Publication: Fixing Nitrogen: Agricultural Productivity, Environmental Fragility, and the Role of Subsidies
Loading...
Published
2025-01-28
ISSN
Date
2025-01-28
Author(s)
Editor(s)
Abstract
Nitrogen fertilizer is essential for boosting agricultural yields and food production. However, agricultural subsidies often drive the inefficient application of fertilizer, leading to significant costs for farms, the environment, and economies. Scientific evidence indicates that nitrogen pollution has exceeded safe planetary boundaries, making it one of the world’s largest externalities. Yet, the global economic costs and consequences of subsidized nitrogen fertilizer use remain poorly understood. This paper combines data on subsidies, satellite-derived measures of crop productivity, nitrogen usage, water quality, and spatial and administrative data sets to provide globally comprehensive empirical estimates of the long-term costs of fertilizer use and the role of subsidies. The results show that in regions with large input subsidies, nitrogen overapplication diminishes crop productivity returns and increases nitrogen runoff into waterways, with lasting implications for human health and labor productivity. More than half of global agricultural production occurs in areas with high subsidized nitrogen use, where the marginal benefit of additional fertilizer is negative. This indicates significant potential to reduce fertilizer use without adversely affecting crop yields. Globally, up to 17 percent of nitrogen pollution in water is linked to inefficient input subsidies, contributing to hypoxic zones and harmful algal blooms. Conversely, decoupled subsidies not tied to production reduce these harmful spillovers. These findings underscore the enduring consequences of nitrogen fertilizer, how well intentioned but poorly designed subsidies can aggravate nitrogen waste, and the potential of policies to pave the path to reform.
Link to Data Set
Citation
“Zaveri, Esha. 2025. Fixing Nitrogen: Agricultural Productivity, Environmental Fragility, and the Role of Subsidies. © World Bank. http://hdl.handle.net/10986/42737 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication The Marshall Plan: Then and Now(Washington, DC: World Bank, 2025-10-14)This paper is a product of the Development Policy Team, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Geopolitical Risks and Trade(Washington, DC: World Bank, 2025-09-23)This paper studies the impact of geopolitical risks on international trade, using the Geopolitical Risk (GPR) index of Caldara and Iacoviello (2022) and an empirical gravity model. The impact of spikes in geopolitical risk on trade is negative, strong, and heterogeneous across sectors. The findings show that increases in geopolitical risk reduce trade by about 30 to 40 percent. These effects are equivalent to an increase of global tariffs of up to 14 percent. Services trade is most vulnerable to geopolitical risks, followed by agriculture, and the impact on manufacturing trade is moderate. These negative effects are partially mitigated by cultural and geographic proximity, as well as by the presence of trade agreements.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Fit for (re)purpose?(World Bank, Washington, DC, 2023-04-21)Agricultural subsidies make up a large share of public budgets, exceeding 40 percent of total agricultural production value in some countries. Subsidies are often important components of government strategies to raise agricultural productivity, support agricultural households, and promote food security. They do so by reducing production costs, promoting the use of inputs or modern farming techniques, encouraging the production of certain crops, and raising household incomes. Given the magnitude of these subsidies, their distributional implications and the externalities they impose on the environment are of significant consequence. This paper uses a new spatial analysis to explore the distributional implications of agricultural output subsidies across 16 countries/regions and the distributional and select environmental implications of input subsidies across 23 countries/regions. The findings show that, relative to the spatial distribution of income, both types of subsidy are distributionally mixed. Output subsidies are relatively progressive in 10 countries/regions and regressive in six, while input subsidies are relatively progressive in 11 countries/regions, regressive in nine, and neutral in three. The results also show that input subsidy schemes significantly increase fertilizer use, particularly in richer regions within countries, leading to soil saturation of nitrogen, an indicator of accelerated environmental degradation.Publication The Nitrogen Legacy(World Bank, Washington, DC, 2020-02)The fallout of nitrogen pollution is considered one of the largest global externalities facing the world, impacting air, water, soil, and human health. This paper combines data from the Demographic and Health Survey data set across India, Vietnam, and 33 African countries to analyze the causal links