Economic policy instruments for sustainable phosphorus management: taking into account climate and biodiversity targets

Abstract

Background: Phosphorus (P) is a vital and non-substitutable nutrient for agricultural production. However, P is often used inefficiently in European agriculture. To ensure food security while avoiding environmental damage caused by improper fertilization, a sustainable P management is required. Although P-related problems are partly addressed by existing agricultural and environmental legislation, e.g., in the EU, the current regulation lacks sufficient governance effect. In addition, the existing legal framework is strongly characterized by detailed command-and-control provisions and thus suffers from governance problems such as enforcement deficits, rebound and shifting effects. This paper focuses on how these challenges could be addressed by economic instruments. The article highlights not only the impact of the instruments on P management, but also on adjacent environmental areas. We pay particular attention to the governance effects on reaching international binding climate and biodiversity objectives, for which fertilization and agriculture play a major role. Results: The analysis builds on two economic instruments that ensure compliance with the climate target of the Paris Agreement and the Aichi targets of the Biodiversity Convention: a cap-and-trade scheme for fossil fuels and a cap-and-trade scheme for livestock products. We state that both instruments simultaneously address a large part of P-related problems. Moreover, if the two emissions trading schemes are combined with a livestock-to-land ratio at farm level, only little need for regulatory supplementation relating to P remains. The latter includes in particular a threshold value for contaminants in P-containing fertilizers. Furthermore, we discuss an almost complete phasing-out of fertilizers containing rock phosphate by means of a further certificate trading scheme. Conclusions: The article shows that a wide variety of problems can be tackled with a few overarching instruments. This is true even for very specific and diverse problems such as those related to P use in agriculture.