This study investigates how pesticide use by neighboring farmers affects a given farmer’s pesticide use. Although it is common knowledge that pesticide use has spatial externalities, few empirical economic studies directly analyze this issue. Applying the spatial panel econometric model to the plot-level panel data in Bohol, the Philippines, this study shows that the pesticide use, especially for herbicides, is spatially correlated although there is no statistically significant spatial correlation in unobserved shocks. This implies that farmers apply pesticides by mimicking neighboring farmers’ behavior rather than rationally responding to the intensity of infestation.JEL Classification Codes: Q56, Q12, O1
