Reducing Volatile Organic Compound Emissions from Pre-plant Soil by ghkgkyyt


									                                                                                                      V. 12 no. 5 • May/June 2009

Reducing Volatile Organic Compound Emissions from Pre-plant Soil Fumigation:
Lessons from the 2008 Ventura County Emission Allowance System
Henry An, Rachael E. Goodhue, Peter Howard, and Richard E. Howitt

                                                      olatile organic compounds           four-year phase-in period that had been
                                                      (VOCs) contribute to the forma-     approved by CARB, the phase-in was
 In 2008, the California Department
                                                      tion of ground-level ozone, a       rejected by the federal district court in
 of Pesticide Regulation implemented a
                                              pollutant regulated under the Clean         December 2007. Consequently, CDPR
 volatile organic compounds emission
                                              Air Act due to its harmful effects on       had to implement restrictions on the
 allowance system for emissions from the
 use of fumigants. We evaluate lessons        human health and the environment.           amount of fumigants used by individual
 from this program for the design and         Several regions in California are           growers in Ventura County. CDPR
 implementation of any future emission        “non-attainment areas,” meaning that        issued emission allowances to growers
 allowance systems.                           their ozone concentrations exceed the       for the 2008 peak ozone season—May 1
                                              regulatory standard for too many days       to October 31. The emission allowances
                                              during the peak ozone season of May         were discontinued September 3, 2008,
                                              through October, when weather condi-        in the wake of a federal appellate court
                                              tions most favor ozone formation. The       ruling in favor of CDPR’s appeal of
                                              use of some pesticide products results      the original 2006 federal court order
                                              in the emission of VOCs. In coopera-        regarding CDPR’s efforts to reduce
                                              tion with the California Air Resources      VOC emissions from pesticide use.
                                              Board (CARB), the California Depart-        Although the allowance system was
                                              ment of Pesticide Regulation (CDPR)         not even in effect for an entire season,
                                              is responsible for reducing pesticidal      some lessons can be drawn from the
                                              VOC emissions in order to help bring        experience that may prove useful if
 Also in this issue
                                              California’s non-attainment areas into      another system for limiting fumigant
                                              compliance with federal standards.          use by individual growers must be
 Update on rbST Use in the                        As part of its plan for meeting its     implemented in the future, whether
 California Dairy Industry                    commitment to reduce VOC emis-              in Ventura County or elsewhere.
 Henry An and Leslie J. Butler........5       sions from pesticide use, CDPR issued           In early 2008, growers submitted
                                              regulations regarding VOC emissions         requests specifying product, acreage,
 The Emerging Global Biofuels                 from field fumigation in January 2008.      and field location to the Ventura County
 Industry: The Biofuel Situation              Low-emission application methods            Agricultural Commissioner. That office
 and Policies in Developing                   were required for fumigation conducted      checked to ensure that the application
 Countries                                    during the peak ozone season. In            method was allowed under the regula-
                                              addition, CDPR specified that it could      tions, and to ensure that the grower
 Carl E. Pray                                 impose limits on the amount of fumiga-      controlled the field in question. The
 and David Zilberman......................8   tion by individual growers if its projec-   requests were then forwarded to CDPR,
                                              tions estimated that the use of low-        which calculated the percentage of
 ARE Faculty Profile:
                                              emission application methods would          requests that would be issued to growers
 W. Michael Hanemann..............11
                                              not be sufficient to achieve its targeted   as emission allowances. If the requested
                                              reduction. While CDPR proposed a            fumigation treatments were identical to
                                                                                                                                                            lower-emission techniques, its scope
 Table 1. Gross Crop Revenues Per Pound of Emission Allowance by Crop: Requested
 Pre-Plant Soil Fumigation Products, Application Methods, and Application Rates, 2008                                                                       for doing so is limited, and offset by the
                                                                                                                                                            relatively weak constraint on growers’
                                                                                     Revenue/ lb.            Crop’s Total               Cumulative
                                                                                      Emission                Requested                 Requested           ability to overstate intended treated
         Crop                                                                         Allowance               Allowance                 Allowance           acreage in their allowance requests.
