When Janet Yellen visited the Tobin Center this year, she emphasized the need “to include the environment in measures of economic growth,” and cited Tobin faculty affiliate Eli Fenichel’s work at the White House as a path forward to more robust national policy on valuing natural resources.
Professor Fenichel recently returned to Yale after serving in the White Office of Science and Technology Policy (OSTP) as assistant director for natural resource economics and accounting for 18 months. During his tenure, he led a 27-agency team that developed the National Strategy to Develop Statistics for Environmental-Economic Decisions.
Building on this work, OSTP recently announced the federal government’s first-ever guidance to federal agencies on how to account for the environment’s contributions to our national welfare, productivity, and wellbeing. Up until now there has been no clear guidance on how agencies should incorporate “ecosystem services,” all the benefits nature provides often without cost (nature’s bounty), into these assessments. Once the draft is finalized, this guidance will advance and strengthen analyses of regulations and government investments by incorporating the value of natural resources.
“Under our current system, the value of timber was easy to consider in a benefit-cost analysis, but the value a healthy forest provides in terms of reduced wildfire risk, wildlife habitat, or recreational use weren’t as readily considered. This guidance makes those benefits part of the equation in a more consistent, comprehensive way,” said Fenichel.
The White House is currently seeking public comment on the draft until September 18, with the goal of finalizing it within a year. The guidance complements a roadmap for a multiyear effort to expand the nation’s economic accounting system to include natural capital, an initiative which was released in April and which Fenichel led during his time at OSTP.
The announcement follows years of work by Professor Fenichel and the Tobin Center to get environmental decision-making onto the same track with economic decision-making. Building on seminal work by Nobel Laureates Bill Nordhaus and James Tobin, the Tobin Center recently announced its efforts to convene accountants and economists to define the next frontier for the economic measurement of public goods.