Private Property and the Endangered Species Act

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Private Property and the Endangered Species Act

Saving Habitats, Protecting Homes

Edited by Jason F. Shogren

To provide policymakers, landowners, and other stakeholders in the Endangered Species Act debates with impartial baseline information, this book offers multidisciplinary perspectives on the role that private property plays in protecting endangered species in the United States.



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6 x 9 | 173 pp.

ISBN: 978-0-292-77737-8

Our whole nation benefits from the preservation of natural habitats and their diversity of animal and plant species—yet small groups of private landowners often bear most of the costs of setting land aside for conservation purposes. This imbalance has generated many conflicts since the passage of the Endangered Species Act in 1973 and remains one of the most controversial issues to be resolved as the ESA makes its way through Congress for reauthorization.

To provide policy makers, landowners, and other stakeholders in the ESA debates with impartial baseline information, this book offers multidisciplinary perspectives on the role that private property plays in protecting endangered species in the United States. The opening chapter traces the evolution of the ESA and set forth the parameters of the debate over regulation of private property. Four subsequent chapters explore the judicial and economic implications of ESA and suggest how issues of scale and diversity affect the implementation of the ESA on private property. The volume concludes with eight principles to help frame the ongoing ESA reauthorization debate, developed by the University of Wyoming's Institute for Environment and Natural Resources Policy Board, the sponsor of the research presented in this book.

  • Abbreviations
  • Foreword (William D. Ruckelshaus)
  • Preface
  • 1. Introduction (Jason F. Shogren)
  • 2. The Evolution of the Endangered Species Act (Stanley H. Anderson)
  • 3. Judicial Application of the Endangered Species Act and the Implications for Takings of Protected Species and Private Property (Murray D. Feldman and Michael J. Brennan)
  • 4. Biological Effectiveness and Economic Impacts of the Endangered Species Act (Jason F. Shogren and Patricia H. Hayward)
  • 5. The Intent and Implementation of the Endangered Species Act: A Matter of Scale (Jeffrey A. Lockwood)
  • 6. The Private Lands Challenge: Integrating Biodiversity Conservation and Private Property (John F. Turner and Jason C. Rylander)
  • 7. Principles to Measure the Endangered Species Act Reauthorization Debate (Policy Board of the Institute for Environment and Natural Resources)
  • Contributors
  • Index

Congress passed the Endangered Species Act of 1973 to shelter threatened and endangered species from the pressures of economic activity on private and public land. They recognized that species have "ecological, educational, historical, recreational and scientific value" unaccounted for in the course of "economic growth and development" (ESA, Section 2). But the act has proven controversial—the benefits of protecting endangered species accrue to the entire nation, while many of the costs accrue only to private landowners. As of this writing, some 1,125 species of plants and animals are listed as endangered or threatened under the ESA (see Table 1.1). In 1993, about 90 percent of the 781 species listed at that time had some or all of their habitat on nonfederal lands, the majority of which were private lands. Many landowners complain that the costs of complying are too high. Broad benefits and concentrated costs fan most political fires, and public pressure to know whether these costs exceed the social benefits has turned up the heat in the ESA reauthorization debate.

The heat is generated from two antithetical beliefs. First, the advocates of species recovery argue that assessing the risk to endangered species is a question best left to the natural sciences—risk is first quantified, and then habitat is managed. This view relegates individual choices and the relevant economic and social parameters to the management stage, in which recovery efforts constrain individual land-use decisions. Second, the advocates of private property believe that since individual sovereignty is the foundation of social order in the United States, a person should be left alone to make his or her own choices on allocating his or her private resources. The idea that we should further restrict this sovereignty with some form of institutional sovereignty such as the ESA that allows presumably better informed policymakers to make resource allocation decisions independent of individual valuations has upset many landowners.

But neither view captures the complexity of the debate. The risk assessment-management bifurcation is unjustified, both by intuition and policy that requires recovery priority rankings to consider the degree of conflict with development. And while Ruckelshaus makes the correct point that normative politics should be excluded, risk assessment does require positive input from both the physical and economic systems that provide the means of choice. Species are more likely to be endangered the greater the conflict with development activities; species are less threatened the greater the conservation efforts. Since development and conservation decisions depend on economic parameters such as relative prices and income, so does the risk of extinction. But of course complete control over private property has never been a reality either. Property rights come with obligations and responsibilities defined by law and refined through the courts. This point is unmistakably illustrated in Feldman and Brennan's detailed discussion of ESA case law in Chapter 3. Whether private markets can be shaped by case law to account for successful endangered species protection remains to be seen. A careful evaluation of the ground between the two beliefs is needed. Effective protection of endangered species requires evaluation of both natural science and economic parameters that affect the accurate estimation of risk and the effective management of needed habitat. As such, a major research priority is to gain more insight into the links between species protection and private property.

This book explores the connection between endangered species protection and private property in the United States. Our objective is to provide fair-minded content to the ongoing ESA debates, with the hope of supplying more light than heat on this already contentious issue. The common thread that underlies the discussion throughout the book is the interaction, divergence, and potential opportunities between private choice and public policy. The ESA links to private economic actions because it can be used to constrain the actions of private parties and public agencies; the subsequent decisions of private parties affect the risks to endangered species. Economic and biological systems affect each other, and policymakers must understand the links to design incentives that will match private actions to social desires, as discussed by Lockwood in Chapter 5.

