Del Rossi Et Al 2023 The Economics of Nutrient Pollution From Agriculture

Annual Review of Resource Economics
The Economics of Nutrient

Pollution from Agriculture
Access provided by 2806:2f0:4041:b397:24bb:3862:b986:6b21 on 10/18/23. See copyright for approved use.
Gemma Del Rossi,1 Mohammad Mainul Hoque,2,3

Annu. Rev. Resour. Econ. 2023.15:105-130. Downloaded from www.annualreviews.org
Yongjie Ji,4 and Catherine L. Kling2,3

1
Bren School of Environmental Science and Management, University of California,
Santa Barbara, California, USA
2
Dyson School of Applied Economics and Management, Cornell University, Ithaca, New York,
USA
3
Cornell Atkinson Center for Sustainability, Cornell University, Ithaca, New York, USA;
email: clk228@cornell.edu
4
Center for Agricultural and Rural Development, Iowa State University, Ames, Iowa, USA
Annu. Rev. Resour. Econ. 2023. 15:105–30 Keywords

First published as a Review in Advance on
agriculture, fertilizer overapplication, nonpoint-source, environmental
June 28, 2023
externalities
The Annual Review of Resource Economics is online at
resource.annualreviews.org Abstract
https://doi.org/10.1146/annurev-resource-111820-
Nutrient pollution from agricultural sources, coming primarily from fertil-
021317
ization of row crops and manure from livestock operations, affects ecological
Copyright © 2023 by the author(s). This work is
health in the United States through water and air pollution. We summarize
licensed under a Creative Commons Attribution 4.0
International License, which permits unrestricted data trends on commercial fertilizer use, manure, cropland, and concentra-
use, distribution, and reproduction in any medium, tions of nitrogen and phosphorus in waterways. We present data indicating
provided the original author and source are credited.
that fertilizer applications per acre of US cropland exhibit an upward trend,
See credit lines of images or other third-party
material in this article for license information. with a strong spatial correlation between agricultural intensification and
nutrient contents in waterbodies. While biophysical science has advanced
JEL codes: Q15, Q25, Q52, Q57
our understanding of how nutrient pollutants affect the functioning of
physical ecosystems, economic research has quantified only some of the
economic damages related to losses in ecosystem services due to nutrient
pollution. Our summary of this work indicates that quantification is incom-
plete and does not yet provide full characterization of these damages across
the country. We summarize key available damage estimates and the lim-
ited evidence on cost-effective policy design. We conclude by identifying
important yet understudied areas, including a focus on contaminated drink-
ing water sources, health damages from nutrient pollution, and the need for
holistic estimates of the costs of the externalities from pollution, where new
research efforts will greatly benefit society.
105
1. INTRODUCTION
Water and air pollution associated with anthropogenic sources of nutrients [specifically nitrogen
(N) and phosphorus (P)] is a growing concern in both the United States and worldwide. The US
Environmental Protection Agency (EPA) reports that only 35% of rivers and streams in the United
States exhibit good water quality for P and 38% for N pollution. Based on these statistics, they
conclude that nearly half of the rivers and streams are in poor biological condition (US EPA 2016).
Separately, all states report that they are impacted by nutrient pollution and have identified about
15,000 water bodies that suffer nutrient impairment (US EPA 2012). Perhaps of most concern
is recent trend analysis indicating that the existing share of oligotrophic water bodies (lakes and
streams with healthy levels of nutrient pollutants) have declined to record lows, with fewer than
10% falling into this ecosystem health category (Stoddard et al. 2016).
Agriculture is the largest source of N pollution in the United States, accounting for more than
50% of nitrate, ammonia (NH3 ), and nitrous oxide (N2 O) emissions (Ribaudo et al. 2011). This
externality is directly linked to the remarkable technological advances in fertilizer production and
seed hybridization in the 1960s. The Green Revolution provided an astounding boost to crop
and livestock production in many parts of the world (Evenson & Gollin 2003, Pingali 2012), in-
cluding the United States. However, the fertilizer not used by plants can accumulate in the soil,
and through the interlinkage of soil geochemical, hydrological, and meteorological processes it
can enter the environment as a pollutant. This can occur through export to surface water bod-
ies through agricultural runoff, leaching into groundwater, or loss into the atmosphere through
conversion into various gaseous forms (Alexander et al. 2008). There is now a higher presence
of reactive N in the environment, including both reactive N and P in the oceans, compared to
preindustrial levels (Galloway et al. 2008, Turner et al. 2012).
Within agriculture, a major contributor of nutrient pollution is row-crop agriculture
(Alexander et al. 2008, White et al. 2014). Although the evidence of nutrient loss is widespread
across all major crops including corn, soybean, wheat, and cotton (Glibert 2020), corn is partic-
ularly problematic. Data consistently indicate that farmers apply more commercial fertilizer and
manure (both P and N) than the agronomically recommended levels (USDA ERS 2019). Further,
evidence indicates that significant amounts of these nutrients leave the field. The US Department
of Agriculture (USDA) estimates that, on average, 34 lb/acre/year of N are lost from crop fields
to waterways through various pathways, which is almost 29% of the applied N, including both
synthetic and organic N (USDA NRCS 2017). To complicate matters, the long-term practice of
fertilization has led to a large accumulation of stored nutrients in subsurface soils, lakes, riverbeds,
and groundwater ( Jarvie et al. 2013; Van Meter et al. 2017, 2018). Van Meter et al. (2016) reported
legacy nitrogen accumulation of 10–28 kg/acre/year in cropland in the Mississippi River basin.
The livestock and poultry sectors are also major emitters of N and P, through both inputs (ani-
mal feed) and outputs (manure). CAFOs (an abbreviation for combined animal feeding operations
with more than 1,000 animals) are subject to the EPA’s National Pollutant Discharge Elimination
System (NPDES) regulation under the Clean Water Act (CWA) and are required to develop a
manure management plan, such as holding manure in a lagoon or spreading on nearby farmland.
The effectiveness of these regulations in preventing nutrient runoff has not been well studied,
but evidence indicates a so-called bunching of animal units by agricultural firms just below the
EPA NPDES threshold for avoiding regulation (Sneeringer & Key 2011, Raff & Meyer 2022),
suggesting that the regulations may be less effective than intended.
The observation that farmers overapply fertilizer contrary to agronomic recommendations
has led some to suggest that farmers are making poor economic decisions (i.e., fertilizer is a costly
input). However, a number of behavioral explanations have been identified, many of which are
consistent with economic optimizing behavior (Paulson & Babcock 2010, Sheriff 2005). These
106 Del Rossi et al.

findings suggest that farmers apply fertilizers at higher rates than recommended for a range of
reasons. These include reducing uncertainty associated with fertilizer availability to plants at the
time nutrients are most needed, loss aversion, perceived conservativeness of the recommended
fertilizer application level, the nature of substitutability with other inputs involved in the pro-
duction process, unobserved opportunity costs of fertilizer, and uncertainty with weather and
agronomic conditions. In short, rather than seeing this as economically suboptimal, nutrient pol-
lution from agriculture should be considered as a standard environmental externality. Agricultural
enterprises optimize their private net benefits and ignore the social costs from nutrient pollution
in the environment.
In this review, we begin by describing the trends of fertilizer and manure use in US agriculture
and its relationship to crop acreage over time. Next, by combining recent estimates of N and P
concentrations in surface waters with the trend information, we depict the geographic correlation
between nutrient applications and concentrations. We describe the ecological and ecosystem ser-
vice impacts of these nutrients such as degraded air and water quality conditions. Finally, we review
some of the most recent estimates of externality damages caused by nutrient pollution as well as
the associated literature that estimates the cost-effectiveness of control strategies. Discussion and
research needs conclude the article.
2. TRENDS OF COMMERCIAL FERTILIZER AND LIVESTOCK

