While agricultural scientists, policymakers and farmers are investigating ways to reduce the risk of severe algal blooms that stem from phosphorus, an Ohio State University environmental economist suggests an economic response could be the most cost-effective one.

Imposing a 25% tax on phosphorus, used as a fertilizer primarily on corn, could reduce soluble phosphorus concentrations in the watershed by about 8%, according to an analysis led by Brent Sohngen, professor in Ohio State’s Department of Agricultural, Environmental and Development Economics. 

“I don’t want to suggest that a tax on phosphorus could solve everything,” Sohngen said. “There’s no silver bullet, and the issues are complex.

“Still, when we look at the data, we can’t detect any effect on water quality from the money spent on encouraging farmers to adopt conservation and no-till practices. But we do see an effect when phosphorus prices are higher.”

Sohngen has studied the economics of conservation programs and non-point-source pollution, or pollution from diffuse sources such as farmland, since he started his career at Ohio State in 1996. 

In his research, Sohngen led teams to examine decades of daily water quality observations by the National Center for Water Quality Research at northwest Ohio’s Heidelberg University and study how different factors may have affected water quality. The water quality analysis differentiated between soluble phosphorus and attached phosphorus: Soluble phosphorus is more responsible for the toxic algal blooms in recent years and is associated with recently applied fertilizer, Sohngen said. Attached phosphorus is attached to soil particles and is related to the history of fertilizer applications on land over 60 or more years.

The researchers examined weather patterns, including rainfall and water flows through the watersheds; policy considerations, including the impact of conservation programs; and economic factors, such as corn prices and prices of phosphorus fertilizer.

Water flows

Sohngen said water flows appear to have had a significant effect on soluble phosphorus levels in the watershed, and the overall flow in northwest Ohio streams increased in 1995 to 2010 over the previous 15-year period of 1980 to 1995. Data from weather stations also seems to indicate that there have been more large rainfall events in the past 15 years than previously, and these may also have increased soluble phosphorus in the water.  

“The weather station data we have from northwest Ohio is limited, but there does appear to be some increase in the number of big thunderstorms — big, large events that bring large amounts of rainfall that create abnormally large flows,” Sohngen said. “Those seem to explain some of the increase in phosphorus in the watershed.”

Investments in conservation practices

Surprisingly, Sohngen couldn’t find an association between water quality and conservation tillage practices, which farmers have been encouraged to adopt for decades as a way to reduce erosion and improve both water and soil quality. Conservation tillage, including no-till practices, do have other benefits, Sohngen said, but according to his analysis, reducing the level of soluble phosphorus in the watershed doesn’t appear to be one of them.

Improvements in water quality in the 1980s and 1990s that were thought to be a result of conservation practices may simply have been due to lower water flows during that period, Sohngen said.

“The amount spent on conservation programs averages $11 per acre per year across farmland in the Maumee and Sandusky watersheds in northwest Ohio,” Sohngen said. “That’s a big chunk of money that society donates to the cause, and, at least in our analysis, we can’t find that it has had an effect on phosphorus levels in the water.”

Corn and phosphorus prices

Higher prices, both for corn and for phosphorus itself, appear to have the largest impact on water quality, Sohngen said.  

“When corn prices increase, farmers plant more corn,” Sohngen said. Although farmers apply more phosphorus to corn than to other crops, corn uses more phosphorus, too, thus reducing the overall amount that seeps into the watershed.

Not surprisingly, Sohngen found even more of an effect on water quality as the cost of phosphorus has increased.

“As a result of higher phosphorus prices in 2005 to 2010, farmers have applied less phosphorus to the land, and we found up to a 20 percent reduction in phosphorus occurred in water relative to what it would have been,” Sohngen said. “We found a huge benefit from higher phosphorus prices.”

Sohngen believes a two-pronged approach could be the most beneficial to the watershed: Encouraging more corn to be planted while at the same time discouraging farmers from applying phosphorus.

“There’s an enormous pool of phosphorus just sitting in soils in northwest Ohio because we’ve over-applied it over the years,” Sohngen said. Since corn is such an effective user of phosphorus, encouraging more corn to be planted in the region could be helpful in using up those stores.

But at the same time, less phosphorus needs to be applied, and taxing phosphorus “looks like it’s the cheapest way to solve the problem,” Sohngen said.

While Sohngen admits that imposing such a tax on phosphorus fertilizer is an idea farmers would understandably resist, he suggests they may prefer it over possible stringent regulations on phosphorus use.

“A tax is less invasive, and farmers would still have a choice,” he said. “They can pay the tax and apply as much phosphorus as they want, or not.

“A few farmers will pay the tax and apply that phosphorus, but others will decide not to, and that will be just enough to make a difference.”