Impacts of the Azinphos-methyl Ban in the Apple Industry and Economy of Washington State

Impacts of the Azinphos-methyl Ban in the Apple Industry and Economy of Washington State

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Andrew J. Cassey , School of Economic Sciences, Washington State University, Suzette P. Galinato , School of Economic Sciences, Washington State University, Justin Taylor , School of Economic Sciences, Washington State University
In 2006, the U.S. Environmental Protection Agency (EPA) declared that the pesticide azinphos-methyl (AZM) cannot be used in apple production after September 30, 2012. While it provides important pest control benefits to growers of apples and other crops, AZM also poses potential risks to farm workers, pesticide applicators, and aquatic ecosystems, according to the EPA website. In this fact sheet, we estimate the change to sales, price, and employment in the Washington State apple industry from using likely AZM alternatives had this ban been in effect in 2007, the first year of the pesticide’s phase-out schedule. Furthermore, we estimate the ban’s effects as it ripples throughout the overall Washington State economy. We conclude that the ban will modestly change sales (–0.8%), prices (0.2%), and employment (0.1%) in the apple industry, with negligible impacts on the overall Washington State economy.
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Introduction

The EPA has mandated the nationwide elimination of the pesticide AZM, or Guthion®, by September 30, 2012 (Federal Register 2009; EPA 2009). Belonging to the organophosphate (OP) class of pesticides, AZM has been the pesticide most used by Washington State apple growers since the late 1960s (Brunner et al. 2007). As of 2008, 80% of Washington apple growers used AZM (Washington State University Tree Fruit Research and Extension Center 2010) primarily to control codling moth, the leading pest in Western apple orchards.

The EPA’s mandate resulted from concerns about the  risks of OPs to the health of farm workers and the quality of local water and aquatic ecosystems. Details about AZM toxicity and other supporting data that guided the agency’s decision are provided in the EPA’s Ecological Risk Assessment (EPA Office of Pollution Prevention and Toxics 2005) and Organophosphorus Cumulative Risk Assessment (EPA Office of Pesticide Programs 2006).

Most growers are expected to shift to an AZM-alternative- based integrated pest management (IPM) strategy rather than relying solely on nonchemical methods or quitting production entirely (Brunner 2009). Though an AZM- alternative-based IPM program is more worker and environmentally friendly, it requires different timing and more precise spray applications than programs based on AZM. Furthermore, AZM-alternative pesticides must be applied an additional time to maintain yield and quality, since the alternatives do not last as long on crops (Brunner 2009). Therefore, codling moth control costs more per acre with an AZM-alternative-based program than with the AZM-based program because the unit price and quantity are higher.

We estimated the economy-wide impact of eliminating AZM for an IPM program based on AZM alternatives in Washington State apple production. We calculated the increase in the per-acre expenditure for growers switching  to an AZM-alternative-based program that ensures the same volume and quality of apples produced under an AZM- based program. We then considered the apple industry’s response to this cost increase by modeling growers’ changes to various production inputs, such as labor or pesticides, in order to maximize profit under the ban, which could result in an output change. The economic effects we studied were changes to sales, prices, and employment for the apple industry, industries that supply inputs to the apple industry, industries using apples as an input, household income, and profit per acre of Washington apples.

Our analysis accounted for relationships between different industries in the state economy and price changes.

Method

We used computable general equilibrium (CGE) modeling to compare the economy’s reaction in two alternative scenarios. The first, a 2007 base case or benchmark, considered an AZM-based program to control codling moth in Washington apple production. Since the benchmark is the primary production practice actually employed in 2007, we used unmodified 2007 data. The second alternative scenario, called a counterfactual scenario, did not occur in reality, but we used it in our model to predict what would have happened had there been a complete AZM ban in 2007, the first year in the AZM phase-out schedule.

We first calibrated the model to find the parameters needed for the model data to perfectly replicate the actual 2007 data. Then we applied these calibrated parameters to the counterfactual scenario to estimate what would have happened if AZM were banned in 2007. The model results were the estimated percent difference in such economic variables as sales, price, and employment from the actual 2007 economic data and that estimated by the model in the counterfactual scenario.

Assumptions

  1. Based on Brunner et al. (2007), we assumed the next best alternative to be an IPM program based on use of AZM alternatives (an assortment of new, safer, but more costly pesticides). Though other OPs such as Lorsban® (chlorpyrifos), diazinon, and Imidan® (phosmet) are legal as of this writing, we predict that, with increased EPA scrutiny, all OP usage will be curtailed in the future. Therefore, we do not consider switching from AZM to another OP to be a realistic option. Though not all of the new pesticides expected to replace AZM were available in 2007, we assumed that these alternatives were available for the counterfactual scenario.
  2. Because our pesticide expenditure estimate is based on the cost needed to maintain apple crop yield and quality at the benchmark level, we assumed that there would be no economic impacts from loss in yield or quality.
  3. Though real non-AZM-based IPM programs require precise timing of applications that can take time for the grower to learn, we assumed that growers had already learned the best application methods for the counterfactual scenario.

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