Derivation of netput shadow prices under different levels of pest pressure

In this paper, we propose a framework to derive agricultural netput shadow prices that assign values to netputs in terms of their contribution to technical and environmental efficiency. Our modeling approach is based on the dual representation of an event‐specific data envelopment model and is applied to a panel dataset of Dutch arable farms. Results show that netput shadow prices vary significantly across pest pressure events, suggesting the relevance to consider the event‐specific nature of the production technology when computing them. By revealing the relative importance of pesticides in terms of their contribution to environmental efficiency, this study provides a potential framework for constructing penalties aiming to internalize some portion of the social cost of pesticide use.