For Pakistan’s economy, agriculture is the most important sector. It contributes about 22 percent of the gross domestic product (GDP) and employs 45 percent of the national employed labour force. It supports directly or indirectly about 65 percent of the population living in rural areas for their sustenance. It also contributes about 65 percent to total export earnings derived from raw and processed agricultural commodities. It is evident that pesticides are used for the benefits. However, use of pesticide leads to negative externalities for the farmers and the society. Negative externalities may include such as effects on human health, loss of bio-diversity, degradation of natural ecosystems and irreversible changes in the environment. Various kinds of pesticides have been used on a large scale in Pakistan since the early 1950s to protect crops from damages inflicted by insects and diseases. After liberalization of pesticides in 1980, pesticide use increased dramatically in Pakistan reaching 117513 metric tonnes in 2005 which was only 12530 metric tonnes in 1985. The massive increase in pesticide consumption is not translated into productivity improvements rather accompanied by a huge cost in terms of human health and degradation of the environment. It is well established that the use of pesticides on the farm is largely governed by voluntary behavior. Therefore, it is important to understand what drives farmer’s behavior of pesticide use. Such information is critical to identify the prospects and constraints to the adoption of alternative crop protection policy. According to microeconomic consumer theory, individuals make choices following their preferences. However, economic theory does not focus to the processes of individual’s reasoning behind choices. Cognitive models in Public Health and Social Psychology argue that persons who have had adverse health experiences are likely to undertake greater preventive behavior. This study combines an approach from social psychology with micro economic consumer theory to understand individual’s reasoning behind their decisions. Further, it also examines the health implications of pesticide use as caused by behavior of the farmers which help to inform policy makers about productivity reducing effects of pesticide use. A survey of 318 farmers in Vehari and Lodhran districts of Southern Punjab was drawn. Results indicate that farmers are frequently exposed to pesticides. Over 90 percent farmers reported at least one health problem in district Lodhran, where as in district Vehari, almost 80 percent farmers reported the same. However, they appeared to give low priority to health considerations and grossly under-estimating pesticide’s health risk where almost all the farmers did not visit hospital or doctor for proper medication. This misperception is largely translated into practical behavior where farmers were found heavily skewed towards pesticide use for pest management and the use of protective measures to avoid direct exposure of pesticides is not sufficient. Low level of education combined with cultural/local beliefs regarding health effects of pesticide use is the main reason of this comportment. Moreover, about 80% pesticides used in the study area are highly or moderately hazardous. In terms of crops, cotton alone received over 70% of total quantity. Similar pattern appeared in terms of toxicity, where cotton consumed over 88% of highly hazardous and moderately hazardous pesticides. Farmers were found to be overusing pesticides. They were also found applying pesticides very frequently. During survey 73 percent of them reported that they applied pesticide more than 10 times on cotton in a season. The spray frequency is as high as 16 on cotton crop in one season. There is a dearth of formal training and information on proper use and safe handling of pesticides. Most of the farmers did not know about IPM, hardly few of them using it which helps them reduce dependence on pesticides. The analysis supports the hypothesis that farmers who have had negative health experiences related to pesticide use are more likely to have heightened risk perceptions than farmers who have not had such problems. Education and training are also important determinant of risk perception. Association also existed between the experience of health problems and the use of protective measures. The results, however, do not support the hypothesis that the farmers who have had negative health effects from pesticide use are more likely to adopt alternative pest management practices. This however does not mean that farmers who have had such experiences do not care about the effects of pesticide use. The lack of information or access to alternative pest management practices is the likely reason. The Contingent Valuation (CV) analysis shows that farmers are willing to pay premium for safe alternatives of pesticides which support our argument. Finally, research findings have some important implications, for example, the empirical relation that appears to exist between training of safe handling and alternative pest management would suggest that trained farmers significantly and effectively substitute IPM for pesticide use. Hence, to improve awareness, necessary for better choices of pesticide use, specific and relevant information regarding the health effects and environmental risks of using pesticide should be provided to farmers through training programs. For this, government should restructure current pro-pesticide extension system and design effective outreach programs, such as farmer field schools which deal specifically with health risk of pesticide use, averting behavior and better management of pests. One such program (e.g. National IPM program) is already in place but with limited coverage which needs to be strengthened and broadened through increased efforts by government and NGOs to educate farmers which may help reduce dependency on pesticide while at the same time maintaining or improving production. Further, policy interventions should also include the restructuring of incentives and punishment to reduce availability of highly toxic insecticides.