Chapter 3. The evolution of the tax on pesticides and the pesticide savings certificates in France

This chapter examines the evolution of the tax on pesticides and the recent introduction of the pesticide savings certificates in France. The analysis takes a political economy perspective to identify potential barriers to reform that were encountered and if and how they were overcome. This case study illustrates how potential competitiveness impacts may or may not influence reform, the benefits of broad stakeholder engagement and how a solid evidence base can help the government resist the influence of vested interests.

  

Introduction

As the leading agricultural producer in the European Union (EU), France is a major user of pesticides. The use of pesticides supports agricultural production but also contributes to environmental degradation and risks to human health. The first tax on pesticides was introduced in France in 1999, later replaced by a tax on diffuse pollution in 2008, which applies to pesticide sales. The tax rate has increased moderately over the years and the tax base has expanded to cover a greater number of harmful substances. However, competitiveness concerns limited more significant increases in the tax rate. The resulting low level of the tax has not provided a sufficiently strong incentive to reduce use, and the ambitious goal to reduce pesticide use by half has not been reached. Indeed, pesticide use has continued to rise. The recent adoption of a novel instrument, pesticide savings certificates, represents a compromise with the agricultural sector, which opposed stricter regulation or a further increase in the tax rate on pesticides.

This case study examines the political economy dimension of these reforms. It highlights the importance of addressing potential competitiveness impacts, the benefits of broad stakeholder engagement and how a solid evidence base to support the reform can help the government to stand firm against lobbying pressure.

3.1. Impact of agricultural pesticide use on biodiversity in France

Like other countries in Western Europe, in France, agriculture is a major anthropogenic pressure on biodiversity (OECD, 2016). Pesticides1 (also referred to as plant protection products) are considered one of the main drivers of the decline in biodiversity in industrialised countries. France is the second largest user of pesticides in Europe in terms of total volume2 (after Spain) (Marcus and Simon, 2015) and was the eighth largest consumer worldwide in 2010 (OECD, 2016). This level of consumption needs to be considered in the context of the level of agricultural production in France (18% of production in the EU) and the agricultural surface used (16% of the agricultural surface in the EU) (Marcus and Simon, 2015). Overall, the situation has not improved much since 2000 (OECD, 2016). The most recent data on national pesticide use from the French Ministry of Agriculture, Food and Forest (MAAF) report a 5.8% increase between the period 2011-13 and the period 2012-14, with a striking increase of 9.4% between 2013 and 2014 (MAAF, 2016a).3

The use of pesticides supports agricultural production by reducing potential harm to crops caused by pests and disease, thus enabling a more consistent yield. However, it also contributes to environmental degradation, with the presence of pesticides in surface and groundwater, soil and in the air resulting in negative consequences for terrestrial and aquatic biodiversity as well as human health.4 Pesticides in the environment can present a particular threat for biodiversity, especially due to their negative impact on species important for the food chain, including pollinators, which are critical for the production of fruits and vegetables (Marcus and Simon, 2015). Pesticides have been shown to cause losses in species richness, even in concentrations that current European legislation considers “environmentally protective” (Beketov et al., 2013). A study of the intensification of agricultural production in Europe concluded that, despite decades of policy aiming to ban harmful pesticides, the negative effects of pesticides on wild plant and animal species persist and also reduce opportunities for biological pest control (Geiger et al., 2010). With regard to human health impacts, pesticides have been associated with several diseases, notably cancer, neurological diseases and difficulties with reproduction (Marcus and Simon, 2015; Green Economy Committee, 2015).

In 2013, pesticides were present at 92% of measuring points for rivers and streams and 69% of measuring points for groundwater bodies in France (SOeS, 2016). While the presence of pesticides in groundwater is generally less prevalent than in surface water, they can accumulate over time, remaining in groundwater for decades. In 2013, the total concentration of pesticides exceeded quality standards in 21.6% of the measuring points for groundwater and 5.1% for rivers and streams (SOeS, 2016).

There are a number of studies that aim to quantify the benefits of pesticides by estimating the productivity of pesticide use, with highly variable results5 (Bourguet and Guillemaud, 2016). However, most of these studies do not consider the related negative externalities of pesticide use. In France, the total costs of the negative consequences of pesticide use on the environment and human health have yet to be fully evaluated (Green Economy Committee, 2015). Recent studies on the economic costs of pesticide use in the United States and the EU indicate that these costs are substantial. The French National Institute for Agricultural Research (INRA) highlights that these costs could be very significant, estimating the “hidden” and external costs6 of pesticide use in the United States at USD 39.5 billion per year at the end of the 1980s and early 1990s (Bourguet and Guillemaud, 2016). In the EU, the annual health and economic costs related to endocrine-disrupting chemicals is estimated at EUR 157 billion, with pesticides accounting for the largest share of these costs at around EUR 120 billion (Trasande et al., 2015).

A study examining the cost to households in France of the impacts of diffuse pollution from agriculture (from pesticides and nitrogen fertiliser) on drinking water estimated the cost at between EUR 1 billion and EUR 1.5 billion annually (Bommelaer and Devaux, 2011). Of this, the costs borne by local authorities for water purification required to treat pesticides is estimated at between EUR 260 and 360 million annually, with the additional cost of purifying drinking water to treat the presence of 1 kilogramme of pesticides estimated at EUR 60 000 (Bommelaer and Devaux, 2011).

Increasing pressure on policymakers to address pesticide pollution

In France, policymakers have come under increasing pressure to address pesticide pollution (Saint-Ges and Belis-Bergouignan, 2009). According to a recent perception survey, risks related to pesticides are the second most worrying environmental risk for the French population (after air pollution) (ISRN, 2015). Heightened attention in the media, studies linking pesticide exposure to disease, as well as a recent court ruling linking a farmer’s sickness to pesticide exposure (Cour d’Appel of Lyon, 2015) continues to alert farmers and the public, especially those living near agricultural sites, to potential risks.

At the same time, France is Europe’s leading agricultural producer7 with powerful agricultural unions (including the Fédération Nationale des Syndicats d’Exploitants d’Agricoles (FNSEA); the Confédération Paysanne; Jeunes Agriculteurs) and a dominance of rural representation in the Senate (the upper house of Parliament in France). The Chambres d’agriculture8 work closely with farmers, providing technical advice about the growing process. They tend to be conservative in their approach, but have the potential to be influential in the diffusion of more ecologically-friendly practices.

