Will increasing scarcity of phosphate fertilizer lead to starvation, conflict, and population collapse later in the century? This slideshow says probably not. The market magic of supply and demand will help us manage any shortages we do face.

1. Economics for your Classroom from
Ed Dolan’s Econ Blog
Does Peak Phosphate Spell
Doom for Humanity or will
Supply and Demand Save Us?
July 20, 2013
Terms of Use: These slides are provided under Creative Commons License Attribution—Share Alike 3.0 . You are free
to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like
the slides, you may also want to take a look at my textbook, Introduction to Economics, from BVT Publishing.

2. Phosphorus is Essential
 The element phosphorus forms part of
the structural backbone of DNA, cell
walls, and fulfills other essential
functions
 No plant or animal life is possible
without phosphorus
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

3. Phosphate fertilizer in traditional farming
 Farmer have added phosphates to their fields
since the dawn of agriculture
 Humans and animals get more phosphorus
than they need from their diets. The rest ends
up in manure
 Manure is the traditional form of phosphate
fertilizer, and still accounts for about 15
percent of all phosphate fertilizer used in
world agriculture
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

4. Modern farming uses fertilizer from phosphate rock
 Today, about 85 percent of phosphate fertilizer
used in modern farming comes from phosphate
rock
 Phosphate rock is mined in many parts of the
world, including the United States, China, and
North Africa
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

5. Rising Phosphate Prices
 In recent years, the price of
phosphate fertilizers has risen
sharply
 Prices dipped during the recent
recession, but as the global
economy recovers, they are
headed up again
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

6. Diet and Population Growth
 Population growth is one factor behind rising
phosphate prices
 Rising incomes in emerging market countries
are also a factor, as new middle classes
increase their consumption of meat
 One recent study suggests that growing meat
consumption accounts for 72 percent of the
global increase in phosphate fertilizer use
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

7. Question: Effects of population and diet
How would population growth and increasing
meat consumption affect the market for
phosphate fertilizers?
 Does the demand curve shift? If so, show
the new demand curve
 Does the supply curve shift? If so, show
the new supply curve
 Show the new equilibrium price
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

8. Answer: Effects population and diet
How would population growth and increasing
meat consumption affect the market for
phosphate fertilizers?
 Population growth and increasing meat
consumption would shift the demand curve
to the right from D0 to D1
 Other things being equal, the supply curve
would not shift
 The market would move up along the supply
curve from E0 to E1 and the price would rise
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

9. The Peak Phosphorus Hypothesis
 Some observers think that we are
running out of high-grade
phosphate rock
 The “peak phosphate” hypothesis
predicts the production will begin
to decrease after about 2035
 Pessimists think that falling
supplies of phosphate fertilizers
will bring famine, wars, and
population collapse later in this
century
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

10. Question: Effects of depletion of phosphate rock reserves
How would the depletion of supplies of high-
quality phosphate rock affect the market
for phosphate fertilizer?
 Does the demand curve shift? If so, show
the new demand curve
 Does the supply curve shift? If so, show
the new supply curve
 Show the new equilibrium price
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

11. Answer: Effects of depletion of phosphate rock reserves
 Other things being equal, the depletion of
high-quality phosphate rock reserves would
cause the supply curve to shift upward from
S1 to S2
 The demand curve does not shift
 As the supply curve shifts, the market
moves up along the demand curve from E1
to E2
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

12. Alternative: A Phosphate Plateau
 More optimistic observers think
market forces will prevent a collapse
of phosphate production
 Prices will rise as supply conditions
tighten. In response to higher prices:
 farmers will use phosphates
more carefully
 Producers will find it profitable to
use lower-grade phosphate rock
deposits
 It will also become profitable to
recycle phosphates from wastes
like urban sewage
 As a result, output will reach a
plateau instead of collapsing
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

13. Question: Effects of new technologies
How would the effects of new technologies like
the ability to use lower-grade phosphates
and recycling phosphates from waste affect
the market?
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

14. Answer: Effects of new technologies
How would new technologies of production and
recycling affect the market?
 Other things being equal, new production
technologies would tend to shift the supply
curve downward
 If new technologies approximately
counterbalance the effects of further
depletion of phosphate rock reserves,
production could reach a plateau for the
rest of the century or beyond
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

15. The Bottom Line
July 20, 2013 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
 Depletion of supplies of phosphate
rock are unlikely to bring on doomsday
scenarios of mass starvation
 Higher prices will create efforts to
improve farm management for more
effective use of phosphates
 Higher prices will also stimulate new
technologies, including recycling
 It is quite possible that these effects
will roughly balance out, leading to a
plateau in production for the medium-
term future

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