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Kiel Berry Clayton Coleman Thomas Grover Travis McNiven I. Precursors to the Endangered Species Act The roots of the Endangered Species Act extend well
into the past century. Aldo Leopold, who
was considered by many to be the father of the modern conservation movement,
proposed an intrinsic value of wildlife.
Previously, management of flora, fauna and natural resources in general
was gauged by the value of economic utilization. This change in resource management
philosophy would have a resonating effect on policy in the One
of the first pieces of conservation legislation enacted by Congress was the
Lacey Act in 1900. This prohibited the
interstate commerce of animals and their byproducts taken in violation of state
laws (Cooper, 1999). In 1914 the most
dramatic domestic extinction occurred. It
was that of the passenger pigeon, which many believe was the most prevalent
North American bird. Partially in
response to the species demise, Congress enacted a treaty with In
1966, Congress passed the Endangered Species Preservation Act. The legislation was designed to protect
species domestically and internationally.
The Act protected domestic species through specific habitat preservation
and species restoration plans. International protection was indirect and came
in the form of the Endangered Species Conservation Act of 1969. The Out of the Conservation Act of 1969 came an international treaty protecting vulnerable species. The treaty was initiated by the Secretary of the Interior and resulted in the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). CITES did little in specific planning for species. It did, however, ban the international commercial trade of endangered species. Though the treaty was ratified, enforcement varied from country to country and a healthy black market developed. II. The Endangered Species ActThe Endangered Species Act of 1973 (ESA) combined the lists of species from CITES (international) and the Conservation Act (domestic). In addition, the legislation created specific criteria for listing species and protecting them on public and private property. The underlying philosophy of Aldo Leopold is manifest throughout the legislation, and in no better instance than section 9. Section 9 prohibits any “taking” of an endangered species. “Taking” is defined “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture or collect or attempt to engage in such conduct (Endangered Species Act).” In addition to the explicit, though broad, definition of “taking” in the legislation, the Fish and Wildlife Service (FWS) defines harm as any action that modifies or changes the habitat of a vulnerable species (Simmons & Simmons 2003). III. Expansion of ESA AuthorityThe paradigm of Leopold was used by the courts in Tennessee Valley Authority v. Hill. The court set the precedent of placing species preservation at a higher value than any other policy. The exact language of the ruling stated, “Congress intended endangered species to be afforded the highest of priorities”. This type of logic has the potential to be devastating. Implicit in the ruling, and Leopold’s writings, is the value of conservation is not quantifiable and therefore limitless. Conservation is not the only type of policy that is difficult to quantify in terms of economic value. Therefore, this should not allow conservation to trump all other public and private activities. In 1978 the legislation was again amended to include methods of exemptions under Section 10 of the ESA. Any exemption is first taken to the Secretary of the Interior. If her consent is obtained a review board processes the application. Finally, the Endangered Species Council convenes to consider granting the exemption. The Endangered Species Council is full of cabinet level members and rarely meets. Since 1978, only six exemptions have been attempted. Of those six, one full exemption was granted as well as one partial exemption. The 1978 legislation also mandated the definition of habitat, concurrently with the listing of any new species. In addition, the scope of the ESA was limited to vertebrates and flora (Baldwin, Buck & Corn, 2002). The 1982 version of the ESA further emphasized the intrinsic and overriding value of conservation by eliminating economic factors in the process of listing species in the ESA (FWS). Section 7 requires that federal agencies consult with the Secretary of the Interior regarding any action which may adversely affect an endangered species and its habitat (ESA). This has implications to both public and private policy. Section 7 draws private land under its umbrella whenever a landowner applies for any type of federal permit. Consideration of private lands is critical as a large percentage of endangered species are found there. Before the permit can be granted, the FWS must be satisfied that appropriate measures have been taken to mitigate any potential conflict (Simmons & Simmons, 2003). Any action that might be considered a take is required to be reported to the Secretary of the Interior for approval before proceeding (Baldwin et al., 2002). Federal agencies have attempted to defy section 7, but have not fared well in court. In Pacific Rivers Council v. Thomas the courts ruled that when agencies defy section 7 they are subject to lawsuits, injunctions and fines levied by the Secretary of the Interior. Section 7 gives extraordinary power to the Secretary of the Interior and the FWS. These agencies have the ability to stop any proceeding of a federal agency whose actions may, even in a remote way, affect an endangered species (Cooper, 1999). The
scope of power granted to the Secretary of the Interior and the FWS was again
significantly expanded by the 1995 case Babbitt
v. Sweet Home. Now, “critical habitat” is not only defined
as habitat currently in use by an endangered species, but also any land that
