March 17, 2022
The federal government has set a national target to reduce GHG emissions from nitrogen fertilizers by 4 megatonnes by 2030. Agriculture and Agri-Food Canada’s February 2022 Discussion paper on the target recognizes that while current approaches are ‘moving the needle,’ new policies and programs will be needed to achieve this ambitious target. SPI’s newest publication sheds light on the types of new policies and programs that should be considered to help Canada achieve its environmental goals, while also supporting farm productivity.
N2O emissions are one of the largest sources of greenhouse gas (GHG) emissions in Canada’s agricultural sector - meaning the time to act is now! Ontario and Prince Edward Island (PEI) tend to produce crops with high nitrogen requirements, such as corn and potatoes. In 2019, 44% of Ontario's and 60% of PEI’s total agricultural sector GHG emissions were attributed to N2O from agricultural soils. Recent research from SPI shows how policymakers can support efforts to reduce agricultural GHG emissions within these two provinces by focusing on efficient nitrogen fertilizer management practices in Ontario’s corn-soybean-winter wheat and PEI’s potato systems. In addition to mitigating direct GHG emissions, improving the efficiency of nitrogen fertilizer management can also bolster farm incomes, enhance soil health, and improve water quality.
The essential first step to solving the problem of GHG emissions from excess nitrogen fertilizer application is to identify the application practices that are scientifically proven to be effective, such as nutrient management planning and practices found in Fertilizer Canada’s 4R program (including enhanced efficiency fertilizers, split nitrogen application, and variable rate application with soil testing). Efficient nitrogen fertilizer management needs to be embedded into a broader understanding of natural on-farm sources of nitrogen and the health of agricultural soils. As such, SPI proposes that to maximize the efficiency of nitrogen management, we must also consider opportunities for synergies with soil health beneficial management practices (BMPs) – such as cover cropping, more diverse crop rotations, and conservation tillage.
SPI co-convened two workshops with Équiterre in Guelph, Ontario and Charlottetown, PEI. The workshop attendees included staff from federal and provincial governments, industry, environmental non-government organizations, as well as local producers. With this group, SPI assessed five novel policy options for improving nutrient management and soil health outcomes. These included:
1) Behavioral economics approaches, such as the use of collective adoption bonus payments and interventions that leverage trusted messengers.
2) BMP Insurance schemes that encourage farmers to trial new practices while also protecting them against production risk.
3) Reforming the suite of business risk management (BRM) programs, such as AgriInvest, AgriInsurance and AgriStability, to encourage the use of new BMPs.
4) Reverse auctions to remove the guess-work from setting an appropriate and motivating subsidy payment.
5) Carbon offsets to offer farmers new revenue opportunities as an incentive for changing their management practices.
Behavioral economics approaches, BMP insurance schemes, and BRM program reforms received the most support from workshop participants in Ontario and PEI, while reverse auctions and carbon offsets were considered to be less of a priority.
1) Behavioral economics approaches
Many workshop participants identified the importance of trusted messengers, stating that they should be considered essential for implementing any policy. Fellow farmers were frequently identified as the most effective trusted messengers, although government extension staff and certified crop advisors were also considered important. The real benefit of trusted messengers is that they can provide reliable knowledge to other producers and help them learn how to effectively implement a BMP on their farm. This process can enhance the perception of a BMP’s efficacy and saves the producer time and effort in learning about the BMP on their own. For these reasons, trusted messenger tactics address multiple barriers to BMP adoption and play a vital complementary role to the other policies in this section.
Collective bonus payments were seen as another favorable option, since they tap into a farmer’s sense of community-mindedness and can be used to encourage both nutrient management and soil health BMP adoption. Collective adoption bonuses can also address knowledge and time barriers through the knowledge spillover effect, where experienced producers in the region share their experience with ‘newer’ adopters to help them move up the learning curve more quickly.
2) Beneficial Management Practice Insurance
BMP insurance was also identified as a strong policy candidate for encouraging efficient nitrogen management in Ontario and PEI because it has the potential to de-risk the decision to adopt new management practices. Under this type of program, payouts are only provided in the event of a loss and losses are likely to be minimal due to a reduction in yield response at higher levels of fertilizer overapplication. BMP insurance programs should adopt a side-by-side trial structure, where business-as-usual practices would be used on one section of the field and the BMP would be implemented directly beside it. This would allow the farmer to easily assess the performance of the BMP compared to their traditional management practices.
3) Reforming Business Risk Management programs
Reforming BRM programs to offer enhanced benefits conditional on BMP adoption was another policy with high potential, especially increased matching under AgriInvest and increasing the subsidy on insurance premiums under AgriInsurance. Both avenues have the potential to reduce production risk and compensate for some of the costs (both financial costs and time costs) of BMP adoption. Pilot projects to test these modifications may be best considered in the short-to-medium term, due to the extensive coordination and approvals required between the federal, provincial and territorial governments to make widespread changes to these programs.
With the knowledge and tools collected through extensive research and convening, SPI has identified three promising policy options that can help Canada meet its environmental targets, increase the sustainability of the agriculture sector, and maintain the economic viability of farmer’s operations. The next step is to pilot these policies to gauge their effectiveness in motivating the use of efficient nitrogen management practices. By identifying the tools and policies with the highest degree of environmental and economic impact, Canada can advance its clean growth objectives and move one step closer to having a high-performing, efficient, and sustainable agriculture sector.
Read the full report on “Efficient Nitrogen Fertilizer Management”