Sustainable Development in an N-Rich/N-Poor World

Sustainable development requires that per capita inclusive wealth—produced, human, and natural capital—does not decline over time. We investigate the impact of changes in nitrogen on inclusive wealth. There are two sides to the nitrogen problem. Excess use of nitrogen in some places gives rise to N-pollution, which can cause environmental damage. Insufficient replacement of nitrogen in other places gives rise to N-depletion, or loss of nutrient stocks. Neither is explicitly accounted for in current wealth measures, but both affect wealth. We calculate an index of net N-replacement, and investigate its relationship to wealth. In countries with low levels of relative N-loss, we find that the uncompensated loss of soil nitrogen in poorer countries is associated with declining rates of growth of inclusive per capita wealth. What is less intuitive is that increasing fertilizer application in both rich and poor countries can increase per capita inclusive wealth.