         Lemons                                                                            $913                  13,677                      13,677             Because the emission allowances
         Raspberries                                                                       $713                  46,620                      60,297         are not tradable among growers, and
         Avocados                                                                          $510                   2,820                      63,117         because the allowances were allocated
         Tomatoes                                                                          $456                 166,281                     229,398
                                                                                                                                                            based on requests that did not include
                                                                                                                                                            the economic value per unit of emis-
         Flowers                                                                           $445                  39,936                     269,334
                                                                                                                                                            sions, the marginal benefit per unit
         Strawberries                                                                      $219               1,915,340                 2,184,674
                                                                                                                                                            of VOC emission allowance varies
         Turf/Sod                                                                          $218                    3,278                2,187,952
                                                                                                                                                            across growers. The second lesson
         Peppers                                                                           $110                 187,600                 2,375,552           from the 2008 VOC emission allow-
                                                          Source: CDPR (2008b) and VCOC (2007).
                                                                                                                                                            ance system implemented in Ventura
the implemented fumigation treatments,                                                                      methyl bromide-chloropicrin products,           County is that the decision to make
then this approach would have resulted                                                                      although the use of methyl bromide had          allowances non-tradable led to inef-
in an identical percentage reduction                                                                        declined in Ventura County in recent            ficient outcomes. The value of a unit of
in fumigated acreage across growers.                                                                        years. Unsurprisingly, growers did not          emission allowance varied across crops,
    As the system was administered,                                                                         actually always use the product listed          but growers with higher values were
growers were not required to use the                                                                        in their requests. They utilized other          not able to purchase additional allow-
product, application method, or appli-                                                                      active ingredients for a substantial            ances from growers with low values.
cation rate specified in their emission                                                                     share of applications. Growers with                 We use the information supplied
allowance requests. The first lesson                                                                        greater scope to move to fumigation             in the allowance requests to provide a
of the 2008 VOC emission allowance                                                                          choices that result in lower emissions          crude measure of the differences in the
system in Ventura County is that this                                                                       per acre were able to fumigate a greater        value of a unit of emission allowance
administrative decision meant that the                                                                      percentage of the acreage specified             across crops. The ideal measure would
across-the-board cut in emission allow-                                                                     in their emission allowance requests.           be the risk-adjusted net returns per unit
ances had different effects on growers’                                                                     Although one might argue that this is a         for each crop but since these numbers
actual capacity for fumigated acreage.                                                                      desirable outcome because it provides           are not available, gross crop revenues
The vast majority of requests were for                                                                      growers with an incentive to adopt              per unit are used instead. To the extent
                                                                                                                                                            that net returns per acre as a percent-
                 Figure 1. Gross Crop Revenues per Pound of VOC Emission Allowances:
                                                                                                                                                            age of revenues per acre are the same
                 Requested Products, Application Methods, and Application Rates, 2008
                                                                                                                                                            across crops, using revenues rather
Gross Crop Revenues per Pound Emission Allowance (in dollars)

