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Meet the economist who wants the field to account for nature

Gretchen Daily is working to make the environment more of an element in economic decision-making.

December 26, 2023
Gretchen Daily holding a chicken
Patrick Tehan

What is the true value of a honeybee? A mountain stream? A mangrove tree? 

Gretchen Daily, cofounder and faculty director of the Stanford Natural Capital Project, has dedicated her career to answering such complex questions. Using emerging scientific data and the project’s innovative open-source software, Daily and her team help governments, international banks, and NGOs to not only quantify the value of nature, but also determine the benefits of conservation and ecosystem restoration.

This marriage of ecological and economic concerns may seem an unusual one to some. But to Daily, it’s a union as natural as the planet’s ecosystems themselves.

Daily completed her doctoral work in ecology at Stanford during the 1990s. It was, she says, a revolutionary time for interdisciplinary approaches to both economic and ecological crises. Spurred by a summit hosted by the Royal Swedish Academy of Scientists, ecologists and economists began coming together for the first time to consider the benefits of a joint approach to developing economic and environmental policy.

“For so much of our history, humanity had operated under the assumption that nature was infinite,” says Daily. “We knew that collapses of civilization were at least in part because of the destruction of the local environment, but nobody thought that could happen at a planetary scale.”

“Many of us finally began to see that, fundamentally, environmental problems are economic and social problems. We cannot maintain the vitality and security of the biosphere without valuing nature.”

Gretchen Daily

Global climate change and its myriad impacts changed all that. “That crisis forced us all to rethink the assumptions on which economic systems operate,” she says. “It also revealed the frailties in different lines of inquiry that have built up for decades and even centuries.”

In 1997, Daily edited Nature’s Services: Societal Dependence on Natural Ecosystems—one of the first books to introduce the concept of ecosystem services, a field that seeks to quantify the value of resources such as clean water, fertile soil, and species habitats. The release of that book inspired unprecedented interdisciplinary collaboration on issues of ecology and economics.

“I think many of us finally began to see that, fundamentally, environmental problems are economic and social problems,” she says. “We cannot maintain the vitality and security of the biosphere without valuing nature.”

That recognition, Daily says, inspired her to create the Natural Capital Project in 2005. More than anything, she adds, the initiative was born out of the idea that mapping and modeling the value of nature would compel global leaders to see the inherent benefits of conservation as well.

A partnership between Stanford, the Chinese Academy of Sciences, the Nature Conservancy, the University of Minnesota, and the World Wildlife Fund, the Natural Capital Project now works with banks, governments, and nonprofit organizations around the globe.

The organization’s open-source software model, called InVEST, combines data gleaned from thousands of researchers working with techniques such as satellite imaging, soil surveys, climate modeling, and human development mapping to quantify and place a value on natural resources. Recent advances in this data collection, along with machine learning and software modeling, allow the Natural Capital team to evaluate ecosystems at a level of detail and sophistication previously considered impossible.

In a recent project undertaken for the Colombian government, for instance, the Natural Capital Project assisted in establishing a conservation plan for the Caribbean Gulf of Morrosquillo and its hinterlands. The region’s Rio Sinú is an essential source of drinking water for many downstream communities but also originates in an area that depends upon logging, ranching, and agriculture for its financial security. Using InVEST, Daily and her team were able to determine the actual cost of silt deposition in the river, particularly for drinking water and hydropower, and the value of maintaining upstream forests that would prevent that congestion from occurring.

“We were able to show that communities in the region were benefiting from this forest in ways they hadn’t necessarily realized,” says Lisa Mandle, lead scientist and director of science-software integration for the Natural Capital Project. “We can never capture the total value of a forest in terms of cultural and spiritual values or even biodiversity, but we can say that it has measurable economic values across dimensions that have not been considered before.”

And that, says Mandle, has created powerful incentives for the Colombian government to think about how to support the communities within that crucial forest.

A similar approach, also crafted by the Natural Capital Project, helps countries determine their gross ecosystem product, or GEP. Modeled after the gross domestic product, the GEP index allows nations to determine the monetary value of their ecological systems. Daily and her team piloted this index in 2014 on both municipal and national scales in China, and it was adopted by the United Nations Statistical Commission in 2021.

“Just as the Great Depression exposed the urgent need for better macroeconomic performance metrics, our current ‘Great Degradation’ of natural capital is making it imperative that we track ecological performance and use that information to guide investments in revitalization and regeneration,” says Daily, who predicts that the GEP metric will be employed globally within the next decade.

In the meantime, she and her team are dedicated to streamlining their ecological assessments in a way that makes the final analysis and visualization easier for political leaders, investors, and local communities to use. Making that information more accessible, she says, will be crucial for fostering a cultural shift toward recognizing humanity’s dependence upon the biosphere.

In many ways, this idea of codifying the value of nature has been 30 years in the making. And it couldn’t have become reality without Daily’s vision, says Qingfeng Zhang, a senior director at the Asian Development Bank, which now includes a Natural Capital Lab inspired and supported by the Stanford project. This initiative, which was launched in 2020, created a platform for the bank to promote sustainable finance with the help of tools that Daily and her team developed.

“Gretchen’s work in the area of environmental science and its implications for public policy has been monumental,” says Zhang. “Her InVEST model and GEP concept are transforming the way governments, corporations, and civil society look at nature. We now have a tangible economic basis to invest in protecting and growing nature.” 

Kathryn Miles is a journalist and the author of five books including, most recently, Trailed: One Woman's Quest to Solve the Shenandoah Murders.

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