Introduction

Chapter 7 showed that market failure (the presence of externalities and imperfect competition in product markets) may give rise to agricultural chemicals which will accumulate in the environment to a socially excessive level. It is the role of governments to intervene to construct institutions to counteract the market failure. Yet all too often, government intervention serves only to exacerbate the original problem by supplying an inappropriate or ineffective institution; such an event is termed a ‘regulatory failure’. In this chapter, various sources of regulatory failure are examined.

In many cases, governments have banned particular chemicals deemed to have accumulated to excessive levels in natural resources. Rölike (1996) reported that by 1993, 78 countries had used this type of regulation. In Germany, 300 of the (approximately) 1000 pesticides registered have been banned individually. Many European countries have responded to a European Commission Directive on drinking water by banning the sale and use of particular chemicals (see p. 218). The objective of this form of regulation is to reduce chemical accumulation by two means: firstly, by removing from use chemicals already present at high concentrations; and, secondly, by providing a signal of society's disapproval of excessive accumulation. It also has the advantage of a degree of certainty (although even this is mitigated by the persistence and continued accumulation of products for several years after the imposition of a ban).

This chapter assesses the combination of maximum acceptable concentrations (MACs) and product-specific bans (PSBs) used by regulators.