While knowledge of the potentially negative impacts of pesticides has been in the public sphere for over a decade, the extent to which public pressure has been sufficiently strong to influence policy decisions at the national level and provide a counterweight to other political pressures, including the agricultural lobby, is a matter of debate. Over the course of the past decade, the influence of public pressure on policy is difficult to trace, but more recently, increased media attention, campaigns by NGOs and swelling public pressure has appeared to give momentum to further action on specific types of pesticides. A notable example is the French Parliament’s ratification in June 2016 of a ban on neonicotinoids (insecticides with harmful impacts on bee populations) starting in 2018. Strong public pressure and concerted engagement from the Minister of Ecology helped to push for policy action on this issue.

Overall, there are multiple forces driving policy reform on pesticide use in France. Some argue that the main driver of reform in this area has been the necessity to meet objectives under the relevant EU Directives and Regulations on pesticides and environmental quality, in particular the Directive on the Sustainable Use of Pesticides (Directive 2009/128/EC), the Regulation on Plant Protection Product Authorisations (EC Regulation No. 1107/2009) and the EU Water Framework Directive (Directive 2000/60/EC). Others point to the elevated attention in the media and action by NGOs, which have contributed to a more aware and knowledgeable general public. An important driver is undoubtedly the French population demonstrating its preferences through market choices, e.g. the growing demand for organic products and their willingness to pay a premium for them.

3.2. The evolution of the tax on pesticides

The general tax on polluting activities

The first tax applied to pesticides in France was introduced in 1999 under the framework of the general tax on polluting activities (taxe générale sur les activités polluantes) (TGAP). The tax was applied to substances contained in commercial products classified as dangerous, including pesticides. The tax had two stated objectives: to provide an incentive to industry to develop less toxic alternatives and to provide an incentive for farmers to purchase and use less toxic products (ORP, 2015). In addition, it also served to raise revenue. The tax rate varied according to the toxicity of the pesticide, with seven categories of products identified and tax rates ranging from EUR 381 per tonne to 1 677 per tonne. With the adoption of this tax, France became one of the few OECD countries (along with Denmark, Norway, Sweden and the United States) with taxes on either fertilisers or pesticides.

Setting an ambitious pesticide use reduction target

In 2007, an ambitious target to reduce pesticide use by half (“if possible”) by 2018 was among the outcomes of the comprehensive, multi-stakeholder process Grenelle de l’environnement (the Grenelle Forum).9 The Grenelle Forum set an important precedent for stakeholder engagement in environmental issues in France. It founded a new model of environmental governance built among five stakeholder groups, involving the government, elected local representatives, business employers, unions and NGOs. Through its broad participatory approach, this five-part governance system10 lends greater credibility to the commitments made on environmental issues (OECD, 2016). Although a time and resource intensive process, Grenelle is credited with helping to set more ambitious objectives for pesticide reduction (along with other environmental goals) than might have otherwise been the case.11

Drawing on the “Grenelle model” of governance, a broad participatory approach was used in the development of the Ecophyto Plan, which was initiated in 2008 to support the pesticide use reduction target. The Plan developed a set of actions to manage risks from pesticide use, monitor impacts, and reduce cropping systems’ dependence on pesticides (OECD, 2012). These actions include better monitoring of use and risks, research and development for alternatives to pesticide use, and information and communication campaigns.

The tax on diffuse agricultural pollution

In 2008, the TGAP on pesticides was replaced by a tax on diffuse agricultural pollution with the entry into force of the Law on water and the freshwater environment (loi sur l’eau et les milieux aquatiques) (LEMA). The law introduced seven “water taxes” (including the tax on diffuse pollution), which are collected by the six Water Agencies (les agences de l’eau).

The tax on diffuse pollution is levied on the sale of pesticides, with the rate varying according to toxicity of the substance (Table 3.1).12 Tax rates for pesticide in other OECD countries are summarised in Annex 3.A1. In France, the tax is paid by farmers and collected by distributors of pesticides (rather than by manufacturers and importers) in order to make it more visible to farmers (Bommelear and Devaux, 2012). The ceiling on the diffuse pollution tax rate is determined by legislators, established in the environmental law (Cour des comptes, 2015).

Table 3.1. Evolution of the ceiling on the diffuse pollution tax rate (2008-11) (in EUR/tonne)

Category of substance

2008

2009

2010

Since 2011

Substances which are very toxic, toxic, carcinogenic, mutagenic or toxic to reproduction

2.25

3.7

4.4

5.1

Substances which are hazardous for the environment

0.9

1.5

1.7

2

Mineral chemicals which are hazardous for the environment

0.38

0.6

0.7

0.9

Source: Marcus and Simon, 2015.

The rate of the diffuse pollution tax was raised several times between 2008 and 2011. At present, however, the tax rate for the most toxic substances still only amounts to around 5% or 6% of the sale price of pesticides, which strongly limits its effectiveness as an incentive to reduce use (OECD, 2016). The increase in the tax rate was mainly driven by the need to raise revenue to finance the Ecophyto plan (Potier, 2014). The total revenue from the tax increased from EUR 100 million in 2011 to EUR 110 million in 2014 (Marcus and Simon, 2015). The amount of tax revenue channelled to the Ecophyto Plan I amounted to EUR 41 million per year, with the remainder going to the Water Agencies.13 As of 2016, the total amount of tax revenue is expected to reach EUR 150 million, of which EUR 71 million will go to the Ecophyto Plan II. This revenue recycling mechanism, which the FNSEA, among others, lobbied for, was a factor that helped to increase the political acceptability of the tax and subsequent increase in rates.

Between the time the tax was introduced in 2008 and 2013, the annual amount paid by farmers increased by a factor of five (Cour des comptes, 2015). However, farmers’ overall contribution to the funding of Water Agencies remains low, in terms of percentage of receipts (6% of all taxes in 2013) and is still well below the health and environmental costs they generate and the incentives they receive (Cour des comptes, 2015; Sainteny, 2011; OECD, 2016). Thus, while the establishment of the tax on diffuse pollution is noteworthy, the polluter pays principle is still not fully applied (Cour des comptes, 2015).

