The Under-Reported Costs of the Endangered Species Act

When I read articles from the apologists for the Endangered Species Act (ESA), I often read silly statements like,

The U.S. federal and state governments spent just more than $1.7 billion to conserve endangered and threatened species under the Endangered Species Act (ESA) in fiscal year (FY) 2012… (W)ith a pretty high success rate of preventing species from going extinct, the ESA works out a decent bang for your buck.

Well, I beg to differ — $1.7 billion is just a small part of the total economic costs of implementing the ESA. Let me count the ways:

1)    The economic costs of implementing the ESA include its total impact on economic efficiency. This includes all of the lost economic opportunity that arises from the restrictions that are imposed by the ESA. When a federal agency declares private property as a “critical habitat” for an endangered species on private land, that agency can force the land owner to discontinue her economic use of that land. This impacts not only the landowner, but all of the businesses that directly engage in trade with that landowner. How bad can this cost be? One economic study in 1994* looked at the ESA recovery plan for the spotted owl species in the northwest. It estimated that this plan decreased economic welfare in the region by $33 billion (and that was in 1990 dollars). That was just one recovery plan… for one endangered species… for specific period of time.

2)    The economic costs of implementing the ESA include its total impact on social equity. What is almost never considered by such apologists is the unequal distribution of who ultimately bears the cost. The cost of any regulation is not just the taxes raised for implementing the Act. These taxes are spread across the federal government tax base, and (conceptually) everyone bears some federal tax exposure. However, the economic costs that arise from regulations are borne only by the landowner and those that directly relied on the land owner for trade. This creates a disproportionate share of the total economic costs to be borne by the land owners and the people who do business with them, rather than by the nation’s taxpayers. That same spotted owl study estimated that the regional producers of intermediate wood products bore the brunt of that $33 billion economic loss, which was a very small segment of the regional population. Ouch…

3)    The economic costs of implementing the ESA include its total impact on individual rights. Yet another aspect of the cost of implementing the ESA is that when private property owners are told that their land is “critical habitat” and can no longer be used for its historical economic activity, this amounts to a “taking”  that is supposedly protected under the Fifth Amendment to the U.S. Constitution. However, the land owner must undertake very expensive legal action to sue the federal government for her rightful “just compensation” for this taking. Research by the Congressional Research Service has shown that the odds of winning such suits are relatively low. Their 2013 study identified 18 such ESA cases filed against the federal government, with only one being successful at the time of printing and two still outstanding. That means there is between a 83% to 94% chance of losing a very expensive law suit to defend your Constitutional rights. A track record like that will be sure to send a message to those who believe the U.S. Constitution will protect their individual rights.

To illustrate how naïve these apologists of the ESA can be, let me quote Gary Frazer, assistant director for endangered species at the U.S. Fish and Wildlife Service (FWS), who was quoted in the Scientific American as saying,

We have almost 1,500 species listed in this country and we have a very healthy economy. We have a growing population with the highest standard of living in the world. That’s often lost. Instead, we hear about the potential for a species to shut down oil and gas development in that particular area.

Using this same logic, I could reply,

We have tens of thousands of species flourishing in this country and an abundance of healthy habitat. In fact, only a couple hundred species appear on the ESA’s list as being endangered. That’s often lost. Instead, we hear about the shutdown of billions of dollars of lost economic activity to potential save only one of these species.

You see, I also could ignore:

  • The efficiency aspect of how species have critical inter-relationships necessary for their greater survival.
  • The equity aspect that each and every species is equally worthy of our concern.
  • The erosion of individual species’ standing in the world’s perspective, where wildlife and humankind both retain an important place on this earth.

Perhaps taking a more holistic approach to considering the economic impact of ESA on our complex economy is just as important as taking a more holistic approach to considering the role of any specific endangered species in our complex ecosystem.

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