modified; D012946:Social Welfare; D013660:Taxes / Q000191:economics*
chemical_list: D010575:Pesticides
keywords: Bt cotton; IPM; Pigovian tax; farmer field schools