has the potential to be inhabited by an endangered species. This Leopold-esque
interpretation of habitat created counter productive and perverse incentives
which will be explored later in this paper (Committee on Natural
Resources). Every land owner whose
property contains critical habitat must submit a habitat conservation plan
(HCP). This plan details how the
landowner will mitigate any conflict between property use and habitat
preservation. The plans must be approved
by the FWS while the cost of implementation is generally left to the
landowner. Part of the HCP is the
Incidental Take Permit (ITP). This was
intended to allow some breathing room for landowners who incidentally take an
animal in the process of normal use of their property. The process of reporting was initially so
cumbersome that most landowners chose not to report or even file for the
permits. However, the regulations have recently
been restricted and applications for the ITP have skyrocketed. The relaxed regulations protect landowners
from future restrictions for species not yet on their property (Alessi, 2003). The process of listing
a species can be initiated by a person or group. A formal request must be filed with the
Secretary of the Interior. A pre-study
is commissioned to determine if the request is germane. If it is determined to be germane a full
study is commissioned. The results of
this study are used by the Secretary to decide whether or not to list the
species. If the Secretary does not, he
must provide in writing her reasons not to within thirty days (Committee on
Natural Resources). The process for enforcing the ESA through the courts is simple. Any citizen or group can bring suit against any person or entity, public or private that is not in compliance with the Act. Ironically, the FWS and Secretary of the Interior have on several occasions (Northern Spotted Owl v. Hodel, Fund for Animals v. Lujan, Marbled Murrelet v. Lujan) been found to be in violation of the ESA. The Secretary has a history of arbitrarily neglecting to follow through with the application process for some species (Committee on Natural Resources). The scope of those allowed to bring suits was narrowed in the case Bennett v. Spear when a group of ranchers tried to use the ESA to protect their financial interests. The courts ruled that the intention of the plaintiff cannot be ulterior or indirect, only a pure intent to protect a species. IV. Juxtaposing Paper & PlayersThe Act and the Courts have given an extraordinary priority to the method of species protection prescribed by the Act. In order to truly understand the Endangered Species Act, we must juxtapose the basic structure of the legislation, along with the interpretations offered by the courts, with the players affected by it. Specifically, we must examine the incentives, both intended and unintended, along with how and why the players respond the way in which they do. We will examine the incentives created for politicians, bureaucrats, special interest groups and landowners. V. Politicians as Players in
the ESA
When determining and predicting the actions of elected officials, we are under the assumption they want to remain in their positions, and will therefore pursue means that lead to that end. Because re-election plays such an important role, politicians are forced in some part to listen to those who do the electing, namely their constituents (Mitchell & Simmons, 1994). This idea is the basis for representative democracy. However, to expect an elected official to perfectly represent all of the interests of his or her constituents would be unreasonable; there are too many diverse interests to effectively appease them all in a single policy. And, even if a general consensus does exist within a population, a large group is subject to the problems of disorganization, free riding and poor interest articulation and therefore is unlikely to have that particular interest represented. Politicians are thus rewarded for listening to pressure, or interest, groups (Anderson & Leal, 1991). These groups, to a point, have overcome the collective action problem and can carry a policy proposal all the way to the legislature. Politicians are well aware of a group’s ability to not only have a representative voice, but a political one as well, and greatly influence an election. VI. Bureaucrats as Players in
the ESA
The members of administrative organizations are presumed to act in the public’s interest and promote the public good. This, however, is not often the case. In reality bureaucrats tend to act in the interest of special groups or in the interest of the bureaucrat himself (Baden & Stroup, 1981). Bureaucrats themselves are not wholly to blame for their actions. In administrative agencies the survival of the agency itself will direct resource allocation, and therefore decisions made in the interests of the agency and not the public good are a result of institutional incentives and not “bad bureaucrats” (Baden & Stroup, 1981). The bureaucrats involved in the administration of the ESA are the Fish and Wildlife Service, the National Marine Fisheries Service, the Secretary of the Interior and in some part the Secretary of Commerce. The Secretary of the Interior (along with the Secretary of Commerce in some cases) determines whether or not a species is endangered or threatened and can list it as such. The Secretaries list species based entirely on the best scientific and commercial data available to them, taking into account any other conservation efforts currently underway (ESA §7 (b) (1) (a) (1)). The Secretary of the Interior, working with the FWS, designates habitat that is critical to the survival of the species in question, taking into account possible impact resulting from the designation (ESA §7 (B) (2)). That habitat is then subject to regulation under the ESA. Like
all government bureaucracies, the FWS exists with demands far exceeding its
