Breaking away from the tyranny of single-indicator rule: Gross Ecosystem Product

This piece was originally published on the Natural Capital Review, NatCap's Substack.

Nothing is so painful to the human mind than a great and sudden change,” wrote Mary Shelley, the author of Frankenstein, in the summer of 1816. It was the “Year Without Summer,” and much of the world had been plunged into a figurative and literal darkness. The sudden eruption of Indonesia’s Mt. Tambora sent tons of volcanic ash into the stratosphere, blocking sunlight from reaching the Earth, resulting in an average global temperature decrease of 0.4°C to 3°C (0.7°F to 5.4°F).

As torrential rain swept across fields, crops and livestock began to die; famine and an economic downturn struck much of Europe. In the midst of all of this, on the shores of Lake Geneva under a heavy downpour, eighteen-year-old Shelley bore witness to this profoundly dark, cultural, environmental, and social crisis - and a monster was born on the page.

I have spent the past week considering why, throughout the course of history, it is when we find ourselves at the precipice of certain disaster that human beings are so often spurred into ingenuity. Yet despite this, it is so often our inability to foresee potential consequences that ultimately becomes our undoing. Just as Shelley could hardly anticipate her character Victor Frankenstein would become an enduring prototype for depictions of mad or evil scientists, Frankenstein himself (despite the initial success of his experiment in bringing a corpse to life) could not foresee the consequences of creating a creature who would take on a mind and will of its own.

Because I spend a lot of my time writing about and speaking with scientists, economists, and policymakers envisioning more positive futures, I cannot help but search for a way out of our modern gothic - because I believe that we remain ultimately responsible for the systems we create. It was with this in mind that I began to explore the consequences of (and reactions to) one particular system that has taken on a life of its own: GDP, or Gross Domestic Product.

The origins of GDP

It was in the depths of the Great Depression in 1934 that the U.S. Congress hired economist Simon Kuznets to present a new accounting system that would help measure the nation’s economic output. Aiming to quantify the extent of the economic collapse and track recovery, the metric was constructed to help policymakers understand the economy’s productive capacity. When it came to the technical challenge, Kuznets and a team of other economists succeeded brilliantly. Yet the metric was never intended to be a measure of national welfare, or to indicate a standard of living. As Kuznets himself cautioned:

“Distinctions must be kept in mind between quantity and quality of growth, between its cost and return, and between the short and the long term. Goals for more growth should specify more growth of what and for what?”

GDP is now the single most influential metric in modern economic policy. It has been adopted by virtually every nation on Earth and is often treated as a singular measure of progress, growth, and prosperity. It is a metric that shapes policies and politics, and for many, is the foundation of what it means for a society to thrive. As NatCap Senior Scientist Tong Wu points out in his 2025 essay in Noema:

“Decimal-level fluctuations in GDP’s growth can unnerve ministries and shift billions on financial markets. The ubiquity and influence of the metric have endowed it with an aura of unshakeable authority over economic affairs; it is often treated as if it were an objective feature of the world rather than a human artifact that is freighted with the biases of its creators and marked by the circumstances of its creation.”

When it comes to the environment, the way GDP is structured means that it counts the degradation of nature (e.g., clear-cutting of forests, over-harvesting of fisheries, erosion of fertile soils, and other unsustainable depletion) as increases in prosperity. It does not account for the fact that many of these activities greatly undermine long-term development by diminishing the stocks of nature that are essential to providing these benefit streams in perpetuity (i.e., flows of ecosystem services to people).

Take the logging boom in the Pacific Northwest during the latter half of the twentieth century: the timber industry contributed billions to regional GDP, yet the clearcutting of old-growth forests occurred without consideration to the subsequent soil erosion, choked salmon runs, and destabilized slopes; which ultimately led to silent ghost towns, empty of people and commerce after the boom, municipalities taking on massive debt to build new water filtration plants, and the state spending billions of dollars to deal with logging adjacent damage to watersheds.

