The High Cost of Noncompliance with Mandatory Pest Control

Controlling pests and infectious diseases requires coordination through coercive policies. Self-interested agents facing limited inspections and penalties may not comply on these policies, which generates further infections and potentially large costs. Estimating these costs is challenging because local pest levels both depend on and drive strategic compliance. This reverse causality issue impedes the ex-post evaluation of pest control policies for which only observational data are often available. We estimate the economic costs of noncompliance with a policy targeting Flavescence dorée, an epidemic pest disease plaguing European vineyards. To identify causal effects, we leverage variations in the incentives to comply generated by historically determined earning differences across vineyards. These differences stem from century-old Appellations d’Origine Contrôlée (AOCs) delineations, so they are unaffected by current infection risk but do correlate with local compliance rates. Our estimates indicate that increasing average compliance rate by 10 points decreases the average probability of disease presence by 4.5 points. This corresponds to a discounted cost of noncompliance of €171 million nationally and to an average benefit-cost ratio of 2.45 for more compliance. Increasing compliance is therefore highly economically desirable for winegrowers, and can increase social welfare as long as the cost of environmental and health damages from one insecticide application is below €50/ha.