prompted research on the private costs and returns from the use of these chemicals. Headley uses 1963 state data to estimate a $4 return for each dollar of pesticide materials of all types (fungicides, herbicides, insecticides, etc.) used on U.S. farms. He indicates that this result helped explain the rapid increase in sales volume of pesticides. But during the 1960s producers were giving additional attention to pest control as more insect species became resistant to more chemical types. Many policy questions on the limitation of use and registration of insecticides require more detailed knowledge of the demand for specific compounds. Regulatory officials are concerned about the substitutability of other chemical and nonchemical pest controls (Davis et al.). Yet, no statistical estimates of insecticide demand are presently available. The importance of insecticide resistance in affecting demand for specific compounds and the long-run productivity of insecticides are investigated in this paper. Individual farm data from several cotton production regions and aggregate insecticide use data are used to test hypotheses of falling productivity of insecticides and substitutability between chemical types.
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