10.2190/MRV2-9BVL-16M2-NFMD MRV29BVL16M2NFMD 3 Regulating Pesticide Discharge Into Surface and Groundwater Under Certainty 375 395 20020509 20020509 20020509 20020509 MRV29BVL16M2NFMD.pdf http://baywood.metapress.com/link.asp?target=contribution&id=MRV29BVL16M2NFMD 4 Keith Willett Tim Zhang Dolores Willett William F. Mcternan Oklahoma State University, Stillwater <p>The presence of contaminants such as agricultural pesticides in environmental media as well as the desire to maintain a high level of economic activity presents a difficult decision-making problem for all concerned parties. It has been difficult to identify the appropriate responses aimed at resolving the potential health risks associated with pesticides in surface and groundwater sources because of the high degree of uncertainty surrounding them and the processes generating them. Public decision makers must not only make decisions on how to manage risk, but also on how to manage risk compounded by uncertainty. Further complications include the high degree of public sensitivity to the notion that these risks are small but indeed costly.</p><p>The current policy used by the EPA to regulate pesticides is based on a mixture of policy instruments that are implemented within the context of a registration requirement. In general, this policy requires that pesticides be registered to be marketed. It has been concluded from an evaluation of this system that the policy decision is dominated by a cancellation decision. It has also been concluded that the current framework does not possess mechanisms for inducing marginal changes in pesticide use to give protection from health risks compounded by uncertainty as well as preventing runoff into surface waters or leaching into groundwater.</p><p>The limited flexibility of the current regulatory framework can be improved by supplementing it with a tax. Traditionally, the process of setting the "optimal tax" for each chemical is viewed as problematic. This can be done using the "standards and charges" approach, which involves two steps. First, standards or targets for environmental quality are set that reflect a relevant set of criteria; second, a set of taxes (charges) is designed and put in place to achieve these standards or targets. This process requires various types of information such as the productivity of and demand for classes of pesticides. In addition, the stochastic nature of pesticides must be taken into account. It is generally concluded that the information on which to base a tax on pesticides, even to achieve a certain level of health risk standards, is not readily available.</p><p>This article develops a protocol that uses simulation and mathematical programming techniques to compute the tax for a standards and charges approach for regulating pesticides under uncertainty. the Kuhn-Tucker conditions are used as a basis to develop the appropriate tax rates. 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