                                                                                                                                                            than net returns will result in the same
                                                                 900                                                                                        ordinal ranking by crop even though
                                                                                                                                                            the absolute values will be different.
                                                                                                                                                                Crops can be grouped by their rev-
                                                                 700                                                                                        enues per pound of emission allowance,
                                                                                                                                                            as shown in Table 1. Lemons have a
                                                                                                                                                            substantially higher willingness to pay
                                                                 500                                                                                        than other crops. Raspberries, avocados,
                                                                                                                                                            tomatoes, and cut flowers have a sub-
                                                                                                                                                            stantially higher willingness to pay than
                                                                 300                                                                                        strawberries and turf/sod, which in turn
                                                                                                                                                            have a substantially higher willingness
                                                                                                                                                            to pay than peppers. Economic theory
                                                                 100                                                                                        predicts that the price of a pound of
                                                                                                                                                            emission allowance will be determined
                                                                        0        500,000       1,000,000        1,500,000       2,000,000       2,500,000   by its marginal revenue product, which
                                                                                             Pounds of Emission Allowance Requested                         will be determined by the net returns

2                                                                   Giannini Foundation of Agricultural Economics • University of California
per pound of emission allowance for
                                            Table 2. January–July Pre-Plant Soil Fumigated Acreage, 2004–2008
strawberries and/or turf/sod, because
these two crops would account for                               ---------------------------------Crop-----------------------------------
                                                                  Unspecified                                                              Outdoor
the lowest-valued unit of emission                 Strawberries        Crop              Peppers        Tomatoes            Lemons         Flowers
allowance given the total amount of
                                            Year    Jan-    May-      Jan-    May-       Jan- May- Jan- May-               Jan- May-       Jan- May-
emission allowances. Growers who                    Apr      Jul      Apr      Jul       Apr   Jul Apr   Jul               Apr   Jul       Apr   Jul
have higher valuations for a unit of
                                            2004    639 5,337          419      703 1,052         150      258 1,055       224         3    48   69
emission allowance would be will-
ing to pay at least as much per unit.       2005       -- 4,203        180      833      443      389      344     332       11      31     24    29
Growers who have lower valuations           2006      76    3,416      373 1,505         342      193      212     510       19      68     15   40
per unit of emission allowance will be      2007      20 2,680         235 1,409         551       64        --    100       72       --    19    --
willing to sell at this price. Because
                                            2008    873     1,416 1,501         443      798        33     760     217     152       24      7    41
products’ emission potentials vary,
                                             Source: PUR data, various years, CDPR. 2008 data are preliminary.
and application rates and methods
vary, crops with the highest value of         growers of the crops with the highest                      do have the flexibility to move at least
production per acre are not necessarily       gross revenues per pound of emission                       some pre-plant soil fumigation treat-
the crops with the highest gross crop         allowance do, then the difference in                       ments outside of the peak ozone season.
revenue per pound of emission allow-          their willingness to pay for a unit of                     Table 2 reports fumigated acreage by
ance. Flowers, which have the highest         VOC allowance will decrease. Conceiv-                      crop and year for the January–April and
value of production per acre, have only       ably, their ordinal ranking may even                       May–July time for the years 2004–2008
the fifth highest gross crop revenue per      change. Another consideration is that,                     due to the effect of the emission quotas,
pound of emission allowance. Again,           in practice, a variety of products with                    using preliminary 2008 Pesticide Use
we emphasize that this analysis assumes       various active ingredients are used on                     Report (PUR) data from CDPR. As
that the ordinal ranking of risk-adjusted     a given crop, implying that some grow-                     CDPR’s appeal progressed, growers
net returns per unit of emission allow-       ers of a given crop will have a higher                     and others began to anticipate that
ance is represented adequately by             willingness to pay than others will.                       CDPR’s phase-in of emission allow-
the ordinal ranking of gross returns              Implementing a market for emission                     ances would be reinstated. By August
per unit of emission allowance. If a          allowances would equalize the value of                     the reinstatement appeared quite
crop’s net returns as a percentage of         a pound of emission allowance across                       likely. Because growers’ expectations
gross returns are substantially higher        uses. Growers would be allowed to sell                     likely influenced their decisions,
or lower than those for other crops,          allowances or to use them for pre-plant                    we focus on the January-July period
or if crops vary greatly in the riski-        soil fumigation once the allowances                        when the outcome was less certain.
ness of their net returns, then ordinal       were assigned. Initially, the state could                       The table includes acreage treated
rankings are more likely to differ.           sell emission allowances, or allowances                    with pre-plant soil fumigation for an
    Figure 1 plots emission requests by       could be allocated across growers based                    unspecified crop. Field-level analysis
crop in decreasing order of gross crop        on historical use or other criteria. In                    of pesticide use reporting data suggests
revenues per pound of VOC emission            the former case, the revenues from the                     that a significant share of the acreage
allowance. It shows that if growers           sale of emission allowances could be                       in this category is planted with straw-
had used their requested treatments,          used to cover program administration                       berries, although certainly not all of
a market for emission allowances              costs and fund research into means                         it. In 2008, the California Strawberry
would have resulted in a substantially        of reducing VOC emissions from                             Commission reports there were 3,157
different allocation across crops than        fumigants, including research regard-                      acres of summer-planted strawberries
the across-the-board percentage cut           ing alternatives to fumigation. Either                     in Ventura County—substantially
used in the 2008 process did. Based           being required to purchase emission                        more than the 2,299 reported pre-plant
on preliminary data, growers’ actual          allowances or having the opportunity                       soil fumigated acres for strawberries
fumigation choices were very different        to sell unneeded emission allow-                           during the first seven months of 2008.
from those in their emission allowance        ances to other growers will provide                        Consistent with this difference in 2008,
requests. To the extent that growers          an incentive for growers to adopt                          in 2005, 63% of the acreage treated
of crops with relatively low gross rev-       lower emission production methods.                         with pre-plant soil fumigation for an
enues per pound of emission allowance             The final lesson of the 2008 emis-                     unspecified crop also had reported
adopt lower emission approaches than          sion allowance system is that growers                      pesticide applications for strawberries,

