Pesticides are defined as chemical substances protecting plants from pathogens, insects, nematodes and weeds. They are used to secure yields, improve quality of food and facilitate harvesting. However, their heavy use in agriculture resulted in pest resistance, ground, surface and water contamination as well as possible health problems on farmers/operators and consumers. Within this context, the objective of the proposed research stems from the need to provide a solid methodological framework and empirical evaluation which will assist policymakers in identifying the true impact of pesticides on agricultural production. The obtained results may well serve as a benchmark for the foundation of future EU policy schemes aiming at achieving a sustainable use of pesticides in European agriculture. In this respect, the proposed project intends to provide an accurate assessment of the external costs of agricultural pesticide use and contribute to the relevant EU policies by developing tools for designing a socially optimal tax and levy scheme aimed at the reduction of pesticide use to its socially optimal level. Specific consideration will be given to the effects of the accrued scheme and alternative policy tools on the socially optimal pesticide use, as well as on economic sustainability and social welfare. Moreover, the proposed research will identify means that can help in the promotion of more integrated pesticide management practices. The project fulfils its aims by combining traditional and well-established theoretical methodologies with the most recent advancements in economic theory, biological and technical scientific work, ultimately developing a consistent and integrated analytical framework. The validity of the employed theoretical models and policy tools will be extensively verified by applying them in selected EU countries, thereby accounting for the diversity in pesticide use among producers in different geographical locations.