Plant pathogens migrate to new regions through human activities such as trade, where they may establish themselves and cause disease on agriculturally important crops. Verticillium wilt of lettuce, caused by Verticillium dahliae, is a soilborne fungus that was introduced to coastal California via infested spinach seeds. It has caused significant losses for lettuce growers. Once introduced, Verticillium wilt could be managed by fumigating with methyl bromide and chloropicrin, but this option is no longer available. Growers can also manage the disease by planting broccoli or not planting spinach. These control options require long-term investments for future gain. Verticillium wilt can also be prevented or controlled by testing and providing spinach seeds with little or no V. dahliae infestation. However, seed companies have been reluctant to test or clean spinach seeds, as spinach crops are not affected by Verticillium wilt. Thus, available control options are affected by externalities. Renters and other producers with short time horizons will not undertake long-term investments and seed companies do not take into account the effect of their decision not to test on lettuce producers. We review the literature on the economics of managing crop disease; discuss the economics of managing Verticillium wilt; and review the recent research on the externalities that arise with short-term growers, and between seed companies and growers due to Verticillium wilt. An externality arises whenever the actions of one individual or firm affects the payoffs to another individual or firm not involved in a specific transaction. These externalities have important implications for the management of Verticillium wilt and, more broadly, for the management of migratory pathogens and the diseases they cause in agriculture in general. This review is of interest to policy-makers, the producers, marketers, seed companies, and researchers.