finite budget. In the case of the ESA
the FWS claimed in October of 1999 “…it could not comply with all of the
demands of the ESA under current budget restraints” and placed the designation
of critical habitat last on its listing budget ( If we assume that these agencies are pursuing
activities that expand their power and solidify their existence it would only
make sense that they would emphasize programs that would increase their budget. As of VII. Special Interest Groups as Players
in the ESA
Interest groups form in society for a number of reasons. Groups can make political life easier by lowering information costs as well as concentrating political power. In a large society, it is difficult for one individual to affect policy, thus rational individuals with a common political interest or stake will come together to form organizations. These organizations act in the interests of their members, and wield more political clout than any single individual (Pierce, Steger, Steel & Lovrich, 1992). In recent years, growth in membership of environmental groups has risen. One reason for the increase is the idea of a culture shift in a postindustrial society (Pierce et al., 1992). As affluence increases, a population experiences a shift to higher-order needs, including a need for higher quality environmental amenities (Pierce et al., 1992), a need that is not exhibited when a population is merely trying to survive. People who have the desire for increased environmental quality can have a variety of motives to join groups. These motives include purposive motives, joining because the individual gives importance to some threat to the environment, or solidary motives, joining because of a desire to enjoy nature with others who share that person’s interests (Pierce et al., 1992). The reasons individuals come together is essential to the analysis of the incentives that drive environmental interest groups. In order to function effectively (be able to affect legislation) groups must have funding and/or volunteer assistance (Pierce et al). Many groups employ administrators to oversee operations. In order to secure the needed resources and keep members employed, groups must perpetuate the reasons to join the group (i.e. environmental threats, the chance to enjoy the outdoors). In reality, if an individual enjoys the outdoors they too will respond to environmental threats as they obviously give value to the environment. If the threats no longer exist, (for example, if loggers no longer want to cut trees or animals are no longer endangered), the legitimacy of the group’s existence would be questioned. Environmental interest groups have an incentive to combat a problem, but not necessarily to solve it. The most
influential groups involved with the ESA are, of course, environmental groups
(i.e. the Sierra Club). For the most
part, environmental special interest groups can be classified as “public
interest groups”, or groups that lobby for a good whose benefits, once secured,
will be distributed to the public at large, regardless of individual
participation in the group (Pierce et al).
This assumption, however, is a risky one. We have already established that politicians
and other decision makers respond to groups, therefore we are more likely to
see environmental group’s goals turn into policy. A certain environmental group’s interests may
not be representative of the public good as one might assume (Mitchell &
Simmons, 1994). To use an example offered by Terry Anderson and Donald Leal,
Americans will pay higher gas prices because oil drilling is not permitted in
the Arctic National Wildlife Refuge.
Because the cost is spread out and the costs of action are high compared
to the benefits individuals will remain “rationally ignorant”. An interest group concerned with preserving
the arctic land stands to gain from the prevention of drilling. As a small group, they don’t pay the
opportunity cost of Effective interest groups successfully secure public funds for what they portray as a public good. Almost always, however, the public good is not universally accessible (air quality a limited exception) by the public who is paying for it, and therefore not a true public good. When push comes to shove, interest groups are effective free riders. They are able to fund projects they place a high value on with other people’s money. VIII. Property Owners as Players in
the ESA
Clearly defined, defendable and divestible property rights are essential to efficient resource allocation and conservation. When property owners have the opportunity to trade their resource they have the incentive to take good care of it and protect its value. This incentive is intensified by the rights they have to protect the resource against anyone taking it away from them (Gwartney, Stroup, Sobel & Macpherson, 2003). When property rights are strong, market prices provide the incentive to conserve and use resources efficiently (Gwartney et al, 2003). The incentives provided to private land owners are essential when looking at the effectiveness of the incentive structure of the ESA. Randy Simmons points out that Section 7 of the ESA provides the federal government with regulatory authority over private lands in order to preserve a species (Simmons & Simmons, 2003). If a listed species is discovered on private land, that property is subject to regulation under the ESA, in turn degrading the use rights of the owner. In essence, the ESA weakens property rights (Gwartney et al, 2003). If an owner wishes to keep all of the rights to his resource, he will maintain it in a way that discourages habitation by a listed species. Simmons best illustrates this incentive structure by citing the national Association of Home Builders Developer’s Guide to Endangered Species Regulation: Unfortunately, the highest level of