We have for the most part continued to follow this logic, with GDP-driven “growth” almost always considered “good” irrespective of the social, and environmental realities it cannot adequately reflect. It is drastically clear that today our world is not the same as it was during the Industrial Revolution: our planet is not the same, and the metric we use to measure so-called growth should not remain the same. We must ask ourselves again: growth of what, and for what?

We have arrived at a critical moment. Like Victor Frankenstein’s creature, GDP has taken on a life and logic that was never intended. In Shelley’s book, the monster pleads for a companion: “When I live in communion with an equal,” the creature says, “I shall feel the affections of a sensitive being, and become linked to the chain of existence and events, from which I am now excluded.”

In the novel, Frankenstein refuses, and the creature turns toward destruction, ultimately consuming its maker. We do not have to look far to draw the parallel. Left without answer, GDP will continue to bend toward its worst impulses. But what would happen if instead we answered the request: not to replace it, but to balance it?

That companion exists. It is called Gross Ecosystem Product, or GEP.

GEP is defined as the total monetary value of the final ecosystem services produced within a given area, such as a city, province, country, or watershed, in a specific accounting period (typically one year). Just as GDP aggregates the value generated by human-made capital - like factories, hospitals, and railways - GEP does the same for the stream of benefits produced by forests, wetlands, mangroves, and other forms of natural capital. Where GDP shows us the dollar value of a forest’s timber, GEP reflects not only the timber value, but also other contributions of the ecosystem, like carbon sequestration, water purification, and erosion control, that are invisible to a traditional market. Of course, we also hold deeper values for nature, and our interdependence with it: aesthetic, spiritual, sense of place and identity, that are beyond calculation. Yet GEP offers a lower-bound measure of the values of nature, in a persuasive format that can go a long way toward making nature visible in mainstream decision-making.

The first major economy where GEP has gained traction is China. It’s perhaps not a coincidence that the country that has experienced the most rapid and sustained economic growth in history, as measured by GDP, is also the country that has now led the way in innovating and implementing GEP. In that respect, it’s an interesting historical parallel with the United States. While the United States was the rising major economy of the early 20th century, China’s is the rising major economy of the 21st century. Then, Gross Domestic Product, now Gross Ecosystem Product.

So how does GEP work, really? What is it measuring exactly?

The city of Shenzhen, China is among the earliest to apply this method. Located on the east bank of the Pearl River estuary, the megacity is one of the most high-tech urban centers in the world. Dubbed the “Silicon Valley of Hardware” but also the “City of a Thousand Parks,” it is known for its particular brand of “Shenzhen Speed” — growing from 30,000 residents in 1979 to more than 17 million today. Yet it is also the “Sponge City” with a parallel metropolis of mangrove forests and wetlands woven into the urban fabric, holding water and managing natural flood risk. Shenzhen is an example of a complex economy rising up around complex ecosystems, with recognition that both contribute to the people living there.

Shenzhen began piloting GEP accounting in Yantian District in 2014, using this information to support its planning and development strategy under an official GEP-GDP dual growth mandate. This mandate requires local officials to grow and include both economic output and ecosystem value simultaneously, with both indicators used as performance metrics (Zheng et al., 2023).

To calculate GEP requires estimating the biophysical quantities of ecosystem services within a region, measured in physical units such as tons of carbon sequestered, cubic meters of clean water supplied, or hectares of floodplain protected. Modeling tools such as NatCap’s InVEST software (Integrated Valuation of Ecosystem Services and Tradeoffs) are often used to simulate how these ecosystems function and produce these services. In Shenzhen, this meant quantifying the contributions of the city’s ecosystems: the natural forests and parks that cool the city; the trees and vegetation that sequester carbon, filter air and water, bind soil, and hold back sandstorms as well as the cultural services of parks, greenways, and ecological attractions that draw 26.18 million dedicated visits each year (Shenzhen Government Online, 2021).