between pollution exposure experienced during the very earliest stages of life and later-life health. The results show that pollution exposure experienced in the critical years of development—from birth until age three—is associated with decreased height as an adult, a well-known indicator of overall health and productivity, and is robust to several statistical checks. Because adult height is related to education, labor productivity, and income, this also implies a loss of earning potential. The analysis begins within an assessment in India, where the data are more available, and is then extended to geographic settings including Vietnam and 33 countries in Africa. The results are consistent and show that early-life exposure to nitrogen pollution in water can lower height-for-age scores during childhood in Vietnam and during infancy in Africa. These findings add to the evidence on the enduring consequences of water pollution and identify a critical area for policy intervention.Publication The Nitrogen Legacy(World Bank, Washington, DC, 2019-12-10)The fallout of nitrogen pollution is considered one of the largest global externalities facing the world, impacting air, water soil and human health. This paper presents new evidence that nitrogen pollution in water is an important determinant of variations in human capital. Data from the Demographic and Health Survey dataset across India, Vietnam, and 33 African countries are combined to analyze the causal links between pollution exposure experienced during the very earliest stages of life and later-life health. Results show that pollution exposure experienced in the critical years of development from the period of birth up until year three – is associated with decreased height as an adult, a well-known indicator of overall health and productivity, and is robust to several statistical checks. Because adult height is related to education, labor productivity, and income, this also implies a loss of earning potential. Results are consistent and show that early-life exposure to nitrogen pollution in water can lower height-for-age scores during childhood in Vietnam and during infancy in Africa. These findings add to the evidence on the enduring consequences of water pollution and identify a critical area for policy intervention.Publication Climate Variability and Water Resources in Kenya : The Economic Cost of Inadequate Management(World Bank, Washington, DC, 2009-01)Eighty percent of Kenya is arid and semi-arid land; yet despite chronic water scarcity, the country has developed only 15 percent of its available safe water resources. Demand for water is expected to rise, owing to population increases and growing requirements for irrigated agriculture, urban and rural populations, industries, livestock, and hydropower. Meanwhile, climate variability and the steady degradation of water resources cost Kenya at least 3.3 billion Kenyan shillings (Ksh) annually. Between 1997 and 2000, the El Nino-La Nina floods and droughts cost an estimated 290 billion Ksh, or 14 percent of gross domestic product (GDP) for the period. While it is not economical to avoid all costs, many of them can be minimized by increased investments in management and infrastructure, and more efficient, accountable, and participatory management and operation of the water sector.Publication Policy and Investment Priorities to Reduce Environmental Degradation of the lake Nicaragua Watershed (Cocibolca) : Addressing Key Environmental Challenges - Study 2(Washington, DC, 2010-06-29)Globally, an estimated 24 percent of the disease burden (healthy life years lost) and an estimated 23 percent of all deaths (premature mortality) are attributable to environmental risks (World Health Organization, or WHO 2006). The burden of disease is unequally shared, with the children and the poor being particularly affected. Among children between the ages 0 and 14, the proportion of deaths attributable to environmental risks, such as poor water and sanitation, indoor air pollution and vector-borne diseases, is estimated to be as high as 36 percent (WHO 2006). Several key messages have emerged from the process of putting together this study: (i) environmental health risks impose a significant burden on Nicaragua's economy, amounting to 2.6 billion Nicaraguan Cordoba (NIO) or 2.4 percent of the country's Gross Domestic Product (GDP), and result in premature deaths and infections, especially in children under five; (ii) cost-effective interventions to address these environmental health risks exist and should be prioritized in Nicaragua; (iii) country-specific health and environmental data are somewhat limited, especially in the case of air quality, and data collection and monitoring need to be further strengthened; and (iv) the capacity of Ministry of Environment and Natural Resources (MARENA) and Ministry of Health (MINSA) staff to conduct environmental health costing analysis needs to be strengthened through proper training.
Users also downloaded
Showing related downloaded files
Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.