A market-based insurance approach aligns environmental and economic outcomes in maize nitrogen management

Abstract Meeting the growing demand for maize while reducing nitrogen losses remains a key challenge for sustainable agriculture. Here, we present a market-based nitrogen insurance concept that allows farmers who apply excess fertilizer to reduce nitrogen use without financial risk. Using a large-scale process-based crop model dataset covering 4270 maize fields in Illinois, over 30 years of weather data, and 33 fertilizer rates, we found that the insurance is profitable for farmers applying at least 40 kilograms of nitrogen per hectare above recommended rates, yielding average annual gains of 14 dollars per hectare for farmers and 10 dollars per hectare for insurers. Applied across the eligible Illinois maize area, the insurance annually reduces nitrate leaching by 31% and lowers greenhouse gas emissions by 682,000 metric tonnes of carbon dioxide equivalent. This self-sustaining approach could be extended to other nitrogen-intensive crops and regions, providing a globally relevant pathway to reconcile farm profitability with environmental stewardship.