TED Case Studies

Pesticide Hazard in Costa Rica

CASE NUMBER: 197

CASE MNEMONIC: COSTPEST

CASE NAME: DBCP and Costa Rica

I. Identification

1. The Issue

Costa Rica is continuing to suffer the consequences from its use of the American produced pesticide, DBCP, during the 1970's. this pesticide, effective at combating those pesty insects which cause banana blemishes and soft spots, was outlawed for domestic use by the U.S.' E.P.A. in 1979, but allowed to be exported to various Third World countries, particularly Costa Rica. The use of DBCP by Costa Rican banana plantations has caused serious environmental problems for the nation, for the ecosystem surrounding the plantations is exhibiting alarming signs of contamination. More seriously, former banana plantation workers have claimed their handling of the American produced pesticide has caused them to be sterile. The importation of this pesticide from America during the 1970's and 1980's is leading to serious litigation disputes, for Costa Rican plantation workers are joining with their counterparts from other developing nations in suing the American Companies for compensation for the irreversible biological damage caused by the use of this pesticide.

2. Description

This case will examine a case of massive sterilization of approximately 1,500 workers in Costa Rica, due to the exposure to a toxic pesticide called DBCP, applied in large commercial banana plantations. In July 1991, 186 banana workers alleged that they were exposed to DBCP from the early 1960 to 1984, causing them serious and permanent sterilization. The banana workers allege Dow, Occidental, and Shell and Castle Cooke Inc. in Houston Texas, where Castle Cooke registered to do business. DBCP was banned in the United States, after an investigation of health problems among California field workers in 1977. (This case is similar to Costa Rica Coffee case. See COFFEE case.)

In Costa Rica, massive mono-cultural banana plantations were established at the turn of the century by the United Fruit Company and have been a leading agricultural sector in the country for many decades. About 95 percent of the production is controlled by three US-based transnational corporations. The banana plantation consumes about one third of the total annual costs of pesticide imports. The usages of pesticides have been indispensable, since its introduction to the banana plantation in the 1950s. This suit could be a landmark for third-world workers, regarding the safety responsibility of the exporter. The earlier suit in 1983 and 1987 was dismissed by the court. On March 29, 1990, thought, the Texas court announced a final decision to allow the trials to be held in Texas, despite the foreign location of the incident. This is a notable preliminary victory for the Costa Rican workers and their layers. Earlier in 1992, Standard --a division of Castle and Cooke Inc., which markets Dole bananas-- agreed to compensate about 1,000 Costa Rican workers in an out-of- court settlement. In 1994 16,000 plaintiffs from 12 countries, half of them from Costa Rica, have filed a class-action suit in Texas court. (This case is still on the process at the end of 1994.)

Pesticides' problems in developing countries are connected to the issue of trade controls to reduce the transfer of hazardous products from developed countries to developing countries. Despite the serious and large damage caused by pesticide, most of the developing countries are not equipped with the accountable standard, nor regulation. In this case, the U.S. Environmental Protection Agency outlawed its domestic use, because DBCP was blamed for causing sterility also being suspected carcinogen. In 1977, in California 60 workers making the pesticides were found to be sterile, and they later sued and were paid sums of up to $2.3 million for their injuries from Occidental. Accordingly, the EPA prohibited DBCA use in September 1977. However, the Federal Insecticide, Fungicide and Rodenticide Act allows chemical manufactures to export pesticides banned at home. Behind this act, there is the interest of the National Agricultural Chemicals Association. Up to 150 million pounds of those domestically banned pesticides worth more than $800 million --about one fourth of U.S. pesticide production-- are marketed overseas each year.

