Should we internalize intertemporal production externalities in the case of pest resistance?

Pesticides efficiency decreases with their global application by farmers. Within a strategic dynamic framework, this results in a classic intertemporal production externality. We analyze the fiscal scheme that can be implemented in order to internalize this externality. We show that it is able to restore socially optimal paths but that final time of pesticide use differs. With this scheme, farmers have a tendency to switch to alternative pest-control technology, as integrated pest management, earlier than is optimal. Furthermore, the socially optimal switching time can be later than the one obtained under a situation without control.