MANURE USE
Figure 1 displays trends in nutrient (N and P) usage across the continental United States from
both commercial fertilizer and manure applied as fertilizer (aggregated from county-level fertilizer
and manure sales) and cropland acreage changes from 1951 to 2017. As observed in Figure 1a,
the overall use of N as fertilizer increased from just over 1 million metric tons per year in 1951 to
almost 13 million metric tons per year in 2017. First, there was a period of exponential increase
(1951 to the late 1970s and early 1980s), when the annual N nutrients from fertilizer use reached
10 million metric tons. This growth in nutrient use can be attributed to the changing landscape
of agriculture in the United States. During this period, increased mechanization and input usage
resulted in significantly increased productivity and the creation of a strong export market for
domestic agricultural goods (Brown & Schulte 2011, Dimitri et al. 2005, Glibert 2020).
Following this exponential growth came a period of stable and gradual increase in commercial
fertilizer usage (mid-1980s to present). Initially, the annual N from fertilizer varied from approxi-
mately 10 million metric tons per year until around 2007, then slowly increased to approximately
13 million metric tons.1 The latter change coincides with the biofuel policy in the Renewable Fuel
Standard that prompted the expansion and compositional change of row crops in favor of corn
(Lark et al. 2022, Wright & Wimberly 2013), which has high nutrient input requirements. When
compared with commercial fertilizer use, the annual livestock manure increase is moderate; the to-
tal N (TN) from manure only increased from 4.7 million metric tons to approximately 6.7 million
metric tons over this same period. Percentagewise, the N from commercial fertilizer accounted for
two-thirds of N nutrients and livestock manure contributed to the remaining one-third in 2017.
The trend of P nutrient application, shown in Figure 1b, generally follows the same pattern
of use over time as N but differs in the magnitude. Over the entire period, the P application of
1 Because our summary is based on the aggregation of county-level fertilizer use from data sources we used, the
exact number may be different from other data sources. For example, in one USDA ERS data set, the annual
N fertilizer use in 2012 was over 13 million metric tons (USDA ERS 2019).
www.annualreviews.org • Economics of Nutrient Pollution 107

a Nutrient N
20
360
15 340
10 320
5 300
Million acres
Metric tons
0 280
b Nutrient P
4
360
3 340
320
2
300
1 280
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Fertilizer + manure Fertilizer Manure Principal crop area
Figure 1
Trends in nutrient [(a) nitrogen (N), (b) phosphorus (P), fertilizer, and manure] use and land use in the
contiguous United States, 1951–2017. The county-level fertilizer use information (in commercial sales) from
1951 to 2005 is from Paudel & Crago (2021), the fertilizer use information (in commercial sales) from 1987
to 2012 is from Brakebill & Gronberg (2017), and data on the nutrients from fertilizer use and livestock
manure from commercial sources are from Falcone (2021). The county cropland acreage information was
queried from the US Department of Agriculture (USDA) Quick Stats web portal “Historical Track Record –
Crop Production” (https://usda.library.cornell.edu/concern/publications/c534fn92g). Because some
information is given for only agricultural census years, we use the linear interpolation method to fill in the
missing values for nutrients and keep the cropland acreage at previous census levels if presented.
commercial fertilizer use increased from ∼1 million metric tons to ∼2 million metric tons. By
2017, the P from fertilizer use and livestock manure contributed roughly equal shares to the total
P (TP) nutrients. There may be agronomic differences in the magnitude between N and P due to
the nutrient requirements of crops, particularly corn and soybean, where N is applied in greater
quantities than P (Alexander et al. 2008, Glibert 2020). The TP composition may reflect the higher
portions of manure than fertilizer due to residual P fertilizer accumulating in soils (hence less need
for P fertilizer) or due to inefficient uptake of P in livestock feed by livestock, leading to greater
P quantities in manure (Alexander et al. 2008, Glibert 2020).
The amount of land planted with row crops varied considerably over this period, as illustrated
in Figure 1a,b. The acreage of row crops planted decreased starting in the 1950s, but the trend re-
versed in the late 1970s/early 1980s and rebounded to around 360 million planted acres by 1980.
Acreage dropped notably in the mid-1980s and coincides with the 1985 rollout of the Conser-
vation Reserve Program (CRP), a US Farm Bill conservation program that pays farmers to take
active cropland out of production for environmental benefits (USDA FSA 2023). After an initial
large drop in acreage following CRP implementation, crop acreage gradually decreased to around
320 million acres in 2017. Given the observed increase in commercial and manure forms of fertil-
izer along with a decline in total agricultural acreage, one can conclude that TN and TP per unit

of planted acreage have increased over time. Notably, the N fertilizer use per acre increased close
to 15 times and P fertilizer use per acre increased close to 3 times from 1950 to 2017.
To further understand the spatial pattern and long-term trends in nutrient application and
cropland acres, Figure 2a–c presents bivariate choropleth maps2 relating the historical geographic
distribution of total nutrient use from both manure and commercial fertilizer (TN per acre and
TP per acre) and cropland to the percent change of nutrient use and cropland over a 30-year
timeframe (1987–2017). Figure 2a demonstrates the change in TN per acre across 1987–2017,
Figure 2b the change in TP per acre across 1987–2017, and Figure 2c the change in cropland
acreage across 1987–2017 relative to each baseline in 1987. The choropleth consists of a 10 ×
10 color grid, with the x-axis representing the percentage distribution in deciles of each variable in
the base year, and the y-axis representing the percent change of each variable in 20% quantiles (e.g.,
(−100%, −80%], (−80%, −60%] . . . (60%, 80%], (80%, 100%]). For example, we can interpret
the bottom-right values of the color grid in Figure 2a as counties that had the highest per acre
TN in 1987 and exhibited the largest percent decrease in TN over time. Comparatively, the values
of the top-left corner of the color grid represent counties that exhibited low initial TN in 1987 but
have seen the largest percent increase (60–100%) over those 30 years. Top-right values represent
counties that were in the top percentile for TN usage and had a large percent increase, and values
in the bottom-left corner are counties in the bottom quantiles for TN use and had a large negative
percent change. The remaining panels can be interpreted similarly for TP and cropland acres.
There are several observations to be made from Figure 2. Overall, the percent changes in TN
and TP over time are closely related geographically. The largest relative increase in TN and TP
over this period occurred in the upper Midwest, including the Dakotas and Montana, along the
lower Mississippi River corridor, as well as parts of Kansas, Texas, and Oklahoma. Regions that
experienced the largest relative increases on top of already high nutrient use were Iowa, Nebraska,
Wisconsin, California’s Central Valley, southern Missouri and Arkansas, southeastern Texas, parts
of the US Southeast, and the Chesapeake Bay region. These areas are historically highly produc-
tive agricultural lands specializing in corn and soybeans, as well as high-value fruits and vegetables
(Glibert 2020). By comparing Figure 2a,b with the cropland information in Figure 2c, we ob-
serve that relatively high per acre changes in TN and TP occurred largely in areas that have lost
cropland over the past 30 years.
Although nutrient use trends in Figure 2a,b are closely related, Figure 2b reveals there were
locations with reductions in TP per acre, notably in counties south of the Great Lakes. This could
be attributable to programs focused on reducing eutrophication due to nutrient pollution in the
Great Lakes as a result of the Great Lakes Water Quality Agreement (GLWQA) in 1978 (Dolan
& Chapra 2012). Figure 2c shows where cropland acreage has increased or declined relative to
1987 levels. It becomes apparent that some regions across the nation that had high shares now
have relatively less cropland over the last 30 years, mostly in the Northeast, Southeast, and certain
counties across the Midwest (Brown et al. 2005). The Midwest demonstrates an interesting trend
in cropland distribution; as noted, several counties had high acreage in crops that declined over
time. Other counties, particularly those in the upper Midwest, remained stable or even exhibited
a percentage increase, indicating a movement of agricultural production from one part of the
landscape to another. This spatial redistribution of cropland may be related to increased demand
2 Tofurther explore data trends with nutrient use and crop acreage in the United States over time, we created
an interactive website to produce data visualizations such as the bivariate choropleth shown in Figure 2.
For more, please see https://observablehq.com/@econvis/bivariate-choropleth-us-map-on-land-use-
and-nutrients-use.

a Change in total N (manure and fertilizer) per acre, 1987–2017
Total N/acre change

Max
(1987–2017)
Min
Min Max
Total N/acre
in 1987
b Change in total P (manure and fertilizer) per acre, 1987–2017
Total N/acre change

Max
(1987–2017)
Min
Min Max
Total N/acre
in 1987
c Change in cropland by county, 1987–2017
Cropland change
Max
(1987–2017)
Min
Min Max
Cropland in 1987
(Caption appears on following page)

Figure 2 (Figure appears on preceding page)
Bivariate choropleth of change in cropland and nutrient [nitrogen (N) and phosphorus (P)] use in the
contiguous United States (1987–2017). Each choropleth consists of a 10 × 10 color grid, with each axis
representing quantiles. The x-axis represents the county’s base year quantile (e.g., the values closer to the
Min are in the bottom 10%, 20%, and 30% of cropland or nutrient use compared to all other counties) in
1987, whereas the y-axis represents the percent change (ranging from below −80% to above 80% change) in
cropland or nutrient use from 1987 to 2017 (e.g., those values further up the y-axis gained more cropland or
applied more nutrients over time, and values lower on the y-axis lost cropland or applied less nutrients over
time). (a) The relative change in total N application per acre over time; N application has become
increasingly concentrated in the upper Midwest. (b) The relative change in total P application per acre over
time, following a similar geographic trend of increased P concentration in the upper Midwest and lower
Mississippi River basin. Our findings suggest there were successful reductions in P concentration in the
Great Lakes region. (c) The relative change in cropland acreage over time. Many counties across the country
lost cropland, but there were modest gains in cropland acreage in the Midwest. The county-level fertilizer
use information (proxied by commercial sales) from 1951 to 2005 is from Paudel & Crago (2021), the
fertilizer use information (in commercial sales) from 1987 to 2012 is from Brakebill & Gronberg (2017), and
data on nutrients from fertilizer use and livestock manure from commercial sources are from Falcone (2021).
The county cropland acreage information was queried from the US Department of Agriculture (USDA)
Quick Stats web portal “Historical Track Record – Crop Production” (https://usda.library.cornell.edu/
concern/publications/c534fn92g).
for row crops, particularly corn, due to the ethanol boom resulting from the Renewable Fuel
Standard being passed in 2005 (Glibert 2020).
The panels in Figure 2 geographically confirm the pattern of intensification of TN and TP
applications: Cropland acreage declined over this time, but both the total nutrient applications and
nutrients/acre increased over much of the United States (Glibert 2020). Further, these patterns are
not homogeneous. We see that over time, regions with a relative decrease in cropland in Figure 2c
also exhibited increasing nutrient applications per acre, as shown in Figure 2a,b. Regions such as
the upper Midwest, however, demonstrate that even counties with rising cropland acreage are also
increasing nutrient per acre applications over the 30-year time frame. Regardless of the change in
acreage, nutrient application intensity has increased across most of the contiguous United States.
3. SPATIAL CORRELATION BETWEEN NUTRIENTS, CROPLAND,

