Pesticide regulation in California is at a crossroads. The California Department of Pesticide Regulation (CDPR) is facing a significant shortfall in funding. California agriculture — which uses about 90 percent of the pesticides reported to the CDPR — is struggling financially. Many stakeholders are unhappy with the current system.
This report makes the case that we should increase the existing pesticide mill fee to both fully fund the CDPR and increase public investment in sustainable agriculture.
A review of the existing pesticide mill fee, required by Assembly Bill 780 (AB780) to take place in 2002, is an opportunity to discuss these issues and to create a “win-win” solution. Regulations that protect pesticide users and the public by establishing “safe standards” for pesticide use should continue. But a complementary policy of significant public investment in “clean” pest management practices, whenever economical, would benefit public health, the quality of our environment, and our economy. Complementary policies of this type are being implemented in other states and countries.
Unfortunately, California has invested relatively little in this approach. For example, the three leading state-wide sustainable pest management programs have combined budgets of about $7 million per year; less than 1 percent of the more than $1 billion per year spent on pesticides by California’s farmers. And less than 2 percent of the budget of the CDPR is for the development of reduced-pesticide use practices.
Those who have lived with the safe standards regulatory approach often perceive the promotion of alternatives to pesticide use as a competing policy. It is not. In fact, it complements existing efforts to reduce the impact from pesticides. Just as driving a well-built car will reduce the risk of injury from an automobile accident, driving fewer miles will also reduce that risk. Rather than arguing for one approach over the other, California can and should provide adequate funding for both.
Many stakeholders fear that reducing pesticide use will increase the cost of farming or services that use pesticides, like termite or home pest control. But experience in and outside of California suggests that these fears are unfounded. The evidence presented in this report suggests that alternative pest management practices can increase, rather than decrease, farm profits. California farmers specialize in high value commodities — wine grapes, strawberries, and almonds for instance. Rising land values and other long-term forces have pushed California’s farmers in this direction, and will probably continue to do so for decades to come. Higher value commodities, on average, use more pesticide per acre than lower value products when they are produced using conventional farming systems. However, many higher value commodities can be produced using low input and organic farming systems.
Since demand for organic and other premium-quality commodities is increasing 4 to 5 times faster than demand for agricultural commodities in general, and because there are price premiums for such products, policies that encourage a transition to sustainable agriculture are consistent with, and reinforce, long-term trends in California agriculture.
Organic and low-input production systems are not always the most profitable. They are, however, more profitable than conventional systems in many instances. Some farmers and pest management businesses have already adopted sustainable pest management practices that increase profitability and are better for human health and the environment. Widespread and faster adoption of these practices, however, requires more public investment in knowledge, training, and incentives. 
But how can we significantly increase public investment in sustainable pest management when large shortfalls in state funding are coming our way? The fairest way to do this is to renew and increase the pesticide mill fee in California. This will not only help the CDPR, but will also give farmers an economic boost during hard times. The high-technology sector of the California economy was supported with public investment during its infancy and eventually created many benefits for California.
Sustainable agriculture and pest management is another long-term investment that will benefit the state. Pesticide use stakeholders in California need to recognize this win-win opportunity, and find common ground to move forward.
 This is true without accounting for the costs of pesticide use that are not borne by the user. When these costs (called “external costs” by economists) are included, the case for public investment is even stronger.