Doomsday: Will peak phosphate get us before global warming?

Price, Ed.  July 22, 2013. Doomsday: Will Peak Phosphate Get us Before Global Warming?

Although climate change catches the headlines, it is not the only doomsday scenario out there. A smaller but no less fervent band of worriers think that peak phosphate—a catastrophic decline in output of an essential fertilizer—will get us first.

One of the worriers is Jeremy Grantham of the global investment management firm GMO. Grantham foresees a coming crash of the earth’s population from a projected 10 billion to no more than 1.5 billion. He thinks the rest of humanity will starve to death because we are running out of phosphate fertilizer. This post on Business Insider from late last year provides an array of alarming charts to back up his warning.

Foreign Policy agrees that phosphate shortages are a potential threat. “If we fail to meet this challenge,” write contributors James Elser and Stuart White, “humanity faces a Malthusian trap of widespread famine on a scale that we have not yet experienced. The geopolitical impacts of such disruptions will be severe, as an increasing number of states fail to provide their citizens with a sufficient food supply.”

What is going on here? Is this really “the biggest problem we’ve never heard of,” as Elser puts it? Or are phosphate shortages something that global markets can cope with? Let’s take a closer look.

Why we need phosphates and why we are trouble if they run out

The element phosphorus is as essential to life as carbon or oxygen. It forms part of the structure of cell walls and DNA without which no plant or animal can exist. Phosphates are phosphorus in chemical forms that are available to plants. Some phosphates occur naturally in the soil as the result of weathering of rocks, but since the dawn of agriculture, farmers have added phosphate fertilizers to increase crop production. Manure, the traditional source, still accounts for about 15 percent of all phosphates used in agriculture, but since mid- twentieth century, most such fertilizer has come from phosphate rock.

What we appear to be running out of are deposits of phosphate rock that can be mined at reasonable cost with today’s technology. Up to now, the United States has been a big producer, but its reserves are declining. China has a lot, but its domestic use is soaring and it is not a big exporter. North Africa has the biggest reserves, but some of them are in politically unstable regions like the Western Sahara.

The following widely reproduced diagram from a 2009 paper in Global Environmental Change depicts the peak phosphorus hypothesis in the form of a “Hubbert curve” that shows production declining at an accelerating rate after hitting a maximum around 2035. After that, say peak phosphate proponents, we are in big trouble.

Peak Phosphorus

Can the market save us?

Yes, a shortage of phosphates could spell trouble, but don’t forget about markets. Adjusting to shortages is just what markets are for. As economists see it, depleting a resource like phosphate rock is supposed to cause its price to rise. As the price rises, two things are supposed to happen. First, users are supposed to figure out ways to get by with less, and second, producers are supposed to find new sources of supply. Will this happen in the case of phosphates, or do they have unique properties that will prevent markets from working their magic?

Some think the latter. For example, the authors of the peak phosphorus diagram write that:

“a key difference between peak oil and peak phosphorus, is that oil can be replaced with other forms of energy once it becomes too scarce. But there is no substitute for phosphorus in food production. It cannot be produced or synthesized in a laboratory. Quite simply, without phosphorus, we cannot produce food.”

Fortunately, the biological impossibility of substituting some other element for phosphorus in food production is not enough to thwart the operation of supply and demand in the phosphate market. One sign that the market is working is that phosphate prices are already rising. As the following chart shows, the U.S. prices of two of the most commonly used phosphate fertilizers soared in the early 2000s. Along with the prices of many other commodities, they dropped back from their peaks after the global financial crisis, but they are heading up again as the economy recovers.

Phosphate Fertilizers

The price increases have already had an impact on phosphate use. As the next chart shows, despite rising farm output, the growth rate of phosphate fertilizer use has slowed over time. The question for the future is whether it is technically feasible to increase food output further while actually reducing phosphate use.

Phosphate Use

Experts appear to think the answer is yes. A report published in Environmental Research Lettersestimates that improvements in farm management practices and consumer waste could cut the phosphates needed to produce the present U.S. farm output by half, even with today’s technologies. In the future, even greater reductions may be possible. According to Roberto Gaxiola of Arizona State University, generations of phosphate fertilizer use have reduced the efficiency of phosphorus uptake by domesticated crop plants. His experiments indicate that selective breeding and genetic engineering can produce plants that can flourish with much lower phosphorus use.

There are significant developments on the supply side, as well. Michael Mew of the Fertecon Research Centernotes that producers are already learning how to upgrade lower quality phosphate rock reserves and are modifying processing plants to accept lower quality inputs. Also, he notes that increasing vertical integration of the industry has resulted in a reduction in transportation costs. Those cost savings slow the rate of price increase and give more time for supply and demand to adjust.

Furthermore, although it is true that we cannot create or synthesize phosphorus, we can recover useable phosphorus from waste streams, including urban sewage. As this source explains, existing systems already remove phosphorus from sewage in order to preserve water quality in the rivers and streams into which they discharge treated waste. Given the low prices for phosphate that prevailed until recently, it did not pay to recover that phosphorus in usable forms. Much of it has ended up as sludge buried in landfills. However, several methods could recover a high percentage of the phosphorus from wastewater. At some price, doing so will become a profitable alternative to producing phosphate fertilizers from increasingly low-grade phosphate rock. It may even become worthwhile to mine phosphate from sewage sludge buried in old landfills.

The bottom line

The problems posed by depletion of finite supplies of high-grade phosphate rock are not trivial. However, it is highly misleading to forecast a sharp peak of phosphate fertilizer production in the near future, let alone to predict that mass starvation and population collapse lie on the downslope of the curve. The fact that there are no substitutes for phosphorus when it comes to building DNA or cell walls does not mean that markets are incapable of managing increasing scarcity.

What does seem likely is a period of continued high or rising phosphate prices, which will trigger three reactions. First, higher prices will make it economical to process ever-lower grades of phosphate rock. Second, they will spur changes in farm management and development of improved crop varieties; these in turn will accelerate incipient trends toward increased food output per unit of phosphate input. Third, higher prices will provide incentives for improved recycling of phosphorus from waste streams.

Putting all this together, Michael Mew dismisses the peak phosphate hypothesis. Instead, he foresees a phosphate plateau as higher prices cause historical growth rates to level off gradually.

Phosphate Produstion

Such a phosphate plateau does not preclude the need for changes in how people live and eat. It could well mean the relative price of food will rise over time, something that could cause hardship for many of the world’s poor. Furthermore, the price of phosphorus-intensive meat is likely to rise relative to those of other foods, making it unrealistic for the world’s emergent middle classes ever to attain the kind of meat-rich diet to which residents of today’s wealthy countries have become accustomed—a diet that, in the age of obesity,  is sometimes less of a blessing than a curse.

When all is said and done, a plateau is not a cliff. There is no phosphate doomsday on the horizon.

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