DBCP (1,2-dibromo-3-chloropropane), was developed in the late 1950's to combat minute nematode worms which attack banana plant roots. It was marketed under the names Nemagon or Fumazone, and came into common use in the U.S. by the late 1960's. However, when in the mid-1970's 35 California workers involved in DBCP's production were found to be sterile, the Environmental Protection Agency issued warnings about its use, and in 1979 finally banned its use in the United States. Despite being banned and included within the Pesticide Action Network's "Dirty Dozen" list, DBCP was still exported to Latin American countries such as Costa Rica. (See Nematode case)

Bananas are important commodities to Costa Ricans. The industry employs 35,000 workers, and is the nation's leading source of exports, worth $500 in 1993. (Economist; 3/12/94) The area under plantation has risen from 45,000 hectares in 1985, to 32,000, and is expected to reach 45,000 hectares by 1995. (The Ecologist 11/95) In order to remain competitive in this export market, Costa Rica relies heavily on the use of pesticides. The nation's pesticide use is equivalent to seven times the world's per capita average. The banana industry imports 25 to 30 percent of all pesticides used in the country, and there are typically 250-300 cases of pesticide poisoning involving agricultural workers each year. (The Ecologist 11/95) The imported pesticides are usually reformulated upon their arrival in Costa Rica, resulting in applications twice as strong than those used in industrialized countries. (See BANANA Case).

In 1979, Costa Rica finally pressured the U.S. Standard Fruit company to stop using DBCP in the country. (Standard Fruit immediately shipped the remaining inventory to Honduras) However, action was taken too late, and hundreds of Costa Rican banana workers were eventually found to have irreversible sterility. For a society such as Costa Rica's, which traditionally values having at least four to five children, this is a tremendous blow to the plantation workers - many of whom have been deserted by their spouses. It is estimated that as many as 2,000 men were involuntary sterilized by their exposure to DBCP throughout the 1970's.

Pesticide use can also have serious consequences for the environment. At least 25% of the pesticides applied by aerial spraying never reach their target but are instead unintentionally applied directly into ponds and streams or on farmland surrounding the plantations. (Multinational Monitor 1/91) Shreds of pesticide-saturated blue plastic, which comes from bags used to cover the bananas until harvest, dangle from the trees adjacent to the rivers. The once majestic ecosystem of Costa Rica's Coastline is now 90% dead as a result of pesticide run-off and sedimentation. In a 1987 study of Costa Rica's Caribbean coral, the International Marine Life Alliance stated that of all the activities "that have driven material, debris, and wastes into the sea, none can equal the sheer annual tonnage of sediment that flows into the Atlantic-slope banana plantations." (See CORAL Case).

For the banana plantation workers themselves, the effects of working with DBCP are personal. Nothing can reverse the fact that they can never have children. These workers feel that they have the right to be compensated for their losses, and thus have set on a legal crusade to hold the foreign makers of DBCP responsible. This has led to historic U.S. court rulings that may have serious impacts on the nature on international law. In March 1990, the Texas supreme court ruled 5-4 to allow Costa Rican farm workers to sue Dole subsidiary Standard Fruit, Dow Chemical, and Shell Oil for personal damages. For seven years, Dow and Shell had blocked the lawsuit (Dow Chemical Company and Shell Oil Company v. Domingo Alfaro, et al.) by invoking the legal doctrine of forum non convenient. This doctrine allowed the judge to dismiss cases which can be tried more "conveniently" in the country where damages occurred. The overturning of this doctrine sets a precedent by favoring foreign workers over big business.

Dow and Shell, the producers of DBCP, have good reason to be nervous. In 1992, a suit by Costa Rican banana workers was settled out of court in the U.S. for what was believed to have been about $20 million. (After legal fees, each worker was left with $1,500 to $15,00, depending on individual circumstances). (The Economist 3/95) Since that time banana workers from around the world have united to file a class-action suit against the companies which manufactured or used the chemical, including Dow Chemical, Shell Oil, Standard Fruit, and Chiquita Brands. The suit lists 16,000 plaintiffs from 12 countries. (8,000 are from Costa Rica, 1,500 from Ecuador; others are from Honduras, Guatemala, Nicaragua, and the Philippines.)

