Adoption of IPM by Farmland Owners and Non-owners: Application of Endogenous Switching Copula Approach

Khuzestan Province is one of the largest hubs of agricultural production, and consequently is one of the largest consumers of chemical pesticides and fertilizers in the country. Integrated pest management can be an effective step toward reducing pesticide use, protect human health, and the environment. Due to the fact that owner and non-owner have different economical–social conditions, it is expected that they have two different sets of priorities in implementing of the operation. To study the effective factors on willingness to pay to reduce risks of environmental pesticides for two groups, endogenous switching method leads to better results. The problem with this method is incorrect normal distribution assumption for residuals. Therefore, in this study to cope with this problem, we applied endogenous switching copula approach which allows us to use different marginal distributions and leads to accurate results. The results showed that the logistic distribution for decision equation’s residual and Student’s t-distribution for willingness to pay equation’s residual are better than normal distribution. In addition, the average treatment effect results showed that owners have more willingness to pay than non-owners; hence, different factors effect on willingness to pay for two groups. The knowledge factor has a positive effect on the willingness to pay in the two groups; thus, giving information about the harmful effects of chemical pesticides and visiting the control farms can be effective. The income factor is insignificant in owners’ equation and has less effect in non-owners; it shows that the two groups are unaware of the benefits of such operation; hence, by raising awareness of the utility and demand of organic agricultural products, the policymakers can encourage the farmers to reduce the pesticides use. Owners have more motivation for this kind of operation, because they can utilize the long-run benefit. Hence, legislation about long-run rental contract and utilization of tax punishment for excessive use of pesticides can encourage non-owner to implement this operation.