Hohenheim Phosphorus Model – Expected Global Scarcity and Social Inequality

Phosphorus (P) is one of the essential components in the (plant) food cycle. It occurs as a natural resource, it is irreplaceable as a fertilizer in food production and generally cannot be produced artificially. Scarce P resources are also very unevenly distributed. Increasing demand for food and thus P leads to an increase in the costs of P, whether through higher extraction or recycling costs. Rising production and thus food costs have serious social consequences, leading to threats to social cohesion and further tension in distributive justice-both globally and within state boundaries.

In this research project, we develop a long-term macroeconomic model of phosphorus scarcity. The model is the first to integrate decision-theoretic foundations into a growth model with a description of goal-oriented technological progress. Our model allows us to represent how households and firms respond to phosphorus scarcity. The core element is the embedding of the formation of expectations of households and firms: How does the current behaviour of actors change when phosphorus is expected to become scarce in the future. Thus, preventive behaviour such as substitution effects, investment and research behaviour can be modeled theoretically.

On the basis of this model, consistent statements can be made about the effects of actual scarcity and, above all, expected future scarcity of phosphorus on the supply and demand behaviour for phosphorus itself, but also for fertilisers and food. It allows the description of the resulting price dynamics of phosphorus, fertilisers and food as well as the distribution effects on a regional and global level. The overall objective of the research project is to provide a quantitative model to simulate and predict different measures to influence the scarcity of phosphorus. This model could, in a developed stage, be used to estimate the general equilibrium effects of different policy measures such as market regulation of phosphorus and fertiliser, taxation of phosphorus usage, promotion of research and development etc. This will allow quantitative and qualitative assessments of policy measures with regard to food security, income and the environment, as well as on social inequality and its consequences.

Michael P. Evers, Franziska Schünemann, Pranav Patil