Nutrient Trading – A Water Quality Solution? - Water and Agriculture: Sustainability, Markets and Policies - page 95

results from excessive amounts of nitrogen entering the Gulf of Mexico from the
Mississippi River (Goolsby et al., 1999). By the summer of 2002 the hypoxic zone, which
has been consistently monitored since 1985, reached a height of 22,000 km 2 or
8,500 square miles in size (Rabalais et al., 1999; Dunne, 2002; LUMCON, 2002).
A majority of the nitrogen in the Mississippi River Basin comes from agricultural non-
point sources, 3 prompting us to explore several agricultural policy options as a mitigation
strategy.
This study compared policy options that directly affected nitrogen losses in the
Mississippi River Basin, as well as a number of options that focused on other
environmental problems such as soil loss, phosphorus runoff and climate change. By
comparing a wide range of policies and their impacts, we were able to look more broadly
at the environmental benefits of the various options.
The policy options assessed included:

taxing nitrogen fertiliser applications;

subsidising a change to conservation tillage practices;

extending Conservation Reserve Program (CRP) acreage;

trading greenhouse gas (GHG) reductions at both $5/t carbon and $14/t carbon;

trading nitrogen reductions to meet either a 3 or 8 mg/l/day N discharge limit 4 for
wastewater treatment facilities;

trading phosphorus reductions to meet either 1 or <1 mg/l/day P discharge limit 5 for
wastewater treatment facilities, and

trading nitrogen reductions (to meet 3mg/l/day N discharge limit for wastewater
treatment facilities) with an additional payment for the associated GHG reductions
achieved with any implemented BMP.

These policies were evaluated using an agro-environmental model of U.S. agriculture,
the U.S. Regional Agricultural Sector Model (USMP). This model was developed and is
maintained by the U.S. Department of Agriculture/Economic Research Service
(USDA/ERS). WRI has worked with USDA/ERS to improve the spatial delineation of
USMP, increase the diversity of cropping rotations included in the model, and simulate
the environmental impacts of various cropping production practices and the Conservation
Reserve Program.

3.

Fifty per cent of nitrogen reaching the Gulf of Mexico comes from fertiliser and soil organic
nitrogen; 24% from atmospheric deposition, groundwater discharge and soil erosion; 15% from
animal wastes; and 11% from municipal and industrial facilities (Goolsby et al., 1999).

4. These discharge limits are based on the limits the Chesapeake Bay are discussing to deal with

their nitrogen pollution problem.

5. The 1 mg/l/day discharge limit represents a transition point in technology and capital expenditure

for phosphorus removal.