Green Economy in a Blue World-Full Report

of the developed and rapidly developing world suggest a global damage figure several times the EU figure. Agricultural measures in the EU- 27, such as the EU Common Agricultural Policy and the Nitrates Directives (part of the Water Framework Directive), have only reduced total reactive nitrogen inputs by about 15 per cent between 1980 and 2000, mainly from reduced fertilizer use and livestock numbers. In the US, while there does not appear to be an equivalent nation-wide review for nitrogen pollution as for the ENA, a great deal of work on the science, policy and economics of managing nutrient pollution and hypoxia has been done for water bodies heavily impacted by hypoxia such as the Gulf of Mexico and Chesapeake Bay. One study for the Mississippi and Gulf of Mexico (Doering, et al., 1999) found minimal aggregate economic impacts on the agricultural sector of a 20 per cent reduction in nitrogen emissions. Above 30 per cent, however, sizeable impacts on grain exports started to become evident due to reduced production resulting from reduced fertilizer application. These analyses found that strategies based on enhancing wetlands and/ or nutrient sinks were more cost effective than fertilizer reduction approaches, vegetative buffers were of limited cost effectiveness, and fertilizer restrictions were more effective than fertilizer taxes. Based on the economic value of closure of oyster beds and other shellfish losses attributed to excess nitrogen, economic costs of hypoxia to the Gulf of Mexico have been estimated at US$1.4 billion per year. In addition, the Gulf alone is source for 72 per cent of all US- harvested shrimp, underscoring the economic risk of business as usual in the Mississippi River basin. While there does not yet appear to be any comprehensive analysis of the aggregate economic costs of hypoxia in the Chesapeake Bay, costs for selected fisheries and other affected sectors are instructive. The decline of the Chesapeake oyster fishery has cost Virginia andMarylandmore thanUS$4billion in losses in the past 30 years (Chesapeake Bay Foundation, 2010). Between 1998 and 2006, the Chesapeake Bay crab fishery experienced losses of US$640 million due to polluted waters; Virginia and Maryland’s seafood harvests declined by 30 per cent between 1994 and 2004. Total estimated costs to achieve an agreed target reduction of nitrogen loads to the Chesapeake of 40 per cent are US$15 billion. Studies of costs and benefits for reducing nutrient pollution to Chesapeake Bay found the lowest costs associated with restoring or creating wetlands with waste- water treatment upgrades averaging 10 times higher.

Given the complexity of the nutrient economy in terms of sectoral point and non-point sources (waste water, fertilizer, manure, industry), the diversity of sectors that can be affected by hypoxia (fisheries, tourism, housing, etc.) and the wide range of unit (US$ per kg N) costs cutting across different nitrogen abatement strategies (fertilizer use, waste-water treatment, manure management, wetland restoration, etc.), there is likely no single answer to the question of net cost or benefit of greening the nutrient economy at a global level. As will be demonstrated in the next section, the nutrient economy presents us with opportunities to pilot and scale up a number of innovative pollution reduction tools (policy, regulatory, economic) which have been successfully applied to nitrogen as well as other regional and global contaminants such as sulphur dioxide, carbon dioxide and chlorofluorocarbons (ozone depleting substances). By incentivizing nutrient efficiency, recovery and reuse, these tools provide opportunities to create new lines of business and employment with associated net positive socio-economic benefits that could well exceed the benefits associated with traditional nutrient management models such as end-of- pipe waste-water treatment and disposal. 3 Enabling conditions As for most other pollution types, excess reactive nitrogen (and phosphorus) in the marine environment represents an environmental negative or externality whose costs of avoiding have not been fully incorporated (internalized) into the prices of the goods and services for which nitrogen represents a required input (primarily agriculture). A wide range of policy, regulatory, economic, financial and institutional tools and approaches are available which can help to internalize such externalities and many of these can be applied to nutrients across the involved sectors. This section summarizes and reviews some appropriate tools (which may be applied at local, national, regional and/or global levels) and provides examples of where they have been successful or in some cases, unsuccessful. Building effective policy, regulatory and economic frameworks and institutions Nutrient contamination of coastal areas and associated hypoxia can have impacts at local, national and regional levels; while not a truly global problem (like climate change is to the atmosphere) in terms of affecting all parts of the world oceans, the frequency and scale of eutrophication and hypoxic areas, combined with the geometric rate at which hypoxia

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