AND NUTRIENT CONCENTRATIONS IN SURFACE WATER
Fertilizer and manure that are used by plants do not create a pollution problem. It is when these
nutrients run off fields or seep into the groundwater that they become a source of water pollution.
The available data indicate that agriculture has become a larger source of water pollution over
time. For example, agricultural sources contribute 70% of the N and P delivered to the Gulf
of Mexico, with the primary contribution from cultivated corn and soybean acres and livestock
manure (Alexander et al. 2008). As discussed above, nutrient use is not uniform across the
country. In the case of the Gulf, nine Midwest states with only a 33% share of drainage area in
the Mississippi and Atchafalaya River basins account for 75% of N and P loading into the Gulf
(Alexander et al. 2008).
To better understand the county-level spatial correlation between land use, fertilizer and
manure application, and water pollution levels (as measured by the concentration of nutrients
in surface water), we construct several bivariate choropleth maps for counties in the contiguous
United States (Figure 3). They combine estimates of long-run averages of N and P concen-
trations in water bodies provided by Shen et al. (2020) with the fertilizer and land-use data
described above. Figure 3a depicts a snapshot of the spatial correlation between the long-term
averages of cropland acres and estimates of nutrient concentration (TN and TP) for the same

a Cropland vs TN Concentration Cropland vs TP Concentration
Max Max
TP
TN
Min Min
Min Max Min Max
Cropland Cropland
b Total N versus TN Concentration Total P versus TP Concentration
Max Max
TN
TP
Min Min
Min Max Min Max
Total N use Total P use
Figure 3
Bivariate choropleth of fertilizer application and concentration of total nitrogen (TN) and total phosphorus (TP) in water bodies across
the contiguous United States. Each choropleth consists of a 10 × 10 color grid, with each axis representing quantiles. The x-axis
represents the county’s average cropland or TN/TP decile, and the y-axis represents the decile distribution of county-level TN/TP
concentrations in surface waters. We assign each county to 10 groups based on deciles for the bivariate choropleth maps.
(a) Comparison of the cropland acreage to TN and TP concentrations in surface waters. (b) Comparison of N or P fertilizer use to TN
and TP surface water concentration. We averaged cropland, fertilizer use, and livestock manure at the county level from 1990 to 2017
to roughly match the research period covered by Shen et al. (2020) that provided the rasterized TN and TP concentrations in surface
water for the contiguous United States. The nutrient concentrations (TN and TP) in water can be aggregated to the county level. The
county-level fertilizer use information (proxied by commercial sales) from 1951 to 2005 is from Paudel & Crago (2021), the fertilizer
use information (in commercial sales) from 1987 to 2012 is from Brakebill & Gronberg (2017), and data on nutrients from fertilizer use
and livestock manure from commercial sources are from Falcone (2021). The county cropland acreage information is queried from the
US Department of Agriculture (USDA) Quick Stats web portal “Historical Track Record – Crop Production” (https://usda.library.
cornell.edu/concern/publications/c534fn92g).
period (note that separate, annual estimates of nutrient concentrations are not available), while
Figure 3b depicts a similar relationship between water quality and fertilizer usage. These bivariate
choropleth maps can be read in the same manner following Figure 2. For example, counties
distributed in the bottom-right of the choropleth’s color grid can be characterized as having high
long-term averages of cropland or/and high fertilizer use but with low nutrient concentration in
nearby waterbodies, whereas counties belonging to the top-left have low acreage or/and fertilizer
applications and high nutrient concentrations.

In general, heavy fertilizer-using counties are more concentrated in the Midwest, counties in
the West are more likely to be in the highest deciles measured by fertilizer uses or crop acres,
and counties in the East are largely associated with low crop acreage and fertilizer use. The spatial
correlation between nutrient use and water quality is broadly as expected: Areas of the country with
the highest agricultural acreage are also exhibiting the most polluted surface waters. The counties
with the heaviest use of commercial fertilizer, livestock manure, or both also have the highest
concentrations of TN and TP in water. The group of counties in the Western United States,
however, shows a counterintuitive link between fertilizer use and nutrient concentration in water
bodies. This may relate to the altered hydrology of the region, characteristics of the soil, crops
grown, or other locational differences. An analysis at a finer geographic scale that incorporates
hydrological network, historical crop choice, and agricultural practices and policies is needed to
understand this situation.
These maps indicate strong correlations, but little empirical evidence is available concerning
causation. There is a large literature within agronomy and agroecology that establishes this link
at the field and watershed scale, but only a scattering of studies are beginning to investigate causal
relations at the larger landscape scale (Chen et al. 2019, Liu et al. 2023, Metaxoglou & Smith
2022, Paudel & Crago 2021). This is also an area that would benefit from significant research
investments.
4. PHYSICAL IMPACTS OF NITROGEN AND PHOSPHORUS

POLLUTION ON WATER AND AIR POLLUTION
N and P are pollutants that affect both surface and groundwater and can be a direct source of
impairments such as the need to remove N from drinking water sources. However, when N and
P enter the physical environment, they induce a number of biological, physical, and chemical
structure changes that damage aquatic ecosystems, as well as those who rely upon these ecosys-
tems (Anderson et al. 2008, Brooks et al. 2016). In this section we provide a brief overview of the
processes and ecosystem consequences of these flows, beginning with water quality effects.
Eutrophication is the process of nutrient enrichment in aquatic environments, including rivers,
lakes, streams, estuaries, and oceans (Anderson et al. 2008). As N and P enter the ecosystem
from agriculture, they enrich phytoplankton algae species, causing increased biomass growth
(Carpenter et al. 1998). These algal growths are known as blooms. High biomass forming blooms
tend to sink to the bottom of the environment and decompose, consuming oxygen and creat-
ing hypoxic conditions; lower biomass blooms stay on the surface waters and can form toxic or
harmful algae blooms (HABs) (Carpenter et al. 1998, Davidson et al. 2014). With consistent nu-
trient flow into US freshwater systems, there is increasing evidence of eutrophication frequency
in US lakes (Stoddard et al. 2016). Eutrophication can lead to the following effects: HABs, hy-
poxia, fish kills, taste/odor/treatment problems of drinking water, change in species composition
and biomass, death of coral reef communities, decreased water clarity, and human health problems
(Carpenter et al. 1998). We provide brief descriptions of some of the most impactful effects.
4.1. Hypoxic Conditions

Hypoxia in aquatic environments occurs when there is insufficient dissolved oxygen concentration
in the water column. This can be a direct result of eutrophication reducing the total dissolved oxy-
gen in the environment (Rabalais et al. 2002). Hypoxia can occur in all aquatic environments, but
the best-known US examples of hypoxic zones caused by excess nutrient influx from agriculture
into the environment are the coastal ecosystems of the Gulf of Mexico hypoxic zone (the dead
zone) and hypoxic conditions in the Chesapeake Bay (Murphy et al. 2011; Obenour et al. 2012,

2013; Rabalais et al. 2002; Tian 2020). The spatial extent of the Gulf of Mexico hypoxic zone was
first measured in 1985 and by 2017 it was the largest ever measured, despite some efforts to re-
duce nutrient loading (Van Meter et al. 2018). Coastal and estuarine seasonal hypoxia is an annual
recurrence that is triggered by the influx of N and P into the Gulf of Mexico from the Mississippi
and Atchafalaya River basins. The process of stratification is where warmer, less-dense freshwater
overlays denser, cooler, and saltier water from the Gulf Shelf. Stratification prevents the mixing
and reoxygenation of the oxygen-depleted bottom waters, and a hypoxic zone is created ( Jarvis
et al. 2021, Rabalais et al. 2002). The nutrient influx from the Mississippi and Atchafalaya River
basins triggers phytoplankton growth, which then sinks to the bottom and undergoes anaerobic
decomposition, depleting bottom water oxygen (Obenour et al. 2012).
Hypoxic conditions in the Gulf of Mexico have cascading effects in the trophic system. Rabalais
et al. (2002) documented the effects of hypoxia on the marine environment, finding decreased bio-
diversity of fish and macroinvertebrate and zooplankton/macrophyte species near the seabed and
corresponding changes to community structure and ecosystem functioning. Hypoxic conditions

affect the sexual maturation and recruitment of prey invertebrates such as copepods (Rabalais
et al. 2002). Changes in the benthic environment contribute to altered sediment structure, bio-
geochemical cycles, and impoverished diets for zooplankton and other bottom-feeding organisms
(Glaspie et al. 2019). Roman et al. (2012) document how zooplankton’s distribution, abundance,
and composition have changed to avoid hypoxic conditions. Other bottom-feeding and demersal
fish species, crabs, and shrimp avoid hypoxic conditions and have shifted in their spatial distri-
bution, impacting commercial fisheries (Craig 2012, Roman et al. 2012). The largest commercial
fishery in the Gulf is for brown shrimp, and there are documented negative relationships between
the catch of brown shrimp and relative size of the mid-summer hypoxic zone (Smith et al. 2014).
4.2. Harmful Algae Blooms