Since these biophysical quantities are not directly comparable — one cannot meaningfully add tons of carbon to cubic meters of water — each ecosystem service is then translated into a common monetary unit using valuation techniques. These include:

• Market-based prices: when ecosystem goods are traded directly (timber, fish, crops), through markets.
• Replacement or avoided-cost methods: for services without markets, economists estimate what it would cost to build a substitute.
• Hedonic and stated-preference methods: for non-material benefits like recreation, values are inferred from behavior — visitor numbers, housing price differentials near green space, or willingness-to-pay surveys.

In Shenzhen, the 68 billion kWh of climate regulation provided by its ecosystems were valued against energy market prices at 48.8 billion yuan; the 35,000 hectares of wetlands were assessed using replacement costs for flood infrastructure, i.e treating the cost of constructing and repairing seawalls per kilometer of coastline as the surrogate price for what the mangroves provide for free; and the approximately 1 billion park and greenway visits were captured through visitor-spending proxies. This information was then aggregated, producing a total GEP of 130.38 billion yuan (~$20.36 billion USD) for 2020 (SZ’s GEP reaches 130 billion yuan_Latest News-Shenzhen Government Online). In this case, GEP is capturing - on the city scale - both the market and non-market values of ecosystems, working within a unified framework that parallels GDP.

Another way to think about this is that together, GEP and GDP function like overlapping circles in a Venn diagram:

• GDP alone includes the value of manufactured goods and services—like construction, factory production, technology, finance, wholesale and retail trade, and mining.
• The overlapping region contains material services (renewable natural resources like timber, fish, and agricultural products).
• GEP’s non-overlapping portion captures those other services that GDP misses entirely: non-material services not typically bought and sold in markets: both regulating services like flood mitigation, heat reduction, carbon sequestration, and water purification, and other services like supplying the conditions to support eco-tourism, nurture spirituality, and cultivate a sense of place and identity.

This information then works in tandem. In Shenzhen, GEP helps make the economic case for investments that might otherwise have been hard to justify with a more traditional accounting system. The “Sponge City” program for example is set to bring 80% of the city’s built-up area to so-called Sponge City standards by 2030, strategically replacing concrete drainage with wetlands, permeable surfaces, and green infrastructure, not necessarily the first thing that comes to mind as the most obvious flood management solution for many city planners

Other incentive structures are also in place. For example, if a development project causes a GEP decrease that cannot be offset onsite, developers are then compelled to pay a “Two-Mountain Company (TMC)”—for off-site ecosystem restoration to make up for the original GEP decrement. The GEP framework has been adapted to the European contexts and is being piloted around the world, with this case study Italy offering another demonstration.

GEP facilitates a different kind of thinking, one that values and protects nature while recognizing that the signals sent by prices remain the most effective mechanism for influencing economic decisions. Wu articulates this well when he says:

“Pricing nature does not condemn it to the maw of capitalist exploitation,” but “despite our qualitative, emotional, almost ineffable attachment to nature, in order to protect and regenerate it, we have to make quantitative arguments. Those are the most powerful and compelling arguments in the world of policy, in the world of finance and business and commerce.” The methodology behind GEP is built precisely for this — “an environmentally sober companion to an indicator that is too often drunk on excessive industrialism (Wu, 2025)."

In other words, perhaps Shelley’s metaphor was always pointing us here, to somehow appease the monster who exclaims: “Nature decays around me, and the sun became heatless; rain and snow poured around me; mighty rivers were frozen; the surface of the earth was hard, and chill, and bare, and I found no shelter. Oh, earth!”

Oh, earth. Yes, we must build better systems: ones that reflect the inextricable linkages between people, our economy, and its ecological foundations. And if a metric like GEP can help us in any way to better maintain our shelter, our lands, our waters, we should pursue it.

Of course, it is not easy to build a companion of this kind. It requires new frameworks for measurement, the integration of environmental accounting into economic systems, and hard-won agreement on structures and standards across disciplines. And yet, scientists, economists, and ecologists are responding to the call. If we will be able to do so fast enough, and if GEP will gain the ubiquity of its companion remains to be seen. What is clear is that Gross Ecosystem Product provides a scientific method and economic framework to begin to build better systems of communion, sensitivity, and linkage, connecting our economy and our environment to the earth to which we are all bound.