Dow Chemical says it has complied with all state and federal regulations in the United States on the sale of DBCP. The plantiffs claim that, whether supplies of DBCP came from distributors' stocks or from multinationals' subsidiaries abroad, the producers acted with gross negligence. As evidence, they presented the pesticide labels for DBCP containers which are written in the same non-urgent language as regular household cleaning products warning labels. However, in 1961, Shell toxicologist Dr. Ted Torkelson wrote guidelines for DBCP use that stated "Workers should wear full-gear face masks equipped with vapor canisters, and provide clothing impermeable to the material." (The Progressive 1991) These guidelines were never passed on to the Latin American banana workers who eventually used the pesticide. In response to these charges, the defendants are trying to move Litigation to the plaintiff's home countries where the courts are less experienced in tort issues, and the damages would be less. If they are successful, the case would be dropped, for compensation would not even cover a fraction of the costs of suing a multinational corporation. These U.S. corporations also hope to reverse a 1913 statute that permits foreigners to sue in Texas courts.

3. Related Cases

Dow Chemical Co. v. Alfaro case

This case is similar to a controversial case also pending in state court in Houston. The case, Dow Chemical Co. v. Alfaro, was allowed to proceed following the Texas Supreme Court's ruling in March 1990 that Texas law bars judge from using the doctrine of the forum non convenience to throw out suit field by foreign plaintiffs against Texas companies. At the urging of the Texas business community, the Texas House of Representatives cleared a bill earlier 1991 that would have reinstated the forum non convenient doctrine. However, the registration died in the Senate. (Considering this past, the Texas court's decision itself is unique in U.S. legal history).

Costa Rican workers v. Costa Rican National Insurance Institute case

The Costa Rican workers have also sought compensation from the National Insurance Institute (INS), (which is the country's nationalized health insurance company), since workers are usually covered by the banana companies' insurance policy. Compensation payments from INS were granted to approximately 500 workers by 1988. Individual compensation payments span a large range from U.S.$500 to $2,000, depending largely on salary level (which varies, but is generally about $3,000 per annum).

Keyword Clusters

(1): Trade Product = PESTICIDE

(2): Bio-geography = TROPICAL (TROP)

(3): Environmental Problem = BIO-DIVERSITY (BIODIV)

4. Draft Author:

Junko Saito and Odera Odenyo

II. Legal Clusters

5. Discourse and Status:

DISagreement and INPROGress

The first agreement was reached on 1992, when Standard agreed to compensate 1,000 Costa Rican workers in an out-of-court settlement. However, standard sought to avoid a lawsuit with Honduran workers by offering about $9,000 to workers made sterilized by DBCP and lesser amount for other side effects. Regarding to the most recent suits, which is more inclusive, it is still on the process. Considering its long history from 1983, the first court case, present state can be placed in the mid stage toward solution.

A Texas civil suit may lead to large monetary losses on both sides. The Plantiffs will have large legal fees to settle if they lose, but if they do win, it might result in them being in a better financial position then if they never were affected by DBCP at all.

A 1992 case was settled out of court for $20 million, in which each worker was left with $1,500 to $15,000, depending on individual circumstances. The defendants in the case claim that if the courts find in favor of the foreign plantiffs, multinational corporations will avoid basing their headquarters within Texas, negatively affecting the region's economy.

6. Forum and Scope:

MULTINATIONAL and U.S.

7. Decision Breadth:

(13 Countries)

At present the U.S. and twelve developing countries are involved in court proceedings in Texas which will decide liability.

8. Legal Standing:

LAW

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: NAMERICA

Effects of DBCP use have been recorded in all countries which have used the pesticide. The effects are not limited to certain countries, but are more severe in those which use the product intensively and have inadequate protection equipment.

b. Geographic Site: SOUTH AMERICA (SAMER)

c. Geographic Impact: COSTA RICA

Costa Rica and other developing countries have been most affected by DBCP use due to its intense use during agricultural production and the lack of technical and administrative procedures for biological and environmental safeguards.