HABs can be a direct result of eutrophication and increased algal biomass; however, not all algae
blooms are HABs. These occur when the presence of certain phytoplankton species proliferates
and outcompetes other benign phytoplankton species (Carpenter et al. 1998, Paerl & Otten 2013).
HABs can also create hypoxic conditions after the bloom dies and decomposes. HABs contain a
variety of documented toxins (Carmichael & Boyer 2016) and are known to cause fish kills in
fisheries and fish populations and are harmful to humans as well.
HABs can occur in freshwater, estuarine, and coastal ecosystems. The primary coastal HABs
that occur are the red tide (dinoflagellate Karenia brevis) in Florida and the Gulf of Mexico (Walsh
et al. 2009) and the brown tide (Aureoumbra lagunensis) in Texas, which has had documented cases
along the Gulf and Florida as well (Gobler et al. 2013, Thronson & Quigg 2008, Wetz et al.
2017). Inland HABs are golden algae (Prymnesium parvum), which has been found in Texas and
the Colorado River basin (Brooks et al. 2016), and blue-green algae (Microcystis, Dolichospermum,
and Planktothrix), which has been found across the United States but with notable cases in the
Great Lakes, particularly Lake Erie (Carmichael & Boyer 2016).
Fish kills can occur from either hypoxic conditions directly or exposure to toxins in HABs
(Carmichael & Boyer 2016, Carpenter et al. 1998). The occurrence of fish kills leads to a decrease
in harvestable fish or shellfish, particularly in commercial fisheries (Brooks et al. 2016, Carpenter
et al. 1998, Roelke et al. 2016). Gobler et al. (2013) document a brown tide in Florida that killed
multiple fish species and mussels/shellfish. Further, HABs can reoccur by previous HABs fish kills’
decomposition, creating a positive feedback loop (Walsh et al. 2009).
Finally, HABs can impact human health through multiple channels, from recreational skin
contact via swimming and wading, to accidentally ingesting HAB-contaminated water, fish, or

shellfish species, or to merely being physically close to HAB-contaminated water. Studies that
looked at the impact of crop irrigation with HAB-contaminated surface water (Brooks et al. 2016,
Corbel et al. 2014, Lee et al. 2017) found that irrigation spray contains cyanotoxin aerosols that
can be inhaled, and cyanotoxins can be absorbed by crops and bioaccumulated. However, this is
an understudied area, and the full effect of using HAB-contaminated water for agriculture and its
impact on human health are not yet well known or documented. Fish, crustaceans, shellfish, and
other aquatic creatures that have been exposed to HABs often accumulate toxins and can cause
paralytic shellfish poisoning, ciguatera poisoning, and food poisoning if consumed (Anderson et al.
2008, Carmichael & Boyer 2016, Kouakou & Poder 2019). Microcystins found in cyano-HABs
contain hepatotoxic peptides and have been found to cause oxidative stress to organs and the
brain. Bioactive amino acids also found in HABs have been linked to Alzheimer’s disease and need
further research (Carmichael & Boyer 2016, Cox et al. 2016). Kouakou & Poder (2019) review
the human health impacts caused by HABs and document the potential health effects from HAB
exposure, including general physical symptoms (dizziness, muscle aches, fatigue); symptoms in the
gastrointestinal tract (cramps, diarrhea, vomiting), skin (rash, swelling, sores), eyes/ears (tearing,
eye irritation), or respiratory system (nasal congestion, cough, wheezing); fever and headache;
cancer (liver, colorectal); and death (no reported cases in the United States).
4.3. Changes in Ecological Structure and Species Composition

in Aquatic Ecosystems
Nutrient inputs into aquatic and marine ecosystems change the physical ecological structure
and functioning and species composition found through the process of eutrophication and hy-
poxia. Algae blooms decrease water clarity, limiting the light availability for consumption by
other phytoplankton, macrophytes, and seagrasses (Paerl & Otten 2013). Certain HABs (such
as cyanobacteria) thrive in warmer water and increase the surface water temperature during a
cyano-HAB, further encouraging proliferation of the bloom in a feedback loop (Paerl & Otten
2013). With the global water temperature increases due to global climate change, cyanobacteria
and other HAB species are more likely to outcompete benign phytoplankton species (Paerl &
Otten 2013) into the future.
The presence of eutrophication and HABs in aquatic ecosystems creates a trophic cascade of
effects. As discussed, HABs decrease water clarity, suppressing plant growth of seagrass, other
primary producers, and coral communities (Carmichael & Boyer 2016, Paerl & Otten 2013).
HABs can outcompete benign phytoplankton communities and reduce grazing zooplankton and
Cladocera populations in the environment, limiting available food sources for consumers
farther up the food chain (Dodds et al. 2009, Paerl & Otten 2013). Wang et al. (2007)
conducted a Wisconsin-wide study on the relationship between nutrient concentrations and
fish/macroinvertebrate populations, finding that there is indeed a negative trend between the
presence of certain nutrient-intolerant species and nutrient concentrations of N and P in the water.
4.4. Greenhouse Gases and Air Pollution

Crop production and fertilization generate N2 O and several air pollutant constituents, such as
NH3 and nitrogen oxide (NO and NO2 ), while the enteric process of livestock production and
manures generates methane (CH4 ) (Good & Beatty 2011). According to the US EPA’s annual in-
ventory of greenhouse gas (GHG) emissions, agricultural activities account for 11% of US GHGs,
and the emissions are about evenly split between crop and livestock production (US EPA 2023).
Fertilizer application is directly associated with high emissions of N2 O, roughly accounting for
68% of N2 O emissions in the United States, with 300 times more global warming implications

than carbon dioxide (CO2 ) (Eagle & Olander 2012, Menon et al. 2007). Both N2 O and CH4
emitted from N fertilization and manure exhibit a persistent increasing trend in the United States
during the last three decades (Glibert 2020).
In addition to the volatilization of N, eutrophic lakes emit CH4 , CO2 , and N2 O. CH4 is
the leading GHG that constitutes 75% of the atmospheric impact from lakes and reservoirs
(DelSontro et al. 2019), with a comparable impact on climate change from approximately 20%
current fossil fuel combustion (Downing et al. 2021). Unfortunately, agricultural expansion, pop-
ulation growth, increasing surface water temperatures, and increased precipitation variability are
expected to drive inland eutrophication-related CH4 emissions by fivefold by 2100 (Beaulieau
et al. 2019).
5. MONETIZED ESTIMATES OF THE DAMAGES

FROM NUTRIENT POLLUTION
Keiser et al. (2019) note the incompleteness of nationwide estimates of water quality damages,
in terms of both geographic coverage and the ecosystem service endpoints. While incomplete,
there are a number of local or regional damage estimates associated with nutrient water pollution.
These services include recreational use of waters, aesthetic damages, health effects, degraded wa-
ter quality necessitating treatment, nonuse values of water quality damages, and the costs of GHG
emissions. In this section, we summarize evidence from the subset of this literature that estimates
the value of water quality improvements using measures of water quality based on biophysical
endpoints (e.g., TN, TP, HABs). In doing so, we find that there is no uniform approach to mea-
suring water quality, even when only biophysical endpoints are considered. The range of measures
includes water clarity (Secchi depth), TN and/or TP concentration, chlorophyll, HABs, cyanobac-
teria, or load reduction scenarios. Further, apart from that by Keeler & Polasky (2014), none of
the valuation studies attempted to establish a direct link between nutrients from agriculture and
damage estimates.
To illustrate the magnitude of the existing range of damage estimates and the difficulties
of making direct comparisons across studies, we present recent estimates to demonstrate the
magnitude of estimated damages, the range of water quality measures employed, and the range
of ecosystem service endpoints (Table 1). Finally, we discuss the limited set of estimates that
have combined damages from several endpoints to generate more holistic social cost of nutrient
pollution estimates.
5.1. Recreational Usage of Water

