Effective pest management ensures the safety and quality of California produce, protects producers, maintains export market access, and supports lower food prices. Climate change and an increasingly interconnected global economy continue to increase pest pressure in specialty crops. An ongoing fruit fly outbreak —among the worst in California’s history—has caused widespread quarantines resulting in direct losses to growers. The new carpophilus beetle is infecting nut orchards across the state. Also, recent outbreaks of INSV and Pythium wilt infections have caused substantial crop damage and grower losses. This puts emphasis on the importance of pest exclusion, detection, eradication, and management, as well as research and development (R&D) to bring new products to market.
California launched its new Sustainable Pest Management (SPM) Roadmap in 2023. SPM is broadly defined as “integrated pest management (IPM) with broader consideration of human health and social equity, environmental protections and economic vitality.” California Bountiful Foundation engaged ERA Economics to develop an economic framework that can be applied to assess the impact of potential policy changes on businesses throughout the agricultural supply chain, and consumers. This considers four SPM “leverage points” for achieving agricultural SPM:
- Enhance knowledge, research, and technical assistance.
- Align pest control advisors with SPM.
- Reduce economic risk for growers transitioning to SPM.
- Activate markets to drive SPM.
We evaluated the economic implications of components of SPM, the state pesticide registration process, and the economic benefits of R&D to bring new products to market. SPM includes provisions to target removal of certain priority pesticides, while reducing economic risk to growers and activating new markets to drive SPM. Removing registered pesticides increases the need for new pesticides to maintain current pest management and achieve broadened goals under SPM. However, pesticides that are federally approved can be delayed for use in California, sometimes by 1–3 years or more.
Working with industry experts, we developed an economic analysis focusing on the lettuce industry, given its importance in California and pest pressures. We considered the impact of selected pesticide restrictions on the lettuce industry, the economic implications of California’s pesticide registration process, and the implications for research and development (R&D) investment. More broadly, the framework serves as a template for measuring the economic impacts of proposed regulations on specialty crop industries and consumers. We can evaluate changes in consumer surplus and producer surplus at different points in the supply chain; changes in conventional and organic lettuce production; and changes in the U.S. market share for lettuce from California, Arizona, and Mexico.
The economic analysis of pesticide restrictions (neonicotinoids and pyrethroids) and the registration process applied to the example lettuce industry found that limiting neonicotinoids and pyrethroids shifts lettuce production to other regions (i.e., Arizona and Mexico). Because these regions do not have the same pesticide restrictions, the goal of California’s SPM is hindered. California production shifts to other states/countries. This is sometimes referred to as regulatory leakage.
Restricting neonicotinoids and pyrethroids would decrease California production by 7.3% and a decrease in producer surplus by $160.3 million and consumer surplus by $694.28 million.
The analysis also found that California’s pesticide registration process for new products is slow. This process can delay pesticide adoption in California by 1–3 years relative to other states. In addition to delaying registrants from bringing new products to market, this discourages investment in R&D. As a result, specialty crop growers in California would have more limited pest management alternatives compared to out-of-state growers unaffected by SPM.
The slow registration process decreases California production by 1% and decreases producer surplus by $42.8 million and consumer surplus by $139.3 million.
Ideally, SPM policy changes would encourage R&D in alternative pest management product and tools (enhancing research is a key pillar of SPM). R&D in agriculture is generally underinvested. The private and public benefits of specialty crop R&D are small compared to major commodity crops. And the registration process in California is slow and costly. These factors appear to cause R&D investments in specialty crops to be especially low. In short, creating pesticide restrictions prior to development of alternative pest management practices would have adverse effects on California growers, other businesses, and consumers as production shifts out of state.
The next steps following this study would be to quantify and compare long-term changes to California agricultural production and pest management R&D.