Despite the increases in the tax rate, the tax on diffuse pollution has not been very effective at reducing pesticide use in agriculture (Sainteny, 2011; Lavraut et al., 2013). This is mainly attributed to the relatively low tax rate and the weak price elasticity of demand for pesticides14 (Dutartre et al., 2014; Carpentier, 2010). To function as an effective incentive to reduce pesticide use, tax rates would need to be raised substantially. Butault et al. (2011) estimated the level of tax that would correspond to reductions in pesticide use. The study modelled the introduction of a tax that would increase the price of pesticides and the resulting impact on various modes of agricultural production. It estimated that to reduce pesticide use by 30%, the tax rate would need to be 100% (of the sale price of the product), while for a reduction of use of 50%, the tax rate would need to be 180%. Thus, moderate increases in the tax rate alone are not sufficient to change behaviour, unless accompanied by other measures such as training, the diffusion of good practices and the development of alternatives (Dutartre et al., 2014; Butault et al., 2011).

Since the last increase in rates in 2011, several proposals have been made to continue to raise the rate and expand the tax base. As part of his efforts to promote agro-ecology, the Minister of Agriculture, requested in 2012 that the ministries of agriculture, environment and finance work together to examine how the revenue from the tax on diffuse pollution could best be used to support actions under the Ecophyto Plan. A joint mission studied ten scenarios to increase the tax rate and/ or enlarge the tax base. The scenario with the highest tax rate was considered to place too high of an economic burden on the agricultural sector.15 Instead of increasing the tax rate, the government chose to enlarge the tax base to cover a longer list of substances. This decision was the result of political discussions and the final outcome influenced by the fact that the decision to enlarge the tax base could be taken by décret, therefore at the initiative of the government, without involving Parliament.16 In contrast, increasing the tax rate would require legislative action by Parliament.

The change in the tax base took effect on 1 January 2015. It is expected to increase the revenue generated from EUR 41 to 71 million from 2016 (MAAF-MEDDE, 2015). Thus, this choice allowed for an increase in revenue raising, but with tax rates remaining at relatively low levels, the potential incentive effect remain weak.

In a separate development, in 2012, the government eliminated the reduced the rate of the value added tax (VAT) for pesticides and fertilisers via an amendment to the Law of Finance. This amendment followed the publication in 2011 of a comprehensive national study on public subsidies harmful to biodiversity (Sainteny, 2011). The re-establishment of a standard VAT rate on farmers’ consumption of fertilisers and pesticides did not have an impact on their production costs, as most farmers are subject to the simplified VAT system and recover VAT that they pay on the purchase of their products. This reform was one of the very few recommendations from the study which was successfully implemented.

3.3. The introduction of a novel instrument: pesticide saving certificates

Despite the numerous actions elaborated under the Plan Ecophyto I, by 2014, the plan had not achieved the desired results to reach the objective of reducing by 50% the use of pesticides (“if possible”) between 2008 and 2018 (MAAF-MEDDE, 2015). In light of the disappointing results, a new Ecophyto Plan II was released in 2015. At the same time, strong action was taken to eliminate non-agricultural pesticide use (by municipalities and households) with the adoption of the law on the Energy Transition for Green Growth (loi de transition énergétique pour la croissance verte) in 2015.17

The Ecophyto Plan II was based on the findings of a mission led by Député Dominique Potier at the request of Prime Minister. The plan maintains the objective of reducing by half the use of pesticides products within 10 years, but postpones the deadline for reaching the objective from 2018 to 2025. The plan sets a short-term goal of a reduction by 25% by 2020 and a 50% reduction by 2025, compared to 2015 (MAAF-MEDDE, 2015). Figure 3.1 depicts the objectives of the first and second Ecophyto Plans plotted against the evolution of pesticide use in agriculture.

Figure 3.1. Evolution of pesticide use compared to the objectives of the Ecophyto Plans I and II
picture

Note: Changes in agricultural “number of unit doses” (Nodu) compared to Ecophyto plan. 2015 is an estimate based on 2012-14 average.

Source: OECD (2016), OECD Environmental Performance Reviews: France 2016, OECD Publishing, Paris, https://doi.org/10.1787/9789264252714-en. OECD based on data from MAAF (2016), Tendances du recours aux produits phytopharmaceutiques de 2009 à 2014.

The preparation of the plan included several studies and consultations to consider the options for introducing changes to existing policies or the introduction of new policy instruments to achieve the plan’s goals (Box 3.1). The focus of the new plan is mainly on diffusing and implementing existing techniques for the reduction of pesticide use to as many farmers as possible, along with financial support, while maintaining efforts on research and innovation. Figure 3.2 depicts the evolution of key policies discussed in the case so far.

Box 3.1. Ecophyto Plan II measures targeting biodiversity

The Ecophyto Plan II, released in 2015, seeks to address many of the shortcomings of the previous plan. The plan maintains the ambitious target to reduce pesticide use by half within 10 years and includes a number of other measures targeted at benefitting biodiversity. These include:

  • A national network monitoring the unintended impacts of agricultural practices on biodiversity. The network is comprised of 500 parcels and focuses on 4 species groups: birds, flora of field edges, beetles and earthworms. The objective is to estimate the impact of agriculture on these species.

  • A network of demonstration farms (“DEPHY”), which diffuse information about what is possible in terms of reducing pesticide use, as well as collect agricultural, environmental and economic data.

  • An information portal on integrated crop protection.

  • Promotion of organic pest control products.

Source: MAAF-MEDDE, 2015.

Figure 3.2. Evolution of key policies to curb pesticide use in France and presiding governments
picture

The establishment of an experimental instrument, the pesticide saving certificates (CEPPs) was recommended by a joint mission consisting of representatives of the General Counsels on agriculture, environment and finance.18 This mission proposed the CEPPs as an alternative to raising the rate of the diffuse pollution tax or applying more direct regulation (e.g. limiting access to certain products). Barriers to raising tax rates further included limited political acceptability, concerns about potential negative economic impacts on the agricultural sector and concerns that such a rise could inadvertently encourage greater recourse to illegal purchase of pesticides. In addition, the weak price elasticity of pesticide demand was used as an argument against raising rates (Dutartre et al., 2014).

