YSE Economist Is Key in Effort to ‘Put Nature on the Country’s Balance Sheet’
Leading a 27-agency team while serving at the White House Office of Science and Technology Policy, Professor Eli Fenichel played a critical role in developing a new national strategy to measure the economic value of natural resources and better understand nature’s contributions to the U.S. economy.
When a hurricane or other natural disaster strikes an area, ecosystems and natural resources are often damaged or lost. Yet, there is no way to measure the value (or loss) of natural assets, such as land, water, and plants, in traditional measurements of economic activity; that is, there hasn’t been up until now. Eli Fenichel, Knobloch Family Professor of Natural Resource Economics, has been at the center of a historic effort by the White House Office of Science and Technology (OSTP), the Office of Budget Management (OMB), and the U.S. Department of commerce to expand the national economic accounting system to better capture the links between nature and the economy. Released by the Biden administration in its final form last week, the “National Strategy to Develop Statistics for Environmental-Economic Decisions,” is a framework for the multiyear effort to use data to better understand nature’s critical contributions to the U.S. economy — an understanding that it says will give a much more inclusive and comprehensive accounting of the U.S. economy overall.
With a research focus on how people can and do allocate natural resources and natural resource risks through time, Fenichel took leave from in YSE in June of 2021 to serve as OSTP’s assistant director for natural resource economics and accounting.
“Dr. Fenichel convened and led the 27-agency team that produced the report, along with colleagues from the Office of Management and the Budget and the Department of Commerce,” an OSTP spokesperson commented in a written statement. “Dr. Fenichel’s vision, leadership, knowledge, and skills all contributed directly to this pioneering effort. We are thrilled to be co-leading an effort to put nature on the country’s balance sheet and see this report as the beginning of important work that will contribute to a robust U.S. economy.”
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In an interview with The New York Times last week, Fenichel used the example of hurricane damage to illustrate how our current system, due to its inability to account for natural capital, often gives an incomplete measure of assets, losses, and true value. “You can look at the TV and know that we’ve lost beaches, we’ve lost lots of stuff that we really care about, that makes our lives better. And you get an economist to go on and say, ‘G.D.P.’s going to go up this quarter because we’re going to spend a lot of money rebuilding.’ Being able to have these kinds of data about our natural assets, we can say, ‘That’s nice, but we’ve also lost here, so let’s have a more informed conversation going forward.’”
YSE alumna Rachelle Gould ’07 MFS, an associate professor of environmental studies at the University of Vermont, also was quoted in the same article on how the strategy did not cover, or pretend to cover, every aspect of nature’s value or address issues surrounding environmental justice, particularly for Indigenous communities.
“When we think about the real-world contributions and impact of our work at YSE, it’s hard to imagine a stronger example than Dr. Fenichel’s contributions on this tremendously important effort,” YSE Dean Indy Burke says. “Our natural resources are not infinite and, in some cases, are rapidly depleting, being able to better understand and assess their value is critical in today’s decision-making.”