Water quality is an important site-specific attribute when recreationists choose where to spend
their time outdoors. Water quality of lakes and streams affects recreation behavior both at the
extensive and intensive margins: Degraded water quality can result in fewer recreation trips being
taken or recreationists exiting outdoor recreation altogether. The consequence of degraded water
quality can also vary by the types of recreation activities, with a higher impact on water-contact
recreation activities, such as swimming and boating, compared to camping or picnicking. Some re-
search based on both stated preference and revealed preference methods has provided evidence in
support of recreationists’ positive willingness to pay (WTP) for improved water quality (Bockstael
et al. 1987, Egan et al. 2009, Keeler et al. 2015, Van Houtven et al. 2014, Viscusi et al. 2008).
Studies used a variety of different biophysical quality measures, including measures of the
nutrient concentration in water. Egan et al. (2009) found strong revealed preference for water
clarity and reduced nutrient (TN and TP) concentration in lakes. Keiser (2019) found causal
effects of TP concentrations on recreational use. For perspective, if aggregated, the water quality

Table 1 Summary of recent nonmarket valuation estimates from water quality changes using biophysical measures
Endpoints of
Study (study site) Biophysical measures ecosystem services WTP (benefits/damages)
Recreation
Keeler et al. (2015) Water clarity (visibility depth in Recreation: travel $22.26/meter-clarity
(Minnesota and Iowa) meters) miles, travel days 1,389 trips/meter-clarity
Keiser (2019) P concentration Recreation: travel −3.99 to −5.32 days per 0.1 mg/L
(National) days change in P
Wolf et al. 2019 HAB (advisory threshold for algae: Recreation: −$0.05/10,000 cells/mL algae
(Lake Erie, Ohio) microsystin >100,000 cells/mL) beachgoers −$0.52/10,000 cells/mL algae
Reduced spring P load by 40% Recreation: angling $0.17/visitor/trip
Recreation: $1.99/visitor/trip
beachgoers
Recreation: angling
Zhang & Sohngen 2018 HAB (algae bloom in miles) Recreation: angling $8–10/boating trip for 1 less mile of
(Lake Erie, Ohio) Reduced upstream P load by 40% HAB exposure
$40–60/trip when P is reduced by 40%
Boudreaux et al. (2023) Reduced HAB warnings from Recreation: visitors, Willingness to drive additional
(Lake Erie, Michigan sudden decrease of an invasive beachgoers 260 miles to avoid sites with HAB
and Ohio) algae species warning area
Egan et al. (2009) TN, TP, chlorophyll, Secchi Recreation: variety of For WQ improvement in all or a set of
(Iowa) transparency (visibility depth), activities (visitors, lakes to the level of cleanest lake in
inorganic and volatile suspended contact recreation, the state: (a) Total trips/HH/year
solids, total phytoplankton, picnickers) increase by 0.07–3.71;
Cyanobacteria (b) compensating variation:
$5.92–153/HH/year
Property values
Walsh et al. (2011) Secchi transparency Properties within WTP for lakefront properties:
(Orange County, 1 km from lakes $4,911–5,663/foot Secchi depth
Florida) WTP for non-lakefront properties:
$357–728/foot Secchi depth
Wolf & Klaiber (2017) Microcystin concentration Properties within Capitalization loss is $17,335/house
(Ohio) associated with HABs 0.6 km from for algal condition exceeding WHO
lakeshore limit of 1 µg/L
Moore et al. (2020) TN and TP concentration, lake Lakefront properties $12,104/1-foot change in Secchi depth
(National) temperature, Secchi deptha owners
Wolf & Kemp (2021) Secchi depth and satellite measure Properties near lakes Mean implicit prices for a
(Wisconsin) of water clarity $1,117–6,044/1-foot increase in
Secchi depth
WTP is higher in eutrophic lakes
Zhang et al. (2022) Frequency of HABs Properties near lakes Annual capitalization/house is
(National) $102–337 from 25% reduction in
cyanobacterial bloom days at nearest
lake
Wolf et al. (2022) Harmful algal concentration Properties within Homeowner losses of $2,205 for each
(Ohio counties TP concentration in the upstreamb 1.2 km from lakes additional 1 µg/L algal
bordering Lake Erie) concentration in lake water
Health effects
Jones (2019) Blue-green algae bloom that Newborn health Incidence of low birth weight fell by
(Gull Lake, generates microcystin through mothers’ 1.4% from reduced microtoxins
Michigan) exposure to Benefits of $0.77 million from saved
microcystin from hospitalization costs
contact recreation
Stroming et al. (2020) Cyanobacterial harmful algal Contact recreation Average cost per illness: mild ($11),
(Utah Lake, Utah) blooms moderate ($264), and severe
($10,719)
(Continued)
Table 1 (Continued)
Endpoints of
Study (study site) Biophysical measures ecosystem services WTP (benefits/damages)
Drinking water treatment
Keeler & Polasky N contamination in groundwater Consumers/HH Cost of nitrate treatment per private
(2014) from land-use change sourcing from well is $2,600–16,725
(Southeastern private drinking
Minnesota) water wells
Mosheim & Ribaudo N concentration in source water CWS: filtration of Marginal costs of reducing 1 mg/L N
(2017) (both surface and groundwater) raw water in raw water are $125 for small
(National) CWSs and $919 for large CWSs
Allaire et al. (2019) Maximum contaminant level Consumers in Significant rise in bottled water
(National) violation for nitrate and other affected regions: purchase trend but not monetized
contaminants with serious health averting behavior
hazards of bottled water
consumers
Liu & Klaiber (2022) HABs generate an alarming level of Consumers in Averting expenditure ranges between
(Toledo, Ohio) microcystin affected regions: $2.60 and $4.12 per HH for the
averting behavior three-day drinking water advisory
of bottled water
consumers
Greenhouse gases
Downing et al. (2021) Reduced TP load in lake Global population $0.78–$5.2 billion (2015 $US) from
(Western Lake Erie reduced CH4 emission
basin)
Local versus nonlocal values
Parthum & Ando Intensity of algal blooms in the Household in the MWTP/HH/year for reduced local
(2020) region studied watershed algal blooms is $9–15
(Upper Sangamon Nutrient runoff reduction from the MWTP/HH/year is $39 for
River Watershed, watershed to meet Illinois’s implementing state’s contribution to
central Illinois) target (45% less) by 2040 to reduce hypoxia in the Gulf of
improve hypoxia in Gulf of Mexico
Mexico
Vossler et al. (2023) BCGc in streams and rivers; Households in WTP for local changes:
(UMOTRB) measured on a scale of 1 (natural) UMOTRB $152–316/household/year
to 6 (extremely stressed) WTP for nonlocal changes:
$165–186/household/year
Shr & Zhang (2021) Nitrate in source water for Households in Iowa WTP for local benefits:
(Iowa) drinking $19.1/HH/month
Algal toxins, harmful algal blooms, WTP for local benefits and reduced
and lake water clarity hypoxic zone in Gulf of Mexico:
$12.8/HH/month
Only recent studies that incorporate biophysical measures of WQ, identify the endpoint of ecosystem services, and report a welfare estimate are included.
The nonmarket valuation estimates relating WQ to any of the ecosystem services should therefore not be interpreted as a comprehensive summary of the
literature.
a
TN and TP concentrations and lake temperature are instruments for Secchi depth.
b
Harmful algal concentration instrumented by TP concentration in the upstream.
c
The BCG is a relatively new WQ assessment index developed by the US EPA. This spatially transferable index informs how WQ conditions change due
to anthropogenic co-occurring stressors including nutrient pollution, pesticides, sedimentation, and other physiochemical changes arising from human
impacts in watersheds (Vossler et al. 2023).
Abbreviations: BCG, biological condition gradient; CH4 , methane; CWS, community water system; EPA, US Environmental Protection Agency; HAB,
harmful algae bloom; HH, household; MWTP, marginal willingness to pay; N, nitrogen; P, phosphorus; TN, total N; TP, total P; UMOTRB, Upper
Mississippi Ohio-Tennessee River basin; WHO, World Health Organization; WQ, water quality; WTP, willingness to pay.

improvements from the CRP would generate water-based recreation use benefits of $0.6–
1.9 billion. In the Lake Erie basin, Wolf et al. (2019) and Zhang & Sohngen (2018) find that
anglers were willing to pay to avoid boating in waters with HABs. In terms of welfare metric,
their estimates translate to as much as $70 million.
5.2. Water Quality and Housing Amenities

