Abstract
Governments worldwide subsidize agricultural inputs to support farmers and increase food production. Subsidies that result in exceptionally low prices encourage farmers to deviate from optimal application levels and result in the overuse of fertilizers. This paper examines the unintended environmental and health consequences of increased fertilizer use driven by a selective subsidy reform. In 2010, India implemented a subsidy change favoring nitrogen, which led to lower prices for nitrogen relative to phosphorus and potassium fertilizers. Leveraging the timing of this policy and exploiting exogenous variation in pre-determined geographic characteristics such as soil texture and river flow direction, I find significant effects of the subsidy on nitrate pollution in downstream river bodies and infant mortality in rural areas. Particularly, I find that a 50% increase in nitrate levels post policy result in 0.03 additional deaths in rural DHS clusters.