Lead, Methane and Monetizing Natural Capital

written by Elise Miller, EdM
Director 
Widespread water contamination from lead in Flint, Michigan, and the huge methane leak in Aliso Canyon, California, have dominated media headlines in recent weeks. The oft-repeated response given to questions of why these situations weren’t addressed earlier has been: It would have been too costly. With this mindset, the government agencies and others responsible did not do anything, and even covered up how bad the situations were, until major health crises erupted. Of course these events are not anomalies. Sadly this is true for thousands of communities around the US and elsewhere because there is little economic incentive to invest in prevention-oriented actions.

What if protecting natural capital (water, air, soil, etc.), however, were included in profit/loss assessments so that ensuring access to healthy water, for example, was seen as a positive investment in the future, rather than simply as a cost? How to do this has been a complicated question economists have wrestled with for years. On Monday, in a paper published in Proceedings of the National Academy of Sciences [see What’s nature’s worth: study helps put a price on groundwater and other natural capital and Economists keep saying we should put a price on nature. now yhey’ve finally done it], a team of economists led by the Yale School of Forestry and Environmental Studies describe a formula they have at last developed to do just that.

Usually investments in conservation (or what might be considered health-protective) practices are only tallied as “expenditures.” By contrast, this new asset valuation approach, which includes measurements of ecosystem services combined with models of human behavior, redefines what have been considered “costs” as “investments.” Further, this paper demonstrates that investments in maintaining clean groundwater, healthy forests, and other natural assets can in fact be compared directly with more traditional investments, such as in improving transportation infrastructures.

The economists used the High Plains Aquifer of western Kansas as a case study. Applying their new formula, they found that the value of the groundwater from this aquifer (primarily used for agricultural purposes) decreased approximately $110 million annually. Because the loss of this natural asset, however, was not quantified in this way and was offset with increases in other non-natural capital assets, those reviewing the budget weren’t aware how much the aquifer was being drained. In other words, the traditional profit/loss calculations didn’t make clear that the overall wealth (as opposed to simply income) in that region was declining dramatically.

Assuming this new formula is applicable in measuring natural capital in many other situations nationally and globally, as these economists say it is, then government agencies and business will have a critical new tool for determining whether activities are truly sustainable. If policymakers start incorporating this approach, then it is less likely that they’ll be able to dismiss taking preventive action based solely on cost. And that bodes well for the health of families of Flint and Aliso Canyon and all of us in the US and around the world now and in the future.

P.S. Join CHE’s partnership call on Tuesday March 8, 2016, which will feature two of the remarkable people who helped bring the dire situation in Flint to national attention: Dr. Mona Hanna-Attisha, a pediatrician in Michigan, and Dr. Marc Edwards, a nationally renowned expert on municipal water quality and an engineering professor at Virginia Tech. Additionally, Dr. Bruce Lanphear, a professor at Simon Fraser University and expert on the health impacts of lead exposure on children, and Tracy Swinburn, MSc, will speak to the economic impacts of lead exposure.

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