Modeling Cumulative Effects of Nutrient Surpluses in Agriculture: A Dynamic Approach to Material Balance Accounting

Abstract

Nutrients such as nitrogen and phosphorus have a dual role as inputs to crop production and as pollutants to water, air, and soil. The nutrient surplus measures are frequently used as indicators of environmental performance or eco-efficiency at micro level of individual farms and at macro levels of regions and countries. However, the static material balance accounting ignores an important dimension of the nutrient cycle: the time. Nutrients accumulate in soil, causing delayed effects and persistent harm to the environment. In this paper we propose a dynamic model of material balance, following the standard model of capital accumulation used in production economics. Using data of agricultural production in Finland in the years 1961-2009, we show that it is possible to estimate the stocks of nitrogen and phosphorus accumulated in the soil using information and data that are readily available. The dynamic model allows us to estimate not only the stocks of nutrients, but also the outflow of nutrients to water and air. Better understanding of flows and stocks of nutrients can provide insights to support managerial and policy decisions.

Keywords: conservation of mass, nitrogen balance, phosphorus balance, productivity, stock pollutants

JEL Classification: Q15, Q51, D24