This an academic essay i did for Innovation and Knowledge Economy lecture by professor Andrew McMeekin. The task is to demonstrate understanding on technological lock-in concept using any chosen topic. This topic was a little bit random and way out of my forte but i guess the point of taking masters degree is stretch yourself so far beyond the comfort zone. .
In a paper called Sprayed to Death: Path Dependence, Lock-In and Pest Control Strategies, economic researcher Robin Cowan and Phillip Gunby chronicled how certain pest control strategy dominate the market using increasing returns and path dependency (Cowan & Gunby, 1996). Two study case were used: Israel citrus fruit industry and cotton industry in United States. The Israel case in particular is very interesting because within the span of nearly 60 years, two pest control technologies were competing and each have achieved lock-in in a different period.
This essay attempt to further explore multiple lock in occurrence involving two different pest control method (Integrated Pest Management and Chemical Control) in the case of Israel citrus fruit industry from 1940s to 1970s. It uses historical observation and theoretical results to explain how these multiple lock-ins started, how contingent events influence the competition, what are the increasing returns for each technology and what escape factors contributed in breaking the lock-ins.
Overview on Israel Citrus Fruit Industry
Citrus fruits such as grapefruit, orange and lemon historically has been a major part of Israel economy. In 1950’s, citrus is the nation’s sole agricultural commodity and contribute almost half the total export value of Israel (OECD, 2010). It has been declining since then due to water shortage and increasing competition from neighboring countries. Yet, in recent time the country still able to produce half a billion kilograms annually and become the primary supplier for European market (Israel Agri, 2015).
Due to its importance, the government established close industry supervision by forming Citrus Marketing Board of Israel (CMBI) in the early 60s. In 2004, the board was merged with other agriculture-related government body into Plant Production and Marketing Board of Israel (OECD, 2010). The institution regulates many factor of citrus production including the choice of advisable pest control methods.
Two methods of pest control
Pest control methods that will be discussed in this essay are chemical pesticide and integrated pest management (IPM). These two are not completely mutually exclusive since IPM consist of various component including rational usage of chemical pesticide (EPA, 2015). However, in Israel case, the IPM component that played a bigger part was the utilization of biological pest control. Hence for this essay, the two will be treated as separate methods.
Chemical pest control often done by showering the farm with pesticide to kill destructive plant, animal, and another organism. Generally, for different pesticide there are specific dose and schedule which need to be. The invention of synthetic pesticides such as DDT further simplify the usage of pesticide due to its one size fits all nature (PANNA, 2016). Synthetic insecticides also widely adopted by the farmers due its high effectiveness and affordability.
However, chemical pesticide is harmful to the human and the environment. Farmers and pest-control operator are prone to have poisoning accidents during the process. Insecticide residue in the produce could potentially increase the risk for long term health problems such as cancer (CDC, 2009). Finally, increasing number of insects and other pest are resistance to chemical pesticide (Cavalloro, 1986). This would potentially render pesticide to be less effective in the future.
IPM is a set of programs designed to response into specific pest problem in the field. Rather than eradicating pest, IPM focus more on minimizing economic impact. IPM programs can include biological control such as introducing natural predator and cutting off the pest reproduction cycle. Cultural control such as crop rotation and irrigation management. Targeted use of pesticide also considered for last resort in IPM (UCDavis, 2016).
In contrast to the simplistic approach of chemical pest control, IPM application is knowledge intensive. Substantial R&D cost need to be invested beforehand to come up with good IPM programs. Farmers need to observe the crop condition, identify the pest, assess the potential damage, and then develop the best course of action. Even though this could be lengthy, the process is designed to ensure IPM activities can be effective both economically and environmentally.
1940s – 1950s: Competing technologies and the first contingent event
Prior to 1938, both chemical and IPM were not applied broadly in Israel citrus fruit industry. This will soon change when mealybug epidemic struck the industry in 1939. Israel Cohen, one of the director of CMBI, promote the use of IPM specifically by utilizing biological agent to control parasite population. Having experience countering similar plague in the US, Cohen spearheaded the project by setting up research coordination with US Department of Agriculture, importing predator specimen from Japan and persuade industry stakeholder to mass produce the predators (DeBach & Rosen, 1991). The result was staggering, the parasites was completely controlled within the next two years.
Attempt to combat mealybug parasite using pesticide was also pursued at the same time. However, the method failed to achieve considerable result.
1950s – 1960s: Lock in period of biological pest control
The mealybug success has made IPM ahead of pesticide in terms of preferable pest control in Israel citrus industry. It gives farmers more certainty in using biological pest control hence persuade many other to learn this method. Cost also went down due to mass production and most of R&D budget was borne by the government (CMBI). Network effects was also building up in the form of information availability. Farmers can ask their neighbor for support if they face difficulty in implementing IPM. Increasing IPM adoption also drive the industry to pour more investment which further improve the method.
When another pest epidemic hit the industry in 1956, path dependency came to play. CMBI chose to promote biological control using IPM once again even though during that time synthetic pesticide was widely available.
