Controlling Pesticides and Toxic Chemicals

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Controlling Pesticides and Toxic Chemicals

• Chapter 20

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Pesticide Controls
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Overview of Pesticide RegulationRulings on
Pesticide Use

• Federal Insecticide, Fungicide, and Rodenticide
  Act (FIFRA) of 1947 and subsequent amendments
  regulate pesticide use
• Controls storage, transportation, and disposal of
  pesticides, including labeling regulations
• Controls use, disposal, refill, and reuse of
  pesticide containers
• Chief regulatory instrument is registration of
  new pesticides and reregistration of those
  already on the market
• Recent revisions made through the Pesticide
  Registration Improvement Act of 2003
• Main objectives include promoting quicker
  decisions for reduced-risk pesticides and
  creating a new registration fee system

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Overview of Pesticide Regulation Rulings on
Pesticide Residues

• Food Quality Protection Act (FQPA) of 1996
  amended FIFRA as well as the Federal Food, Drug,
  and Cosmetic Act (FFDCA), which sets tolerances
  for pesticide residues left on food
• FQPA provides consistency by establishing a
  single health-based standard for all pesticides
  in all foods and gives special attention to
  pesticide risks faced by infants and children

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Registration of New Pesticides

• Pesticide registration refers to formally listing
  a pesticide with the EPA based on risk-benefit
  analysis before it can be sold or distributed
• Risk-benefit analysis is an assessment of risks
  of a hazard along with the benefits to society of
  not regulating that hazard
• At registration, EPA sets the pesticide
  tolerance,
• A pesticide tolerance is the legal limit on the
  amount of pesticide residue allowed on raw or
  processed foods

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Reregistration of Existing Pesticides

• Pesticide reregistration is a formal reevaluation
  of a previously licensed pesticide on the market
• At the final phase of reregistration, EPA issues
  a Reregistration Eligibility Decision (RED)
• An RED is a document that gives the results of
  the EPAs risk assessment of the pesticide
• EPA must reassess each pesticide every 15 years

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New Policy Direction

• Objective of the Pesticide Environmental
  Stewardship Program (PESP) it to achieve
  pollution prevention
• A voluntary program whose main objective is to
  reduce pesticide usenot just regulate it
• PESP promotes Integrated Pest Management (IPM)
• Methods that foster more selective use of
  pesticides and greater reliance on natural
  deterrents
• Sets up partnerships with pesticide users to
  implement preventive strategies

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Analyzing FIFRA
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Risk-Benefit Analysis

• According to FIFRA, costs and benefits of
  pesticide use are to be considered in determining
  risk, suggesting risk-benefit analysis
• Risks of using a pesticide should be weighed
  against benefits, such as greater crop yields
• In practice, risks are the dominant factor in
  EPA's registration decisions

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Assessing Risks

• For new pesticides, risks are evaluated using
  data on health and environmental effects
  submitted by manufacturers as part of the
  registration application
• If risks are negligible, EPA usually assumes that
  private benefits exist because manufacturer is
  willing to absorb high registration costs
• If risks are greater than negligible, onus is on
  manufacturer to formulate a risk reduction
  strategy or show that benefits exceed risks
• For existing pesticides, a formal benefit
  analysis is done by determining and monetizing
  biological gains, such as increased crop yields

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Risk Assessment Problems

• Scientists question EPA's risk assessment methods
  
• Some argue risks are underestimated
• Due to EPAs lack of attention to inert
  ingredients and cumulative effects from using a
  combination of pesticides
• Some argue risks are overestimated
• Due to findings from animal bioassays that
  overstate the potential harm to humans
• Federal government's environmental priorities do
  not align consistently with expert risk ranking

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Benefit Assessment Problems

• Primary incremental benefits are reduced plant
  damage and increased crop yields
• In theory would be modeled as a supply (S)
  increase, with incremental benefits estimated as
  change in consumer and producer surpluses
• Problems in practice
• Precise information is likely not available for
  demand, pre-pesticide supply, and post-pesticide
  supply for every market in which the pesticide
  were used
• Difficult to estimate secondary benefits such as
  improved worker productivity linked to greater
  food supplies

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Toxic Chemical Controls
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Overview of Toxics Regulation

• Toxic Substances Control Act (TSCA) of 1976 is
  aimed at identifying and controlling chemicals
  that present a health or environmental risk
  before they are introduced into commerce
• Gives EPA authority to collect data on chemical
  risks from producers, to call for testing on
  existing chemicals, and to review new chemicals
  before they are made available for use
• Requires compilation of the TSCA Inventory
• A database of all chemicals commercially produced
  or processed in the U.S.

