Underlying drivers of nitrogen flows in California

These drivers encompass a range of temporal and spatial scales and, in turn, influence direct drivers of nitrogen use and, ultimately, the statewide mass balance of nitrogen.

This chapter examines four key underlying drivers affecting nitrogen use decisions in California:
1) human population and economic growth
2) market opportunities for California commodities
3) agricultural production costs and technological change
4) policies targeting nitrogen in California

Main Messages

Forces affecting levels of agricultural production and fossil fuel combustion have been the dominant drivers of the nitrogen (N) cycle in California.

California’s agriculture ships a large share of its products to other states and regions of the world. For 2009, almost 50% of production went to Europe and Canada, and another 27% to Mexico, China, and Japan. Long-term reduction of transportation costs and reduction of international trade barriers have increased access to international markets for California producers. Thus California carries a lot of the nitrogen burden for many non-Californians.

Over the last fifty years, world population doubled and global income quadrupled. The resulting increase in global demand for food has been a fundamental driver of expansion of agricultural production in California.

Demand for many of California’s main agricultural exports (pistachios, almonds, rice, walnuts, and oranges) is driven by rising per capita incomes and perceptions of quality. Accordingly, population growth of high-income countries and increases in household incomes in regions such as East Asia have been the dominant underlying drivers of demand for food and other agricultural commodities produced in California.

Long-term decline in nitrogen fertilizer prices resulted in a large increase in fertilizer use in California from the 1950s through the 1970s. Thereafter, fertilizer prices were stable relative to the prices of crops until 2000. Fertilizer price increases between 2001 and 2011 have exceeded increases in crop prices.

California's population doubled over the last 50 years, while income more than doubled over the same period. The growth of California’s economy has resulted in a growth in non-agricultural activities that generate nitrogen emissions, including fossil fuel combustion and wastewater creation. In addition, population and economic growth in California has increased non-agricultural use of resources such as land and water.

In comparison to the effects of economic growth on fossil fuel combustion or the increase in fertilizer use, policies targeting nitrogen pollution have had small effects on nitrogen flows in California to date.

The bottom line: short of catastrophe, demand side fundamentals driven by growth in population and income in the rest of the world suggest that nitrogen flows in California are unlikely to decrease and indeed are likely to continue to grow. In short, California agriculture is unlikely to disappear; in fact, on balance, it seems more likely to continue growing. Moreover, while there is considerable uncertainty about future climate, water supply, energy prices, and labor costs, the history of innovation in California agriculture gives some tentative (but unproven) reasons to believe that technological change and other forms of adaptation will enable California agriculture to continue to grow in value and employment. Since these underlying drivers on balance portend continued growth in agriculture and attendant nitrogen flows for the foreseeable future, we proceed to assess the direct drivers, relative magnitudes of N flows, and their consequences for the state's ecosystems and the well-being of California's inhabitants in Chapters 3, 4, and 5, respectively. As long as the direct benefits of the system are so big, it is not likely that the the attendant external costs (environmentally or socially) will be mitigated on their own. The main sources of uncertainty regarding the future balance of costs and benefits of nitrogen flows in California concern policy choices regarding trade and exchange rates determined in national and international policy arenas and regarding environmental and public health policies largely shaped within California. The implications of these uncertainties and their interactions regarding opportunities for profitable agricultural exports, the balance of costs and benefits -- for the state as a whole and for the profitability of the agriculture sector in particular -- of different policy strategies, and the prospects for technological and institutional innovation necessary for adaptation, are explored in the scenarios in Chapter 6.