Business manager are fond of saying that we can’t manage what we can’t measure.
This is just as true in the management of communities and nations.
Natural resources are—directly or indirectly—the foundation of all wealth. Yet this foundation of our global economy isn’t measured when making crucial decisions.
The foundation of sound bookkeeping is the double-entry system: when you create a new asset in the “plus” column, you must document what was expended in the making of that asset as a debit in the “minus” column.
But we don’t do that when we measure GDP. We make believe that the energy and gadgets we create were magically formed out of nothing; not showing the fossil fuels or metals or topsoil that were depleted in the process as a debit.
The reverse is true, too: if we don’t account for the value of natural resources, we can’t show the value of the environmental restoration we do either.
Now, on January 19, 2023, the Biden-Harris Administration released the final National Strategy to Develop Statistics for Environmental-Economic Decisions, a historic roadmap that will kick off a multi-year effort to put nature on the nation’s balance sheet for the first time, with an emphasis on better data to understand nature’s critical contributions to the U.S. economy and to guide policy and business decisions moving forward.
Current national economic statistics measure the U.S. economy in a manner that does not account for the role and value of underlying natural assets, such as land, water, minerals, animals, and plants.
Without natural capital reflected in national statistics, the United States cannot fully track the role of natural capital in driving economic growth, making it harder for public and private sectors to plan for the future.
Expanding the national economic accounting system to include natural capital will better capture the links between nature and the economy and lead to a more inclusive and comprehensive accounting of the U.S. economy.
The White House Office of Science and Technology Policy (OSTP), the Office of Management and Budget (OMB), and the U.S. Department of Commerce led the development of the final National Strategy to Develop Statistics for Environmental-Economic Decisions, working with more than 27 federal departments and agencies at the table, and incorporating input received from across sectors during a public open comment period.
“Natural assets, like land and water, underpin businesses, enhance quality of life, and act as a stabilizing force for economic prosperity and opportunity. They also help counteract the destabilizing risks to our environment and markets caused by climate change and nature loss. Yet the connections between nature and the economy are not currently reflected in our national economic statistics,” wrote OSTP Director Arati Prabhakar, Commerce Secretary Gina Raimondo, and OMB Director Shalanda Young, in a letter introducing the report.
“The National Strategy gives us a path to change that. Clearly measuring the quantity and value of natural capital will enable more accurate economic growth forecasts and facilitate a more complete picture of economic progress to inform how we prioritize investments,” the report continues.
Using existing authorities and building on and integrating numerous existing natural capital measurement efforts across the government, implementation of the Final National Strategy to Develop Statistics for Environmental-Economic Decisions will organize the information needed to make informed decisions that enhance economic prosperity in the present, while securing future nature-dependent economic opportunities.