Phosphate fertilizer trade policy scenarios and their implications using the partial equilibrium Global Simulation Analysis Model (GSIM)

Highlights

• Export-tax policy shifts welfare toward exporting governments while imposing losses on import-dependent economies
• Positive global welfare under export taxes mainly reflects revenue transfers
• Production-subsidy policy raises output but requires substantial fiscal support and only partly offsets the effects of export restrictions
• Combined policies only partly offset the effects of export taxes on importers
• Tariff-removal policy lowers fertilizer prices but reduces tariff revenue and net welfare in major importing economies.
• Environmental implications of policy scenarios vary with production shifts and regional phosphorus balances.

Abstract

Phosphate fertilizers are essential to global food systems, but their mineral supply base is geographically concentrated and vulnerable to trade policy and geopolitical shocks. This study uses the World Bank Global Simulation Analysis Model (GSIM), calibrated to a 2022 bilateral trade matrix, to evaluate four policy experiments relative to the 2022 benchmark: a 50% export tax by major exporters, a 25% production subsidy for selected importing economies, a combined export-tax-plus-subsidy scenario, and elimination of selected import tariffs. 

Coordinated export restrictions generate the largest market adjustments, raising fertilizer-user prices and imposing substantial welfare losses on import-dependent economies. Production subsidies expand domestic output and generate gains in several subsidizing economies, but they require substantial fiscal support and only partially offset the effects of export restrictions. Tariff elimination lowers fertilizer-user prices in Brazil and India, while the loss of tariff revenue produces negative net welfare in both countries. Positive aggregate welfare under the export-tax scenarios is driven primarily by government export-tax revenue and therefore reflects redistribution rather than broad efficiency gains. Environmental implications are interpreted through literature-supported pathways linking changes in output and fertilizer affordability to production-related pressures and regional phosphorus balances. 

Overall, the results support diversified supply, predictable trade relationships, and targeted domestic measures as complementary elements of phosphate-fertilizer security.