César Antonio Salazar Espinoza, University of Copenhagen: "Is pesticide use risk-reducing or risk-increasing in rice production in Vietnam? Exploring consistency between a production and a lottery approach"
The excessive and unsustainable use of pesticide has generated concerns because of its detrimental effects on farmers’ health, environment and agricultural sustainability. Thus, the overuse of chemical pesticides remains an important development issue, and understanding pesticide input decisions is a key requisite to sound policy-making. This paper examines the risk effect of pesticide use by applying a lottery in combination with a production function approach using a dataset of rice producers in Vietnam. We also investigate the source of this risk by comparing pesticide productivities under pest and water shortage events. Results from the lottery approach show that more risk averse farmers use less pesticide, suggesting that pesticide is a risk-increasing input. Results from the production function show that an increase in pesticide enhances production risk, supporting also the risk-increasing argument. Higher uncertainty on rainfall relative to pest is likely driving the increasing risk effect of pesticides. Therefore, the relative importance of multiple uncertainties rather than the approach is much more relevant to determine the risk property of inputs.