Improved water quality provides amenity values in the form of aesthetics, reduced odor, and other
local amenities for those who live near water bodies. These values have been shown to capitalize
in properties adjacent to water bodies. The positive relationship between property prices and
ambient water quality is well established in the literature, as captured by a series of meta-analyses
on pooled hedonic estimates from both stated preference and revealed preference studies (Ge
et al. 2013, Johnston et al. 2019, Van Houtven et al. 2007). The positive capitalization of water
quality occurs consistently for properties near inland lakes (Moore et al. 2020, Walsh et al. 2011),
near estuaries (Walsh et al. 2017), near rivers (Keiser 2019), for residential land prices (Leggett
& Bockstael 2000), and for measures of water quality ranging from physically measured Secchi
depth to satellite-based measures (Wolf & Kemp 2021). These property prices exhibit an inverse
relationship with distance to water bodies, with higher values for waterfront properties (Zhang
et al. 2022). The coverage of these studies ranges from a single site to nationwide, with most
recent studies covering broader areas (Moore et al. 2020, Zhang et al. 2022).
With increasing episodes of HABs in Lake Erie, a few recent studies report declines in nearby
property prices in response to the toxicity measured in lake water (Wolf & Klaiber 2017, Wolf et al.
2022). The latter of these studies reports that households’ marginal willingness to pay (MWTP)
for reduced algae concentration by one unit is around $2,200, which is limited to the properties
within 1.2 km of Lake Erie. If this value is transferred to the aggregated water quality improvement
targeted for the Great Lakes region, the authors find that the average yearly benefits of $43 million
would pass a simple cost-benefit test. Another recent nationwide study (Zhang et al. 2022) uses
satellite-derived cyanobacterial bloom measures and inland lake-adjacent properties. They report
MWTP for degraded water quality by region, and find that the highest values occur in the upper
Midwest, an area with extensive agriculture and degraded water bodies.
The hedonic method of capitalizing the water quality in housing prices often misses the other
benefits of water quality, such as recreation at a distance from the house. Households may ex-
hibit residential sorting, where they choose which recreation sites to visit once they choose their
housing location. Phaneuf et al. (2008) suggest that ignoring the recreation benefits of water qual-
ity would generate downward bias in WTP for water quality. In a regional study of Tampa Bay,
Florida, a popular tourist destination, Kuwayama et al. (2022) provide evidence in support of this
underestimation, with housing benefits of $77 million and recreation benefits of $167 million for
a 10% increase in water quality for all properties with recorded repeated sales.
5.3. Health Effects

HABs can produce a variety of mycotoxins that can impact human health through contamina-
tion of drinking water sources, bioaccumulation in food (fish, shellfish), and contact recreation
in cyano-HAB-affected water (Stroming et al. 2020). We discuss the drinking water cost implica-
tions below and note that research on bioaccumulation is almost nonexistent. Extant research with
a public health focus indicates that water-based recreation activities, such as swimming, fishing,
skiing, or boating in cyanobacterial blooms, can expose an individual to toxicity through sudden
ingestion of contaminated water, inhalation of water vapor, and direct dermal contact (Hilborn

et al. 2014). In most cases, gastrointestinal illness, respiratory distress, ear or eye symptoms, and
skin allergies are the main reported health conditions (DeFlorio-Barker et al. 2018).
Using the information from a HAB event in Utah in 2017, Stroming et al. (2020) estimate
that the health benefits from avoiding recreation through remote sensing–based health advisories
in affected lakes could be approximately $0.4 million. In a study based on a lake in Michi-
gan, Jones (2019) exploited a natural experiment from the sudden decrease of an invasive algae
species that triggers blue-green algae bloom to examine how microcystin exposure affects infant
health. The finding suggests that the incidence of low birth weight significantly dropped in the
region with improved water quality from reduced HABs, the value of which could be around
$0.8 million. However, the mechanism through which mothers were exposed to improved water
is not discussed. The finding nonetheless highlights an important area for future work.
5.4. Drinking Water Contamination

Excessive nutrients from agriculture contaminate raw water sources of community water systems
(CWSs) that serve almost 86% of the US population (CDC 2021). There are several ways through
which excess nutrients from agriculture can affect drinking water services, including excess ni-
trates, presence of cyanotoxins caused by HABs, excess turbidity, and disinfectant by-products
caused by the reaction between nutrients and disinfectant agents used by the CWSs. The US
EPA regulates nitrate level in finished drinking water by CWSs based on health safety, with a
maximum contaminant level of 10 mg/L for nitrate-N and 1 mg/L for nitrite-N. However, viola-
tion of N content and disinfection by-products in the finished water by CWSs are frequent in the
United States (Allaire et al. 2018). With the rising frequencies of HABs, drinking water systems
will likely face increased incidence of various forms of cyanotoxins, resulting in adverse health
consequences.
The costs of removing excessive nitrates from final water require significant capital expenditure
by CWSs (Mosheim & Ribaudo 2017), which would ultimately be borne by the endline consumers.
Additionally, households respond to drinking water violations by incurring averting expenditure
in the form of bottled water purchases (Allaire et al. 2019, Graff Zivin et al. 2011). Liu & Klaiber
(2022) estimated that the three-day closures in Toledo, Ohio resulted in $800,000 of expenditures
by consumers to purchase clean water.
There is increasing evidence of groundwater contamination by nitrate leaching in the United
States. The burden of such contamination will fall upon the 43 million, mostly rural, households
who source drinking water from private wells. Evidence suggests that most of these households do
not regularly test their well for nitrate levels, although many are located in heavily nitrate-polluted
regions (Lade et al. 2022). In Minnesota, land conversion from grassland to cropland increased
the probability of private wells exceeding the EPA limit for nitrate maximum contaminant level
by 45%, with an implied cost of $0.7–12 million for fixing the well, switching to alternative wells,
and avoidance behavior (Keeler & Polasky 2014).
Studies found a range of health effects related to excess nitrate in drinking water, with the
strongest evidence for methemoglobinemia in infants exposed to drinking water with nitrate-N
exceeding 10 mg/L. Several epidemiological studies linked excess nitrate or nitrite to cancers of
different organs, low birth weight for infants, spontaneous abortion, neurological diseases, and
thyroid disorders (Ward et al. 2018). Many of these findings are based on statistical association
rather than clear evidence of causality. The lack of well-designed studies characterizing a dose-
response function between nitrate intake and health outcome means that we lack a definitive
answer to the marginal effect of nitrate in drinking water on the incidence of cancers or other
health defects.

5.5. Use and Nonuse Values
There are many more values than what are discussed above, but not all values of water quality
are monetized in a comprehensive manner. People generally care about biodiversity, biological
integrity, cultural values of waterbodies, and option values. However, the valuation of these types
of benefits is yet largely absent in the nonmarket valuation literature. In one contingent valuation
study with a nationally representative sample, Carson & Mitchell (1993) quantified the value of
water quality improvement from status quo (no pollution control) to swimmable level to be ap-
proximately $29.4 billion in 1990 value. This is one of the few comprehensive studies that covers
both use and nonuse values of water quality, although the linkage of water quality with nutrient
pollution is not directly established.
A few recent studies exploring the nonuse values captured by the estimated WTP for im-
provement in nonlocal water quality have partly started to fill this gap. In an effort to link altered
biological integrity due to water pollution to economic valuation through a well-designed choice
experiment in the Upper Mississippi and Ohio-Tennessee River basins, Vossler et al. (2023)
provided evidence that households value water quality both within and outside their region of
residence despite the fact that use values from recreation and amenities are largely concentrated
locally. Other studies have documented households’ WTP to reduce local water pollution that
generates downstream benefits in terms of a reduced extent of hypoxia in the Gulf of Mexico
(Parthum & Ando 2020, Shr & Zhang 2021).
Only limited Gulf of Mexico studies to quantify the damages from hypoxic zones exist. These
include damages to the brown shrimp fisheries in North Carolina in terms of catch and fishers’
welfare (Huang et al. 2012); the effect of the Gulf on size, population distribution, and catch rates
(Smith et al. 2014); and the relative prices of large to small shrimp from the reduced abundance
of large shrimp due to ecological disturbance (Smith et al. 2017).
5.6. Eutrophication and Global Climate Change

The monetization of eutrophication-related climate damages is limited. Downing et al. (2021)
link lake eutrophication–related CH4 emission to climate damages and translate it into economic
damages using the social costs of CH4 estimates from the US Interagency Working Group. They
find that if global emissions (and associated eutrophication levels) remain at current levels, the
present value of avoided climate damage would be $0.66–24 trillion ($2015) relative to projected
pathways for climate change. To put this into perspective, the authors compare anglers’ recreation
benefits of avoided climate damage estimates from a 40% reduced P load to the western Lake Erie
basin and note that the climate benefits are an order of magnitude higher ($0.087–0.12 billion
versus $0.78–5.2 billion). Notably, this monetization is an incomplete representation of the actual
costs of eutrophication due to exclusion of CO2 and N2 O. The monetization of N2 O by Sobota
et al. (2015) includes damages from all anthropogenic active N release in the United States, but
no specific estimates for eutrophication-related N2 O emission are reported.
5.7. Estimates of the Total Damages of Nutrient Pollution

