Expanding Emissions Markets to Reduce Agricultural Nitrogen Run-Off

Abstract

Synthetic fertilizers have been critical in averting global food shortages; however, synthetic fertilizers and their production have led to numerous environmental harms, including greenhouse gas emissions, water pollution, and soil degradation. 

Scientists are working on a new technology that will create a more efficient and less impactful fertilizer process, but the legal mechanisms to encourage widespread adoption and subsequent environmental benefits fall short. In the absence of regulation, market tools can encourage behavior change. If the pollution reduction by exchanging fertilizer is turned into a tradable asset, agricultural users can benefit financially, which lowers potential barriers to participation in a new fertilizer market.  

When carefully designed, offsets for carbon, nitrogen oxide, and nitrogen can be created to represent reduced pollution from a new fertilizer process and sold to generate revenue streams.  Existing offset markets serve as models and examples of unintended consequences. This paper will reevaluate the potential for fertilizer offset markets through the lens of other trading schemes. Recommendations include ensuring carbon reductions adhere to offset criteria and consider environmental justice factors; broadening existing nitrogen protocols to accommodate alternative fertilizers and increasing education regarding nitrous oxide emissions; and expanding water quality trading markets to incorporate nontraditional participants and objectives.

Keywords: nitrogen, clean water act, offset, offset markets, non point source