1960s – 1970s: Resurgence of chemical pest control
IPM / Biological become the method of choice against for majority of the citrus fruit industry for almost a decade. During the mid-1960s, two major development in citrus ecosystem changed this dynamic. First, numerous citrus fruit farming field was exposed to synthetic pesticide by accident. Many of the citrus field was neighboring to cotton field while pesticide often delivered through airplane spraying. This spray drift kills IPM predatory insects and made biological pest control less effective. Secondly, another wave of plague hit the industry. Four new type of bug was identified and there was no known natural predator to combat this. The industry was forced to rethink whether to continue with IPM or switch to chemical control.
During this period, IPM have two unfavorable factor. The first one was time delay. Since the type of pests are new, CMBI and other industry shareholders needs further research to find effective natural predator to contain the plague. Secondly, even if the IPM solution was found there were no effective ways to prevent insecticide spray drift from cotton fields. Newfound IPM solution would continue to be ineffective if this problem persists. These two factors made IPM prospect look bleak and uncertain.
On the other side, switching to chemical pest control seemed to be more rewarding. Developed after world war two, synthetic pesticide was widely available and affordable due to rising demand and mass production. Even though synthetic pesticide had little success story in citrus fruit, it was evidently very effective in other type of crops. Switching cost was also low due to usage simplicity. Considering this factor, majority of the industry then switched to chemical pest control by the end of 1960’s.
1970s – onward: The second coming of biological pest control
The reign of chemical pest control didn’t last long. Increasing number of pest became resistant to synthetic pesticide hence its effectiveness decline overtime. Increasing oil price also made the pesticide more expensive. Combination of both of this factor lowers the merit of chemical pest control.
During the same period, Israeli government helped IPM regain popularity through favorable legislations. Sponsored by CMBI, the government banned the practice of aerial spraying near citrus grove. This regulation helped to decrease pesticide spray drift which in turn brought back the effectiveness of biological pest control once again. Another government support for IPM came in the form of consultation services. CMBI and Israel Ministry of Agriculture offered IPM education and technology transfer session to citrus farmers. This services lowered the barrier for switching back to IPM.
Government support also brought indirect benefits such as restored confidence in future IPM prospects. Investors and industry shareholders resumed investment in this area which enhance IPM capabilities along the way. By early 1980s, majority of known citrus fruits pest were controllable using IPM / Biological agents.
Lock-in escape factor
During 1940s to 1980s, two occurrences of lock-in escape happened. The first one was when chemical control broke through of IPM lock in in 1960s – 1970s. Second one was when IPM regain dominance in 1970s and onward. In his paper about electric vehicle, Robin Cowan and Staffan Hulten proposed six factor that could lead to lock in escape (Cowan & Hulten, 1996):
- Crisis in existing technologies
- Technological breakthrough producing cost breakthrough
- Changes in taste
- Niche market
- Scientific results
These escape factors will be used to further describe both of lock-in escape events.
For the first lock-in escape, crisis in IPM technologies and cost breakthrough in synthetic pesticide. Unintended consequence of aerial pesticide spraying has reduced IPM effectiveness in many farms across Israel. Furthermore, new type of pest was causing epidemic. In the middle of crisis, citrus farmers simply could not rely on IPM to immediately stop the damage. On the other hand, due to mass production of synthetic pesticide, the chemical control alternatives are inexpensive. The method also relatively simple to use and it has been proven to work in other type of crops.
In the second resurgence of IPM, both crisis in existing technologies and regulation contributed to the lock-in escape. Increasing number of detrimental bugs were resistant to synthetic pesticide. This raised uncertainty about the future prospect of chemical control. Price hike attributed to rising oil price also further reduce the merit of this method.
Government regulation also pushed the balance in favor of IPM. Anti-aerial spraying legislation helped IPM to be effective again. The government pushed IPM further by providing extension which essentially lowered the cost for farmers to switch back from chemical control. Government support also established legitimacy for IPM future prospect in the eye of investors and industry shareholders.
From the essay, it can be concluded that both lock-in escape events have similarities on how the incumbent technology fall from its dominance. Due to certain circumstance, somehow the dominant technology loses its edge which forced users to rethink their choice. On the other hand, availability of alternatives with low switching cost attract users to swap their current technology. This push-pull dynamic involves multiple escape factors which lead to lock-in escape.
In the electric vehicle paper, Cowan and Hulten did not discuss whether simultaneous occurrence of their proposed six escape factors required to happen for lock in to be escaped. Further exploration on the effect of multiple escape factor can be beneficial to better understand lock-in phenomena while also comprehend which of these factors yield the best result when combined.
Below are several references which i used in the essay :
- The idea and majority of the study case came from Cowan-Gunby paper
- Background information and context about Israel citrus fruit industry are taken from OECD report on Israel agriculture and IsraelAgri.com.
- To get the detail about pest control methodology, i used several website from United States such as EPA, CDC and also University of California Davis.
- Additional information on the history of citrus fruit industry development came from two books : Robert Cavalloro – Integrated Pest Control and Debach and Rosen – Biological Control by Natural Enemies.
- The discussion about how lock-in can be escaped and the six escape factors are taken from Cowan – Hulten paper