When honey bees transport pollen across citrus orchards they can increase the number of seeds in varieties that remain seedless otherwise. An increase in seeds diminishes the market value of the fruit creating an externality between seedless growers and beekeepers. This paper investigates the efficiency of different policy resolution of this externality including a range of regulated spatial segregations of beekeeping and seedless farming with or without financial compensations. We develop a spatial model of honey foraging behavior to quantify the efficiencies and redistributions of different policies that may be used to correct this market failure. Some of these policies have been implemented others are being currently discussed in policy debates in the California citrus belt. This paper illustrates that quantifying biophysical processes that create externalities is a necessary step towards evaluating the economics efficiency of alternative solutions.


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