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Giving GDP a needed ecological companion

June 08, 2020

To have a more sustainable world, people need to put a dollar value on nature's contributions.

In this week's interdisciplinary journal - Proceedings of the National Academy of Sciences, an international group of scholars show that gross domestic product (GDP) fails to fully capture nature's contributions to economic activity and human well-being. In addition to the D - domestic, there needs to be an E for ecosystem. Gross ecosystem product (GEP) summarizes the economic value of nature's contributions to humans.

Valuing nature's contribution globally is a critical step to affording the world's forests, grasslands, fertile soils, wetlands and biodiversity the protections and respect given to traditional economic powerhouses.

"We must bring ecosystem services to the business table for a sustainable future," said Jianguo "Jack" Liu, director of Michigan State University's Center for Systems Integration and Sustainability. "The world is losing a tremendous amount of its natural capital - clean water, biodiversity, sequestering greenhouse gases. It's time we give people a way to understand what they stand to lose economically."

Both GEP and GDP use accounting measures to estimate the economic value of goods and services. The group assigned GEP to western China's Qinghai Province, which is known as the water tower of east and southeast Asia as it is the source of three major rivers. Qinghai also is a biodiversity hotspot that has suffered from population increases and overgrazing.

By applying new accounting to Qinghai's natural capital, the group was able to not only put Qinghai's ecosystems on a balance sheet, but also show only a third of the economic value generated in the province's ecosystems was provided to its residents. The rest were exported to other provinces of China and other countries of the world. This demonstrates the importance of human-nature interactions not only within a place but also across adjacent and distant places on this metacoupled planet.
In addition to Liu, who holds the Rachel Carson Chair in Sustainability, "Using gross ecosystem product (GEP) to value nature in decision making" was written by Zhiyun Ouyang, Changsu Song, Hua Zheng, Stephen Polasky, Yi Xiao, Ian J. Bateman, Mary Ruckelshaus, Faqi Shi, Yang Xiao, Weihua Xu, Ziying Zou, and Gretchen C. Daily.

Michigan State University

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