Can outsourcing pest and disease control help reduce pesticide expenditure? Evidence from rice farmers

Abstract

Outsourcing pest and disease control (PDC) has grown rapidly worldwide, especially in developing countries. Although numerous studies have investigated various advantages of outsourcing PDC, little is known about its impact on pesticide expenditure. This study addresses the gap by estimating the impact of outsourcing PDC on pesticide expenditure using data collected from 448 rice farmers in China. We employ an endogenous treatment regression (ETR) model and an instrumental variable quantile regression (IVQR) model to investigate the homogenous and heterogeneous impacts of outsourcing PDC, respectively. The results estimated by the ETR model show that outsourcing PDC decreases total pesticide expenditure. The reduction in herbicide expenditure due to outsourcing PDC is greater than the reduction in insecticide expenditure. The results estimated by the IVQR model reveal that the pesticide expenditure reduction effect of outsourcing PDC is larger among farmers with higher pesticide expenditure. Our findings generally suggest that it is necessary to take outsourcing PDC into consideration when designing policies to promote pesticide expenditure reduction and protect the ecological environment and human health.