Gross Ecosystem Product (GEP): An Overview

Gross Ecosystem Product (GEP) is a statistic that summarizes the value of nature’s contributions to economic activity. It measures the monetary value of ecosystem services produced within a given area in an accounting period (typically one year). NatCap core members have been co-developing its scientific foundations and methodology since the early 2010s. 

Here you can find a collection of resources, information, and updates about work on GEP from across NatCap. 

How does GEP connect to GDP?

GEP supplements more traditional forms of economic accounting, like Gross Domestic Product (GDP), which measures the monetary value of goods and services traded in markets. Because GDP only measures market values, it does not include the many non-market values of ecosystem services. GEP bridges this gap by providing a summary monetary measure of the contribution of ecosystem services – using both market and non-market valuation. GEP includes ecosystem contributions to marketed goods that are in GDP such as livestock, forestry and fishery products (material services); regulating services such as climate regulation (through carbon sequestration), pollination, pest control, filtration of air and water pollution, and hazard mitigation; and non-material or cultural services like eco-tourism. GEP is calculated using similar methods as GDP.

International recognition and application

In March 2021, GEP was officially approved by the UN Statistical Commission as an indicator of sustainable development, paving the way for widespread adoption across the globe. In practice, GEP has been used all across China (and now increasingly around the world) as a benchmark for land use planning, a standard for evaluating management, and a framework within which to develop payments for ecosystem services and green finance mechanisms.

How is GEP different from other kinds of natural capital accounting or assessments?

GEP builds upon more general natural capital assessment and accounting approaches. However, instead of producing a list of estimates for separate ecosystem services (which don't always use monetary values), GEP aggregates the monetary value of final ecosystem services (i.e., those that are directly consumed by people) produced within a given region - such as a city or country - into a single metric that can be readily tracked and used for a diverse suite of policy and financial decisions.

More on how GEP is calculated

GEP has five key elements that make it transparent, trackable, and readily understandable: (1) a focus on nature’s contributions to people; (2) the measurement of ecosystem services as flows; (3) the quantification of ecosystem service use; (4) an understanding of ecosystem service supply chains through value realization; and (5) the disaggregation of benefits across groups. GEP is composed of individual ecosystem services, which can be selected by country context, built over time, and made consistent with the UN System of Environmental Economic Accounting (SEEA). 

The calculation of GEP begins with determining the functional quantity of constituent ecosystem services. However, since their physical quantities are not commensurable (e.g., one cannot straightforwardly sum the volume of clean drinking water supplied with the amount of carbon sequestered), it is necessary to convert them into a common monetary unit to be aggregated. The three main types of monetization methods are: market transaction prices where available; engineering substitution costs where available at a relevant scale (e.g., the cost of a physical water treatment plant or avoided carbon emissions); aesthetic value estimation methods such as hedonic pricing. The growing availability of relevant data, from geospatial information to socio-economic statistics and “big data”, has made the accounting of GEP increasingly practical in diverse settings.

Origins and development of GEP

In 2013, Zhiyun Ouyang with the Research Center for Eco-Environmental Sciences, Chinese Academy of Sciences, and Chunquan Zhu, former representative of the IUCN China Office, first proposed the concept of GEP. In the time since, the concept has been further developed through collaborations between the Chinese Academy of Sciences, the University of Minnesota, Stockholm Resilience Centre, and Stanford University as part of the Natural Capital Alliance (formerly the Natural Capital Project). In 2020, the first English-language academic study of GEP was published in the Proceedings of the National Academy of Sciences of the United States of America (PNAS), using the province of Qinghai in China as a case study. The study found that nearly 80% of the benefits captured in Qinghai’s GEP flowed to other provinces. Based on these and other findings, China has developed policies to coordinate regional development, explore new mechanisms of aligning ecosystem service providers and consumers, and promote the sustainable supply of important ecosystem services through land stewardship.