| Hurricanes can drive Economic growth as now measured, even if they leave murky rivers and devastated coastlines behind. Zach Whitman |
A forest that prevents erosion on the mountainside and cleans the air. Wetlands that protect coastal assets from storm surges. Rivers and deep snow attract tourists and create local jobs. These are all valuable natural assets, but cannot be accounted for by conventional measures of economic activity.
On Thursday, the Biden administration announced efforts to change that by creating a system for assessing the value of healthy ecosystems to humanity.
The government's special envoy for climate change, John Kerry, announced the plan in a speech at the annual World Economic Forum in Davos, Switzerland.
This initiative will require the help of many branches of the executive branch to integrate new methods into policy. The private sector is likely to take similar precautions, as there is a growing awareness that extreme weather can wreak havoc on assets and calls for investment in renewable energy and sustainable agriculture.
In the past, such undertakings have been politically controversial, with conservatives and industry groups opposing data collection and seeing it as a driving force for regulation.
The White House reports that the effort will take about 15 years. Once the criteria are fully developed and phased in, researchers can continue to use Gross Domestic Product as currently defined but consider broader contributions to the tangible and intangible natural economy. gain. Extended statistics are also available.
These statistics can help measure the impact of hurricanes, for example, more accurately. As now estimated, severe storms could boost economic growth even as they leave murky rivers and exposed shorelines that could be used for fishing, transportation, tourism, and other economic uses. there is. . Resources are reduced.
Eli Fenichel, assistant director of the White House Office of Science, said, "If you watch TV, you know we've lost our beaches and a lot of what we hold dear. Technology policy." It is," he said. That's fine, but we lost again here, so let's discuss it based on future information."
| John Kerry, the White House Special Envoy for Climate, in Davos, Switzerland, this week. The Biden administration plans to incorporate ecosystem values into indicators of economic activity. Markus Schreiber/Associated Press |
Incorporating nature into economic accounting, known as natural capital accounting, is not a new concept. As early as the 1910s, economists began thinking about how to quantify the contribution of biodiversity and the damage of air pollution. Prototypes of statistics appeared in the 1970s, and in 1994 the Department of Commerce's Bureau of Economic Analysis proposed how measures of Environmental health and output could be used to enhance accounting tools.
But Congress has ordered the agency to suspend its efforts until an independent review is complete.
"They thought that measuring the productivity of natural resources was essentially an environmental measure," a Commerce Department official later said.
That independent review was completed five years later with a report from the National Academy of Sciences. The Academy committee, led by Yale University economist William Nordhaus, who won the Nobel Prize for his work on the economic impact of climate change, said the Secretariat should continue.
"Natural resources such as oil, minerals, clean water, and fertile soil are as many assets to the economy as computers, homes, and trucks," the report read. “Thus, if natural assets are left out when creating a country's balance sheet, a significant portion of the economy's overall picture is lost.”
The United States has lagged behind, but other countries have moved to include nature in their main bills. We have developed a framework to support decisions. The UK has also been publishing environmental economic statistics for several years. International groups such as the Network for Greening the Financial System, which includes most of the world's central banks, use several techniques to assess the financial system's systemic risk.
| The proposed plan considers the broader economic contributions of nature, both tangible and intangible. Chanel stone |
In the United States, skepticism remains about including environmental considerations in economic and financial decision-making, with conservatives citing investments that prioritize corporate performance along environmental, social, and governance lines. Advancing guidelines. I am here. impoliteness. The social cost of carbon, another measurement tool for assessing the economic impact of regulation through its effects on carbon emissions, was set at near zero during the Trump administration and increased significantly under President Biden. Did. Did it. did it.
Benjamin Speicher, a senior fellow at the right-wing American Enterprise Institute, expressed concern on Thursday that the new approach introduces a degree of subjectivity.
"If they are going to put the value of environmental quality into the national accounts, there is no easy way to do it and the real danger is that it is impossible not to politicize it. I think," said Dr. Zycher. Interview. "It will be a process deeply fraught with problems and questionable interpretations."
However, few economic statistics are a perfect representation of reality, and all require refinement to ensure consistency and comparability over time. Measuring the value of nature is inherently tricky as there is often no market price to refer to, but other sources may also be revealed. The Bureau of Economic Analysis has other efforts to measure the value of services that are never sold, such as domestic labor.
“That's why we need this kind of strategy,” says Nathaniel Cohane, director of the Center for Climate and Energy Solutions, a research and advocacy group. “We make sure the data we need is not subjective and, like other areas of economic statistics, we focus on quality control and completeness.”
This strategy only pretended to cover some aspects of nature's value or to solve environmental justice issues by embracing nature's contribution more fully at the university.