Q&A with Tong Wu

To learn more about this, I sat down for an interview with Tong Wu, a senior scientist at the Natural Capital Alliance. He is a deep thinker about the intersections of ecology, economics, and international development, particularly how societies can recognize and cultivate nature as a productive asset rather than treating it as something to be exploited and erased. Wu has written extensively about what happens when economic systems fail to account for planetary boundaries and the tools that can be used to fill that void. As mentioned, he wrote “Investing in the Ecosystems That Sustain Us” in Noema Magazine, and is a co-author on the 2023 paper on GEP in the journal Ambio. For more detailed information about GEP, see

• Gross ecosystem product (GEP): Quantifying nature for environmental and economic policy innovation | Ambio
• Investing In The Ecosystems That Sustain Us - NOEMA
• Using gross ecosystem product (GEP) to value nature in decision making | PNAS
• High-Level Expert Group on Beyond GDP | United Nations
• What is GEP, the alternative to GDP that has taken off in China? - Green Central Banking

I want to begin with the Great Depression and Simon Kuznets, a man who created a measurement so ubiquitous that most people take it for granted. Some of us might think this is the way we’ve always done it: the powerful, but imperfect measurement, Gross Domestic Product. GDP. Can we start there?

Wu: Simon Kuznets is generally considered to be the founding figure of GDP, although there were a lot of other prominent economists who contributed to this broader idea of national economic accounting. From the very beginning, a lot of what he was trying to do was misunderstood or neglected, which is part of a general trend where ideas are taken out of context, and then develop a life of their own.

People became psychologically wedded to this idea that as long as GDP is going up, things are all kinds of good in the world. But when Kuznets and others first formulated national economic accounting in general, and GDP more specifically, it was meant to be used as something more practical: a tool, as opposed to this metaphysical or supra-scientific metric.

It wasn’t an accident that National Economic Accounting and GDP developed when they did – they emerged from necessity. In the United States, we were faced with the Great Depression and with fighting World War II, a large-scale industrial war, and this required advances in statistics, advances in planning. You can’t manage those things, or construct welfare states, or figure out macroeconomic management of unemployment, if you don’t know certain metrics about the economy. That’s why it was developed. This is a rather simplistic account of the history, but it shouldn’t be forgotten that GDP was developed to solve real-world, immediate problems. It wasn’t created as some kind of objective measure of the world.

What is left out of GDP, and why is this a problem?

Wu: GDP was created at a time where the world and planet looked very different from the way it looks today. The way we understand what an economy is and can become is a product of historical circumstances, including those that prevail at the moment. At that time, environmental problems weren’t as acute. But the world has changed, the planet has changed, but the indicators we use to measure and manage the economy are more or less still the same. The moment you see GDP going down, people have been socialized to believe the world, or your country, is in a bad place. Which it could be — but that’s not necessarily the case. Conversely, just because GDP goes up doesn’t mean the world is a better place, or your country’s in a better place.

For example, U.S. life expectancy has decreased over the last several years even as U.S. GDP has grown significantly - in fact, outperforming most members of the OECD [Organisation for Economic Co-operation and Development]. That asymmetry is rather insane and ought to unsettle any person seriously thinking about the future of global development. It’s never happened before to an advanced economy in peacetime. How do you explain that? GDP is, in many ways, untethered to a lot of real-world problems – the biggest problem of all being the relationship between the economy and the planet.

There’s a great quote from António Guterres, the United Nations Secretary-General: “Absurdly, GDP rises when there is overfishing, cutting of forests or burning of fossil fuels ... .We are destroying nature, but we count it as an increase in wealth.” Guterres is pointing out the absurdity of the fact that the destruction of ecosystems counts as economic progress according to GDP. And despite the best efforts of a lot of smart and well-intentioned people, this problem hasn’t been fixed.

In your Noema article, you said, “And while appeals to material interests and calculations may seem disagreeable to many, appeals to sentiment, sanctity and nostalgia have their own limitations and even dangers.” Say more.