As noted above, most of the valuation studies have looked at just one of the ecosystem service
endpoints of damages coming from nutrient pollution. To provide a sense of the range of damage
estimates and the variability of total damages from nutrient pollution, the next step of research in
this field requires aggregation across different single endpoint damages. However, such a compre-
hensive damage assessment is extremely difficult given that the measurement of economic damages
varies across studies in many dimensions, including the scope of each study, use of water quality
measures, range of the ecosystem services affected, and scale of analysis. As an example, changes

in the biophysical endpoints can affect all the water quality impacts described in the previous sec-
tion, but comparison across metrics is not possible without knowledge of the conversion function
(e.g., TN/TP concentration to HABs or to cyanobacteria). A comparative analysis across studies
within and across ecosystem service endpoints would illustrate the complexities in aggregation of
damage estimates.
As seen in the first section of Table 1 for studies on recreation, the damage estimates are
reported in various forms: count of trips/water-quality-indicator (Keeler et al. 2015, Keiser et al.
2019), additional miles traveled to avoid damaged sites (Boudreaux et al. 2023), WTP/trip/water-
quality-indicator (Wolf et al. 2019), and WTP/trip/water-quality-scenario (Egan et al. 2009). Note
that damage estimates across water quality measures are not directly comparable. For example, it
is difficult to compare Keiser’s (2019) damage estimates of reduced trips from a marginal change
in P concentration using Zhang & Sohngen’s (2018) estimate of the per trip value from a 40%
reduction of phosphorus. In addition to different magnitudes, the former incorporates a variety
of recreation activities while the latter concentrates only on anglers, again indicating that the
endpoints are not directly comparable.
The damage estimates for properties in response to changes in water quality (Table 1) are
again generally incomparable owing to differences in metrics used for water quality or scenarios
implying nonmarginal changes. Similarly, health effects and drinking water abatement costs are
often subject to nonmonetization and not directly linked to a comparable water quality. As an
example, damages estimated by bottled water purchases due to the incidence of nitrate standard
violations (Allaire et al. 2019) are not directly comparable with damages based on sick days from a
HAB event (Stroming et al. 2020). Without ways to link the core drivers of water quality change
to the various biophysical measures, it is not possible to generate estimates that combine many of
these lost ecosystem services. A comprehensive model to integrate drivers of water quality change
with the various biophysical endpoints (HABs, water clarity, etc.) is needed. With such a com-
prehensive model, it would be possible to translate a comprehensive set of estimates of damages
from nutrient pollution that represent a full suite of lost ecosystem services (e.g., health effects,
recreation effects, amenity values).
A few studies have taken the next step to combine multiple damage endpoints to estimate a
more holistic total damage estimate. To quantify the damages from eutrophication in US freshwa-
ter systems through reduced recreation opportunities, depreciated waterfront housing properties,
expenditures for recovery of endangered and threatened species, and treatment of drinking water,
Dodds et al. (2009) report a yearly loss of $2.2 billion. A few studies also focus on the nutrient,
N, rather than eutrophication in general (Compton et al. 2011, Keeler et al. 2016, Sobota et al.
2015). However, only Keeler et al. (2016) note that estimating social costs of N requires tracking
N from sources of release through land, water, and air pathways (fate and transport) to various
endpoint effects. The damage function for N varies based on the form it is transformed into and
the group of people that are finally impacted. For each unit of fertilizer application at different
places in Minnesota, the authors derived spatially explicit estimates of marginal damages in terms
of health effects due to air pollution, global warming, and groundwater–drinking water sources for
private well contamination. The social cost of each kilogram of fertilizer N across the counties of
Minnesota ranges between $0.001 and $50. The surface water–related damages from N pollution
are excluded from the above estimate, however, so it represents a lower bound on total costs.
6. COST-EFFECTIVE POLICIES FOR NUTRIENT

POLLUTION CONTROL
Once released to the environment, N and P are costly to control. To reduce nutrient pollution
from agricultural sources, the USDA has created and implemented subsidy programs to support

conservation efforts. Among these, three major programs are the CRP, which is a land retirement
program where farmers agree to take their land out of active row crop production in exchange
for a payment; the Environmental Quality Incentives Program (EQIP), a cost-sharing program
for adopting conservation practices on operational farm and ranch land; and the Conservation
Stewardship Program (CSP) that provides financial and technical assistance to farmers for wider
adoption of conservation practices. For nutrient abatement, several in-field practices (e.g., reduced
tillage, fertilizer application rate/time/source/method, nitrification inhibitors) and edge-of-field
practices (e.g., vegetated buffer strips, saturated buffers, wetland) are supported.
Participation is voluntary in these programs. The combined fiscal outlay for the CSP and EQIP
programs was $2.7 billion in 2022 (CBO 2023). Although these are large numbers, the extent and
intensity of agricultural production in the United States are substantial (40% of the continen-
tal United States is devoted to agriculture), and improvements in water quality from agricultural
sources have been limited (Kling 2011, Segerson 2013). Achieving cost-effectiveness in imple-
menting these programs is challenging for several reasons. These include asymmetric information,
large-scale nonadoption, endogeneity in targeting, nonadditionality (paying for abatement that
would have taken place in the counterfactual context) and slippage, and reallocation among farm
activities to offset the incentivized environmental gain (Claassen et al. 2018, Fleming et al. 2018,
Khanna et al. 2003, Pannell & Claassen 2020). As an illustration, additionality was reported at a
high rate in the case of edge-of-field buffers, but the rate was quite low among farmers practicing
reduced or no tillage in Ohio in a study of the EQIP and CSP programs (Claassen et al. 2018).
Leakage was observed in a cost-share program for cover crop adoption in Maryland, where more
crop acres came under cultivation as a consequence of the program (Fleming et al. 2018).
Another challenge in implementing cost-effective programs is that the effectiveness of a par-
ticular conservation action on a field can depend significantly on the practices that are in place
on adjacent fields. This means that individual assessment of the cost-effectiveness of a conserva-
tion practice cannot be determined without consideration of the full set of conservation options
available on adjoining lands (Rabotyagov et al. 2014a, Savage & Ribaudo 2016).
A further component of these conservation programs that can be improved to deliver more
cost-effectiveness is the payment mechanism. Currently, farmers are generally incentivized by
practice-based payments that perform worse than performance-based payment and pollution trad-
ing schemes (Kling 2011, Ribaudo & Shortle 2019, Shortle & Horan 2013). Approaches that
would require farmers to pay for their pollution as opposed to the current approach of paying
farmers not to pollute could also increase the cost-efficiency of the conservation efforts (Kling
2011, Rabotyagov et al. 2014b).
In addition to the literature on the design of major federal conservation programs, a growing
literature develops integrated models linking land use, fate and transport of nutrients in water
bodies, and the costs of conservation practices. This literature has considered the varying extent
of coverage, target nutrients, sets of practices, pollution control tools, and methods of estimation
(Hansen et al. 2021; Jenkins et al. 2010; Kling et al. 2014; Lupi et al. 2020; Rabotyagov et al.
2014a,b; Ribaudo et al. 2001). Where to target the conservation efforts is a major focus of many
of these studies. Because areas are heterogeneous in terms of soil and geologic characters, con-
servation practices in different locations are not equally effective at meeting the pollution target.
Accordingly, identifying the areas where conservation placement would bring the maximum ben-
efit with a limited budget is a key challenge. To solve this, Rabotyagov et al. (2014a) used an
evolutionary algorithm for identifying a set of practices and their spatially optimized placement
for achieving a target reduction in hypoxic zones.
To avert the adverse impact of nutrient pollution, most conservation programs are designed
to trap the nutrient pollutants’ discharge at their source to prevent them entering the system.

Hansen et al. (2021) compare the cost-effectiveness of a set of in-field conservation practices with
near-channel fluvial wetland construction that would slowly remove the nutrients before reaching
the rivers and streams. Their findings support wetland construction, although very large public
investments and policy coordination are required for successful implementation.
Understanding farmer behavior is key to assessing the cost-effectiveness of these programs. By
incorporating farmers’ choices through an adoption model for P reduction in the Lake Erie basin,
Liu et al. (2020) demonstrate how important farmers’ adoption decisions can be. Fleming et al.
(2020) provide additional evidence for this finding in the setting of the Chesapeake Bay watershed.
Specifically, the authors explicitly provide measures of how additionality and slippage can mask
the potential outcomes of abatement.
7. DISCUSSION
In this review, we have summarized the problem of nutrient pollution coming from agricultural
sources in the United States. These sources include fertilization of crops, primarily row crops, and
manure spreading and application from livestock operations. Basic data on the quantity and loca-
tion of both commercial fertilization and manure spreading were provided. The consequences of
nutrient pollution on a range of physical impacts on ecological health, water pollution, and air pol-
lution were discussed, and we presented the spatial patterns of agricultural land use, commercial
fertilizer application, manure spreading, and concentrations of N and P in waterways. The litera-
ture on the economic damages from this pollution and the costs and benefits of policy approaches
to controlling these pollutants were summarized.
The review highlights important areas where policy makers and the public would benefit from
more research. First, many of the biochemical and physical changes to water quality and natural
systems have been identified in the natural sciences, as has the extent to which these changes have
occurred. However, linking those physical changes to the exposure of people and wildlife is yet
to be broadly accomplished, and the ensuing economic damages remain seriously understudied,
as Keiser et al. (2019) note. Understanding the population exposure to nitrates in drinking water
from private wells and the degree to which households undertake averting or abating behavior are
key examples of an understudied problem. At the same time, the epidemiology of exposure risks
regarding cancers and birth defects is advancing (Ward et al. 2018). Quantifying the increased
morbidity and mortality from this source of exposure will be essential for determining the de-
gree of control needed. Likewise, better accounting of the damages to humans and wildlife from
exposures to HABs is an important need. Again, quantifying the extent of that exposure across
populations and geographies and then linking that exposure to economic damages will provide
valuable policy guidance. The many examples of understudied damage estimates fall under the
general category of the need to produce estimates of the social cost of nutrient pollution, analo-
gous to the social cost of carbon. Like the social cost of carbon, linking the full set of externality
damages generated by agricultural production to damage endpoints will require an integrated
assessment model geographically linking land use to downstream damage estimates.
Second, more work on cost-effective policy design is needed. Given the absence of federal
authority to regulate agricultural pollution beyond CAFO permitting, researchers and policy ana-
lysts could contribute significantly by exploring and quantifying options that states can take under
their authorities and/or partnerships with the federal government and nongovernmental organi-
zations to improve targeting and allocation of nutrient losses from agriculture. The role of current
state programs and their general equilibrium effects (movement of production to other states,
impacts on costs of production, consumer prices, etc.) need study and assessment. Perhaps more
valuable would be ex ante studies of potential state and/or federal policies such as nutrient taxes, ex-
panded CRP subsidies, regulations on use, timing, and application of fertilizers, and participation
in a trading scheme based on practices (Kling 2011). Quantifying the distributional consequences
of potential policies (e.g., incidence on consumers, landowners, and farm workers), costs of
implementing and enforcement, and improvements in nutrient pollution and the associated
magnitude of reduction in social costs is much needed for the design of fair and efficient policies.
DISCLOSURE STATEMENT
The authors are not aware of any affiliations, memberships, funding, or financial holdings that
might be perceived as affecting the objectivity of this review.
ACKNOWLEDGMENTS
The authors would like to thank Tom Hertel for his thoughtful comments during the review
process.
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RE15_FrontMatter ARjats.cls August 16, 2023 17:15
Annual Review of
Resource
Economics
Contents Volume 15, 2023

