Natural Capital Accounting

The nation’s economy and environment are deeply interconnected. Water, soil, air, forests, and other natural assets play a critical role in sustaining and powering our economy—from supplying the food we eat, to starting critical supply chains, to spurring innovation, and more. And yet the data we rely on to describe and measure our economy are largely disconnected from the natural world.  

On Earth Day 2022, President Biden directed in EO 14072 the establishment of the first government-wide natural capital accounts that would measure the economic value that natural assets provide to society and connect changes in nature with changes in economic performance. This new system of Natural Capital Accounts (NCA) will put nature on the nation’s balance sheet. The NCA initiative is just one part of a broader agenda to conserve and restore nature for the U.S., essential to measuring and monitoring our progress. It complements the America The Beautiful initiative, the National Nature Assessment, the roadmap for using nature-based solutions, the Climate Adaptation and Resilience Plans, and others. 

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Water usage by US state. (A) Total water use by state (million gallons/day), 2015; (B) percent change in total water use, 2000 to 2015; (C) percentage of water use coming from groundwater; (D) percent change in groundwater use, 2000 to 2015. Bagstad et a

After a public comment period and revisions, the Administration released the final National Strategy to Develop Statistics for Environmental-Economic Decisions on January 19, 2023. This is an historic roadmap that will kick off a multi-year effort to integrate a system of NCA with the system of national economic accounts for the first time. This system of NCA will help bridge the gap between economic statistics and the environment, with an emphasis on better data to understand nature’s critical contributions to the U.S. economy and to guide policy and business decisions moving forward.  

The U.S. Department of the Interior has a critical role to play given our responsibility for an extensive portfolio of natural capital; the scientific expertise in our bureaus and offices; and the value NCA can provide to the Department’s decision making for resource management. 

The lands and waters of the U.S. Department of the Interior are of profound ecological, social, and economic importance. The Department and its bureaus manage more roughly 420 million acres of federal lands, nearly 55 million acres of tribal lands, more than 700 million acres of subsurface minerals, and about 2.5 billion acres of the Outer Continental Shelf across a range of biomes, from arid shrub-scrub landscapes to forests, wetlands, and others. In addition, irrigation water managed by the Bureau of Reclamation can be applied to approximately 49 million acres of crop agriculture, primarily in the western United States.  

The natural capital that comprises these lands and waters provides valuable ecosystem services to the Nation. It supports socioeconomic well-being and contributes to our Nation’s economy in a range of ways that can be measured and quantified. A system of natural capital accounts will provide information that could fundamentally change the broader policy discussion across land management and environment agencies and even beyond government.  

These accounts will align with our national accounting standards to measure the economic value that natural assets provide to society — from forests and reefs to fish stocks and urban parks to the quality of our air and water. That is, natural capital accounts will be vital tools of information for land management and environment agencies such as the Department of the Interior: we will be both providers and users of environmental-economic statistics. Interior is involved in the strategy via USGS and the Office of Policy Analysis and DOI will contribute to several key accounts. These include serving as the lead or supporting agency to develop accounts for freshwater, land, minerals, urban green space, pollinators, wetlands and peatlands, and grasslands/rangelands.   

Additional Resources

PPA Seminar Series 2023-04-18 slides on NCA and Interior

Watch this space for updates from the Office of Policy Analysis as the NCA national strategy is implemented across the Department of the Interior and beyond. 

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Feature photo of a forest--one very common form of natural capital from which people benefit--by form PxHere.