Eli Fenichel

I have a number of ongoing projects.  My research addresses two interconnected questions.  First, how do forward looking human decisions and ecological dynamics feedback, and what does this mean for management of ecological systems?  Second, how can we think about natural resources as forms of capital, and how do we move this thinking from a metaphor that is useful for guiding intertemporal management to broader application so that natural capital interfaces smoothly with traditional forms of capital? 

Valuing natural capital - with generous support from the Knobloch Family Foundation

The earliest economists thought about natural resources, such as land and forests, as capital assets.  This means that nature should be accounted for in a similar fashion as financial assets (e.g., stocks and bonds), real assets (e.g., real estate and machines), and human assets (e.g., knowledge and health). Over the past few decades the idea that nature is capital has expanded beyond economic theory. However, most natural capital, such as fish, wildlife, water, air, and forests, remains unaccounted (or mis-accounted) for in national and other public accounts like GDP.  Valuing natural capital is essential for reforming national accounts and developing other measures of social progress and sustainability. Valuing natural capital provides an approach to inform local resource management, by providing the value of conservation of natural resources to compare to the benefits of their consumption. The idea of natural capital has remained restricted to a useful metaphor despite the number of efforts underway to measure ecosystem services (the benefits people gain in terms of material, recreation, and cultural benefits from nature) and to map natural resources to understand the spatial distribution of “natural capital.” We are working to move natural capital from a useful metaphor to a measurable, actionable concept with support from the Knobloch Family Foundation. To date, we have recovered the natural capital value for:

• Fish in the Gulf of Mexico and shown how their value jumped with the recent shift towards a tradable quota system 
• Groundwater stored in the Kansas section of the high plains aquifer, showing a loss of $1.1B in value between 1995-2005
• The shift toward ecosystem-based management in the Baltic Sea increases the wealth stored in that fishery by about 300 million Euros. 

Talk on valuing natural capital

For our practical approach

• Applied to Gulf of Mexico reef fish see our publication in Journal of the Association of Environmental and Resource Economists
• The the story on the Yale School of the Environment web page. 
• Watch co-author Josh Abbott discuss this research  
• Applied to groundwater see our publication in PNAS, read about it on the Yale School of the Environment webpage
• Covered in the Washington Post  and Newsweek also see the adaptation of the research for Science Journal For Kids
• Baltic sea ecosystem analysis in PNAS or press release from Yale FES.
• The nature of natural capital and ecosystem income in the Handbook of Environmental economics.
• A review of the importance of human decision making in the value of natural capital in Oxford Review of Economic Policy
• We have also applied our approach to threatened caribou in Alberta to develop the concept of conservation debt that is based on natural capital theory

Watch the musical chairs tradeable permits and taxes game (password: fes794fenichel) or the short version supporting materials including the spreadsheet and directions for a ClassEX version of the game can be found on this GitHub page. 

Get my natural capital asset pricing problem set that uses the {capn} R package and is based on Fenichel et al. 2016 PNAS from my GitHub site. The "capN and groundwater exercise.pdf" is the problem set. You will also need to download the R script, "groundwater_capn.R".