Natural Assets
In 2002, economists Robert Costanza and Paul Sutton estimated the contribution from natural ecosystems to the U.S. economy at $2 trillion. Their calculation of “ecosystem services” represents the benefits humans derive from natural ecosystems, including food from wild plants and animals, climate regulation, waste assimilation, fresh water replenishment, soil formation, nutrient cycling, flood control, pollination, raw materials, and more. Using data from many previous studies, as well as satellite photography, Costanza and Sutton estimated values for ecosystems per unit of biome (an acre of rain forest, or grasslands, or desert, for example). They then multiplied by the total area of each biome and added all services and biomes.
If $2 trillion represents the yearly contribution of nature to the U.S. economy, what’s the underlying value of America’s natural assets? One way to answer this is to treat yearly ecosystem services as “earnings” produced by the “stocks” of natural assets. These earnings can then be multiplied by the average price/earnings ratio of publicly traded stocks over the last fifty years (approximately 17:1) to arrive at an estimated natural asset value of $34 trillion.
This figure is, if anything, an underestimate, because it ignores a singular aspect of nature: its irreplaceability. If Corporation X goes out of business, its useful assets will be picked up by another corporation. If a natural ecosystem disappears, however, it can’t be easily replaced. Thus, an irreplaceability premium of indeterminate magnitude should be added to the $34 trillion.
Social Assets
The value of community and cultural assets has been less studied than that of natural assets. However, we can get a sense of its immense price tag by considering a few examples.
The Internet has contributed significantly to the U.S. economy since the early 1990s. It has spawned a host of new companies (Google, Amazon, E-bay, to name a few), boosted sales and efficiency of existing companies, and stimulated educational, cultural, and informational exchange. How much is all that worth?
There’s no easy answer to this question. However, a study by Cisco Systems and the University of Texas found that the Internet generated $830 billion in revenue in 2000. Assuming the asset value of the Internet is 17 times yearly revenue it generates, we arrive at an estimated value of $14 trillion—a figure that has no doubt risen considerably since over the last 15 years.
Another valuable social asset is the complex system of stock exchanges, laws, and communications media that makes it possible for Americans to sell stock easily. Assuming that this socially created “liquidity premium” accounts for 30 percent of stock market capitalization, its value today is roughly $6 trillion. (If that much equity were put in a mutual fund whose shares belonged to all Americans, the average household would be $50,000 richer.)
Not-for-profit cultural activities, which operate outside the for-profit economy and thus are part of the commons, also pump billions of dollars into the U.S. economy. A 2002 study by Americans for the Arts found that nonprofit art and cultural activities generate $134 billion in economic value every year, including $89 billion in household income and $24 billion in tax revenues. Using the 17 times multiplier suggests that America’s cultural assets are worth in excess of $2 trillion.
These three examples alone add up to about $22 trillion. The long list of other social assets—including scientific and technical knowledge, our legal and political systems, our universities, libraries, accounting procedures, and transportation infrastructure—suggest that the total value of our social assets is comparable in magnitude to that of our natural assets.
Tallying $34 trillion each for natural and social assets provided by the commons in the U.S. adds up to almost as much as all private wealth (stocks, bonds, real estate, etc.) in 2014 — $81 trillion, according to the Federal Reserve Bank.
That said, there are two important differences between our common and private wealth:
• Our private wealth is superbly organized (property rights, corporations, lobbyists, etc.) to expand at the expense of common wealth. By contrast, our common wealth is poorly organized and extremely vulnerable to private takings.
• Our private wealth, owned mostly by a small minority, pays cash dividends to its owners. Our common wealth, owned by everyone, does not (save for the Alaska Permanent Fund).
