Research project HL/DD/11 (Research action HL)
One of the instruments used in Belgium to tackle the pollution caused by pesticides is to impose environmental taxes on the sale of these products. The application fo fiscality as an instrument to tackle this environmental problem causes two difficulties:
. On which basis (evaluation criteria) these taxes have to be imposed to achieve a maximum reduction of the environmental consequences of the sale and the use of the product ?
. What is the socio-economic feasibility of such taxes in Belgium within the framework of the open European context ?
Ten substances have been selected for further research: atrazine, simazine, diuron, isoproturon, dichloorvos, endosulfan, arsenic acid, chromiumtrioxide, potassium dichromate and copperIIoxyde.
In order to obtain an environmental index/indicator for each pesticide, the following elements were studied by the Laboratory of Environmental Toxicology and Aquatic Ecology (RUG): physical-chemical characteristics, dispersion in water, soil and air, degradation mechanisms and final destination, persistence in the different environmental compartments, bioaccumulation, ecotoxicity, toxicity, carcinogenicity, mutagenicity and teratogenicity.
For these ten substances, the exposure and effects parameters were integrated into indices/indicators. This has been carried out based upon a model (USES 2.0) as well as with the help of environmental risk indicators.
ECOLAS was responsible for the socio-economic aspect of the assignment and calculated the additional cost in the case of different ecotax scenarios for the most important user groups (families, farmers and wood protection sector) in Belgium. Furthermore, the possible consequences for the employment were estimated and related to the size of the concerned sectors and foreign competition.
Based upon the research results concerning the evaluation criteria for the determination of the tax basis and the social-economic implications of the taxes, it was possible to set up a decision tree which can be used as a policy supporting instrument for the application of environmental taxes on pesticides.
Methodology
In the first phase of the project an extensive literature survey was performed concerning the environmental characteristics (exposure and effects data) of the substances. The second phase integrated the environmental effects to indices/indicators. As a reference framework, detailed risk assessments were performed for each active substance using the computer model USES 2.0. The results showed that the environmental compartments at risk are surface water and soil.
In the third phase of the study a limited number of existing environmental risk indicators were critically evaluated: Environmental Impact Quotient (EIQ), Environmental yardstick for pesticides (EYP), Ipest, p-EMA and SYNOPS. These indicators were applied to the selection of pesticides and compared with the results of the detailed risk assessment. From the results it can be concluded that none of the existing indicators adequately quantify the environmental effects. However, the risk-based indicators SYNOPS and Environmental yardstick can be used as a basis for a new complete indicator.
On the basis of the results formulated above and the fact that most comparable results were obtained with the risk-based indicators, a new indicator HEPRIS (Human and Environmental Pesticide Risk Indicator System) was developed. This indicator quantifies the risk to the environment by taking into account exposure and effects (risk scores). On the basis of the risk scores 5 risk classes can be defined. Comparison of the results of the HEPRIS indicator with the USES model shows that the environmental module of the indicator is well designed. The qualitative methodology used to assess the risk to men is inadequate and needs further refinement in order to establish an optimal pesticide risk indicator.
A survey was organised in a number of garden centres in order to examine the influence of a possible eco-tax on the private consumption of herbicides. The results of the survey have given rise to parameters regarding consumption and purchasing behaviour in relation to pesticides as well as the price elasticity of demand from households for these products. On the basis of elements that included experiences from abroad, an eco-tax of 2 and 4 BEF per gram of active chemical was chosen. The results from the survey are being used to produce price sensitivity graphs for different packaging volumes. From these, it is possible to interpret the acceptable price spread and the optimal price. These graphs allow the expected fall in consumption to be projected as a function of price rises.
We then examined the influence of the eco-tax on average expenditure and the share taken by this expenditure in revenue for the different revenue categories.
While compiling information about the cost price of the pesticides for agricultural use being investigated, a serious lack of transparency came to light concerning how the end price of these products was set. This involved highly secretive data as well as the fixing of pesticide prices subject to the quantity purchased by the farmer at the end of a year of application.
The three eco-tax scenarios from the committee monitoring environmental taxes (2, 5 and 10 BEF/gram of active chemical) were produced for crops in which the active chemicals for investigation are used frequently and for which the pesticide cost per hectare is known. For these crops, we examined the extent to which the ‘Gross Standard Balance’ will fall in response to the different eco-taxes. The accepted hypothesis is that a fall of more than 10% in the balance is not socio-economically acceptable. This signifies that a more severe fall in the balance will adversely affect the competitive position of these crops to a large extent. Where eco-taxes produce a socio-economically acceptable fall in the balance, we calculate the extent to which a reduction in consumption of the active chemical involved might be expected on the strength of demand price elasticity of -0.4.
Finally, we examined the socio-economic consequences within the category covering ‘wood protective agents for industrial use’ on the basis of eco-tax scenarios of 2.5 or 10 BEF/gram of active chemical. These results were tested against the findings from a survey organised in co-operation with Febelhout.
The decision-making tree for creating an eco-tax in Belgium is based on the boundary conditions developed while carrying out the present study. This tree includes the results of part-research from both the ‘Environmental Toxicology Laboratory’ (RUG) and ECOLAS.
1. The Gross Standard Balance consists of the value of the gross balance corresponding to the average Belgian situation for each line of agricultural production. The gross balance from a line of agricultural production corresponds to the revenue from gross production or the value of the main products and by-products minus specific operational costs (including pesticides).
2. The Gross Standard Balance ‘after eco-tax’ comprises the original ‘GSB’ minus the additional cost per hectare as a result of an eco-tax on pesticides. This additional cost is the eco-tax value and comprises the used quantity of active chemical per hectare multiplied by the eco-tax in BEF/gram of active chemical.
