Natural capital is missing in infrastructure investments
While congressional leaders debate trillions of dollars of federal spending, they have a critical blind spot. Discussions about where to focus investments in infrastructure and what to build are not informed by a complete accounting of the nation’s assets, leaving out many critical services that nature provides. As a result, billions of dollars could be squandered — along with the ability to improve the well-being of our communities.
Consider, for example, maintenance of our national highway system through the bipartisan infrastructure bill that Congress recently passed and is awaiting President Biden’s signature. Decisions regarding which roads to repair, expand or build anew do not adequately account for the impact these roads are likely to have on natural resources and community well-being. History is full of examples of roads that were planned for economic and traffic efficiency, but that inadvertently cut off community access to parks and natural lands or created local flooding by altering the flow of water.
Decision-makers traditionally do not consider information about these impacts when weighing how to invest in infrastructure. Our national accounting system, which provides measures like GDP to track the economy and set policy, has the same flaw. The current system misses key information about the role of nature in the health, wealth and resilience of our nation. The accounts capture changes in natural resources that have a market price like timber, crops, fish and minerals, but they leave out natural capital that often has a significant impact on communities. For example, they do not include the value of wetlands in protecting homes from flooding, the health benefits of outdoor recreation or the depreciation of natural capital assets like declines in soil health that can reduce agricultural productivity.
A better accounting system that links economic activity and the environment would enable smarter policy decisions. For example, land development and infrastructure decisions should account for not only the costs and benefits of more roads and pipes, but also the value of maintaining surrounding natural systems that filter and store water, clean the air and reduce localized extreme heat. When watersheds are maintained with significant natural vegetation, they help clean and store water, reducing the need for expensive treatment plants and levees. Coastal habitats like mangroves, oyster reefs and salt marshes can help protect bridges, roads and homes from coastal storms and rising sea levels. And areas with significant tree cover help keep summer temperatures lower.
As the nation prepares to spend huge sums of money on roads, bridges, rail, the electric grid and more, we risk doing so without knowing how much natural capital we have, how it supports economic activity or how it is being impacted. We are planning to spend many billions on water infrastructure — a sensible goal — without fully accounting for the nation’s water supply, use, productivity, quality or resource trends.
Some countries like the U.K. and Canada have already begun to utilize natural capital accounting to guide large-scale economic decisions. While the U.S. has lagged in this area, efforts are now underway to understand the state of our nation’s natural capital. A group of experts from the private sector, universities, government agencies and non-governmental organizations from the U.S. and beyond have developed a first set of U.S. natural capital accounts to assess the value of land, water and ecosystems. We need to take the next step of institutionalizing this accounting in governmental decision-making.
Natural capital is real; it just isn’t accounted for. We will ultimately pay the price of diminished natural capital if decision-makers don’t add it into the equation.
Stephen Posner, Ph.D., is director of policy with the Gund Institute for Environment at the University of Vermont.
Lydia Olander, Ph.D., is director of the Ecosystem Services Program with the Nicholas Institute for Environmental Policy Solutions at Duke University.