Pesticide Drift and the Coase Theorem

Two farms are next to each other. The brussels sprouts farm uses pesticides; the herb farm is seeking organic certification. When the pesticide is deployed, the wind or fog may blow pesticide onto the herb farm, destroying its organic status. What result?

According to this article, $1M in damages to the organic farm. At the same time, there is apparently a California code that says a pesticide user’s responsibility ends as soon as the chemicals are deployed, and a county investigation exonerated the brussels sprouts farm of wrongdoing.

So what gives? This seems like a classic application of the Coase Theorem, which says it shouldn’t matter if the brussels sprouts farm has the entitlement to deploy pesticide or the herb farm has the entitlement to run an organic farm without worrying about pesticide drift because the parties will bargain with each other to achieve an efficient outcome. However, it’s interesting to see that California law expressly gives the entitlement to brussels sprouts farm, privileging chemical use over organic farming. Sounds like maybe a little rent-seeking took place.

Personally, it seems much more logical to me to set the defaults the other way and make the pesticide users figure out how to avoid drift. After all, if the pesticide is drifting onto other crops, where else is it drifting?

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