HUMAN IMPACTS OF THE NITROGEN AND PHOSPHORUS CYCLES

GLOC-2, Montego Bay, 3 October 2013 HUMAN IMPACTS OF THE NITROGEN AND PHOSPHORUS CYCLES A water security perspective Gérard Bonnis, OECD Environment Directorate

Why does nitrogen matter? European Nitrogen Assessment (2011) 2

What is water security? Water security is about establishing an acceptable level of water risk for four risks: Risk of shortage Risk of inadequate quality Risk of excess Improving water security Risk to freshwater systems (resilience) 3

NUTRIENTS 4

Get the math right N cascade River N exports to coastal waters agriculture (fertilisers) 63 34 agriculture (surplus) biological fixation by plants 24 58 N deposition and biological fixation energy and transport 13 8 urban wastewater Total 100 100 European Nitrogen Assessment (2011) OECD Environmental Outlook (2008) 5

Nitrogen effluents from wastewater 20 OECD India China Africa Rest of the world Millions of tonnes of N / year 18 16 14 12 10 8 6 4 2 0 2000 2050 12

Get the math right > 2030 N cascade River N exports to coastal waters agriculture (fertilisers) 63 34 > 43 agriculture (surplus) biological fixation by plants 24 58 > 45 N deposition and biological fixation energy and transport 13 8 > 11 urban wastewater Total 100 100 53 > 55 million tonnes European Nitrogen Assessment OECD Environmental Outlook (2008) 13

WATER SECURITY 14

Example of water insecurity >> eutrophication Direct discharges of N and P to inland and coastal waters NO 3 from agriculture NO 3 from urban wastewater Air pollution (eutrophying deposition): NOx from the burning of fossil fuels at high temperatures (industry, energy, transport) NH 3 (ammonia) from agriculture 17

Eutrophication outlook to 2050 18

What matters is to set acceptable levels of risk.. 19

.. based on likelihood, consequences and cost of amelioration Most likely PROBABILITY Risk cannot be taken on COST OF AMELIORATION Oftentimes Occasional Rare Highly unlikely Acceptable level of risk Tolerable: risk reduction measures are necessary IMPACT Negligible Minor Serious Critical Catastrophic 20

A risk-based approach allows assessing policy priorities The aim is NOT to reduce (reactive) N emissions everywhere and at any cost The aim IS to improve water security Contrary to C, N risk is local even though all countries are affected The aim is to identify/delineate areas at risk of water insecurity (weak spots) «know the risks» 21

e.g. no need to treat wastewater where there is dilution capacity (Reykjvavik sea outfall) sewage treatment facility main outfalls pumping station planned main outfalls planned pumping station 22

POLICIES 23

Water security: a three-step process Coherence with other policy instruments MANAGE THE RISKS Cost-efficiency Coherence with other policy objectives TARGET THE RISKS Acceptable level Feedback from practice KNOW THE RISKS Assessment 24

Improving water security (managing risks) requires sound economics Emissions permit trading schemes for point and nonpoint pollution. allows pollution to be reduced from the lowest cost sources. Emissions taxes. creates ongoing incentives to reduce pollution OECD (2011), Economic Instruments in Water Management",ENV/EPOC/WPBWE(2011)13 25

Case studies Emissions trading schemes generated USD 30 million in Long Island, U.S. and reduced pollution and water treatment costs in Hunter River, Australia other trading schemes have been less successful due to high transaction costs Emissions taxes in western Europe have successfully reduced point source pollution In the Netherlands emissions taxes led to a decrease in industrial organic emissions by 75%. Nonpoint source emission taxes have been less successful In France, emissions taxes now make up around 1/3 of household water bills OECD (2011), Economic Instruments in Water Management",ENV/EPOC/WPBWE(2011)13 26

Improving water security (managing risks) also requires policy coherence 1. when setting water security targets 2. when designing policies to meet the water security targets 27

Coherence: targets and policies Water policies Water security targets Other (direct N impact): climate (N 2 O) nature (NO x and NH 3 deposition) agriculture (NO 3 ) energy & transport (NO x ) Trade-offs between targets objectives Other policy targets Policy coherence Other policies 28

Policies to mitigate climate change affect N Directly, e.g. through curbing N2O emissions from fertiliser use 1000 t CO2 equivalent 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 CO2 CH4 N2O HFCs PFCs SF6 N 2 O is a GHG (6% of OECD GHG emissions) 29

Policies to mitigate climate change affect N Indirectly, e.g. through fostering land use change for carbon sequestration e.g. in New Zealand, in places where it has induced farmland conversion into forests, carbon emission trading has reduced nitrogen releases into water. Lake Taupo, New Zealand 30

private benefits Lake Taupo, New Zealand Conversion to pasture Forest conservation S. Kerr (2012), Presentation at the OECD Expert Workshop on Water Security.

costs to others private benefits Costs exceed private benefits Conversion to pasture Forest conservation S. Kerr (2012), Presentation at the OECD Expert Workshop on Water Security.

Policy Interactions Conversion to pasture Forest conservation private benefits carbon emission costs to others water quality S. Kerr (2012), Presentation at the OECD Expert Workshop on Water Security.

Policy Interactions Conversion to pasture Forest conservation Land use private benefits carbon emission costs to others water quality S. Kerr (2012), Presentation at the OECD Expert Workshop on Water Security.

Policy Interactions Conversion to pasture Forest conservation Land use payment private benefits carbon emission costs to others water quality S. Kerr (2012), Presentation at the OECD Expert Workshop on Water Security.

Policy Interactions Conversion to pasture Forest conservation Land use payment private benefits costs to others carbon emission water quality S. Kerr (2012), Presentation at the OECD Expert Workshop on Water Security.

Policy coherence for managing water risks Similar examples of policy coherence can be drawn from: 1. nature conservation policy, 2. agricultural policy, 3. energy and transport policy.. 38

1. Payments for ecosystem services (PES) flexible, incentive-based and site-specific >> can improve cost effectiveness in managing water risks, compared to indirect payments or other regulatory approaches. should only compensate holders of land-use rights (e.g. farmers or foresters) for the additional costs of ecosystem service provision, over and above legal requirements. should not take the form of uniform payments per hectare, as is often the case, but take account of differences in ecosystem benefits and opportunity costs for holders of land-use rights. 39

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2. Agricultural policy reform, OECD area % 90 80 70 60 50 40 30 20 10 %Producer Support Estimate (PSE) support based on commodity output payments based on input use payments based on current, production required payments based on non-current, production required payments based on non-current, production not required payments based on non-commodity criteria miscellaneous payments 0 OECD.Stat 40

In a nutshell The frame of action to address N and P should be guided by water security objectives, NOT by across-the-board N reduction This entails establishing «acceptable levels of water risks» (scientific, economic and concern assessments), coherent (trade-off) with other policy objectives, such as food security, energy security, climate change mitigation, nature conservation.. and learning to live with them : through direct actions Emissions permit trading schemes for point and nonpoint pollution. Emissions taxes. coherent with measures to achieve other policy objectives: carbon cap-and-trade (climate mitigation) Payments for Ecosytem Services (nature conservation) Environmentally Harmful Subsidies (context of agricultural support), Taxation of externalities (NOx tax on energy and transport) 42