The value of nature and the nature of value

Last week, the White House Office of Science and Technology, the Office of Management and Budget, and the Department of Commerce released a final version of its National Strategy To Develop Statistics For Environmental-Economic Decisions. Aimed at quantifying and more fully understanding the contributions of nature to the nation’s economy, leading to better business decisions moving forward, it is a welcome development for our economic prosperity.

As a scientist who has spent 25 years researching the economic value of natural capital and the contribution of ecosystem services, I applaud any recognition that Gross Domestic Product (GDP) has not served us well in guiding our allocation of natural resources. The realization that we must account “for the economic value of land and water, fish and forests, and other natural assets, rather than effectively counting nature as zero on the balance sheet” is a dramatic step forward for the administration to accurately frame the meaning of economic health.

In fact, ecological economists have been engaged in this sort of environmental accounting and supporting this “newfound” realization for decades. 

To better explain “natural capital,” ecosystem services are the vast non-market benefits provided by nature free of charge, of which most of us are not aware: A healthy watershed provides the ecosystem service of water purification; the trees in a public park add soil stabilization, wildlife habitat and flood prevention are worth much more than the market value of the timber alone.

These are just a few of the thousands of natural settings that can be evaluated in terms of non-market gains — and analyses of the value of ecosystem services have been conducted all over the world for wetlands, coral reefs, grasslands, tropical forests and the complete range of ecosystems. Putting all these studies together, it’s estimated that the global value of the world’s ecosystem services equals $125 trillion annually. That’s over 50 percent more than the $80 trillion per year that scientists estimate for the global market economy.

It would have been $145 trillion had we not lost vast areas of coral reefs, tropical rainforests and more in the past 20 years. That $20 trillion loss due to changes to the earth’s surface in just two decades is comparable to losing the entire Gross Domestic Product (GDP), the value of all United States economic activity, over the same period.

It cannot be overstated how important it is that we reflect natural capital in our national economic statistics. Currently, we are losing trillions in ecosystem services because of our environmental policies. Diminishing wetlands leads to less water purification, dying coral reefs can no longer nourish the fish that feed us, organically depleted soil shrinks crop yields, as well as a threatened bee population jeopardizes the pollination of our fruit trees. One study estimates that annual losses of ecosystem service value since 1997 are on the order of $22 Trillion a year.

Moreover, a major contributor to the destruction of ecosystem services is climate change. For example, snowpack in the Rocky Mountains, vital to the outdoor recreation industry, appears to be decreasing because of climate change, precipitating an economic impact all too painful for ski resort owners.

We have collectively failed to recognize and value how our society, our economy, and our very lives depend on functioning ecosystems, and we profoundly need this more complete ecological-economic paradigm. Ecological economics scientists can tell you the data is already in, we can and must include nature in the pursuit of economic goals and in the process improve environmental and human health. But it can only become policy through the kinds of intentional efforts championed by the current administration. With a firm national intent to highly regard the life-sustaining non-market benefits of natural capital, we can shape a more complete picture of economic progress that serves life and leads us all into a better future.

Paul Sutton is a professor in the Department of Geography and the Environment at the University of Denver. Sutton was a delegate for the American Association of Geographers at the 2021 United Nations COP-26 climate summit.