The use of a tax on plant protection products in the transition to resilient cropping systems in The Netherlands

Effective control of diseases, pests and weeds is important for a profitable and high-quality agriculture and horticulture. However, social and political concerns about the burden on humans, animals and the environment from the use of certain types of plant protection products are increasing. The Netherlands is therefore faced with the task of designing its agriculture and horticulture in such a way that not only the plant, but also the environment remains healthy. Making crop protection more expensive with a tax can help. 

In 2021, Ecorys conducted a study commissioned by the Ministry of Agriculture, Nature and Food Quality (LNV) on how economic incentives can help promote the transition to resilient cropping systems with minimal environmental impact. Based on results of this study, the ministry requested a follow-up study focusing on the instrument of taxation. Ecorys examined several foreign taxes to investigate whether and in what way taxes in the Netherlands can promote a transition to resilient cultivation systems with minimal environmental impact.

Main findings

Based on the investigated taxes in other countries, Ecorys found there are a number of elements that determine the difference between certain taxes: the level of the tax, the point of application (risk profile versus volume) and the method of recoupment. Variation in these element makes the taxes effective to a greater or lesser extent.

The following conclusions can be drawn about incentivizing behavioural change among growers and producers of regular crop protection products through a tax:

• Higher costs due to a tax may incentivize a grower to choose an alternative product. The other option for the grower is to continue using the same crop protection product as before.
• Increased costs through a tax may encourage a grower to use an agent with a lower risk profile. It is possible that this agent is less effective at lower doses, which could result in more crop damage and/or the frequency of use going up.
• A tax may incentivize a grower to reduce the use of crop protection and adopt a different form of management, by switching to other crops or a combination of crops that are more resilient

Increased costs through a tax can incentivize producers of crop protection products to replace products with a higher risk profile with products with a lower risk profile and to engage in the development of alternatives.

Based on the study, Ecorys formulated a number of recommendations on the use of taxes in the Netherlands:

• Taxes should be introduced as part of a complete policy package, since a taxes work especially well when there is room to make other choices
• Part of being able to successfully implement a tax is the extent to which consumers and the chain are willing to pay the tax. Related policies are therefore needed to make consumers pay a ‘fair price’.
• Efforts should be made to harmonise a tax at the European level. This will create a more level playing field.
• Conducting follow-up research is important to improve the generalisability of the findings and place the topic in a broader, topical context. It is recommended, for instance, to further investigate the availability of alternatives and the impact of a tax on different crops.
• When introducing a tax, feasibility, enforceability and legal fit must be taken into account.

The full study can be found on the website of the Dutch government.