In Chapter 2, Anderson notes that the administrative process supporting the ESA involves listing a species as threatened or endangered, designating critical habitats for its survival, prohibiting activities that accelerate extinction, creating and executing a recovery plan, and removing a species from the list when it no longer is in danger. Under the current Section 9 of the ESA, when a listed species is found on private property, the landowner must manage this habitat such that he or she does not "take" the fish or wildlife species, where take means "to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct." If the current or proposed use of the private property is inconsistent with this directive, the landowner must either rethink his or her actions toward more benign activities or apply for an "incidental take" permit (Section 10).

The incidental take permit under Section 10 of the 1982 ESA Amendments authorized take that is incidental to otherwise lawful economic activities. A landowner wanting the incidental take permit must develop a habitat conservation plan that spells out the likely impacts; the measures to monitor, minimize, and mitigate any impacts; funding sources to undertake these measures; protocol to deal with surprises; alternative actions considered that would cause no take, and why these actions are not being used; and additional measures that the Fish and Wildlife Service and the National Marine Fisheries Service may require as necessary. Regardless, the landowner usually does not receive full, if any, compensation for the lost opportunities from having to manage his or her land in ways compatible with the ESA.

For instance, in the Balcones Canyonlands Conservation Plan in the Hill Country of Texas where a 30,000-acre preserve was established for the golden-cheeked warbler, landowners within the preserve were offered an average of $5,500 an acre for land selling at $10,000 to $20,000 an acre previously. The specific arrangement was that developers using land outside the preserve paid a $5,500-per-acre mitigation fee that would then be used to buy one acre inside the preserve. Plus the BCCP gave the government twenty years to pay and obliged it to do so only if it actually had the money at any time during the twenty years. But since enough funds currently do not exist to buy the 30,000 acres within the preserve, no compensation has been paid to the private property owners for complying with the ESA.

In general, the ESA imposes economic costs on private landowners when a designation constrains productive activity that was unanticipated by the market. In Chapter 4, Shogren and Hayward discuss what is known about the magnitude of these economic costs. And although landowners could avoid economic loss by destroying potential habitat both before and after the species are listed, most have not. But property owners are angry because federal and state officials have the additional authority to impose land-use policies that restrict what they can do on their private property. Landowners have pushed back with such vigor that policymakers and natural scientists now willingly admit that any attempt to rewrite the ESA must explicitly address the nature of economic incentives.

For instance, in 1995, Interior Secretary Bruce Babbitt announced ten principles to improve implementation of the ESA: (1) treat landowners fairly and with consideration; (2) minimize social and economic impacts; (3) provide quick, responsive answers and certainty to landowners; (4) base ESA decisions on sound and objective scientific information; (5) prevent species from becoming endangered or threatened; (6) promptly recover and delist threatened or endangered species; (7) provide state, tribal, and local governments with opportunities to play a greater role in carrying out the ESA; (8) make effective use of limited public and private resources by focusing on groups of species dependent on the same habitat; (9) promote efficiency and consistency in the Departments of the Interior and Commerce; and (10) create incentives for landowners to conserve species. Eisner et al. also include economic incentives in their wish lists of ways to fix the ESA.

Closing the gap between private choices and social goals will require more than wishful thinking about changing individual preferences—it will require a change in the relative costs of different actions. Various proposals to change costs by adding flexibility to the ESA have attempted to fill the void; as detailed by Turner and Rylander in Chapter 6, these include "safe harbors," tax relief, and tradable habitat permits. These flexibility measures are aimed at closing the gap between private and social perceptions of time and space. The endangered species agencies have launched a "no surprises" policy to reduce uncertainty to landowners who have filed a habitat conservation plan to qualify for incidental takings. If the habitat needs of a species change, these landowners are under no further obligation to meet the new needs. These agencies have also developed a safe harbor agreement—if a landowner agrees to manage his or her lands for a listed species, he or she is safe from any future restrictions if the population of the species increases and expands.

Economic incentives are also being considered as direct tools to close the private-social gap in perceptions. Numerous proposals have been made that would add a compensatory or insurance policy to the ESA—people would receive compensation for or would be insured against losses suffered under the ESA. This would reduce opposition to the ESA, deter the government from taking too much land, and encourage landowners to develop land in more socially efficient ways. But the risk of extensive litigation and concocted claims are potential downsides to some of the illconceived compensation schemes proposed in recent ESA reauthorization bills. The agencies can also take a proactive role by identifying critical habitat for listed and unlisted species, and designing a voluntary compensation scheme for critical habitat that cuts across the holdings of several private landowners. Such a system should be voluntary, allow for a minimum probability of species survival, be flexible enough to accommodate a single large or several small reserves through the use of an acreagglomeration bonus, provide incentives for the landowner to reveal his or her private information on his or her ability to make a profit from the land, and account for the deadweight loss of the funds used to compensate the landowner for setting aside his or her acres.

In the end, the better we understand how economic and biological systems are linked, the fewer unpleasant choices we may have to make. Although the idea of extinction is inherently unacceptable to most people, a balanced understanding will be required because it is not obvious to everyone that encyclopedic species protection holds a moral trump card over economic growth to raise the standard of living for people alive today. Wise choices will require guidance from common principles such as those defined in Chapter 7 by the diverse policy board of the Institute of Environment and Natural Resources at the University of Wyoming. Whether people choose to believe such principles will dictate whether the future of endangered species and private property will be dominated by conflict or cooperation.


The contributors to this volume include University of Wyoming faculty members, as well as outside experts. Editor Jason F. Shogren is the Stroock Distinguished Professor of Natural Resource Conservation and Management and Professor of Economics at the University of Wyoming. He recently completed a term as a senior economist on the President's Council of Economic Advisers responsible for environmental and natural resource policy.