1. 1 The Law and Politics of Federal Wildlife Preservation Dean Lueck

2. 2 Introduction Until the Endangered Species Act of 1973, wildlife preservation was relatively uncontroversial. Since the ESA, wildlife law has been a contentious battleground in law and politics.

3. 3 Key Concepts There is an economic rationale for federal wildlife preservation based on transaction costs and incomplete property rights. The ESA has placed property rights to wildlife up for grabs and has lead to extensive “claiming” activity. Perverse Incentives: landowners have destroyed potential wildlife habitat to avoid costly land-use restrictions under the ESA.  “shoot, shovel, and shut-up”

4. 4 Endangered Species Act of 1973 The ESA fundamentally changed the role of the federal government in wildlife issues. It expanded federal authority and dramatically changed the way endangered species would be managed.  Secretary was required to list endangered and “threatened” species.  Made it unlawful to take species whether on private or public land.

5. 5 Property Rights and Wildlife Preservation An economic model of wildlife preservation can illuminate the behavior of landowners, environmental groups, politicians, and bureaucrats. Landowners tend to have better information than the FWS about habitat and populations of listed species.

6. 6 The Model Model assumes two competing uses of a plot of land: wildlife habitat and non-wildlife uses. When the marginal values in the competing uses are equal, then the value of land will be maximized. The first-best outcome is at L *.

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8. 8 The Contracting Problem: High Transaction Costs The landowner may not be able to capture the value of providing habitat for wildlife.  His small plot essentially makes wildlife an open- access resource. If the landowner captures no benefit from wildlife habitat, he chooses to allocate all his land to non-wildlife use—L x.

9. 9 Too Little Wildlife Habitat The small landowner sets aside too little habitat resulting in a deadweight loss given by the triangle BCL x.  this loss also represents the gains from a contract among a group of landowners who can effectively control the amount of habitat needed for the wildlife to thrive. In the case of public ownership, the misallocation results when the agency subsidizes the non-wildlife use of the land.  E.g., “chaining”

10. 10 Collective Action to Provide Habitat Before the ESA: Pay-to-Protect  The FWS purchases wildlife habitat from the landowner. If the FWS sets the price correctly (P*), the solution is identical to the first-best solution in figure 1. ESA: Land-Use Regulations  The ESA prevents land-use modification, meaning that landowner will have to set L ESA aside.  This allocation has a deadweight loss associated with too much habitat provision shown by triangle ABL ESA.

11. 11 Claiming Land Under the ESA Once a species is listed, the land that provides habitat for a listed species comes under the control of the FWS. The landowner loses both the use of and income from the land. Because the ESA allows citizen lawsuits, environmental groups can sue for listing, thereby claiming land by removing it from non-wildlife uses.

12. 12 Claiming Land: Preemption and Political Action The landowner maintains important influence over the land by virtue of control over non- wildlife uses. The static model does not fully capture the actions of landowners facing potential ESA restrictions. The landowner may be able to take action to prevent the administration of the ESA.

13. 13 Thwarting the Implementation of the ESA If the species is already present but unknown to the FWS, landowners may kill all listed species inhabiting their property.  “shoot, shovel, and shut-up” If the species is not yet present but the potential for inhabitance is high, landowners may destroy habitat in order to preempt ESA regulations.  Preemption can be examined using a two-period model.

14. 14 Two-Period Model The landowner can chose to maintain or destroy habitat in period 1.  Destroying habitat has a one-time cost C D and generates benefits B D from development (timber harvest).  C D is the cost of premature development, such as foregone revenue from harvesting timber before it is financially mature. The FWS moves in period 2.  If it finds a listed species, the payoff to the landowner is zero.

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16. 16 Choosing Preemption In a dynamic model, landowners have incentive to decrease the amount of wildlife habitat, even compared to that without the ESA (not even L x is provided). Without habitat the population of the listed species declines because the amount of land allocated to habitat declines under the ESA.

17. 17 Other Implications If permits are required for development, then killing species becomes more attractive to landowners. Paying landowners will reduce the payoff from preemption. Increase in the probability of listed species detection in period 2 will increase the likelihood of preemption. Risk-averse landowners will preempt more often than risk-neutral landowners.

18. 18 Three Case Studies Takeovers of Public Land by Environmentalists: The Northern Spotted Owl Preemptive Habitat Destruction on Private Land: The Red-Cockaded Woodpecker Wildlife Restoration before and after the ESA

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20. 20 The Northern Spotted Owl In 1990, the owl was listed as a threatened species. Nearly 11 million acres of public forests in California, Oregon, and Washington were set aside as crucial habitat. Annual timber harvests from public lands has declined dramatically.

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23. 23 The Red-Cockaded Woodpecker RCWs—listed in 1969—reside in longleaf pine ecosystems ranging from Virginia to Arkansas. Cost of foregone timber harvests for a single RCW colony can be as much as $196,107. A forest landowner has an incentive to preemptively harvest timber.

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25. 25 RCWs cont’d Ben Cone’s confrontation with the FWS. The closer a plot is to RCWs, the higher the probability that the plot will be harvested, even if the trees are younger than when trees are normally harvested.  Timber at high risk sites is harvested 9 years earlier than the average age of 47.9 years. Population of RCW continues to decline despite being listed for 37 years.

26. 26 The Record Under the ESA Only 24 species have been de-listed.  Seven were de-listed because they were extinct, and nine because of data errors.  Eight were considered “recovered” None of these eight recoveries is because of the ESA. The alligator should never have been listed. Improving status of the bald eagle is due to the ban on DDT and enforcement against poaching— neither unique to ESA policies.

27. 27 Conclusion Under the ESA no dramatic species recoveries can be claimed. The ESA has been a double-edged sword for environmentalists.  It has given them great sway in the use and management of public lands.  But habitat is being destroyed and species are losing ground on private lands because of the perverse incentives under the ESA.