Evaluating alternative policies to reduce pesticide groundwater pollution in Dutch arable farming

This article develops a dynamic optimal control modelof farmers' production decisions and applies it to panel data from Dutch arable farms to assess the effectiveness of different policy interventions in reducing pesticide groundwater pollution. Three different policy measures are examined in turn: namely, a flat tax on pesticides; a groundwater contamination tax; and a quantity restriction on pesticide use. The examined policies are compared against both quantitative and qualitative criteria drawn from the pesticide policy literature. Results show that the groundwater contamination tax is the most preferred policy for reducing pesticide groundwater pollution. A way to apply such a tax is proposed and discussed.