Incentive taxes on pesticides can contribute towards reducing the risk of negative external effects on the environment and human health in real terms. A meta analysis of the elasticity of demand for pesticides shows that the use of pesticides is price-sensitive. Experiences with existing tax systems in other European countries also show that it is possible to effectively reduce these risks at low transaction costs. Targeted pesticide tax systems, in which only very highrisk products are strongly taxed, can especially stimulate the move towards substituting less hazardous products and alternative pesticide strategies. Tax proceeds then flow back to farmers to minimise loss of income. If the reimbursement includes methods that further reduce the risk of pesticide use, this can create significant leveraging effects on the use of pesticides.
Incentive taxes on pesticides: economic analysis, experiences from Europe and the effects of accompanying measures