«Toward More Effective Endangered Species Regulation By Jacob P. Byl Dissertation Submitted to the Faculty of the Graduate School of Vanderbilt ...»
The FWS and NMFS should follow suit and measure co-benefits of conservation efforts to capture the full range of benefits of critical habitat designation. They have done this a few times in the past when multiple listed species have overlapping critical habitat, like the Spotted Owl and salmon in the Pacific Northwest (U.S. FWS 2012). But this still fails to capture the full range of benefits of the regulations, just as the EPA failing to consider reductions in co-pollutants would not capture the full range of benefits for regulations that reduce NOx. The most accurate way to capture benefits of critical habitat protection is to measure the benefits of critical habitat to listed species, but also factor in a category of benefits from the conserved ecosystems.
The most promising way to measure benefits of critical habitat designation is to use metrics of ecosystem services such as carbon sequestration, water filtration and retention, and recreational values of critical habitat in addition to the existence values of the species themselves. These services provide large benefits to people who enjoy clean air, filtered water, and scenic vistas. Kareiva et al. (2012) and others have put numbers on the value of some of these ecosystem services by combining economic and ecological tools. Agencies can use these previously published valuations for ecosystem services to give a sense for what kind of benefits flow from the protection of critical habitat for endangered species. Going forward, agencies can also encourage more valuation efforts of other ecosystem service benefits.
Not all of the benefits from the ecosystems designated as critical habitat should be counted as benefits of critical habitat designation. As discussed above, the appropriate increment of protection for critical habitat should be based on how people actually respond to critical habitat designations.
There is little doubt that measuring the benefits of an old-growth ecosystem in the Pacific Northwest is not a simple accounting task because most of these benefits are not traded on markets that inform us of prices. Sometimes economists are able to estimate how those ecosystem services are used in production of goods and services in the market (Nunes et al. 2003). This can allow for backing out valuations that are based on market prices. So for something like water filtration, economists might look at how important clean water is to the input of industries that rely on clean water, such as agriculture, manufacturing, and recreation. One of the ways to put values on something like water filtration is to look at what it would cost to filter it with human technology.
Ecosystem services can also be valued with stated-preference studies, much like the benefits of species can be. Economists have estimated the value of carbon sequestration, water filtration, and a range of other services.
By accurately measuring the costs and benefits of critical habitat, the FWS and NMFS can focus conservation efforts on proposed actions that achieve high net benefits to society. This suggestion is more than a pipe dream because existing estimates of the values of species and ecosystem services can be used to improve the accuracy of economic analysis in the short term. In the long term, additional studies can provide more data points to allow more accurate quantification of costs and benefits for more species and situations.
measures by examining the recent economic analysis for the Northwest Atlantic population segment of loggerhead turtles. The FWS estimates the benefits of designating critical habitat along almost one-third of the Atlantic coast of the United States to be approximately zero. I use existing estimates of the benefits of protecting the turtle and the value of ecosystem services provided by the critical habitat to calculate a more accurate estimate of the benefits that flow from critical habitat designation. I estimate benefits of critical habitat designation for the North Atlantic population segment of loggerhead turtles to be around $46 million per year.
of the species” (16 U.S.C. § 1532(5)). In the case of the loggerhead turtle, critical habitat includes the coastal islands and the species of those islands that are connected to loggerhead turtles through the complex web of life. (U.S. FWS 2013). Loggerhead turtles also rely on the shallow waters and bays that are scattered along much of the Atlantic and Gulf coasts of the United States, so these marine ecosystems are proposed for designation as critical habitat by the NMFS. In total, about one-third of the coastal zone of the Southeast is proposed critical habitat for loggerhead turtles under either FWS or NMFS control.20 The incremental approach of the agencies assumes that there are minimal costs For species like the loggerhead turtle that pass through both marine and coastal environments during their life cycles, the FWS and NMFS coordinate their regulation in ways that are in the best interests of the species.
and benefits of protections above a baseline of protections for listed species, so the estimated benefits of loggerhead turtle critical habitat are negligible.
The FWS estimates the costs of critical habitat by looking at the expected paperwork burdens of administering critical habitat. For the loggerhead turtle, this amounts to about $150,000 per year. Benefits are estimated to be unclear but negligible because there is so much overlap between protections of listed species and critical habitat. Hypothetical benefits are mentioned and described qualitatively, but are not quantified.
B. More Accurate Economic Analysis of Loggerhead Turtle Critical Habitat As discussed in Part IV, there are advantages to measuring costs and benefits of proposed regulations using methods that accurately capture how society values the expected changes due to the regulation. A more accurate estimate of the benefits of critical habitat for the loggerhead turtle adds the values of better outcomes for loggerhead turtle to values of other ecosystem services that are preserved or improved because of the critical habitat designation.
There are two existing studies of willingness-to-pay for conservation of loggerhead turtles. Wallmo and Lew (2012) use a stated preference choice experiment on a nationally representative sample to estimate a household willingness to pay of $46.01 per year (2014$) to have loggerhead turtles recover to the point of not needing endangered or threatened status. Aggregated over 115 million households in the United States, this leads to a total annual benefit of $5.3 billion. Since the North Atlantic population segment has one-third of the world’s loggerhead turtles, the benefit of saving the relevant population segment of loggerheads is $1.8 billion per year.21
in recovery status of loggerhead turtles and finds that the median North Carolina household is willing to make a one-time payment of $57.36 to reduce the probability of extinction to zero for the next twenty-five years for loggerhead turtles. Assuming this response can be extrapolated to the other states that include loggerhead critical habitat, this leads to an estimated willingness to pay for loggerhead turtles of $1.09 billion, or $62.5 million per year.22 Taken together, the studies indicate a substantial range of willingness-to-pay estimates for loggerhead turtles from $62.5 million per year to $1.8 billion per year. To address concerns noted in Arrow et al. (1993) that stated preference studies may tend to overestimate willingness-to-pay, I use the lower estimate in the range.
limited to the listed species, but should also include benefits of ecosystem services of the critical habitat. Barbier et al. (2011) report valuations of ecosystem services for coastal wetlands. The ecosystem service of reducing storm surge is estimated to provide an annual benefit of approximately $20,000 annually per mile of coastal wetland. With The Northwest Atlantic population segment of loggerhead turtles makes up one-third of the world population of loggerheads, but taking one-third of the total annual benefit likely underestimates willingness-to-pay for this segment because people probably care more about these domestic turtles than those overseas.
