The federal government has published draft guidelines to assist public agencies in incorporating ecosystem services into their cost-benefit analyses. On Aug. 1, the Office of Information and Regulatory Affairs (OIRA) and the Office of Science and Technology Policy (OSTP) published the draft and opened it up to comments from the public.
"Considering ecosystem services, broadly defined, in benefit-cost analyses helps agencies understand relevant tradeoffs or complementarities among different ecosystem services and with other costs and benefits," the Office of Information and Regulatory Affairs said in the draft guidelines. "It also helps agencies avoid situations in which the value of specific ecosystem services are implicitly given no weight or disproportionate weight in an analysis."
According to Climate Wire, the White House released draft guidance that would mandate federal agencies to fully assess how their decisions impact ecosystems that the public relies on. The OIRA and the OSTP guidance specifically focus on the benefits derived from forests, wetlands and waterways. While ecosystems have been considered in some cost-benefit assessments previously, this would be the first governmentwide directive to ensure comprehensive accounting of their effects, the report states.
According to Climate Wire, the draft guidance is a component of the broader efforts by the Biden administration to modernize the long-standing regulatory systems of the government. These plans for regulatory reform were initially proposed in April and aim to revamp how agencies assess the costs and benefits associated with a wide range of activities, including environmental standards, leasing decisions, procurement and construction. The draft guidance fundamentally encourages agencies to assign a dollar value to a policy's effect on ecosystem services, similar to the process used for economic impacts, Climate Wire reports.
According to Carbon Pulse, OIRA Administrator Richard L. Revesz and OSTP Director Arati Prabhakar wrote in a blog post, “Because nature provides us with so many things without cost, these benefits – called ‘ecosystem services’ – are not always fully captured in benefit-cost analysis, which the U.S. government has used for decades as a way to check that regulations and investments are making a positive impact on Americans’ lives. Failing to fully account for nature’s bounty has led to under-valuing and erosion of our nation’s natural assets. When we account for our environment, we are able to harness opportunities to confront climate change, promote prosperous and resilient communities, and invest in strong infrastructure.”
OIRA and OSTP anticipate that the finalization and implementation of the guidelines will likely take about a year, according to the Carbon Pulse report. Although it's just the initial stage, the initiative has been positively received by observers who have been advocating for a more significant role for the U.S. in protecting natural ecosystems and developing natural capital accounting.
One example of this, according to the Federal Newswire, is Douglas Eger, CEO of the Intrinsic Exchange Group (IEG), and the new asset class known as “Natural Asset Companies” (NACs). The Federal Newswire reported in April that the proposal of these NACs aims to evaluate the economic worth of U.S. natural assets using the federal government's standard national accounting system and allow the public to buy and sell shares. The article reported that critics have argued that this could create artificial economic value, enabling the government to leverage these assets for borrowing while apparently not raising the country’s debt. In a report from April, the Biden Administration emphasized the significance of these "natural assets" in its 30x30 initiative.
