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Do Farmers Internalise Environmental Spillovers of Pesticides in Production?


  • Theodoros Skevas,

  • Spiro E. Stefanou,

  • Alfons Oude Lansink

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    • Theodoros Skevas is a PhD graduate, Spiro Stefanou is a Professor and Alfons Oude Lansink is a Professor with the Business Economics Group, Wageningen University, Wageningen, The Netherlands. E-mail: for correspondence. Spiro Stefanou is also affiliated with the Department of Agricultural Economics, Sociology and Education, Pennsylvania State University, University Park, PA, USA. The authors would like to thank the three anonymous referees and the Editor for their useful comments. Financial support by the EU-funded project, TEAMPEST, a collaborative project in the Seventh Framework Programme Theme 2: Food, Agriculture and Fisheries, and Biotechnology (, is gratefully acknowledged.


Pesticides are used in agriculture to protect crops from pests and diseases, with indiscriminate pesticide use having several adverse effects on the environment and human health. An important question is whether the environmental spillovers of pesticides also affect the farmers’ production environment. We use a model of optimal pesticide use that explicitly incorporates the symmetric and asymmetric effect of pesticides’ environmental spillovers on crop production. The application focuses on panel data from Dutch cash crop producers. We show that pesticides have a positive direct impact on output and a negative indirect impact through their effects on the production environment.