Last week, USDA’s Economic Research Service (ERS) released a new report entitled, Nitrogen in Agricultural Systems: Implications for Conservation Policy.

The 89-page report “explores the use of nitrogen in U.S. agriculture and assesses changes in nutrient management by farmers that may improve nitrogen use efficiency.”  It “reviews a number of policy approaches for improving nitrogen management and identifies issues affecting their potential performance.”

Findings

The report outlines its key findings as follows:

Emission of reactive nitrogen to the environment can be reduced by matching nitrogen applications more closely with the needs of growing crops.  This can be achieved by adopting three “best management practices” (BMPs):

• Rate: Applying an amount of nitrogen at a rate that accounts for all other sources of nitrogen, carryover from previous crops, irrigation water, and atmospheric deposits.

• Timing: Applying nitrogen as close to the time that the crop needs it as is practical (as opposed to the season before the crop is planted).

• Method: Injecting or incorporating the nutrients into the soil to reduce runoff and losses to the atmosphere.

Two-thirds of U.S. cropland is not meeting three criteria for good nitrogen management related to the rate, timing, and method of application.

Among all U.S. field crops planted in 2006 that received nitrogen fertilizers, 35 percent are estimated to have met all three of the nutrient BMPs.  For the remaining cropland, improvements in management are needed to increase nitrogen use efficiency (i.e., reduce the amount of nitrogen available for loss to the environment).

Based on Agricultural Resource Management Survey (ARMS) data, 65 percent of surveyed cropland, or 109 million acres, is in need of improved nitrogen management.

Corn is the most intensive user of nitrogen fertilizer, on a per acre basis and in total use.  Fertilizer applied to corn is least likely to be applied in accordance with all three BMPs.  Corn acres make up nearly half of all acres that are in need of some type of improvement in nitrogen management.

The application rate BMP criterion was not met on over 53 million acres treated with nitrogen (32 percent).  Cotton had the highest percentage of treated acres not meeting the rate criterion (47 percent), followed by corn (35 percent). However, corn accounted for 50 percent of all treated crop acres not meeting the rate criterion.

The timing BMP criterion was not met on over 40 million treated acres (24 percent).  About 34 percent of treated corn acres received commercial and/or manure nitrogen in the fall.  These corn acres account for over 64 percent of all treated crop acres not meeting the timing criterion.

Soybeans (45 percent) had the highest percentage of acres not meeting the method BMP criterion.  However, corn accounted for about 46 percent of all treated acres not meeting the method criterion.

Incentives for improving nitrogen use efficiency by adopting the rate, timing, and method BMPs can come from policy or market forces:

• Government programs that provide financial assistance for adopting BMPs can be effective if they encourage the participation of farmers with land most in need of improvement and if the farmers choose the most cost-effective practices.  Data suggest that the amount of cropland needing improvement would require a substantial increase in the current Federal budget devoted to nutrient management practices.

• Including nitrogen management in compliance provisions for receiving Federal farm payments could encourage farmers to adopt more effective management practices.  In 2005, producers of U.S. corn received government payments that were much higher than the cost of improving nitrogen management.  The strength of this incentive, however, has declined in recent years because of increases in crop prices and a decline in commodity payments.

• Emissions markets, such as water quality trading and greenhouse gas cap-and-trade, could provide financial incentives to farmers to adopt improved nitrogen management and produce nitrogen credits that can be sold in these markets.  The effectiveness of such markets would depend on market design, including rules defining who can participate and what needs to be done to produce credits.

• On-field improvements to nitrogen use efficiency could be supplemented with off-field practices, such as wetlands restoration and vegetative filter strips that can filter and trap reactive nitrogen that leaves the field through surface runoff and groundwater flow.  Of the two practices, restored wetlands can be more cost effective at removing nitrogen and provide additional environmental benefits, but they are limited to areas with suitable soils and hydrology.  Vegetative filters can be employed more widely across the landscape but are not effective when existing tile drains bypass the filters.

• Policies for increasing nitrogen use efficiency should recognize the potential environmental tradeoffs when addressing particular issues related to reactive nitrogen.  Focusing strictly on one issue, such as nitrate leaching, could lead to increased emissions of other nitrogen compounds, such as nitrous oxide, even when total reactive nitrogen emissions are reduced.

The report discusses a variety of mechanisms for reducing nitrogen loss.  It notes, for example, that nitrogen loads to surface water could be reduced by up to 30 percent (~500 million pounds) in the Upper Mississippi and Ohio River basins with the addition of 0.5 to 1.1 million acres of strategically placed wetlands.

Methodology

The authors used data from USDA’s Agricultural Resource Management Survey on nutrient application rates, methods, and timing to model how market and policy instruments affect nitrogen management.

The report estimates water treatment and wetland restoration costs, uses the Nitrogen Loss and Environmental Assessment Package (NLEAP) to model nitrogen loses, estimates changes in nitrogen fertilizer application rates relative to price and other factors, and compares the costs of farms using various nutrient management practices.

According to the report, “Because reactive nitrogen is mobile and able to transform into different compounds, researchers used a field-level nitrogen loss simulator developed by USDA’s Agricultural Research Service to track how improving nitrogen use efficiency by meeting all three BMPs [rate, timing, and method] affects emissions of different reactive nitrogen compounds. These interactions were taken into account when evaluating alternative policy options.”

Why is nitrogen loss important?

According to the report, human-induced increases in reactive nitrogen emissions to the environment may contribute to the following harmful changes to ecosystems:

• Ozone-induced injury to crop, forest, and natural ecosystems
• Acidification and eutrophication (nutrient enrichment) effects on forests, soils, and freshwater aquatic ecosystems
• Eutrophication and hypoxia (oxygen depletion) in coastal and lake ecosystems
• Harmful algae blooms
• Biodiversity losses in terrestrial and aquatic ecosystems
• Regional haze
• Depletion of stratospheric ozone
• Global climate change
• Nitrate contamination of drinking water aquifers”

Beyond environmental impacts, nutrient loss has a major financial impact on farmers and taxpayers.  According to the report, “ERS estimates the cost of removing nitrate from U.S. drinking water supplies is over $4.8 billion per year… [A]griculture’s share of these costs is estimated at about $1.7 billion per year… ERS findings indicate that reducing nitrate concentrations in source waters by 1 percent would reduce water treatment costs in the United States by over $120 million per year.”

For more information on nutrient loss and management, see an earlier ERS report entitled Reducing Agriculture’s Nitrogen Footprint: Are New Policy Approaches Needed? The report provides a helpful review of earlier ERS publications on nutrient management and the array of possible policies to accelerate adoption, including financial assistance, compliance, and regulation.