10. Sub-National Factors:

NO

11. Type of Habitat:

TROPical

IV. Trade Clusters

12. Type of Measure:

IMPORT BAN (IMBAN)

13. Direct v. Indirect Impacts:

(IND)

Trade is not affected by the civil case.

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: NO

b. Indirectly Related to Product: YES

c. Not Related to Product: NO

d. Related to Process: YES

15. Trade Product Identification:

FOOD, Bananas, Pesticides

16. Economic Data

Total sale of pesticides by U.S. corporations: $6,882 million (1991)(Du Pont=$1,768, Dow Elanco=$1,593, Monsanto=$1,551 etc.)

On the global scale, driven by the "green revolution," the global pesticide market has been increasing, except the short time drop in the early 1980s. In 1990 the world pesticides' market was valued at $26.8 billion, within that, the US's share was 30%. In Costa Rica, for the banana export, one third of the total annual cost of pesticide imports is used. Pesticide's cost accounts for 50 to 55% of total cost of the material inputs for banana production. Pesticide is dispensable product, specially for the mass agriculture.

Costa Rican Banana Trade

Total Value of Banana Export (1993): Over $500 million [ in 1989, $278 million]

Employment: 35,000

Total Area for banana plantation: 45,000 hectares (1994)[In 1985, 20,535h, in 1992, 32,000 h.]

Industry Output: 76 million 40pound box of bananas (1990)

Costa Rica is the leading banana exporter in the region and second in the world, after Ecuador. The United States is the largest banana importer in the world, consuming 25 pounds of banana per year, per person. To the United States, Costa Rica is the top exporter, followed by Colombia, Ecuador Guatemala and Honduras in 1994. Costa Rica is a small country whose economy is dependent on the export of cash crops. For Costa Rica, banana has been the traditionally important exporting products, only next to coffee, since the turn of the century. Specially along with the rise of banana price in the late 1980s, its total value of export is rapidly increasing (In 1989, banana export worth $ 270.6 million).

17. Impact of Trade Restriction:

BAN

18. Industry Sector:

FOOD and CHEM

19. Exporters and Importers:

U.S.A. and COSTA RICA

V. Environment Clusters

20. Environmental Problem Type:

HEALTH and HABITAT

The large-scale banana production in Costa Rica causes severe chemical pollution and other related environmental damages, including the rivers and underground water pollution. Valle de la Estrella in the Limon province, where the plantation of Standard Fruit Company locates, is one of the major examples. In this region, several pesticides were found in superficial and underground water and also in sediments and in sea cucumbers. The plantation system of drainage channels ends up in the Estella river, and transports besides superficial water also sediment and chemical substance that is a potential danger for the population and natural aquatic environment of the zone. Pesticide contamination eventually reached the oceans. Especially when it rains shortly after the application of pesticides, fish kills near the plantation have been reported. It is noteworthy that the Costa Rica's pesticide use is equivalent to seven times the world's capita average.

This contamination also effects existing bordering zones, such as the coral reef on the Caribbean Coast of the Limon province. The coral reef of this area is now nearly 90 percent dead because of pesticide runoff and sedimentation, mainly from the banana plantation.

Another problem from the dependence on chemical pesticides is what is commonly called the "pesticides treadmill." It is the development of resistance by pests to pesticides and concomitantly outbreaks of new insects as natural enemies are killed, and loss of pest control, which thus impels farmers to increase pesticide use. The resulting effects are secondary pest outbreaks and target pest resurgence, which is the increase of the target pest after the pesticide application.

In the mid-1980s, the expanding banana industry has taken over as the main agent of deforestation. In some cases the forest is felled and burned to clear land for plantations. The cultivation of bananas requires a system of irrigation trenches which flushes millions of tons of soil into the waterway annually.