assurance that a property owner will not face an ESA issue is to maintain the
property in a condition such that protected species cannot occupy the property,
and managing the vegetation in ways that prevent the presence of such species
are often employed in areas where ESA conflicts are known to occur (Simmons
& Simmons, 2003, p. 7). As a number of case studies will demonstrate, the incentives that the ESA provides private landowners act in opposition to the stated goals of the Act. As mentioned earlier, governmental regulation often leads to inefficiencies that could be avoided in a more market oriented system. Gwartney et al conclude: Without the signal and incentives of
the market mechanism, it is difficult to discover low-cost means of resource
conservation. There is also less
incentive for decision makers to use low-cost methods, even when they are known
(Gwartney et al, 2003, p. 788). IX. Three Case StudiesNow that we have
examined the structure of the Endangered Species Act, the incentives it creates,
both intentional and otherwise, and how players respond to both of the
aforementioned, we will examine three case studies. The first case is the Snail Darter. It was the first litigation ever that went
before the courts to settle the value of a species. In this case, the species
was deemed to have an incalculable worth that put a halt to the finishing of
the Tellico dam, a project with millions of dollars already invested for its
development. The second will be the Red Cockaded-Woodpecker. This case is an example of the use of
preemptive action to destroy the habitat of a species. And finally, we will see
the example of the Mojave Desert Tortoise, which has a direct impact in
southern In all of these examples, the habitat that is occupied by these species also has a high value of worth for the people living there. Those that could benefit from the use of the land and surrounding area are being restricted. By applying a Coasian solution to these problems we will be able to see how plausible it really is to achieve the goals and desires of both parties. X. Case Study One: The Snail Darter The
Snail Darter came to the forefront when a dam was proposed to be built on the
lower main branch of the What was discovered was that the Darter could live upstream in various branches of the river and is currently surviving today, listed as a threatened species instead of an endangered one. In the case of the Snail Darter, the species was given an infinite worth, meaning that no matter what the situation was, the Darter would have one. This logic is questionable; the value of a dam is known, whereas data suggesting that the Snail Darter has comparable value to the public is lacking. The bottom line is that to assign a value of “incalculable” leaves no room to even measure what has the most benefit. We can also see that had the dam been allowed to be built in the first place clearly defined property rights could have been assigned to the dam. Even if the sides were to be reversed and the Darter was given the rights to the habitat it would have been possible to buy out the Darter. In all likelihood it both solutions would have left the Darter in the state that we now find it in. All the ESA did in this example was slow down the completion of the dam and add a burden on the courts, thus increasing the dam’s costs. Sadly, the ESA has been accused of only clogging the courts and slowing the natural progress of man and nature (U.S. Fish and Wildlife Service Division of Endangered Species). XI. Case Study Two: Red Cockaded Woodpecker The
Red Cockaded-Woodpecker (RCW) has been on the endangered species list since
1970, and its habitat consists of old growth pine trees, ranging from 50 –80 years
of age. The older trees that the RCW lives in are valued for timber. The reason
for the decline in the RCW’s population are the
reduction of the pine forests with old growth trees, (old being 50 years and
above), and also the encroachment of hardwood industry due to fire suppression
( The ESA has created the incentive for those who own the land that contains old growth trees and possibly the RCW to cut trees prematurely, thus eliminating the nesting of the RCW. This technique of destroying the habitat is also known as the “scorched earth” technique (Simmons & Simmons, 2003), or preemptive destruction. This leads to over harvesting and unnecessary destruction, but land owners do it because if they do not restrictions could result and nothing of value would happen with the land. To maintain the value of the land and have any option for its development or other use, the RCW must not be in the picture. If the RCW is around, along with ESA restrictions, the value of the land is drastically reduced and the owner’s options are severely limited. This fact results in tactics such as “shoot shovel and shut-up”. If the older trees are cut first then the RCW has to find somewhere else to roost and the land can still maintain its value. Dean Lueck and Jeffrey Michael note: While regulators consider restrictions to preserve land, developers race to beat the regulations, resulting in more rapid development than would have other wise occurred…The primary cost of preemption seems to be the reduction in the conservation benefits from RCW protection. This cost not only includes the public benefits of species protection but also includes the private environment benefits to landowners of maintaining old-growth pine forests for recreation and for other reasons (Journal of Law and Economics, 2003, p.17). The
current status of the bird’s population is believed to be 10,000 – 12,000, and
this is after thirty years of being on the endangered list ( XII. Case Study Three: The
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the
lost energy production and “too much” of the habitat is produced (Anderson
& Leal, 1991). This phenomenon of “externalities” is represented in the
figure to the left.