Optimal Phosphorus Management in a Transboundary Setting: A Dynamic Game Approach

Chanheung Cho, Nathan Schunk, Zachary S. Brown, Brent Sohngen and Justin S. Baker

No 360742, 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO from Agricultural and Applied Economics Association

Abstract: Phosphorus (P) runoff from agriculture is a major driver of eutrophication in trans-boundary water systems like Lake Erie. This paper develops a dynamic game model to examine how strategic interactions between the U.S. and Canada shape long-term crop production and environmental outcomes under stochastic soil P dynamics. The results show that while unilateral decisions often lead to higher crop production, they also result in greater environmental damage due to excessive P runoff. In contrast, incorporating transboundary nutrient spillovers naturally reduces P application and mitigates environmental harm, though at the cost of lower production. These findings suggest the importance of integrating biophysical feedback and economic incentives in nutrient management, emphasizing that long-term sustainability requires balancing productivity with environmental constraints.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 38
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea25:360742

DOI: 10.22004/ag.econ.360742

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