Economics of Formosan Subterranean Termite Control Options in Louisiana

Linda Benedict, Paudel, Krishna P.  |  1/8/2011 1:47:50 AM

Krishna P. Paudel, Mahesh Pandit and Michael A. Dunn

Experts estimate the damage from Formosan subterranean termite infestations in the United States exceeds $1 billion per year. In Louisiana alone, the most affected state in the continental United States, they estimate damage at almost $500 million a year.

The Formosan subterranean termite, a species native to China, was introduced to Louisiana, South Carolina and Texas by ships returning from World War II. As of 2010, this invasive species is present in Alabama, California (an isolated infestation in San Diego County), Florida, Georgia, Hawaii, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas. These termites are known as super termites because a single colony can consist of as many as 10 million individuals.

The Formosan termite attacks living trees as well as structural wood. Colonies are established both in the ground and above ground as long as they have a source of water. To control Formosan termites, researchers are attempting to identify the best options to minimize economic damage. Additionally, if needed, subsidized treatment programs can be implemented based on homeowners’ preference rankings. Decisions based on homeowners’ responses provide a basis for urgency of the situation and perceived cost/benefit of a proposed control method.

The U.S. Department of Agriculture has subsidized a treatment program in the New Orleans French Quarter since 2000 through which a subsidy is paid to participating homeowners. Because Formosan subterranean termites can move easily during the breeding season from other areas into the subsidized zone, the subsidy may need to be expanded to a larger area.

A survey was conducted in 2002 to identify the termite control option preferred by Louisiana homeowners. The survey population consisted of all Louisiana homeowners occupying single-family homes in four metropolitan areas – New Orleans, Baton Rouge, Monroe and Alexandria. A total of 5,641 homeowners were contacted through a mail survey: 1,490 from Monroe, 1,305 from Alexandria, 1,395 from Baton Rouge and 1,451 from New Orleans metropolitan areas.
 
Four termite treatment options were offered for each individual homeowner to rank from the most preferred to the least preferred. The treatment choices provided were:

No control. Do not engage in any sort of activities, such as contracting with a pest control operator, to protect against termites. This option costs no money. With no form of termite protection or control, however, the chance that your home will be attacked by termites over the next five years is significant.

Liquid. Contract with a pest control operator to install a liquid termite prevention solution, which is an insecticide applied in a trench dug around your home. The cost of this option is, based on a 2,000-square-foot home, $750 for the initial inspection and installation fee and $113 in annual renewal fees, including the first year. This equates to an average cost over the next five years of 13 cents per square foot per year. With this service you will receive one home inspection per year. The contract lasts for five years.

Bait. Contract with a pest control operator to install a termite baiting system around the exterior of your home. The cost of this option is, based on a 2,000-square-foot home, $2,000 for the initial inspection and installation fee and $450 in annual renewal fees, including the first year. This equates to an average cost over the next five years of 43 cents per square foot per year. With this service you will receive a minimum of one inspection per month. The contract lasts for five years.

Liquid+Bait. Contract with a pest control operator to install a liquid termite prevention solution around the exterior of your house plus a termite bait system. The cost of this option is, based on a 2,000-square-foot home, $2,750 for the initial inspection and installation fee with an annual renewal fee of $563 per year, including the first year. This equates to an average cost over the next five years of 56 cents per square foot per year. With this service you will receive a minimum of one inspection per month. The contract lasts for five years.

The 747 respondents who completed the survey ranked four termite control options. The liquid treatment was preferred by 52 percent of the respondents, followed by the no-control option at 23 percent, bait treatment at 13 percent and liquid-plus-bait at 12 percent. Seventy percent of the respondents preferred some form of treatment. Further statistical analysis of the data indicates that if liquid is the first choice, bait is the second choice for termite control.

The analysis also showed that a treatment choice differs by socio-economic characteristics. Respondents with incomes less than $125,000 preferred the liquid treatment option whereas respondents with incomes greater than $125,000 prefer the bait treatment. At this income point, there is an apparent change in perceived risk versus value. Homeowners with incomes greater than $125,000 perceive they can afford to pay more for termite control because the extra cost is worth the protection. The less-than-$125,000 group appears to believe the extra cost is not worth the perceived extra protection.

Likewise, if a home’s market value was less than $300,000, respondents preferred the liquid treatment option, while respondents preferred the bait treatment if their homes’ market values were equal to or greater than $300,000. In addition, respondents who considered termites to be a problem in their neighborhoods preferred the bait treatment option, whereas the liquid treatment option was preferred by those who did not consider termites to be a problem in their neighborhoods. Finally, respondents from New Orleans preferred the bait treatment option, and respondents from outside New Orleans preferred liquid as a treatment option.

The study indicated that Louisiana homeowners chose the liquid treatment as the single most preferred option to control Formosan subterranean termites, and the liquid-treatment option and bait-treatment option are the two most preferred options. This study also revealed that New Orleans respondents preferred the more expensive termite treatment options. This could be due to several factors, including a "subsidy effect" that occurs because some areas in that city were already under subsidized termite control and an "information effect" resulting from heavy termite damage that has occurred in New Orleans during the past 20 years.

State and federal agencies can provide the public with support in terms of information, knowledge and education on Formosan subterranean termite control. This study indicates that information should be targeted to different groups according to where they live, their experience with termites and other demographic categories that relate to termite control preferences and risk tolerances.

Krishna P. Paudel, Associate Professor; Mahesh Pandit, Graduate Student; and Michael A. Dunn, Professor, Department of Agricultural Economics & Agribusiness, LSU AgCenter, Baton Rouge, La.  

(This article was published in the fall 2010 issue of Louisiana Agriculture Magazine.)

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