                                                             Giannini Foundation of Agricultural Economics • University of California                3
    Table 3. Monthly Share (percent) of January–July Pre-Plant Soil Fumigated Acreage,          Henry An and Peter Howard are Ph.D. candidates,
    2004–2008: Strawberries                                                                     Rachael Goodhue is an associate professor, and
    Year        Jan        Feb       Mar          Apr         May         Jun         Jul       Richard Howitt is a professor and chair, all in
    2004         1          0           0          10            8          48         33       the Department of Agricultural and Resource
                                                                                                Economics, University of California, Davis. This
    2005         0          0           0           0            7          58         35
                                                                                                article is based on a technical report prepared
    2006         0          0           1           1            2          50         45       for the California Department of Food and
    2007         0          0           0           1           13          74         13       Agriculture. Opinions expressed in this report
    2008         0          0           0          38            3          50          9       are those of the authors.
    Source: PUR data, various years, CDPR. 2008 data are preliminary.

and an additional 11% had reported                 larger cap specified under the phase-in.
pesticide applications to strawber-                Under the phase-in of emission quotas,             For More Information, the
ries and at least one other crop.                  more emission allowances are available               Authors Recommend:
    Table 3 reports the share of acreage           to growers over the next few years. The      Goodhue, Rachael, Richard Howitt,
fumigated monthly for the January–                 immediate effect is to reduce the direct      Peter Howard and Henry An.
July period for the years 2004–2008                impact of emission quotas on growers.         “Effects of the January 2008 CDPR
for strawberries. Comparing 2008 to                The longer-term effects pose a chal-          Field Fumigation Regulations:
previous years, a substantial share                lenge. If the phase-in period is simply       Ventura County Case Study.” Final
of pre-plant soil fumigation treat-                treated as a means to continue current        report submitted to California
ments were performed prior to the                  pre-plant soil fumigation practices,          Department of Food and Agriculture.
peak ozone season on land intended                 then the only effect of the phase-in          April 2009.
for strawberries. Applications were                will be to reduce short-term regulatory       pdf/GoodhueHowitt042309.pdf.
shifted into April, while the percent-             impacts. If the phase-in period is used
                                                   to identify and implement economically       California Department of Pesticide
age in May and June declined. For
                                                   feasible lower-emission alternatives to       Regulation. “Volatile Organic
the other crops, the annual pattern
                                                   current fumigation practices, then the        Compound (VOC) Emissions
of applications was much less consis-
                                                   phase-in period will also mitigate the        from Pesticides.” 2009. www.
tent for the 2004–2007 period, so it
                                                   longer-term effects of post-2012 regula-
is difficult to draw any conclusions
                                                   tions. In the event that CDPR must            vocproj/vocmenu.htm.
regarding a change in the monthly
shares of fumigated acreage in 2008.               again implement emission allowances
    The emission allowance system is               in Ventura County or elsewhere, the
not in effect for 2009. CDPR projec-               2008 experience provides some guid-
tions indicate that its field fumigant use         ance for the design of future systems.
regulations will achieve the reduction
in VOC emissions from pesticide use
that is required to comply with the

As part of its plan for meeting its commitment to reduce VOC emissions from pesticide use,
CDPR issued regulations regarding VOC emissions from field fumigation in January 2008.
Comparing 2008 to previous years, a substantial share of pre-plant soil fumigation treatments
were performed prior to the peak ozone season on land intended for strawberries.

4          Giannini Foundation of Agricultural Economics • University of California

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