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Title: Nutrient prices and concentrations in midwestern agricultural watersheds

item SOHNGEN, BRENT - The Ohio State University
item King, Kevin
item HOWARD, GREGORY - The Ohio State University
item NEWTON, JOHN - The Ohio State University
item FORSTER, D - The Ohio State University

Submitted to: Ecological Economics
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 2/4/2015
Publication Date: 4/2/2015
Citation: Sohngen, B., King, K.W., Howard, G., Newton, J., Forster, D.L. 2015. Nutrient prices and concentrations in midwestern agricultural watersheds. Ecological Economics. 112:141-149.

Interpretive Summary: Excess nutrients exiting agricultural lands continue to plague streams and waterbodies worldwide despite concerted efforts to encourage adoption and implementation of best management practices. An alternative or compliment to best management practices is reduction in application volume. However, there is no quantifiable evidence that this approach is valid at a watershed scale. We used long-term nutrient concentration data from five major watersheds in Ohio coupled with nutrient prices during the same period to establish an elasticity index for both nitrogen and phosphorus. The findings suggest that a 10% increase in fertilizer costs will result in an approximate 2% decrease in nutrient transport. These findings support further exploration of nutrient trading and fertilizer usage fees as approaches to reducing nutrient transport from agricultural crop production.

Technical Abstract: Policies to reduce nutrient emissions from agriculture rest on the assumption that it is very difficult to link inputs on farms to nutrient outputs. As a result, conservation programs fund the installation of best management practices that attempt to avoid, trap, or otherwise control nutrient emissions. If nutrient inputs by farmers could be more carefully linked to nutrient outputs in watersheds, then more effective economic policy instruments, such as nutrient taxes, nutrient trading, and even best management practices focused on reducing nutrient inputs, could be implemented. This paper establishes an empirical link between farm nutrient inputs and N and P outputs from watersheds. Given our estimates, a 2.6 ton (1 ton = 1 t = 1000 kg) reduction in N inputs reduces N export from an agricultural watershed by 1 t, and each 11 t reduction in P inputs reduces P export by 1 t.