Nature-based solutions or green taxes? Riparian buffers prevent eutrophication more effectively than taxes on fertilizers

Nutrient pollution from agricultural activities deteriorates water quality, biodiversity, and ecosystem functioning of interconnected terrestrial, aquatic and marine ecosystems. There are many policy instruments aiming to reduce the impact of nutrient eutrophication. However, their effectiveness is seldom compared. We assessed the environmental and economic performance of two policy instruments for controlling phosphorus diffuse pollution from agriculture into riverine systems: the implementation of riparian vegetation buffers and a phosphorus fertilizer tax. We used a spatial explicit model and integrated economic analysis to compare the cost-effectiveness and equity of both interventions using a representative watershed within the Rio de la Plata freshwater system of South America. We found that riparian vegetation buffers achieve substantial reductions in phosphorus exports from land to freshwater systems (51–61%), while a phosphorus fertilizer tax yields only marginal environmental benefits (less than 1% reduction in phosphorus exports to water). This contrasting environmental outcomes translate into marginal abatement costs that are approximately two to three orders of magnitude lower for riparian buffers than for a phosphorus fertilizer tax. Building on this comparison, we then explored a combined policy scheme in which riparian buffers costs are compensated through the revenue generated by a phosphorus fertilizer tax. This hybrid approach preserves the environmental effectiveness of riparian vegetation buffers while improving distributional outcomes and feasibility by reducing the burden imposed on farmers located near watercourses. Our findings suggest that complementing regulatory measures with targeted environmental taxes can offer a balanced and politically feasible strategy for addressing nutrient pollution in agricultural and ecological ecosystems.