The establishment of CEPPs was included in the Law of the Future of Agriculture and Forestry (Loi d’Avenir Agricole et Forestiere) (LAAF) of 2014. Inspired by the energy saving certificates, the CEPPs require pesticide distributors to encourage farmers to adopt practices recognised to be effective in lowering the use of pesticides and the associated risks and impacts. This requires defining a standardised and approved list of actions which reduce pesticide use and quantifying the expected reduction, differentiated by crop type. In exchange for taking these approved actions, the distributors receive CEPPs in accordance with the expected pesticide “savings” achieved. Distributors are expected to develop their role as an advisor and guide in suggesting alternatives to pesticide use as a part of this process. The approach of the scheme is to stimulate the diffusion of good practices in the sector where technical solutions exist, but a number of barriers to implementation remain, such as risk aversion or a poor understanding of the potential benefits for farmers.

The scheme will have an overall target of reducing pesticide use, which will be shared among individual distributors (in a manner that is still to be determined). They will self-report their actions taken under the scheme, with an external audit undertaken for each distributor at least once during the period of experimentation. At the end of the period of experimentation, distributors must demonstrate a reduction of pesticide use compared to a baseline. Distributors who have not met their obligations, either by implementing recognised actions or by purchasing certificates from other obligated parties, will be penalised (MAAF-MEDDE, 2015).

In its recent (2015) recommendation on pesticides, the Green Economy Committee listed a number of necessary conditions that will need to be in place for the good performance of the scheme. Among the long list of conditions cited are: ensuring transparency in the definition of the list of approved actions; vigilance regarding possible leakage (savings generated by adoption of actions offset by increased use of pesticides elsewhere) or double-counting; evaluation and re-adjustment in the course of the period of experimentation; considering the possibility of including seeds treated with pesticides in the scheme; and continued development of indicators which can reliably measure the impact of pesticide use (Green Economy Committee, 2015).

Stakeholder consultations to inform the design of CEPPs

A collaborative approach was taken in the process of developing proposals on the specific design of the CEPPs, including public consultations led by the ministries of environment and agriculture. Inspired by the “Grenelle” model, this consisted on broad engagement with a wide diversity of stakeholders with periodic meetings spanning nearly a year and a half. This approach engaged the vital support of research institutions, including INRA, which contributed to a sound evidence base the government could rely on to defend against lobbying efforts attempting to stall or weaken action on pesticide reduction. It also permitted the engagement of a diversity of actors from the agricultural sector, including those pioneers advocating for stronger action on agro-environmental measures and actively demonstrating the viability of alternative techniques.

Consultations took place in 2014 with professional organisations representing farmers, distributors, as well as scientific and technical experts. The mechanism of pesticide saving certificates faced criticism from agricultural professional organisations, in particular due to the complexity of the scheme, which was described as an “incomprehensible system” (“usine à gaz”) (Dutartre et al., 2014). The scheme was also criticised for focusing on the reduction in pesticide use, rather than the reduction in the impact of the pesticide use and thus, the risk related to pesticide use.19 However, the reduction of pesticide use is the main lever to reduce the risk related to their use. In general, agricultural organisations preferred the CEPPs as a policy option, compared to increasing the tax on pesticides or more direct regulation. The majority of agricultural actors consulted indicated that more direct regulation would not be acceptable (Dutartre et al., 2014).

Distributors raised concerns about possible competitiveness impacts related to the implementation of the CEPPs (Dutartre et al., 2014). As France is the only country in the EU implementing this novel instrument, distributors raised concerns about possible market distortions that it could create for French pesticide distributors. They noted that there could be possible distortions, especially along the border, between French farmers who buy pesticides from French distributors subject to both the tax on diffuse pollution and the CEPP scheme and those who buy pesticides from a (non-French) European distributor not subject to either regime. However, the joint mission concluded that potential competitiveness impacts are not related directly to CEPPs, but instead concern fraudulent behaviour and should be addressed by strengthening existing controls (Dutartre et al., 2014). Furthermore, it is recognised that a reduction in pesticide use can be made while still maintaining production levels, as demonstrated by the DEPHY network20 (MAAF, 2016b). However, this requires a change in management practices, which take time to diffuse widely.

Drawing on the recommendations of the joint mission, the Ministry of Agriculture set out the detailed design of the CEPPs in an ordonnance and a draft décret (an order with legal force issued by the French President or Prime Minister). In the draft décret, the Ministry of Agriculture proposed that the CEPPs should target a reduction in pesticide use (as measured by the NODU) of 20% after the 5-year period of experimentation. It was proposed that failure to reach the objective for reduction would be sanctioned by a fine of EUR 11 per NODU of savings lacking, an estimated 11 times the net profit per NODU of pesticide distributors. The proposed overall target of the scheme, the level of the sanction and the indicator to measure progress were all contested by pesticide distributors and the agricultural union, FNSEA.21 The Ministry of Agriculture agreed to discuss these three points with these stakeholders. Stakeholders argued that the level of the sanction was too high and was not an accurate estimate of distributors’ net profit per NODU, but the gross revenue per NODU. Also, they referenced the example of the energy saving certificates, which started with a low level of sanctions that eventually increased as the scheme was refined and improved. As a result of these negotiations with stakeholders, the level of the sanction in the draft décret was reduced by more than half, to EUR 5 per NODU.

The indicator to measure progress under the CEPP scheme will remain the NODU. Although an alternative composite indicator to measure the progress of developing and diffusing economically viable alternatives to pesticide use, as proposed by FNSEA, will also be developed jointly by the ministries of agriculture and environment and used as a complementary measure in the context of the Ecophyto Plan II.

In addition to negotiations with targeted stakeholders, a public consultation on the draft décret took place in early May 2016. The overall target of reduction in pesticide use by 20% was seen as acceptable. The draft décret will also be evaluated to assess the economic impacts on affected businesses (pesticide distributors and farmers). An environmental impact study is not obligatory.

