AGRICULTURAL ECONOMICS Agricultural Economics 46 (2015) 653–666 Evaluating the impact of rising fertilizer prices on crop yields T. Brunelle a,∗ , P. Dumas a , F. Souty b , B. Dorin a , F. Nadaud c a CIRAD, UMR CIRED, F-94736 Nogent-sur-Marne, France b Universit´ e Versailles Saint-Quentin, UMR CIRED, F-94736 Nogent-sur-Marne, France c CNRS, UMR CIRED, F-94736 Nogent-sur-Marne, France Received 31 January 2014; received in revised form 24 September 2014; accepted 18 December 2014 Abstract Because of tensions on fossil energy and phosphorus markets, the rise in fertilizer prices observed during the last decades may continue in the future, putting into question production pathways relying heavily on crop intensification. To evaluate how, in this context, economic choices may alter crop yields, we first construct different fertilizer price scenarios to 2050 based on an econometric relation with oil and gas prices. Other possible scenarios, such as the continuation of historical trends, are also considered. The resulting changes in fertilizer price range between +0.8% and +3.6% per year over the 2005–2050 period. These scenarios are tested in a global land-use model incorporating an endogenous representation of the land–fertilizer substitution. We find that the supply-side response to rising fertilizer prices could lower crop yields in 2050 from -6% to -13%, with a corresponding increase in global cropland area ranging between 100 and 240 Mha if the demand for food and nonfood products has to be met. The sensitivity of these results is tested with regard to assumptions on food consumption, change in potential yield and nutrient use efficiency. JEL classifications: Q11, Q15 Keywords: Fertilizer price; Crop yields; Land–fertilizer substitution; Land-use modeling 1. Introduction Spurred by socioeconomic and demographic changes, global crop demand is projected to increase by 60–100% of its 2005 value by 2050 (Tilman et al., 2011; Alexandratos and Bruinsma, 2012). Faced with this daunting prospect, the global research community is concerned about our ability to enhance agricul- tural productivity, given climate impacts, and soil management practices (Alston et al., 2009; Spiertz and Ewert, 2009; Brisson et al., 2010). In addition to biophysical constraints, adequate economic incentives are a key factor for productivity growth, as changes in relative prices of land and fertilizer may impact crop yields as farmers choose to extensify rather than intensify produc- tion (land–fertilizer substitution). This substitution mechanism is attested to by several studies over the six last decades. Bin- swanger (1974) estimate the elasticity of substitution between ∗ Corresponding author. Tel.: +33-1-43-94-73-65; fax: +33-1-43-94-73-70. E-mail address: brunelle@centre-cired.fr (T. Brunelle). Data Appendix Available Online A data appendix to replicate main results are available in the online version of this article. the main agricultural production factors (land, labor, machin- ery, fertilizers) using an approach based on a Translog cost function. For 39 American states over a period from 1949 to 1964, he finds that fertilizers are the best land-substitutable production factors. In a more recent study carried out for three American states in the corn production sector over the 1976– 1990 period with an approach based on a constant elasticity of substitution cost function, Hertel et al. (1996) obtain a high estimate of the industry-level elasticity of substitution between land and nitrogen (ε = 1.15) and explain the divergence with the low estimate at the farm-level through compositional changes in the corn production sector. Based on a quadratic program- ming model applied to field crops and vegetables production in Florida, Adams et al. (1977) demonstrate that a 20% re- duction in fertilizer supplies increases cropland area by 21% and decreases the value of production by 4%, field crops being relatively more impacted than vegetables. Land–fertilizer sub- stitution is not specific to American states. In a study covering 10 Asian countries from 1966 to 2005, Imai et al. (2011) show that the ratio of oil price to the producer commodity, used as a proxy for fertilizer prices, has a significant negative effect on yields of most commodities, maize being the most impacted crop. C  2015 International Association of Agricultural Economists DOI: 10.1111/agec.12161