Environmental and Ecosystem Services in Benefit–Cost Analysis

Eli P. Fenichel, Lydia Olander and Heather Tallis

Review of Environmental Economics and Policy, 2025, vol. 19, issue 2, 238 - 247

Abstract: The 2023 reissuance of US Office of Management and Budget Circular A-4 and related federal activities to modernize regulation have elevated the importance of services from the environment—broadly known as ecosystem services—and have clarified guidance for accounting for their value. These changes emphasize the importance of ecosystem services in federal benefit–cost analysis, provide clear entry points that make it easier and more transparent for agencies and stakeholders to include ecosystem services in benefit–cost analysis, and document advances in the literature showing that ecosystem services can be credibly and robustly included in such analysis. Here, we provide an overview of the updates, highlight changes, explain how the updates clarify when and how to include ecosystem services in federal benefit–cost analysis, and discuss opportunities for research on the economics of ecosystem services.

Date: 2025
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