At the same time, there have been several calls to analyse the possibility to strengthen the incentive nature of the diffuse pollution tax (Green Economy Committee, 2015; Potier, 2014). In particular, in 2015, the Green Economy Committee recommended that a study be undertaken to examine this issue, including an analysis of how the revenue raised could be allocated. The committee recommended that two options be examined: using the revenue to sustain the competitiveness of the agricultural sector and using the revenue to support farmers evolving their practices towards a reduction in pesticide use. The potential use of additional revenue from an eventual increase in the tax was a strongly debated issue within the committee, with environmental NGOs insistent that the revenue should benefit only those farmers changing to more ecological practices and opposed to revenue being used to offset any competitiveness impacts on the sector a higher tax could generate.

Overall, both the Ministries of Environment and Agriculture agree that any future increase in the tax on diffuse pollution should be used to support actions to encourage the reduction of pesticides use. However, there has been disagreement in the past about who would receive the revenue and how it would be used: the Ministry of Environment preferring that the revenue continue to be allocated to the Water Agencies and the Ministry of Agriculture preferring that the revenue is directly recycled to the agricultural sector (to the farmers, via the distributors) (Dutrante et al., 2014). Since the adoption of the Ecophyto Plan II, both ministries co-pilot the plan, and have reached agreement on the objectives and means to implement the plan. This co-pilotage is considered an important element of government efforts to encourage the reduction of pesticide use.

3.4. Lessons for addressing barriers to biodiversity policy reform

Revenue recycling helped secure ambitious targets and political acceptability of reforms

This case illustrates a number of challenges in implementing effective biodiversity policy reforms and highlights lessons for overcoming some of them. In this case, the distribution of costs and benefits of policy reforms has been a facilitating factor for gaining political acceptability. In particular, the tax on diffuse pollution has been widely used as an instrument to finance pesticide reduction policy, rather than as an instrument to generate an incentive for the reduction in pesticide use. Recycling the revenue from the tax to fund actions under the Ecophyto Plan (ultimately benefitting farmers) to reduce pesticide use and Water Agency programmes facilitated decisions to increase the tax rate on diffuse pollution over time, which were relatively modest. This revenue recycling was also a critical factor that supported maintaining the ambitious reduction targets under the Ecophyto Plan II. Further, the fact that farmers benefit from a simplified VAT scheme and that the removal of the reduced VAT rate did not affect production costs for most farmers undoubtedly contributed to the acceptance of the removal of this environmentally-harmful subsidy.

However, the low level of the tax on diffuse pollution has not provided an incentive to reduce use and the actions under the Ecophyto Plan I financed by the revenue generated from the tax has fallen well short of the government’s own target while pesticide use continues to increase. Substantial increases in the tax rate have not been pursued, primarily due to concerns about negative economic impacts, especially in some farming sectors where alternatives are more limited. Rather than regulating pesticide use more strictly, the government has chosen to work in collaboration with farmers and pesticide distributors to encourage practices that reduce use. Interestingly, future attempts to raise the tax rate on diffuse pollution may be stymied by strong opposing views about how the additional revenue raised should be used: whether allocated to the general budget, to actions by farmers and Water Agencies aimed at improving ecological outcomes or to offset potential competitiveness impacts in the agricultural sector. This topic has already provoked vigorous debate among stakeholders in the Green Economy Committee.

In general, revenue from environmentally related taxes, such as the tax on diffuse pollution, should be treated as general government revenue and used to maintain spending, reduce debt or reduce other taxes (OECD, 2011). While the earmarking of revenues from environmentally related taxes (e.g. to fund spending on pesticide reduction policies) can promote transparency and thus help garner public support and thereby the political acceptability of the tax, it also bypasses or pre-empts the annual budgets, where departments compete for funds on an equal footing, and creates a precedent for other government agencies to have their own earmarked funds (OECD, 2013).

Concerns about competitiveness impacts stalled reforms in some instances

This case also provides an example of how competitiveness concerns have been sufficient to limit the increases in the rate of the tax on diffuse pollution to modest levels, far below levels that could have a strong incentive impact on pesticide use. However, concerns about potential negative impacts on competitiveness have not thwarted the introduction of a novel policy instrument (the CEPPs), despite France being the only EU country to put such an instrument in place.

Considering the strong opposition of the agriculture sector to stricter regulation or a further increase in tax rates on pesticides, the adoption of CEPPs appears to represent a compromise to gain political acceptability of the reform, at least as far as the choice of policy instrument is concerned. Further compromises have been made in key design features of the scheme, such as the level of sanctions to be imposed for non-compliance following consultations with select stakeholders. Although the government has opted to develop a rather complex, novel instrument, it has not given much consideration to potential risk mitigation instruments, such as insurance, to date. This type of policy instrument could help offset potential revenue losses due to declines in the quality or quantity of production arising from reduced pesticide use. Reflections on developing such instruments are mandated under the Ecophyto Plan II, so should provide an opportunity to consider such alternative approaches in the future.

Finally, although often cast as such in policy debates, pesticide use reduction need not be at odds with the competitivity of agricultural firms. As argued by Potier (2014), the results demonstrated by the range of farmers engaged already in reducing pesticide use – from the pioneers of sustainable agriculture to the champions of precision agriculture – show that such systems can deliver economic, environmental and social benefits, without reducing production. Further, the notion of competitivity itself needs to reflect environmental and social externalities of agricultural production (Potier, 2014).

Broad stakeholder engagement helped to gain support of the agricultural sector

The close co-operation between the Ministries of Environment and Agriculture, along with reliance on the “Grenelle model” of broad stakeholder engagement are viewed as key to advancing policies to curb pesticide use. The agriculture sector has significant heterogeneity, which includes a number of smaller, innovative pioneers, which are helping to push the agro-ecology agenda within the sector. Including a very diverse and broad range of actors avoided the process being captured by only a few large lobby groups. Thus, greater representativeness of stakeholders has had a positive influence on policy reforms in this case. In addition, the frequency of periodic meetings, while time consuming and resource intensive, was an important factor in moving the agenda forward with the engagement of and not in opposition to the agricultural sector. Overall, progress has been rather slow and modest, but it is moving in a positive direction.

