Inclusion of the social costs of N2O emissions increases the financial benefits from N inhibitor use on corn production in Ontario, Canada

Crop agriculture contributes to climate change from N application, including direct nitrous oxide (N 2 O) emissions and indirect N 2 O emissions from volatilized ammonia (NH 3 ) and leached nitrate (NO 3 − ). To achieve future climate goals, the government of Canada seeks to reduce greenhouse gas emissions from agriculture N use by 30 % by 2030, including the use of N inhibitors. This study examines the effects of N inhibitor use, with UAN and urea, at different N rates, on the financial and environmental performance of corn production in Elora, Ontario. The study employs a bioeconomic model that incorporates yield, and environmental effects generated by the De-nitrification De-composition (DNDC) model with an economic maximization model that chooses optimal private (from a producer standpoint), and social (from a social planner standpoint) inhibitor use and N rate for two N sources, based on 30 weather-years. The results indicate that, from an average private financial perspective, combined nitrification and urease inhibitors on corn production in Elora, Ontario, may not maximize profit with UAN or urea under the baseline price conditions ($302/t corn; $1.79/kg N). However, a variety of factors could make inhibitor use profitable: 1) specific weather conditions; 2) lower N rates; 3) consideration of social profits; 4) increasing social costs of N 2 O emissions; and 5) enhanced yield effects around 2 %. Therefore, the results show that inhibitor application can be recommended when there are favourable yield and weather conditions, when social costs are considered, and when applying N rates below the private economic optimum. N inhibitors may also reduce direct and indirect emissions from UAN application by between 33 % and 19.8 %, and Urea by between 17.7 % and 11.8 %, becoming less effective as the N application rate increases from 100 kg N/ha to 225 kg N/ha. Inhibitors could play an important role in both on-farm GHG mitigation efforts and enhanced financial performance. • N inhibitors may situationally enhance farm profit in Elora, Ontario • N inhibitors may increase profit with lower N rates and in specific weather • N inhibitors may increase social profit • N inhibitors may increase farm profit when yield increases by at least 2 %