Tong Wu: When it comes to nature, people in general have an automatic, instinctive, emotional, sentimental, and psychological attachment to nature. But valuing nature isn’t some romantic notion. It’s an appeal to necessity, or, you could argue it’s a concession to necessity. We come from the standpoint of pragmatism. Nobody’s making the argument saying we need to price and value nature because we have some utopian vision. We do it because the challenge of saving and regenerating nature is more urgent with every passing day. And, the sooner we can get more of the people with their hands on the levers of policy and finance to see the economic value of nature, the sooner we can begin to truly reverse that process.

To do this you’ve been working on Gross Ecosystem Product: what is GEP, how does it work?

Wu: Gross Ecosystem Product, or GEP, is, to simplify, an indicator much like GDP that attempts to capture and aggregate, in a single number, the economic value of most of the goods and services produced by ecosystems. This is similar to how GDP captures a lot of the goods and services produced by what we might call conventional or industrial capital. GEP captures much of the economic value produced by natural capital that is left out of GDP. Methodologically, we’re not doing anything really outlandish in the realm of economics. It’s just that natural capital isn’t part of the conventional framework of economic analysis or policymaking, and we’re filling that gap.

Because biophysical processes move across landscapes, GEP utilizes spatial information in a way that is different from GDP; why is that important for gaining this sort of bigger picture?

Wu: Yes, this is a very important point, and it’s seldom made about the economic valuation generally, and GDP specifically, which is that traditional measures of economic performance aren’t spatially explicit. But because GEP emerged at the nexus of the social and the natural sciences, of economics, ecology, geography, if you want to understand how to optimize the goods and services that nature provides, how to go from where they’re produced to where they’re consumed, you need to understand it spatially.

One of the advantages of recent technological developments, especially with respect to things like geospatial information and the availability of remote sensing data, is that we can map the provision and the flow of benefits of all the good things that GEP captures spatially.

And from a really practical standpoint, it seems like that information is actually super helpful to a decision-maker who is concerned say about redistribution of wealth, or about who an infrastructure project might benefit… but also would like to know what the cost of said project that might incur for, say, drinking water in a poor and rural communities.

Wu: Yes, exactly. That, I think, is one of the major reasons why we need GEP.

How did GEP emerge?

Wu: GEP emerged as part of a global intellectual community spanning countries and disciplines. There have been ecologists and economists from all over the world, people from development banks, people from universities. The first major economy where GEP gained traction was China. It’s perhaps not a coincidence that the country that has experienced the most rapid and sustained economic growth in history, as measured by GDP, is also the country that is now most prioritizing GEP. In that respect, it’s an interesting historical parallel with the United States.

GEP is part of a broader movement for a more pluralistic approach to understanding the economy. This has been referred to as a dashboard approach. The United Nations is moving very much in that direction. They have the Beyond GDP Initiative that’s being championed by the Secretary General. I see GEP as part of a larger intellectual shift, and part of a larger cultural transformation. Until we embrace this pluralistic vision, we’ll be stuck under the tyranny of single-indicator rule.

One of the other metaphors that I’ve heard people use is, if you’re a driver on a winding mountain road at night, in a storm, you probably want more than just one headlight. That’s essentially what it all boils down to: GEP is one of those new headlights.

What I’m advocating for, along with many others, is that we make the measurement and management of the economy more pluralistic. We have multiple indicators, and we apply the relevant indicators to the relevant real-world problems that we need to solve. As the world confronts the mounting challenges of the Anthropocene, it’s possible that GEP, like GDP, will eventually be used by all countries as a compass for development.

Related Resources:

• Gross Ecosystem Product (GEP) (China) | Natural Capital Alliance
• Nature’s Financial Value, GEP, and Scaling an Initiative to 75 Countries with Prof. Gretchen Daily
• Gross ecosystem product: An attractor for social innovation and transformation - Stockholm Resilience Centre
• For more on the accounting process: Gross Ecosystem Product (GEP)