However, the “Grennillien” approach does not eliminate the diversity of opinions and interests. According to Potier (2014), a major reason for the failure of the Ecophyto plan was that it was built on a fragile consensus. Gaining agreement on issues where there are real or perceived short term losses is especially difficult. In the absence of Grenelle, it is unlikely that French would have adopted such ambitious targets, but achieving these objectives still requires steady political will.

A robust evidence base is critical for standing firm against lobbying pressure

The engagement of research institutions to build a solid evidence base to support policies to reduce pesticide use has been critical to help the government to stand firm against lobbying pressure from vested interests and to convince reluctant actors to engage. Notably, research support from INRA was instrumental in the development of the EcoPhyto Plan II. Further, an independent commission was convened to develop a scientifically-sound list of approved actions for the CEPPs. Ensuring a robust link between the approved actions and actual reductions in pesticide use is essential for the success of the scheme.

Yet, incomplete information on total environmental and health costs to society of the use of pesticides in France impedes a more thorough cost-benefit analysis of pesticide use and a more comprehensive understanding of the distribution of costs and benefits to society. At present, there has been limited economic evaluation of the costs of negative externalities from pesticide use. An economic evaluation on impacts of pesticide use on public health has yet to be undertaken. This requires much better information on the potential risk to health of pesticide use. Such a valuation study would allow for a more complete evaluation of the benefits of pesticide use against the costs and provide comprehensive information to both policy makers and the public. However, as noted in the recommendation on pesticides of the Green Economy Committee, there is sufficient information on the potential risks of pesticide use to promote stronger action. Incomplete information should not be used as a reason to delay action.

Public concern is an increasingly important driver of reform

There are multiple forces influencing the direction and pace of policy reform to reduce pesticide use in France, including growing public concern, media attention, campaigns by NGOs, policy decisions at the EU level, as well as the influence of agricultural lobbies and other vested interests. Views differ as to the relative influence of these factors. Some argue that the obligations stemming from EU Directives and Regulations have been a major driver, while others point to the heightened attention in the media and NGO campaigns, which have contributed to a more aware and knowledgeable general public and more pronounced action at the highest levels of the French government. What is clear is that public opinion, as expressed through their market choices (via demand for organic products, etc.) is an increasingly important driver of reform. Most agree that the trend towards less pesticide use is irreversible and while certain vested interests many aim to slow or stall reforms, the long-term momentum is toward more environmentally sustainable farming practices.

References

Aubertot et al. (Eds.) (2005), Pesticides, agriculture et environnement. Réduire l’utilisation des pesticides et limiter leurs impacts environnementaux, [Pesticides, Agriculture and the Environment : Reducing the Use of Pesticides and Limiting their Environmental Impact], Collective scientific expertise, synthesis report, INRA et Cemagref.

Beketov, M. et al. (2013), “Pesticides reduce regional biodiversity of stream invertebrates”, Proceedings of the National Academy of Sciences 110(27): 11039-11043, www.pnas.org/cgi/doi/10.1073/pnas.1305618110.

Böcker and Finger (2016), “European pesticide tax schemes in comparison: An analysis of experiences and development”, Sustainability, 8(378), https://doi.org/10.3390/su8040378.

Bommelaer, O. and J. Devaux (2012), “Le financement de la gestion des ressources en eau en France” (actualisation de janvier 2012) [Financing water resources management in France], Études & documents n°62, Janvier 2012, Commissariat général au développement durable, La Défense.

Bommelaer, O. and J. Devaux (2011), “Coûts des principales pollutions agricoles de l’eau” [Costs of main agricultural water pollution], Études et documents, no. 52, Septembre 2011, Commissariat général au développement durable, [General Commission for Sustainable Development], La Défense.

Bourguet, D. and T. Guillemaud (2016), “The hidden and external costs of pesticide use”, Sustainable Agriculture Reviews, Sustainable Agriculture Reviews 19, https://doi.org/10.1007/978-3-319-26777-7_2.

Butault, J.-P. et al. (2011), “L’utilisation des pesticides en France : état des lieux et perspectives de réduction”, Notes et études socio-économiques no. 35, October 2011, pp. 7-26, Centre d’Études et de Prospective, Ministère de l’Agriculture, de l’Alimentation, de la Pêche, de la Ruralité et de l’Aménagement du Territoire, http://agriculture.gouv.fr/lutilisation-des-pesticides-en-france-etat-des-lieux-et-perspectives-de-reduction.

Cour d’appel of Lyon (2015), Arret du 10 Septembre 2015, [Decision of September 10, 2015], Décision du Tribunal de Grande Instance de Lyon, SAS Monsanto Agriculture France v. Monsieur Paul Francois.

Cour des comptes (2015), “Les agences de l’eau et la politique de l’eau : une cohérence à retrouver” [Water agencies and water policy: coherence to be found], in Rapport public annuel 2015, Cour des comptes, Paris, www.ccomptes.fr/Publications/Publications/Rapport-public-annuel-2015.

Cour des comptes (2013), Les certificats d’économies d’énergie [Energy Savings Certificates], Cour des comptes, Paris, www.ccomptes.fr/Actualites/Archives/Les-certificats-d-economies-d-energie (accessed 22 March 2016).

Dutartre, S. et al. (2014), Préfiguration de la mise en œuvre des Certificats d’Économie de Produits Phytosanitaires (CEPP), mission d’appui [Foreshadowing the Implementation of the Plant Protection Products Saving Certificates Support Mission], un rapport pour l’Inspection Générale des Finances, la Conseil Général de l’Alimentation, de l’Agriculture et des Espaces Ruraux, et le Conseil Général de l’Environnement et du Développement Durable, juillet 2014.

Eurostat, (2016), “Pesticide sales”, http://ec.europa.eu/eurostat/web/products-datasets/-/aei_fm_salpest09 (accessed 27 June 2016).

Geiger, F. et al. (2009), “Persistent negative effects of pesticides on biodiversity and biological control potential on European farmland”, Basic and Applied Ecology, 11 (2010) 97-105.

