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OSTP Blog -- Accounting for Nature on Earth Day 2022 [excerpts]

Despite the regular drumbeat of economic statistics — about the Gross Domestic Product (GDP), jobs, or the Dow Jones – our economic knowledge is incomplete.

There is no doubt that GDP is a big improvement over what was available in the 1920s when we measured the current state of the economy by rail car loadings — but economists have long known that GDP has blind spots. It tends to capture the economic benefits that people have to pay for. Because many of the benefits that nature provides seem “free,” they are not visible in our economic models and indicators. GDP also tells us little about future opportunities. In short, nature’s role in generating economic benefits today and tomorrow falls into these big blind spots.

That’s going to change.

On Earth Day, the Biden-Harris Administration announced new initiatives to better understand, account for, and find solutions in nature. In short, we are acting on the knowledge that nature provides unique value to our economy and way of life.

First, to give us a full picture of the state of nature and how it matters to our lives, we are initiating the first U.S. National Nature Assessment. This periodic assessment will build on the wealth of existing data, scientific evidence, and Indigenous Knowledge to create a holistic picture of America’s lands, waters, wildlife, ecosystems and the benefits they provide to our economy, health, the climate, environmental justice, and even our national security. The assessment will allow us to take stock of what we have now, as well as look ahead to anticipate how nature and its benefits might change in the future. This information will enable us to identify opportunities for nature to help achieve our societal and economic goals, including the America the Beautiful Initiative.

The National Nature Assessment will provide information to guide decisions about how ecosystem restoration funds could protect species in decline, support economic recovery, and overcome injustices done to communities with limited nature access. The assessment will provide a clear idea of which nature investments could make infrastructure more resilient—like using living shorelines to buffer rebuilt roads from storms and erosion, or pairing bridge-building with watershed management to help the bridge last longer. The Assessment will also tell us how effectively natural investments to combat climate change are working. It will even tell us how nature currently affects our food and water security.

The first National Nature Assessment begins immediately, under the auspices of the U.S. Global Change Research Program, to be delivered in 2026. With this Assessment, we will know – for the first time – how nature is doing in the United States, the ways in which nature is supporting us, and how we might do more to embrace nature as a critical part of creating a prosperous and equitable nation.

Second, we’re launching a Natural Capital Accounts initiative to connect changes in nature with changes in economic performance. These accounts will work with our standard national accounting to measure the economic value that natural assets provide to society — from forests and reefs, to fish stocks and urban parks, to the quality of our air and water. Our natural assets will finally be reflected on our nation’s balance sheet, where they will tell us how future opportunities are changing — just like a balance sheet helps assess a business’s creditworthiness.

This information fills important economic gaps and will help improve federal regulations and private business decisions. Currently, GDP omits important economic benefits, including many provided by nature. For example, agricultural production adds to the economy, but farms will create more value when we track how changes in pollinators or water supply influence their profits. We know that 1.8 percent of GDP is generated by the outdoor recreation industry, but we don’t know the share attributable to beautiful beaches, clear lakes, open trails, and fishable rivers. We constantly hear how employment rates are changing, but we don’t yet understand how many jobs depend on nature. Natural capital accounts will help answer these questions and more. By connecting nature to our core economic statistics system, we will also better understand who has access to nature’s economic benefits and who does not, reporting on several aspects of inequality that are currently difficult to measure. When we can see how economic progress depends on nature, then we will see what’s at risk when we lose it — and what’s to gain from investing in it.

Because the Biden-Harris Administration understands that this knowledge is critical to having a globally competitive economy, the White House Office of Science and Technology Policy, the White House Office of Management and Budget, and the Department of Commerce (DOC) will regularly report on the role of nature in the economy. They will work together to create a system of natural capital accounts and environmental-economic statistics. We have the data and expertise needed to produce these accounts scattered across Federal agencies. Some, like DOC are already moving in this direction. Over the next nine months, an interagency group will harmonize those efforts and plan a strategy for regularly producing natural capital accounts, with the first regularly-produced pilot accounts planned for release in 2023.

Third, we will identify prime opportunities to vastly accelerate our use of solutions that are grounded in nature. Called “nature-based solutions, these solutions include actions to protect, conserve, restore, sustainably use, and manage terrestrial, freshwater, coastal, and marine ecosystems to improve nature and our quality of life. Investments in nature-based solutions are already being catalyzed inside and outside of government, but much more can –and must—be done. Communities are clamoring for marsh restoration to protect coasts, shade trees to cool homes and reduce energy costs, greenspaces to revive communities and improve health, wetlands and forests to filter water and reduce sewerage needs and pollution, and native plants to protect our food supplies.

The White House Council on Environmental Quality, White House Office of Science and Technology Policy, and White House Office of Domestic Climate Policy will work with other Federal agencies to release a report identifying new opportunities for implementing nature-based solutions. The report will include opportunities to increase workforce capacity for designing and building nature-based solutions. It will recommend increasing support for communities’ ideas to use nature-based solutions for building equitable and sustainable communities. And, it will provide avenues to simplify community access to relevant federal funds. This initiative will put nature-based solutions on par with the other options communities have for meeting their needs and building a prosperous future.

https://www.whitehouse.gov/ostp/news-updates/2022/04/24/accounting-for-nature-on-earth-day-2022/

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