The Dangers Of Government Efforts To Monetize Nature

The Biden Administration released draft guidance last week on accounting for “ecosystem services” in regulatory cost-benefit analysis. The guidance aims to improve how environment-related costs and benefits are captured in federal cost-benefit analyses of regulations. However, the new guidance, as well as the larger effort it is part of to expand the use of “green accounting” in government, is a misguided endeavor. Pricing the priceless probably only degrades nature while simultaneously leading to inefficient and even irrational public policy decisions.

The new guidance is the first of its kind and was developed jointly by the Office of Information and Regulatory Affairs (OIRA) and the Office of Science and Technology Policy (OSTP) to fulfill directives in an executive order from last year on strengthening forests and communities facing stress from wildfires and climate change. The document serves as a complement to other ongoing efforts by the Biden Administration, such as a strategy to develop environmental statistics for inclusion in national economic accounts.