Phosphate: Hard Landing or Soft Landing

by Eric Rempel

In last week's column on sustainable phosphate, I made the point that phosphate use in our current food system is inherently not sustainable. Nature only moves in a cycle, but our current food system does not recycle phosphate. Within our current system, the phosphate plants need comes from phosphate mines, and the phosphate once “used” becomes a pollutant ending up either in Lake Winnipeg, or a landfill. This disrespect for nature's cycle, will catch up with us, we just don't know when. It's inevitable. Nature always bats last.

When that inevitable time comes, we will experience either a “hard landing” or a “soft landing”. A hard landing means that our whole food system collapses. In this scenario phosphate becomes so scarce, so suddenly, that food production is hugely impacted. Farmers and others active within the food production system cannot adjust fast enough, and there is massive starvation. We all hope we can avoid that.

Most readers will have have been exposed to the concept of “peak oil”. Economists researching phosphate deposits have developed a similar curve. Of course any curve like this is speculative in that it makes significant assumptions. The reddish part of the graph points to North American deposits. The graph creators are of the opinion that we are now at maximum production in North America. Within the next few years phosphate extraction in NA will diminish because the readily available phosphate will have been exhausted. The result will be higher prices and farmers will apply less phosphate. What will happen then? The creators of the graph assume that over a period of time this North American produced phosphate will be replaced by phosphate mined in Morocco (the dark brown part of the graph), and that this can be done at a reasonable cost. If they are right, the adjustment will not be difficult, and most of us will hardly notice. But what if the political reality at that time then does not allow for this?

A soft landing means, in part, that because of the shortage of phosphate supplies, the price of phosphate goes up. This price increase creates an incentive to look for solutions. Inevitably one of the solutions will be that, with higher prices, harder to get at phosphate deposits will now be mined. But that will only postpone the finding of a real solution. Any real solution needs to “close the [phosphate] loop.” The phosphate we all “dispose” of when we flush our toilets needs to be recycled.

An encouraging recent development has been the work done with floating cattail bioplatforms on the Landmark and Niverville sewage lagoons. The goal here is to recycle nutrients. This is a move in the right direction. But what would such a move for Steinbach, or cities like Winnipeg, Toronto or New York look like? Who knows! Because there is minimal financial incentive to look for a solution, the search is not intense.

Given the inevitability of a phosphate shortage scenario, and the possibility that such a shortage could result in a hard landing, it seems to me that we all should be interested in measures that would mitigate away form a hard landing, towards a soft landing. What could be done in this regard?

I submit that our only real option if we want to mitigate against a hard landing, is a tax shift – that we move away from our current tax regime where we primarily tax income to a regime where we tax undesirable behaviour; in this case phosphate mining and the flushing of phosphate laden waste into lagoons.

Consider an admittedly over-simplified scenario: suppose the revenue government now collects by taxing income were shifted to a tax on the use of phosphate fertilizer and a tax on the flushing of phosphate laden waste. There is no doubt that this would create incentive to recycle phosphate, but how would this affect you and me? It would result in an increase in food prices and an increase in sewage and water rates. Since, in this simplified model, we are considering a tax shift (not an increase or decrease in taxes), the amount of that increase would about equal the saving on our income tax bill. Our general welfare and our disposable income would not be affected. But there would be substantial incentive for us as a society to alter our behaviour.