21. Name, Type, and Diversity of Species

Name: MANY

Type: MANY

Diversity: NA

22. Resource Impact and Effect:

LOW and PRODuct

23. Urgency of Problem:

Urgency estimates vary too widely to give an accurate account - the effects of lowered population is insignificant given high population rates. Ecosystem destruction poses more of a problem, as this directly affects the food cycle which has unending influences on the ecosystem and all species of life.

24. Substitutes:

BIODG

Integrated pest management (IPM), biological controls, and other organic farming techniques offer ecologically responsible alternatives to complete dependance on chemical pesticides.

VI. Other Factors

25. Culture:

NO

Even if pesticides are not related to any culture, the impact of sterilization on the workers includes significant cultural implication. Many local victims are not only being sterilized but also they become impotent --a crushing stigma in a rural Latin American culture that prize family, virility and machismo. Impact of pesticide toxic on human being is not confined to the physical damage but also mental one because of the cultural implication of the sterility. For example, a 39-year-old plaintiff cannot farther children and his first wife has left him and he avoids his friends in embarrassment. Of the workers surveyed in 1988 by Thrupp, 26.5 percent reported being divorced because of their sterility. Many have encountered difficulties being accepted society.

26. Trans-Boundary Issues:

NO

27. Rights:

YES

28. Relevant Literature

Alan, Scott Lewis. "Banana Bonanza: Multinational Fruit Companies in Costa Rica," The Ecologist, (vol.22, no. 6, November/December 1992): 289-290.

Brestein, Paul and Lipman. W. Thomas. "The Riled Bunch," Washington Post. (October 20,1995.) B1-B2.

Bronson, Gail. "Chemical Concern: Worries Are Growing Over Male Infertility Because of Job Hazards." Wall Street Journal, January 26th, 1978. A1.

Brown, Karen, and Thrupp, Lora Ann. "The Human Guinea Pigs of Rio Frio". The Progressive. April 1991, 28-30.

The Economist. "The Price of Banana" (March 12, vol.330, no. 7854, 1994): 48.

"Entrapment and Escape from Fruitless Insecticide Use: Lessons from the Banana sector of Costa Rica". International Journal of Environmental Studies (vol.36, no.3, 1990): 173-189.

Financial Times. "Costa Rica: Dow-Oxy-Shell litigation; Costa Rican Workers Sue" (March 25, 1993): 14.

Hosmer, Ellen. "The South's Day in Court". Multinational Monitor, July/August 1990, 14-17.

International Trade Reporter. " Costa Rican Firm Workers Sue in Texas, Alleging Work Exposure Caused Sterility" (August 14, vol.8, no.33, 1991): 1199.

Lewis, Scott Alan. "Banana Banana" The Ecologist. Vol 22, No.6 Nov/Dec 1992, 289-290.

Otis, John. "Pollution, Illness, Bland on Banana -crop Pesticides," The Washington Times. (September 15, 1992.): A10.

Satchell, Michael. "A Vicious Circle of Poison," U.S. News & WorldReport, (June 12, vol.110, no.22, 1991): 31.

Thrupp, L.A. " Sterilization of Workers from Pesticide Exposure: The Causes and Consequences of DBCP- Induced Damage in Costa Rica and Beyond." International Journal of Health Service. ( vol.21, no.4, 1991): 731-757.

"The price of Bananas", The Economist, March 12th, 1995. 48.

"The Cost of Bananas" The Economist, September 12th, 1995, 54.

Schemo, Diana Jean. U.S. Pesticide Kills Foreign Fruit Pickers' Hopes"' New York Tmes: December 6th, 1995.

Sugarman, C. "Small Amount of Tainted Bananas Found" Washington Post, June 5th, 1991. A14.

Thrupp, Lori Ann. "Pesticides and Policies: Approaches to Pest-Control Dilemmas in Nicaragua and Costa Rica". Latin American Perspectives, Fall 1988, 37-70.

VanArsdale Christopher. "Banana Development in Costa Rica" Multinational Monitor, Jan/Feb 1991, 15-19.


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