Green Economy in a Blue World-Full Report

point source reductions canbe addressed through the establishment of sound and consistent estimation tools to ensure comparability. Uncertainties within the estimation method itself can be addressed through the application of trading ratios which are discount factors related to the uncertainty associated with the actual measurement of reductions, e.g. the uncertainty associatedwith the effectiveness of an agricultural BMP in achieving nutrient reductions. Four of the states in the Chesapeake Bay adopted voluntary nutrient trading principles in 2001 (Wiedeman, 2001) and at least one state, Pennsylvania, appears to have put a voluntary nutrient trading programme in place (NutrientNet, 2012) (for the Susquehanna and Potomac River watersheds) which involves reductions from both point and non-point sources, one of the first in the US. Cap-and-Trade on fertilizer production At the global scale, the main example of a cap placed on production (as opposed to emissions) of a global contaminant is ozone depleting hydrochlorofluorocarbons under the Montreal Protocol, the latter involving a stepwise decreasing cap on production and import and permits trading between and within companies of different types (based on ozone depleting potential) of HCFCs. As noted above, the diffuse nature of the vast majority of nutrient pollution creates challenges in nutrient accounting for cap-and-trade approaches to reduce emissions, although the Chesapeake/Pennsylvania example above demonstrates it is doable, but requires highly complex nutrient accounting tools which may be subject to large error bars. As discussed earlier, the majority of the net new nitrogen that is being systematically added to freshwater and coastal ecosystems is ultimately sourced from Haber-Bosch production of fertilizer (presently 100 million tonnes per year). A rather bold and likely controversial approach to reducing global nutrient pollution and ocean hypoxia could include application of a cap-and-trade scheme to production of artificial fertilizer at a global scale. Unlike HCFCs, the objective would not be to completely phase out fertilizer production (which will clearly continue to be required to feed a growing population) but to use market mechanisms to promote increased fertilizer use- efficiency and enhanced recovery and reuse of nutrients for fertilizer from the human and animal waste streams. Fertilizer manufacturers who sourced a portion of their N (and P) feedstock through innovative approaches (nutrient recovery) could reap additional profits by trading their issued quotas to traditional producers more dependent on manufactured sources of nitrogen.

a clear and predictable signal to the fertilizer industry of the need to incrementally increase the share of fertilizer produced from recovery and reuse of nutrients from the human and animal waste streams, and create completely new business partnerships between the fertilizer and waste-water-management industries. Second, it would catalyze innovation in nutrient recovery technology, from waste water collection and treatment to the separating toilets being promoted by Gates Foundation (Time World, 2011) and others that permit nutrient recovery and reuse. Third, by making manufactured inorganic fertilizer incrementally more expensive, it would promote its more efficient use in agriculture as well as increased use of existing (and emerging, via increased nutrient recovery) organic fertilizers such as manure and food waste. Fourth, it would create sizeable numbers of new jobs in both the developed and developing world as nutrients recovery would be far more labour-intensive than the much more energy, technology and chemical- intensive manufactured reactive nitrogen. However, such a scheme is likely to face industry andpolitical oppositiondue topossible short-term effects on fertilizer prices as the mechanism is put into place and associated impacts on global food prices, so clearly substantial additional analysis and stakeholder dialogue would be required if such an approach were to be considered as one element of a global strategy. Nutrient management budgets Nutrient budgets for farms are becoming increasingly common as a number of countries, such as the US, EU, Canada and Australia, have put in place policies and regulations which require or encourage farmers to prepare and implement nutrient management budgets for their fields. Such budgets, by providing farmers with a quick measure of how nutrients are being used, give them the tools to decide on optimal fertilizer management and to evaluate increased efficiency gains against cost. In New Zealand (MAF, 2010), over 99 per cent of dairy farmers have completed such budgets under the Clean Streams Accord and such budgeting is expected to be applied more broadly across the agricultural sector. Local, national and regional taxes on fertilizers Fertilizer taxes have been introduced in European countries such as Finland, Norway, and Sweden with this tax revenue frequently earmarked for various environmental uses. Sweden, for instance, used its fertilizer and pesticide tax to finance environmental research and improvements; the fertilizer tax amounted to about a 20 per cent premium on fertilizer production and import in Sweden

in a Blue World

Properly designed, such a scheme would send

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