Today, House Committee on Natural Resources Chairman Bruce Westerman (R-Ark.) led a letter to Office of Management and Budget (OMB) Director Shalanda Young, regarding the Biden administration’s efforts to incorporate natural capital accounting and ecosystem services valuation into federal decision making and federal actions. The committee is seeking information from OMB to understand OMB’s role in fundamentally changing the federal government’s accounting standards and subsequent OMB directives. In part, the members wrote:

"Overall, it is clear that Federal agencies have followed the directives from OMB to develop and enact policies that incorporate natural capital and ecosystem services into Federal decisions and actions.

"The Committee is interested in learning more about OMB’s historical, ongoing, and integral work to incorporate natural capital accounting and [ecosystem services valuation] into Federal decision-making and Federal actions, including, but not limited to, the development and implementation of the National Strategy for Natural Capital Accounting."

Read the full letter here.

Background

Natural capital accounting is a method of accounting for and assessing the stock of renewable and non-renewable resources (e.g., plants, animals, air, water, soils and minerals) that provide benefits to people. Relatedly, ecosystem services valuation places a dollar amount on the direct and indirect benefits that flow to humans from ecosystems. While generally establishing fair accounting standards is essential, skeptics of natural capital accounting and ecosystem services valuation are often concerned with the significant uncertainties and limitations of attempts to financialize nature, along with the likelihood of shifting the use and control of land from local communities and stakeholders to financial elites and foreign interests.

Nonetheless, treating natural assets as a form of capital is becoming increasingly popular in some circles and the Biden administration has embraced it through executive orders, guidance to agencies and requests for information. This process has bypassed Congress and used natural capital accounting and ecosystem services valuation to prop up a partisan, anti-use agenda.

Since the Obama administration, OMB has led the federal government’s efforts to develop and implement natural capital accounting and ecosystem services valuation. OMB’s role has only grown during the Biden administration. OMB was one of three co-authors of President Joe Biden’s National Strategy for Natural Capital Accounting, released in January 2023. Since then, OMB has issued several pieces of guidance to federal agencies, directing them to incorporate natural capital accounting and ecosystem services valuation into federal decisions and actions, particularly as it relates to benefit-cost analysis. The updated guidance from OMB could have a profound impact on agency actions, decisions, and the ability of the federal government to defend those actions in court.

OMB declined to testify before the committee in February regarding their role in developing and enacting policies that incorporate natural capital accounting and ecosystem services valuation in the federal government.