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Controlling Chemical UseNew Chemicals

• For new chemicals, TSCA requires producers to
  notify government at least 90 days before they
  plan to produce or import the substance
• A new chemical is one not listed in the TSCA
  inventory
• Notification is done via a premanufacture notice
  (PMN)

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Controlling Chemical UseExisting Chemicals

• For existing chemicals, manufacturers must
  notify the EPA if any chemical is found to
  present a substantial risk to health or the
  environment
• An existing chemical is one listed in the TSCA
  inventory
• EPA response can vary and may include labeling
  requirements or outright ban

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New Policy Direction

• Green Chemistry Program promotes the development
  and use of innovative technologies to prevent
  pollution by minimizing or eliminating production
  of hazardous substances
• Extended Product Responsibility (EPR), also known
  as product stewardship, calls for commitment by
  all participants in the product cycle to reduce
  environmental effects

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Analyzing TSCA
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Risk-Benefit Analysis

• TSCA's objectives are to regulate chemicals
  posing an unreasonable risk
• Use of risk-benefit analysis in the chemical
  approval process is implied in a Congressional
  report discussing how unreasonable risk is
  determined
• Therefore, TSCA empowers the EPA to ban or
  restrict use of toxic chemicals that do not pass
  the risk-benefit test

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Risk Assessment Problems

• Testing is done only upon formal request by EPA,
  so some risks are not discovered until after a
  chemical has been introduced into commerce
• Reportedly, risk assessments have been done on
  relatively small proportion of registered
  chemicals
• Government's environmental priorities do not
  always align with expert risk rankings

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Benefit Assessment Problems

• Estimating social benefits is particularly
  difficult for chemical use because the benefits
  accrue in various ways and across multiple
  markets
• Expected benefits are difficult to measure
  because of so many substances to assess
• Over 76,000 chemicals are registered
• Over 1,000 premanufacture notices (PMNs) are
  filed each year

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Bias Against New Chemicals

• Bias exists because government is more efficient
  at testing new substances than it is for existing
  chemicals
• Analysis of existing chemicals is complex and
  time-intensive relative to rules for reviewing
  new substances
• Result is that chemical producers have an
  incentive to continue selling existing, and
  possibly more dangerous, substances, to avoid
  costs of introducing new substances that will be
  subject to governments more efficient testing

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Economic Analysis and Market-Based Solution
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Inefficient Outcomes

• Nothing in FIFRA or TSCA assures efficiency
• In both the pesticide and chemical markets,
  source of inefficiency is a negative consumption
  externality associated with use
• Modeled as a negative marginal external benefit
  (MEB), that causes marginal social benefit (MSB)
  to lie below marginal private benefit (MPB)
• Without government intervention, the negative MEB
  is ignored, so competitive equilibrium output,
  QC, where MPB MPC, is higher than efficient
  output level, QE, where MSB MSC
• Result is overallocation of resources to
  production

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Market-Based SolutionProduct Charge

• To internalize the consumption externality, a
  product charge could be implemented as a unit tax
  (t) on the chemical.
• To achieve efficiency, t must equal MEB at QE
• Modeled as a shift up of MPC, by the amount of
  the tax, raising effective product price to (PE
  t)
• Product charges are used by some state
  governments to discourage chemical use, and by
  other countries, such as Belgium, Denmark,
  Norway, and Sweden

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Modeling the Product Charge
Price ()
S MPC MSC
D MPB
0
Q of Chemicals