$57 per household * 19.1 million households in NC, SC, GA, FL, AL, and MS. U.S. CENSUS BUREAU, USA Quick Facts 2013, available at http://quickfacts.census.gov/qfd/states/00000.html.
Annual payment based on payments for 25 years using 3% discount rate.
approximately 2,600 miles in the loggerhead analysis, this amounts to $52 million in annual benefits.
which Mitsch and Gosselink (2008) estimate to be worth around $8,000 annually per mile of shore. The loggerhead analysis has 1,300 miles of beaches, so this results in $10 million in annual benefits.
critical habitat designation. As discussed in Part II, the increment of protections of critical habitat has to be measured against the baseline of what would have been protected in a no-action alternative. The Zabel and Paterson (2006) results discussed in Part IV suggest that critical habitat designation can lead to a 37% drop in construction activity. Although this estimate is looking at the cost side of critical habitat designation, there is a close link between the opportunity costs of foregone development and the benefits of preserving an area as critical habitat. Namely, foregone development is likely to result in more natural environments and vice versa. Using this as a rough proxy of the impact of critical habitat on conservation behavior, I estimate that 37% of the values discussed above would be protected because of critical habitat designation.23 This results in a preliminary estimate of the benefits of critical habitat designation for loggerhead turtles in the Southeast as $46 million per year.
More research is warranted in this area to get a better sense for the empirical impacts of critical habitat designation both in terms of costs imposed on regulated parties, such as in Zabel and Paterson (2006), and in terms of benefits to listed species and ecosystem services of land that is designated as critical habitat.
As studies provide valuations of additional services like shoreline recreation, the estimates of benefits can include these quantified ecosystem services as well. For now, the benefit measures can be thought of as lower bounds on the measures of benefits that flow from critical habitat. The estimate of $46 million per year of critical habitat for the North Atlantic population segment of loggerhead turtle more accurately reflects social preferences for turtles and benefits of coastal areas than the FWS estimate of approximately zero benefit for this designation.
VI. Conclusion This section concludes with a discussion of how accurate economic analysis of critical habitat designation can help improve the discourse about the Endangered Species Act by helping focus the discussion on the tradeoffs that are at the heart of the ESA.
As discussed above, the FWS and NMFS should engage in more accurate economic analysis when designating critical habitat under the ESA. This is because it is a better fit with the language of the statute and can help lead to more effective regulations.
Following these suggestions would put the FWS and NMFS more in line with guidance of the White House and practices of other agencies that implement environmental laws.
The agencies have made policy choices to 1) only consider narrow incremental effects of critical habitat; and 2) value only the benefits that come from the listed species themselves. I argue that the agencies should reverse course on these two policies and promulgate a new rule that establishes a methodology of economic analysis that fulfills Congress’s call to consider economic factors when designating critical habitat. Benefits should be measured by looking at the value of listed species and the value of ecosystem services protected through critical habitat designation.
As seen with the example of the economic analysis of the loggerhead turtle, the tools for more accurate economic analysis are within reach. Current practices of the FWS and NMFS do not accurately capture the real costs and broad benefits that reflect society’s feelings about the tradeoff between conservation and development.
Additionally, economic analysis can be a tool that allows the FWS and NMFS to keep conserving beautiful places, but get rid of the worst of the burdens on landowners. By focusing first on regulations that provide large net benefits, the agencies can avoid some of the extreme results that get critics of the ESA really mobilized.
Climate change is likely to increase the stakes of endangered species regulation by straining both ecological and economic systems. With this additional strain, it will be increasingly important for the FWS and NMFS to be able to point to how their proposed regulations are benefiting society. Although some find it distasteful to try to put a price on nature, failing to do so often means that only opponents of conservation have numbers to wave in front of Congressional committees and the press. If the agencies that implement the ESA engage in accurate cost-benefit analysis, all sides of the argument can have more information to use when making decisions about how to best balance the conservation of resources against other social goals. Agency actions can be more transparent by clearly laying out proposed actions, alternatives, and estimated costs and benefits. All of these factors can help improve the discourse about the ESA by shifting from arguments about owls versus jobs to meaningful discussions about how to use ecosystems that are critical to improving outcomes for species and provide valuable products and services to people.
REFERENCES Arrow, Kenneth, Robert Solow, Paul R. Portney, Edward E. Leamer, Roy Radner, and Howard Schuman. 1993. Report of the NOAA Panel on Contingent Valuation.
Washington, D.C.: Government Printing Office.
Barbier, Edward B. 2013. “Valuing Ecosystem Services for Coastal Wetland Protection and Restoration.” Resources. 2(3): 213-30.
Barbier, Edward B., Sally D. Hacker, Chris Kennedy, Evamaria W. Koch, Adrian C.
Stier, and Brian R. Silliman. 2011. “The Value of Estuarine and Coastal Ecosystem Services.” Ecological Monographs. 81: 169-83.