Green Economy Committee (Comité pour l’economie verte), (2015), “Avis du Comité pour l’economie verte du 16 juillet 2015 portant diagnostic sur les instruments économiques relatifs à l’utilisation des produits phytosanitaires et portant recommendation sur les certificats d’économie de produit phytopharmaceutiques” [Recommendations of the Commission for Green Growth of 16 July 2015 based on the diagnosis of economic instruments relating to pesticide use and the recommendation on plant protection product savings certificates].

Institut de Radioprotection et de Sûreté Nucléaire (ISRN), (2015), “Baromètre” [Barometer], http://barometre.irsn.fr/ (accessed 27 June 2016).

Levraut, A.-M. et al. (2013), Évaluation de la politique de l’eau [Evaluation of Water Policy], an analytical report commissioned by le Conseil général de l’environnement et du développement durable, le Conseil général de l’alimentation, de l’agriculture et des espaces ruraux, le Conseil général de l’Économie, de l’Industrie, de l’Énergie et des Technologies, l’Inspection générale des finances, et l’Inspection générale de l’administration, June 2013.

Ministry of Agriculture, Food and Forests (MAAF) (2016a), Utilisation des produits phytosanitaires: Résultats nationaux pour l’année 2014 et lancement du nouveau plan Ecophyto II [Use of plant protection production : national results for the year 2014], Press release, March 8, 2016.

Ministry of Agriculture, Agrifood and Forestry (MAAF) (2016b), Ecophyto, Note de suivi 2015, Tendances du recours aux produits phytopharmaceutiques de 2009 à 2014, [Ecophyto Tracking Note 2015, Trends in the Use of Pesticides from 2009 to 2014].

Ministry of Agriculture, Food and Forests and Ministry of Ecology and Sustainable Development (MAAF-MEDDE) (2015), Plan Ecophyto II, [Plan Ecophyto II] Ministère de l’Agriculture de l’Agroalimentaire et de la Forêt, Ministère de l’Écologie, du Développement durable et de l’Énergie, Paris, http://agriculture.gouv.fr/sites/minagri/files/151022_ecophyto.pdf.

Ministry of Ecology and Sustainable Development (MEDDE) (2016), “Les pesticides interdits dans les espaces verts en 2017 et les jardins en 2019” [Pesticides Banned in Green Spaces in 2017 and in Gardens in 2019”], www.developpement-durable.gouv.fr/Les-pesticides-interdits-dans-les,39463.html (accessed 18 July 2016).

Marcus, V. and O. Simon (2015), “Les pollutions par les engrais azotés et les produits phytosanitaires : coûts et solutions” [Pollution from nitrogen fertilisers and plant protection products: Costs and solutions], Études et documents, n° 136, Commissariat général au développement durable.

Observatoire des Résidu de Pesticides (ORP) (2015)  “Qu’est-ce que la TGAP?” [What is the TGAP ?], www.observatoire-pesticides.gouv.fr/index.php?pageid=184&ongletlstid=165&locator=Foire%20aux%20 questions (accessed 9 February 2016).

OECD (2016), OECD Environmental Performance Reviews: France 2016, OECD Publishing, Paris, https://doi.org/10.1787/9789264252714-en.

OECD (2012), Water Quality and Agriculture: Meeting the Policy Challenge, OECD Publishing, Paris, https://doi.org/10.1787/9789264168060-9-en.

OECD (2011), “Environmental taxation: A guide for policy makers”, www.oecd.org/env/tools-evaluation/48164926.pdf (accessed 29 June 2016).

Poláková, J. et al. (2011), Addressing Biodiversity and Habitat Preservation through Measures Applied under the Common Agricultural Policy, Report Prepared for DG Agriculture and Rural Development, Contract No. 30-CE- 0388497/00-44, Institute for European Environmental Policy, London.

Potier, D. (2014), “Pesticides et agro-écologie: les champs du possible” [Pesticides and agro-ecology : the range of possibilities], Rapport de Dominique Potier, Député de Meurthe et Moselle, au Premier Ministre Manuel Valls, [Report from Dominique Poteir, deputy of Meurthe et Moselle to the Prime Minister Manuel Valls], November 2014, Paris, www.dominiquepotier.com/UserFiles/File/rapport-dpotier-pesticides-et-agro-ecologie-basse-def.pdf (accessed 14 March 2016).

Saint-Ges, V. and M.-C. Belis-Bergouignan (2009), “Ways of reducing pesticides use in Bordeaux vineyards”, Journal of Cleaner Production, Vol. 17, pp. 1644-1653.

Sainteny, G. (2011), “Public incentives harmful to biodiversity”, Report of the commission chaired by Guillaume Sainteny, Centre d’analyse stratégique.

Skevas, T. et al. (2013), “Designing the emerging EU pesticide policy: A literature review”, Wageningen Journal of Life Sciences, 64-65, pp. 95-103.

SOes (2016), “Les pesticides dans les eaux” [Pesticides in water], www.statistiques.developpement-durable.gouv.fr/lessentiel/s/pesticides-eaux.html (27 June 2016).

Trasande, L. et al. (2015), “Estimating burden and disease costs of exposure to endocrine-disrupting chemicals in the European Union”, Journal of Clinical Endocrinology and Metabolism, 100(4): pp. 1245-1255, https://doi.org/10.1210/jc.2014-4324.

Urruty et al. (2015), “Usage des pesticides en agriculture: effets des changements d’usage des sols sur les variations de l’indicateur NODU” [Pesticide use in agriculture : impact of the change in land use on the variations of the NODU indicator], http://agriculture.gouv.fr/usage-des-pesticides-en-agriculture-effets-des-changements-dusage-des-sols-sur-les-variations-de (accessed 24 February 2016).

Annex 3.A1. Pesticide taxes in selected countries
Table 3.A1.1. Pesticide taxes in selected countries

Country

Tax base

Tax rate(s)

Imposition point

Year introduced

Other details (earmarking, exemptions, total revenue)

Denmark

Active ingredients in pesticides. Revised in 2013 into a more differentiated tax scheme

Insecticides: 54% of retail price

Wholesalers/importers

1996

Earmarking: 100% for environmental purposes and to compensate farmers. Total revenue in 2013 DKK 659 million (~EUR 88.4 million)

Herbicides, fungicides, growth regulators: 34% of retail price

Wood preservatives: 3% of gross value

France

Pesticides (differentiated by category of substance)

Substances which are very toxic, toxic, carcinogenic, mutagenic or toxic to reproduction: EUR 5.1/ tonne

Pesticide distributors

1999 (TGAP) replaced by current tax in 2008

Tax revenue used to finance the Ecophyto Plans I and II, with the remainder going to the Water Agencies.