Autobiographical
Sir Partha Dasgupta: Meeting the Challenges of Environmental

and Development Economics
Partha Dasgupta, Gordon C. Rausser, and David Zilberman p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 1
Agricultural Economics
Economics of Crop Residue Management

Vijesh V. Krishna and Maxwell Mkondiwa p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p19
Food Losses in Agrifood Systems: What We Know
Luciana Delgado, Monica Schuster, and Maximo Torero p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p41
Inferential and Behavioral Implications of Measurement Error
in Agricultural Data
Kibrom A. Abay, Tesfamicheal Wossen, Gashaw T. Abate, James R. Stevenson,
Hope Michelson, and Christopher B. Barrett p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p63
Food Fraud: Causes, Consequences, and Deterrence Strategies
Konstantinos Giannakas and Amalia Yiannaka p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p85
Environmental Economics
The Economics of Nutrient Pollution from Agriculture

Gemma Del Rossi, Mohammad Mainul Hoque, Yongjie Ji, and Catherine L. Kling p p p p 105
The Market Stability Reserve in the EU Emissions Trading System:
A Critical Review
Simone Borghesi, Michael Pahle, Grischa Perino, Simon Quemin,
and Maximilian Willner p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 131
Behavioral Economics and Neuroeconomics of Environmental Values
Phoebe Koundouri, Barbara Hammer, Ulrike Kuhl, and Alina Velias p p p p p p p p p p p p p p p p p p p p 153
xiii
Environmental Regulation and Labor Demand: What Does the Evidence

Tell Us?
Wayne B. Gray, Ron Shadbegian, and Ann Wolverton p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 177
Competition Policy and the Environment
Roman Inderst and Stefan Thomas p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 199
The Effects of Temperature on Labor Productivity
Wangyang Lai, Yun Qiu, Qu Tang, Chen Xi, and Peng Zhang p p p p p p p p p p p p p p p p p p p p p p p p p p 213
A Review of the Financial Sector Impacts of Risks Associated
with Climate Change

Fujin Zhou, Thijs Endendijk, and W.J. Wouter Botzen p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 233
Development Economics
Do Different Estimation Methods Lead to Implausible Differences in the

Size of Nonobserved or Shadow Economies? A Preliminary Answer
Friedrich Schneider p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 257
Food Insecurity in the United States: Measurement, Economic Modeling,
and Food Assistance Effectiveness
Travis A. Smith and Christian A. Gregory p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 279
Social Protection and Rural Transformation in Africa
Juan Sebastian Correa, Silvio Daidone, Benjamin Davis, and Nicholas J. Sitko p p p p p p p p 305
Resource Economics
Economics of Ecosystem Restoration

Alisher Mirzabaev and David Wuepper p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 329
Agroecology for a Sustainable Agriculture and Food System: From Local
Solutions to Large-Scale Adoption
Frank Ewert, Roland Baatz, and Robert Finger p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 351
The Role and Use of Mathematical Programming in Agricultural,
Natural Resource, and Climate Change Analysis
Chengcheng J. Fei and Bruce A. McCarl p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 383
Health and Nutrition Economics
A New Wave of Sugar-Sweetened Beverage Taxes: Are They Meeting

Policy Goals and Can We Do Better?
Kristin Kiesel, Hairu Lang, and Richard J. Sexton p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 407
xiv Contents
Heterogeneous Effects of Obesity on Life Expectancy: A Global

Perspective
Sangeeta Bansal and Yanhong Jin p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 433
Advances in Causal Inference at the Intersection of Air Pollution
and Health Outcomes
Dylan Brewer, Daniel Dench, and Laura O. Taylor p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 455
Research and Development

Slow Magic: Agricultural Versus Industrial R&D Lag Models

Julian M. Alston, Philip G. Pardey, Devin Serfas, and Shanchao Wang p p p p p p p p p p p p p p p p p 471
The Rigor Revolution: New Standards of Evidence for Impact

Assessment of International Agricultural Research
James R. Stevenson, Karen Macours, and Douglas Gollin p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 495
Errata
An online log of corrections to Annual Review of Resource Economics articles may be
found at http://www.annualreviews.org/errata/resource
Contents xv

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Annual Review of Resource Economics

The Economics of Nutrient

Gemma Del Rossi,1 Mohammad Mainul Hoque,2,3

Yongjie Ji,4 and Catherine L. Kling2,3

Annu. Rev. Resour. Econ. 2023. 15:105–30 Keywords

106 Del Rossi et al.

2. TRENDS OF COMMERCIAL FERTILIZER AND LIVESTOCK

www.annualreviews.org • Economics of Nutrient Pollution 107

Fertilizer + manure Fertilizer Manure Principal crop area

108 Del Rossi et al.

www.annualreviews.org • Economics of Nutrient Pollution 109

Total N/acre change

b Change in total P (manure and fertilizer) per acre, 1987–2017

Total N/acre change

c Change in cropland by county, 1987–2017

(Caption appears on following page)

110 Del Rossi et al.

3. SPATIAL CORRELATION BETWEEN NUTRIENTS, CROPLAND,

www.annualreviews.org • Economics of Nutrient Pollution 111

b Total N versus TN Concentration Total P versus TP Concentration

112 Del Rossi et al.

4. PHYSICAL IMPACTS OF NITROGEN AND PHOSPHORUS

4.1. Hypoxic Conditions

www.annualreviews.org • Economics of Nutrient Pollution 113

corresponding changes to community structure and ecosystem functioning. Hypoxic conditions

4.2. Harmful Algae Blooms

114 Del Rossi et al.

4.3. Changes in Ecological Structure and Species Composition

4.4. Greenhouse Gases and Air Pollution

www.annualreviews.org • Economics of Nutrient Pollution 115

5. MONETIZED ESTIMATES OF THE DAMAGES

5.1. Recreational Usage of Water

116 Del Rossi et al.

118 Del Rossi et al.

5.2. Water Quality and Housing Amenities

5.3. Health Effects

www.annualreviews.org • Economics of Nutrient Pollution 119

5.4. Drinking Water Contamination

120 Del Rossi et al.

5.6. Eutrophication and Global Climate Change

5.7. Estimates of the Total Damages of Nutrient Pollution

www.annualreviews.org • Economics of Nutrient Pollution 121

6. COST-EFFECTIVE POLICIES FOR NUTRIENT

122 Del Rossi et al.

www.annualreviews.org • Economics of Nutrient Pollution 123

www.annualreviews.org • Economics of Nutrient Pollution 125

and harmful algae in coastal waters. J. Environ. Manag. 146:206–16

126 Del Rossi et al.

www.annualreviews.org • Economics of Nutrient Pollution 127

and nutrient loading. Estuaries Coasts 34(6):1293–1309

128 Del Rossi et al.

major ecological disturbance. PNAS 114(7):1512–17

www.annualreviews.org • Economics of Nutrient Pollution 129

Land Econ. 87(4):628–44

130 Del Rossi et al.

Contents Volume 15, 2023

Sir Partha Dasgupta: Meeting the Challenges of Environmental

Economics of Crop Residue Management

The Economics of Nutrient Pollution from Agriculture

Environmental Regulation and Labor Demand: What Does the Evidence

with Climate Change

Do Different Estimation Methods Lead to Implausible Differences in the

Economics of Ecosystem Restoration