Substances which are hazardous for the environment: EUR 2/ tonne

Mineral chemicals which are hazardous for the environment: EUR 0.9/ tonne

Norway

Pesticides (differentiated tax scheme)

Banded tax system, with rates determined by a complex formula

Industry, importers/wholesalers

1988

Estimated revenue in 2015 NOK 50 million (~EUR 5.8 million)

Sweden

Pesticides (fixed tax scheme)

EUR 3.64 per kilogramme of active substance

Wholesalers/importers

1984

Exemptions: Wood preservatives. Total revenue in 2015 SEK 70 million (~ EUR 7.5 million)

United States (Washington State)

Pesticides

0.7% of wholesale value

Earmarking: 100% funds are distributed to the Department of Ecology to help clean up and manage solid and hazardous waste in the state of Washington.

Source: OECD (2016), Database on instruments used for environmental policy; Böcker and Finger (2016); Skevas et al. (2013).

Notes

← 1. Including insecticides, fungicides and herbicides.

← 2. In France in 2012, 63.8 Mt of pesticides were sold, 66.7 Mt were sold in 2013 and 75.3 Mt were sold in 2014 (Eurostat, 2016).

← 3. The indicator used for this measurement is the “Number of Unit Doses” (NODU). It is expressed in quantities of pesticides in terms of the unit doses of active substances applied. It is calculated on an annual basis at national level, but cannot be broken down by culture (Urruty, et al., 2015), nor at a sub-national scale. The NODU is determined based on required declarations of sales of products covered by the tax on diffuse pollution. It provides a better indication of potential impacts of pesticide use as compared to simply tracking the volume of quantities sold, which does not take into account changes in the efficiency or toxicity of pesticides, such as older products which were used in larger quantities being replaced by products which can be effective at low doses (Marcus and Simon, 2015). Data released by MAAF (2016) account for climatic variations.

← 4. The risks of pesticide use to the environment vary considerably from one pesticide to another, depending on the intrinsic characteristics of their active ingredients (toxicity, persistence, etc.) and use patterns (applied volumes, application period and method, crop and soil type, etc.).

← 5. Reviewing a range of studies between 1963 and 1991, Bourguet and Guillemaud (2016) note that a benefit-cost ratio of 4 has become the most widely-cited figure. The benefit-cost ratio reflects the marginal productivity of agriculture due to pesticide use compared to the cost of buying pesticides.

← 6. These are costs associated with the impact of pesticides on the environment and human health, regulatory measures and defensive behaviour. They are either internal to the market, but “hidden” in the sense that users (e.g., farmers) may not be aware of them, or external to the market.

← 7. France is the leading agricultural producer in the European Union with production valued at EUR 75 billion in 2013 (MAAF-MEEDE, 2015).

← 8. They must be certified by the government to provide this advice, which must be based on a risk analysis, propose alternatives to pesticide use and by formally documented and signed by the advisor. The government certified requires an audit every two years.

← 9. This target exceeds the requirements set out in EU Directives and Regulations on pesticides. While the target was not included in the Grenelle Law I (2009) or II (2010), it was included in a national action plan led by the Ministry of agriculture.

← 10. More recent manifestations of the “Grenelle model” include a 6th group, Parliamentarians. This is referred to as the “Grenelle + 1” model.

← 11. It was in the course of the Grenelle negotiations that “if possible” was added to the target for pesticide reduction (Potier, 2014).

← 12. Notably, nitrogen fertiliser is not covered by this tax, which is paradoxical in view of the objectives of the EU Framework Directives on Water and Nitrates (Cour des comptes, 2015).

← 13. The Finance Law of 2012 set a EUR 41 millionceiling on the annual contribution from the tax to the Ecophyto plan for the period 2012-18 (Potier, 2014). Potier’s mission recommended increasing the contribution of the revenue of the diffuse pollution tax to the Ecophyto plan to EUR 100 million per year.

← 14. Aubertot et al. (2005) note that the price elasticity of pesticide use is low in the short term, but higher in the longer term. Higher price elasticity in the long term reflects the possibility to adopt the full range of alternatives to pesticide use available to agriculture (Carpentier, 2010).

← 15. The final report of the joint mission was not released to the public.

← 16. The possibility to tax a broader range of substances was already included in the LEMA.

← 17. Non-agricultural use accounts for about 5-10% of all pesticide use in France. The ban for municipal use will take effect at the start of 2017 and the ban for households will take effect in 2019. Infractions can be sanctioned by a prison sentence of up to 6 months with a fine of EUR 30 000 (MEDDE, 2016).

← 18. Specifically, the General Counsel on Food, Agriculture and Rural Spaces (Conseil Général de l’Alimentation, de l’Agriculture et des Espaces Ruraux, CGAAER), the General Counsel on Environment and Sustainable Development (Conseil Général de l’Environnement et du Développemnt Durable, CGEDD), and the Inspector General of Finances (l’Inspection Générale des Finances, l’IGF).

← 19. Notably,there is not a simple link between the intensity of pesticide treatment, as measured by the Index of the Frequency of Treatment (IFT) and the impact on the environment, which varies in function with the date of application, the soil type and the toxicity of the product used (Dutartre, 2014).

← 20. As of 2014, the DEPHY network included 1900 farms using agricultural techniques to reduce pesticide use. The network has shown that it is possible to reduce pesticide use while maintaining productivity levels (MAAF, 2016b).

← 21. Using the NODU as the key indicator for the Ecophyto Plans has been criticised by representatives of the agricultural sector. They argue that the way it is constructed will tend to show disappointing results despite progress reducing the use of more dangerous products. For example, as more dangerous products are banned and replaced by less concentrated products that require greater doses and more frequent treatment, the result will be an increase in the NODU, even though the risks related to the pesticide use is, in principle, reduced.